Sheppard Pratt sells employee assistance unit

Managed behavioral health program also purchased by APS

September 18, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

Sheppard Pratt Health System announced yesterday that it has sold its employee assistance and behavioral managed-care unit.

The sale will have no impact on Sheppard Pratt's hospital in Towson and its services, said Bonnie Katz, vice president for corporate business development for Sheppard Pratt.

The buyer, APS Healthcare Inc. of Bethesda, will continue to operate the programs under the Sheppard Pratt name, Katz said. Sheppard Pratt's clinicians will be part of APS' provider network.

She said the unit had 45 employees working in such areas as claims processing and care management. None delivered care to patients. Of those, Katz said, about a dozen are working for APS, some have taken other positions at Sheppard Pratt, and "there were about 20 who, when all was said and done, left." The sale was completed at the end of last month.

The employee assistance program provides short-term counseling. The managed behavioral health unit acts as an insurer for inpatient and outpatient mental health care.

Sheppard Pratt began contracting with employers to provide employee assistance services in 1983. It added the managed behavioral care unit in 1991, when hospitals thought contracting directly with employers, rather than with insurers, would be an important business option.

In all, Sheppard Pratt contracted with about 300 employers to provide about 550,000 with services, mostly employee assistance services. In turn, Sheppard Pratt paid community clinicians to care for patients and provided some of the care on its Towson campus.

In general, in mental health, "providers are keeping their owned-and-operated programs" in managed behavioral health and employee assistance, said Monica Oss, president of Open Minds, a research and consulting firm for the mental health industry in Gettysburg, Pa.

"In some markets, providers as large as Sheppard Pratt are making the decision that they are better investing their money elsewhere," Oss said.

Diana L. Ramsay, Sheppard Pratt's executive vice president and chief operating officer, said, "As we assessed the need for increased investments in technology and systems to remain competitive in this business, we decided it was best to exit that market while our programs had value in the marketplace."

Katz said the units were "not performing consistently in a way we were happy with, and some pieces were losing money." Revenue from the units was about $4.5 million of the total of $117 million for the system as a whole, which is "in the black," Katz said, although she said she did not have specific figures available.

Terms of the deal were not disclosed. Privately held APS said it could not comment because it is registering with the Securities and Exchange Commission for a potential public stock offering.

Oss said APS is "rapidly growing, quite aggressive in a good way," with the growth coming from attracting new business rather than from acquisitions. According to Open Minds, APS had 7.2 million members this year, up from 4.3 million a year earlier.

According to APS' registration statement, filed with the SEC in January, APS had $55.4 million in revenue in 1999, up from $31.5 million in 1998 and $11.3 million in 1997. It lost $2.8 million in 1999, down from $4.6 million the previous year.

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