COLUMN ONE : Healing Patients, or Profits? : Pressures on private psychiatric hospitals have led to aggressive recruiting of patients. Diagnoses, critics say, are often based on insurance practices rather than people’s needs.

She was feeling deeply depressed. The advertisement on late-night TV said she could get free counseling. So the woman, a 37-year-old mental health professional, called an 800 number and was given an address. When she arrived at the location, which turned out to be Los Altos Hospital in Long Beach, a clerk confirmed she had insurance coverage.

Then, the woman says, she had no opportunity to talk to a psychiatrist or counselor before she was dragged away by men in white coats and committed against her will to a ward filled with seriously disturbed mental patients.

“I was scared to death . . . I was just put away,” says the woman, who asked that her name not be used. Released after a night of frantic phone calls to lawyers, she was later billed $1,700 for an overnight stay, including a fee from a doctor she never saw.

The woman, like many others seeking out attorneys and patient advocacy groups with similar stories, says she believes she was a victim of psychiatric care driven more by profits than concern for patients. Richard Louis, Los Altos’ assistant administrator, declined to comment on the woman’s charges, citing patient confidentiality laws.

Across the country, from New Jersey to Texas to California, patients contend that private psychiatric hospitals have been misdiagnosing them and holding them against their will to milk their insurance.

Such complaints prompted massive investigations in Texas, where the attorney general has charged a subsidiary of Santa Monica-based National Medical Enterprises, which owns Los Altos, with paying kickbacks for patients. Texas also is investigating chains, including Laguna Hills-based Community Psychiatric Centers, Charter Medical Corp. of Macon, Ga., and Nashville-based Hospital Corp. of America, for possible kickback payments and consumer and insurance fraud. State authorities in New Jersey and Florida are also investigating complaints against National Medical.

As the nation debates what to do about the skyrocketing costs of health care, some experts say the recent history of the $8-billion private psychiatric hospital business is a prime example of what is wrong with the system. Too often, they argue, patients are evaluated and treated based on what their insurance will pay for rather than what they need. Hospitals get built to take advantage of trends in payment rules. Worse, they say, while private hospitals spend millions marketing to well-insured patients, thousands of uninsured people who desperately need psychiatric care roam the streets.

Now, in one of the most troubling shakeouts in the $740-billion health care industry, the private psychiatric hospital business is ailing as employers and insurers cut back sharply on payments.

Charter Medical has announced plans to file for Chapter 11 bankruptcy reorganization. Community Psychiatric Centers saw its 1991 third-quarter per-share profits drop 98%, and is expected to announce its first annual profit drop in decades for last year. National Medical has seen business drop sharply at its psychiatric hospitals and recently took a $28.7-million charge against earnings for the costs of its legal battles in Texas and a corporate restructuring of its psychiatric and rehabilitation divisions.

Many Southern California for-profit private psychiatric hospitals are half empty, but shareholders continue to expect the high returns of the past decade. This bottom-line crunch is forcing severe cost-cutting and aggressive recruiting of patients that critics say is hurting the quality of care.

The industry today is far removed from the early to mid-1980s, when private psychiatric hospitals boomed. The number doubled to 444 hospitals nationwide from 1984 to 1988 to meet demand fueled by increased inclusion of psychiatric and alcohol- and drug-abuse treatment benefits in employer insurance plans.

Many struggling hospitals were also encouraged to convert medical-surgical beds to psychiatric care because limits placed on federal Medicare reimbursements in the early 1980s largely exempted psychiatric care. While procedures such as appendectomies and heart surgery yielded low, fixed Medicare fees, psychiatric care was still mostly reimbursed at whatever level hospitals charged.

“In the early ‘80s it was like the Klondike gold strike. There was money in them thar hills,” said Dr. James Q. Simmons, director of the mental retardation and child psychiatry division of the UCLA Neuropsychiatric Institute. There was a broad awareness among mental health professionals, Simmons said, that some colleagues were unnecessarily hospitalizing patients--and keeping them until their insurance ran out.

Many hospitals advertised on television and recruited patients through churches and school counselors. Hospitalizing adolescents was the fastest-growing sector of the business as, critics charge, psychiatric hospital marketing scared middle-class parents struggling with misbehaving teen-agers. Some ads suggested that ordinary adolescent behavior such as talking back to parents, untidiness, or occasional drunkenness could be signs of serious psychiatric problems.

Barbara Demming Lurie, director of the Los Angeles County patients rights advocacy program, has tracked how diagnoses often followed payment trends. When insurers began refusing to pay for inpatient treatment for teen-agers if they were found to have only behavioral problems, “all of a sudden you had an epidemic of major depression,” Lurie said.

Faced with such abuses, employers and insurers have been trying to cut costs by limiting the number of days they will pay for inpatient care. In 1988, inpatient stays averaged 30.7 days, but by 1990 they averaged 26.1 days, sharply cutting into hospital revenues.

As employers tried to cut back, critics say hospitals scrambled to get more patients.

Kay Staley, a Houston attorney, said she went to a mental health seminar advertised in “one of those newspapers you pick up at the grocery store,” hoping to get counseling. But when she arrived at the Baywood Hospital, a Texas institution owned by National Medical, she said administrators tried to get her to “voluntarily commit” herself as an inpatient.

“They were high-pressure salespeople,” she said. “They said that . . . everyone (committed themselves), that it was for insurance purposes. In other words, to get more money.”

Duard Bok, formerly head of chemical dependency programs at the National Medical hospital in Ft. Worth, said doctors and administrators were pressured into keeping patients longer than necessary to collect more insurance money, and contends that he was fired because he did not go along with the hospital’s profit-oriented policies.

National Medical has declined to comment on Bok because of his lawsuit against the company.

Although other states are investigating hospitals owned by California-based chains, neither the California attorney general nor the state Department of Health Services say they are scrutinizing the chains’ operations within the state. “We go in and survey hospitals on a regular basis. We have not had any indication there’s a big problem with these facilities,” said Margaret DeBow, deputy director for licensing and certification at the California Department of Health Services.

Yet patients, doctors, nurses, and administrators familiar with California psychiatric hospitals say that abuses are going on in some hospitals here, too.

“There is a subset of hospitals that plays fast and loose,” says Dr. Don Rockwell, director of the UCLA Neuropsychiatric Institute. “I’ve been around enough psychiatric hospitals to know those abuses--iffy criteria used to hospitalize patients, lengths of stay extended without good clinical reason, multiple interventions (treatments) where one would be enough.”

Some California hospitals are casting their nets nationwide to scoop up patients. Bellwood Health Center of Bellflower lists an 800 number in an Upstate New York phone book. People calling the number are told their troublesome children should be institutionalized in the hospital’s inpatient program--without any preliminary examination.

Terry Manell, who lives near Albany, said that he called the number in early January because he wanted to get his teen-age children away from his tempestuous divorce proceedings. He said he was told they could be enrolled in the Bellwood “youth program,” which would include trips to Disneyland and shopping malls at no charge to him. He was not aware that he was committing his children to a locked psychiatric ward, he said. The hospital bought plane tickets for his children, who picked them up at the Albany airport by giving the password “Santa Claus” and then flew to California.

His 14-year-old son, Jason, was content to stay at the hospital, Manell said. But, he said, his 16-year-old daughter, Bridget, wanted to leave as soon as she arrived; instead, she was told she was depressed and should stay longer. He said he fought for two weeks before the girl was released last Wednesday and put on a plane for New York.

Manell contends that his children had no psychological problems requiring treatment and were not seen by a psychiatrist or counselor for evaluation before their departure. The hospital also has subsequently admitted his wife--whose insurance is footing the bill for the children--for psychiatric care, he said.

Mary Lou Landes, assistant administrator of the hospital, said she could not comment on the case because of confidentiality rules.

California law is supposed to prevent such abuses. Campaigns by people such as Susan Vossler helped strengthen regulations that require a patient to be seen by a psychiatrist or “deputy” in order to be committed to a mental institution. Vossler, an articulate businesswoman, said she was confined to a mental hospital for two weeks during a messy divorce in 1984 after her husband paid a psychiatrist $750 to sign papers to commit her, even though the doctor had never talked to her. Vossler says she was dragged away from her home at midnight by psychiatric workers as her 9-year-old son and neighbors watched.

Despite strengthened regulations on protecting patients’ rights that she and Lurie pushed for, they say abuses can still occur. The psychiatrist’s deputy designated as a valid hospital admissions agent in the law does not have to have psychiatric training.

Lurie said that some for-profit hospitals in Southern California provide excellent care. But conditions at other hospitals have deeply disturbed her.

One hospital Lurie visited had computer-generated stickers with boilerplate notes about attendance and behavior at group therapy sessions and other activities to place on patient charts. Such notes may have helped cover up the lack of visits by therapists, she said. One patient was ill with infectious hepatitis and unable to attend therapy sessions. Yet, the stickers plastered on her medical records for billing purposes indicated that she had participated in a variety of sessions, Lurie said.

Lurie said that at one hospital she saw many patients’ charts that had been altered to improve the chances of being reimbursed by insurers. One of Lurie’s staff also overheard a hospital administrator advising a doctor to medicate a minor because it “looked better” on an insurance claim and helped ensure payment.

Plagued by empty beds, psychiatric hospitals in 1989 turned to importing patients from Canada. The Ontario government last year cut off the flow of funds to U.S. hospitals after it saw its bills for south-of-the-border substance-abuse care balloon from $5 million to $51 million in three years. According to the Ontario Ministry of Health, recruiters targeted Toronto’s down-and-out and promised them stays in Florida or California. The ministry estimates that many of the 3,000 Canadians sent to 150 U.S. hospitals for substance-abuse therapy did not need to be there or did not get appropriate care.

Health care reformers say hospitals alone cannot be blamed for abuses in psychiatric care. Doctors, they note, officially make admissions decisions, and their treatment protocols determine billings. In psychiatry, it is easier to fudge treatment than in many other branches of medicine, and even the most ethical doctors feel the pressures of time, UCLA’s Simmons said.

“If you visit for 8 to 10 minutes and charge for 45 minutes, nobody’s watching. The lure of compressing time is irresistible,” Simmons said. “It leads to a crisis of conscience.”

But he also said that the payment system, especially as it attempts to cut costs, also encourages fibs and fraud by doctors. “Insurance companies in a way force collusion. They pay only for certain diagnoses so you have to search around (for the right one),” he said.

Hospitals, doctors, and insurers who have failed to reform the system are all part of the problem, he said.

“We’re all guilty to varying degrees,” Simmons said. We’ve boxed ourselves in. Everyone is competing for a shrinking dollar.”