Advisor Warns County of Superagency Costs

Warning that Ventura County stands to lose millions of dollars, an expert hired to oversee the creation of a new superagency is recommending that county leaders do more homework before implementing the plan.

In a memo to the Board of Supervisors, consultant David P. Henninger advises that the move to meld the Public Social Services Agency with the Behavioral Health Department should be at least partly postponed until it can be studied in detail.

The reason: the merger could wind up costing the county a lot of money--even more than a previous financial estimate of $11 million to $15 million in state and federal funds--if the new agency does not comply with state licensing laws and Medicare requirements.

Furthermore, it could lead to a revocation of the operating license for the Ventura County Medical Center’s mental health wing, according to the memo.

“We believe the reorganization raises important legal concerns,” wrote Henninger of the Los Angeles law firm of Hooper, Lundy & Bookman, which specializes in medical licensing issues. “Under a ‘worst-case’ scenario, non-compliance with these requirements could result in decertification and/or de-licensure of the hospital’s mental health services.”

Though careful to stress that the plan to create the new Human Services Agency--approved earlier this year on a 3-2 vote by a sharply divided board--may not violate any laws and might work without economic consequences, Henninger preached caution.

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County officials should implement the merger--which would create the county’s largest agency--only after developing a detailed plan for how it would work, and making sure state and federal officials sign off on it, he wrote.

Supervisor Judy Mikels, who strongly opposed the merger on the grounds that it needed much more review, is asking the board to take up the issue at its meeting Tuesday.

Mikels said the consultant’s report validated her concern from the start: that county leaders had acted irresponsibly in voting for the merger before gathering more information.

“I don’t like one-upmanship and to say, ‘See, I was right,’ but this was my concern all along,” Mikels said. “This is a board that sends little items back for nit-picky reasons, and I could not understand for the life of me why we had to move so fast.”

Among Mikels’ chief concerns is the financial risk posed by the restructuring.

A consultant’s report released last March stated that the merger could result in the loss of as much as $15 million in state and federal funding received through the county hospital if a separate medical license is required for mental health services. The hospital’s funding is based on patient caseloads.

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Supervisor John Flynn, who voted for the merger along with supervisors Kathy Long and Susan Lacey, was in Sacramento on Thursday and said he had not seen the memo.

But he downplayed the prospect of any major financial repercussions stemming from the board’s decision, which set off protests from the medical director of the mental health unit and others in his office. Flynn said the merger had been properly researched and can work.

“I think those are phony, drummed-up consequences,” Flynn said. “I don’t know who is spreading this, but I don’t believe in this worst-case scenario at all.

“Sometimes when you do things, the bureaucracy doesn’t like to change,” he added. “It’s a creature that’s sometimes hard for anyone to change.”

Supervisor Frank Schillo disagreed, saying that the board pushed the merger through without considering all the consequences.

“There’s no way you can create a new organization without any public input, with so little study, and expect everything to work out,” he said. “I think we need to stop right now and see what is the best way.”

Auditor-Controller Thomas Mahon said he would strongly advise that the board follow the consultant’s recommendations.

“If we move ahead without slowing down, there would be financial consequences,” Mahon said. “We would have a problem in my opinion.”

Supervisor Susan Lacey, widely considered the architect of the merger plan, could not be reached for comment Thursday. But she and other county officials have said that the merger poses no financial risk because no new license would be required.

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The result of intense lobbying by advocates and opponents, the split vote to separate the county’s doctors by taking the Behavioral Health Department out of the county Health Care Agency has become one of the more hotly debated decisions in recent county history.

Proponents of the merger contend it would lead to a more “team-oriented” approach to dealing with the mentally ill, with psychiatrists and social service employees working hand in hand, and would eventually save the county money.

Opponents contend the team approach would erode the authority of doctors to make medical decisions about the mentally ill and prevent the county from collecting Medi-Cal reimbursement for patients they treat.

“It is our concern that this administrative reorganization will have a substantial long-term adverse effect on the quality of mental health care delivered to the county’s mentally ill,” Michael Gales, the president of the Southern California Psychiatric Society, wrote in a letter to the board.

Meanwhile, Mikels and other critics of the merger question the true motives behind the decision. They argue that it has more to do with personal squabbling and empire-building among certain bureaucrats and politicians than with an intent to improve public services.

“I’m obviously very frustrated,” Mikels, who felt “blindsided” by the vote, said recently. “It was done as a political power play, not to serve the public, and that is what I’m angry about.”

Lacey has ridiculed those charges, calling them sour grapes.

“Change is very difficult for people,” she said in a prior interview. “There’s a lot of healing that has gone on, but it’s still not over. I and the other members did it because we thought it was best for the patients, period.