Agustin Arbulu has a tough sell to make and not much time to make it.
As CEO of Horizon Health Care Inc., he oversees a 140-bed psychiatric hospital that’s been on life support for nine months. There are no patients, so a skeleton staff of 15 or so keeps the facility on Detroit’s near west side open.
But money is running out as Arbulu scrambles to bring patients back. Otherwise, hospital rooms that are desperately needed to treat Detroit’s mentally ill — especially children and teens — could be lost, with conversion to condos one possible alternative, says Arbulu.
Until December 2001, what was then known as Aurora Healthcare Inc. provided in-patient psychiatric care to children, teens and adults through a contract with the Detroit Wayne County Community Mental Health Agency (DWCCMHA). Located on Lawton near the intersection of I-96 and West Grand Boulevard, it was the only community hospital in the county providing psychiatric care to children and adolescents, and was consistently operating at near capacity. Since its closing, patients have been forced to seek treatment in Oakland and Macomb counties, creating a hardship for them and their families, say mental health advocates.
“We don’t have anywhere near enough safe, appropriate residential living arrangements for people experiencing mental disorders,” says Mark Reinstein, vice president of the nonprofit Mental Health Association in Michigan.
Troubled past
With two buildings comprising 160,000 square feet, it also provided care to Wayne County Jail inmates. But there were problems. In the months before it closed, Aurora was being scrutinized by the federal Centers for Medicare and Medicaid Services, which certifies hospitals. Two patients had died — one after being released without an adequate discharge plan, another following two days without receiving seizure medication. There were reports of patients having sex; facility upkeep was also an issue.
“I had several clients there who were minors, and I quickly became convinced they were violating the mental health code up one side and down the other,” says Susan McParland, an attorney who serves as director of the Michigan Association for Children with Emotional Disorders. “There was excessive use of chemical restraints, the withholding of food as a disciplinary measure, inappropriate use of physical force, an absence of any kind of structured program throughout the day.”
Although federal regulators approved the hospital’s corrective plan in December, the Detroit Wayne County Community Mental Health Board voted not to renew its contract with Aurora for 2002. By the end of January, all the patients were gone. So were all the hospital’s top administrators and its board of directors — except for Arbulu, who became the hospital’s new CEO.
A lawyer with an MBA and a doctorate in business, Arbulu says he stayed on to help find some way to keep the facility operating. But there are a lot of hurdles. Before disbanding, Aurora’s former leadership filed a lawsuit against DWCCMHA, claiming the hospital was owed at least $2 million. William Smith, now chief financial officer for Horizon, says that number may be as high as $10 million. The agency responded by filing a countersuit, saying the hospital actually owed it $1.2 million.
In addition, Arbulu himself is raising questions about his nonprofit’s previous financial dealings. With Aurora’s revenue reaching as high as $25 million per year, it contracted with a private, for-profit management company that essentially ran operations at the hospital. According to Arbulu, Salem Management, owned by psychiatrist Soon Kim of Bloomfield Hills, in turn contracted with other companies affiliated with Kim to provide a number of services, including transportation and pharmaceuticals. Arbulu and Smith are still combing the books in an attempt to sort everything out, but they have learned enough to claim that the structure created a “big web of self-dealing.”
Attempts to reach Kim for comment were not successful.
Lawyers and changes
Part of the difficulty he’s encountered, says Arbulu, is convincing skeptics that there’s been a complete break from the previous administration.
There’s also a lawsuit filed by former Aurora employees represented by the American Federation of State, County and Municipal Employees. Union members say the hospital failed to provide them with proper notice before laying them off and that they are still owed compensation for vacation time.
The legal fight with the mental health agency is particularly nettlesome, since county money will be required if the hospital is to have any hope of again taking in patients. As it is now, Arbulu has been told not to talk directly with the agency. All communication has to go through the agency’s lawyers.
“When you’re in litigation, it can be difficult trying to sit down with the other party,” says Arbulu.
He’s also dealing with a mental health system in the midst of drastic change. Like other Michigan counties, Wayne has been compelled by Lansing to shift the way it funds services. In the past, it would contract directly with providers such as Aurora. Under the new system, the local mental health agency will see that services are delivered through a half-dozen HMO-like nonprofits that will in turn contract with other providers. That system is expected to be up and running by Oct. 1.
Which, by Arbulu’s calculation, is about how much time he has to breathe new life into the hospital before being forced to file for bankruptcy. Including mortgage payments and salaries, it’s costing $250,000 to $300,000 a month to keep the facility open. So far, money has been trickling in as past bills are collected. But that revenue stream is about to run dry.
As a result, Arbulu isn’t ruling out any options. Along with exploring the community mental health agency’s new system for contracts, he’s also talking with other hospitals, saying he’s open to everything from forming joint ventures to leasing the facility.
“We’re willing to discuss any reasonable arrangement,” he says.
Among the plans he’s pushing hardest is one that includes dedicating 80 beds to provide minors with what’s known in the industry as “intensive crisis residential” services. These are targeted for people who require short-term in-patient care, but are not considered to be of immediate risk to themselves or others. The care would be less comprehensive than that usually associated with a hospital, but provide more supervision than that found in a group home.
One benefit to such an approach is that the cost per patient would be substantially less than hospitalization. The downside, say mental health advocates, is that the most pressing need is for long-term hospital beds for minors, especially with the looming possibility that the state-run Northville facility could close.
Making the mortgage
As if all this weren’t enough, Arbulu also finds himself hamstrung by the hospital’s debt. With two mortgages totaling nearly $18 million, including about $8 million in bonds issued through the Detroit Hospital Finance Authority, selling the facility outright could be difficult. Developers — including one who’s talking about turning the facility into condominiums — have shown interest, but so far the offers have been in the $10 million to $13 million range.
Taken together, the obstacles facing Arbulu— the lawsuits, the hospital’s unenviable record, questions about past financial practices, and the debt — are daunting. And they won’t be overcome unless he can first convince people he’s trustworthy.
“Because I served on the previous board, I’m tainted,” Arbulu admits. “What we have to do now is prove that we’re not connected to the prior administration. We owe it to this community to do everything we can to get this hospital reopened.”
Curt Guyette is the Metro Times news editor. E-mail [email protected]
