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People Inc/Family Life merger reflects change in mental health care regulation

Two respected Twin Cities mental health organizations — St. Paul-based People Incorporated and Family Life Mental Health Center (FLMHC) of Coon Rapids — joined forces at the beginning of this month. The move, which will expand the mental health care safety net in Anoka County, will also shore up the smaller FLMHC, which has struggled in recent years under increasingly complex reimbursement regulations.

People Incorporated, a 47-year-old nonprofit serving people with mental illness in the Minneapolis St. Paul metro area, is the state’s largest provider of community-based mental health services, with more than 700 employees. The partnership will provide the 40-year-old FLMHC’s 60 employees with the administrative support needed to navigate the new health-care landscape, said People Incorporated CEO Jill Wiedemann-West.

While the merger is news in itself, the fact that the two organizations felt the need to join forces speaks to a larger issue facing many small-to-midsize mental health organizations, Wiedemann-West said. The merger shouldn’t be seen as a commentary on the financial health of FLMHC, she explained: Rather it reflects the way the health-care marketplace is changing.

“Was Family Life failing?” Wiedemann-West asked. “Were they ready to go out of business? No. They were doing an excellent job serving their clients and the people of Anoka County. It’s just that smaller providers are having a harder and harder time being able to manage in the current marketplace because it is hard for them to have the depth needed to keep up with the regulations.”

A small agency with an annual revenue of approximately $3 million, FLMHC has anticipated the difficulties of the changing regulatory and payment environment. In 2009, the agency became a subsidiary of Rise, a St. Paul-based nonprofit providing employment and housing support for people with disabilities. This year’s People Incorporated merger made sense because it helped give FLMHC the power it needed to thrive in the marketplace while continuing its focus on mental health. “They realized that in order to grow they had to be part of something larger,” Wiedemann-West said.  

Meeting the more complex administrative requirements tied to changing health-care laws takes time and expertise, Wiedemann-West explained, and finding the staff to keep up with the demands costs money: “Everything from the way we’re paid to staffing to overhead costs to compliance requirements takes countless hours of administration. Smaller entities are finding it harder and harder to be able to operate successfully on their own.”

The way we were

Jim Olson, People Incorporated’s CFO, said that in past, funding requirements for nonprofit mental health organizations were far less stringent.  

“We’re moving toward the big health-care model now,” he said. “In the old days we would get a contract from a funder that would pay an equal amount every month. Now it’s gotten more complicated because we are billing for insurance coverage that involves different codework documentation and working to get payers to pay on time each month.”

Jill Wiedemann-West
Courtesy of People Incorporated
Jill Wiedemann-West

Wiedemann-West said that she can’t help but feel nostalgic for the simpler times.

“The old grant-driven days were wonderful,” she said. “Back then, we sent a note to the state that said, ‘We treated this many people,’ and they sent us back a check. It was simple. Now we have to build different lines of revenue for each client. It is more complex, but at an agency like ours we’ve been able to build and staff a back office to make sure that we are ready to support the new ways of doing things. We’ve worked efficiencies into our system.”

This expanded back-office support frees People Incorporated program staff to focus on the needs of clients, Olson said. It also has helped the agency broaden its influence in the marketplace.

“We are able to expand our service depth,” he said. “It makes us stronger as an agency. It helps us to be able to acquire these agencies and spread that strength to them.”

All that said, Wiedemann-West and Olson both said that they can see a downside in the move away from the small-agency structure in mental health care. 

“We always want to make sure that we are honoring choice in the marketplace,” Wiedemann-West said. “People out there need services. It’s important to recognize that it is getting harder for smaller agencies to make a way for themselves. If other smaller organizations like Family Life go away and disappear, that puts a bigger burden on the system, which already isn’t meeting the needs of people who need services.”

Benefits for family life

Now that the merger is complete, FLMHC staff should have more opportunity to focus on the jobs they were hired to do, Olson said.  

“They are getting the benefit of People Incorporated’s centralized support,” he said. “We have our own HR department, for instance. With that off their hands, Family Life staff will be able to focus on their client work, which is what they wanted to do in the first place.”

At a smaller agency, staff is often called upon to handle multiple responsibilities.

“Smaller agencies have a handful of people in an agency that are a jack-of-all-trades,” Wiedemann-West said. “With this merger, people’s jobs will become more identifiable to certain areas of the organization.”

Jim Olson
Courtesy of People Incorporated
Jim Olson

People Incorporated’s bigger budget means that FLMHC will likely be able to expand its programming.

“They should be able to do some moderate expansion really soon,” Wiedemann-West said. “The reason they’ll be able to see some of that increase is the benefit of having an in-house recruiter. They’ve been stretched for years: They’ve had staffing needs that haven’t been met simply because they haven’t had the capacity to do the hiring. We can fill positions in a much more direct and targeted manner. They will now have the benefits of an HR department. They’ll also have a finance department that can help them set up  new business relatively quickly.”

Right now FLMHC serves some 3,000 people a year. The addition of People Incorporated’s existing client base in Anoka County will significantly expand its reach into the community. “This is a good development,” Olson said. “We want to serve as many people as we can.”

But change is always hard, and Wiedemann-West admits that there may be some glitches early on.

“I don’t think there are any negatives to this merger,” she said, “but culture is what culture is and change is hard. If you’ve been a 50- to 60-person agency for a lot of years, staff may not see all the back-office benefits at first. We recognize that this integration is going to take a year or more to feel comfortable because culture changes take that long to manage.”

While employees may feel some growing pains with the merger, the client transition should be seamless.

“They will be in the same office,” Wiedemann-West said. “Clients won’t see any difference at all in the quality of the service they receive. There are a lot of amazing things going on at Family Life, and we intend to honor those in this change.” 

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Comments (1)

  1. Submitted by Jim Million on 11/16/2016 - 10:35 am.

    Doing the (very) Difficult

    Thanks for encouraging words to all who may (or likely may not) know the Minnesota mental health scene.

    People Incorporated began its life by meeting the most difficult, if not seemingly impossible, care delivery challenges (often dual disability) facing our Minnesota Departments of Human Services and Health, challenges these departments knew they could not properly meet through customary programs. That was an exceptional mission for that time, most anywhere. Today we read the organization has 700 skilled employees, who carry forward the original mission while expanding leadership roles in the professional community.

    Thank you, all you past and present special people of People Incorporated. What could be a better example of non-bureaucratic model success?

    Best wishes to all involved here.

    Jim Million
    Former Board Member/Treasurer

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