When I reflect on the impact of the economy on mental health services, I find it impossible to describe the effect beyond the organization that I manage in Bethlehem, Connecticut. Wellspring is a nonprofit multi-service mental health organization that serves children, adolescents, young adults and adults, and their families. Services provided by Wellspring and the highly regarded Arch Bridge School include a community-based outpatient psychotherapy practice for children and adults, an educational program for ages 6 to 21, and a set of age specific residential/congregate care programs for ages 5 to young adult (we are licensed to 65). Wellspring is a small organization with a capacity of 41 residents and 51 special education students and, at any one time, serves about 200 individuals and families through our outpatient practice. Since we work with a small operational reserve and no endowment, we are very concerned about the effect of the economy on our organization.
This fiscal year, 2009, was the most financially volatile we have experienced in 12 years. Although the fiscal trend was the same as every year, the valleys were deeper and the peaks were higher. Since we predominately serve children, our fiscal year is structured around the school year, with census low in summer, rising from the fall to the spring, then plummeting at the end of June. Financially, we always spend nine months chasing the first three months. The calendar year 2008 (last six months of FY 08 and the first six months of FY 09) was the worst we have experienced in more than 10 years—probably the worst in our 32-year history. It represented a seven percent deficit, more than three quarters of the loss in cash. Then, suddenly in January, referrals picked up and for the first five months of 2009 we experienced the second highest census in 12 years.
So, what was the impact of the economy on Wellspring? Did families feel that our services were a luxury during these difficult times, and then realize it was a need? Was the change in our fiscal fortune due to the economy – a situation beyond our control? Or, did we make brilliant management decisions that turned our fortunes around? As the CEO, I still do not know the answers to these and other pertinent questions about our current and recent past. Regardless of the cause, we needed to act.
In several different ways, Wellspring reaffirmed its commitment to mission, to intensity of clinical practice, and to quality of services. We cut back, but not at the expense of programs and staff integral to the accomplishment of the mission. This was important because as a mission driven organization, how we meet our mental health purposes is as important as balancing a budget. We have a clinical philosophy that was developed over 32 years ago which has had significant success, along with clinical practices that set us apart from many other mental health serving organizations. Next, we looked at the three streams of funding used to support Wellspring—private payment (including reimbursement by insurance companies to families), government payment (including per diem and contract methods of payment) and philanthropy (a modest 3% of our income). As a result of this analysis, we decided that we needed to market to each target source of income.
Also, expenses needed to be controlled. In fact, expenses were the only financial aspect of the organization we could control. Over the 20 months between October 2008 and May 2009, we eliminated four positions, just below 4% of our employee count. We eliminated the positions of COO, one of two admissions coordinators, a discharge planning Social Worker, and an assistant to the Director of External Affairs. The reductions of personnel had little, if any, effect on direct clinical services. Non-personnel expenses were reduced within each program by the line staff. Even though income was reduced in 2008 because of lower census, expenses also were lowered through staff cuts and non-program reductions. In this period, we created a position for a marketing director to assist in increasing our census and our philanthropic visibility and asked some clinical managers to develop more functional direct relationships with referrals sources.
At the same time, we looked at ways to lower non-program expenses. We refinanced mortgages, renegotiated leases, stopped advertising to fill vacant positions (almost all positions were filled for the past 18 months), purchased cheaper energy and fuel, maintained but reduced the cost of staff celebrations and fund raising, and most difficult of all, eliminated a pay raise scheduled for January 2009. These economies made us leaner, but not at the expense of program quality.
During this difficult time, we needed to sustain faltering morale, and decided to absorb all health care cost increases in FY 2009 and again for FY 2010. The latter decision was based on the theory that this was not very expensive, but a real boost to morale. The decision was an attempt to show our concern for our employees and not place further economic burdens on staff. Because our situation improved in the last half of FY 2009, we provided a modest increase in salaries for 2010. We controlled what we could, engaged staff in controlling what they could, and provided small concrete gestures of support.
Among our responses to the economic plight, the most important was our constant reiteration of Wellspring’s mission. A year ago, we began a strategic planning process with board of directors and management staff work groups. The combined process focused on mission and the development of a vision for the future. The mission was endorsed again and a new vision gave us a vital developmental goal, well-grounded in foundational activities and excitement for the future. The vision–long term connection and relational care–has sound philosophical roots for Wellspring. It created a need to engage residential and educational program alumni, board members and management staff, in new thinking. The necessity of responding to the economy created a better understanding of the mission and a new commitment to program development.
At Wellspring we attempt to engage in what I refer to as relational management, just as we follow a relational model of therapeutic care. This type of management is a long-term investment in developing an organizational culture that builds relations with and among staff. To paraphrase Marshal McLuhan, we try to use “the medium as the message”. How our managers manage informs therapy models and supports our therapists in how they should conduct treatment. Relational management does not negate managing the bottom line, but is an adjunct to good technical management in finance, human resource, information technology, external affairs and plant management.
The economy has pushed us to a wall, but sticking to our core business, managing “as well as we can,” supporting our staff through a united and multi-dimensional response to our fiscal plight has made us stronger. I am reminded of the quote, “that which does not kill us makes us stronger.” Although I hope the worst is over, or at least is greatly diminished, I know Wellspring is better for what we experienced in 2008.