Officials with Highland Hospital announced today that the mental health center's board of directors has unanimously agreed to sell its Charleston facilities to a Tennessee-based behavioral health care company.
Cynthia Persily, president and CEO of the Highland Hospital Association, said Acadia, which operates facilities in 39 states, has issued a letter of intent, signaling its plan to buy Highland. The two companies will now move into "due diligence" and work toward a finalized agreement, which Highland hopes to have in place by Sept. 30, Persily said.
"Highland has recognized for some time that health care is constantly changing. We must adapt to those changes to continue to provide high- quality behavioral health care services to our community," Persily said. "We are pleased to be having these discussions with Acadia, a nationally recognized name in behavioral health care. We firmly believe Acadia will enhance the ability of Highland to serve our community's behavioral health needs and provide us the best path forward to meet our mission within the ever-changing health care landscape."
Acadia operates more than 580 facilities, including six suboxone/methadone treatment clinics in West Virginia. Highland is a nonprofit organization; Acadia is a for-profit company traded on the NASDAQ stock exchange.
The company's purchase of Highland would include Highland's acute psychiatric hospital in Kanawha City, which has 80 acute-care beds for adults, adolescents and children and includes a 24-bed psychiatric residential-treatment facility for children and adolescents. It also would encompass Highland Health Center Inc., a 16-bed residential-treatment and detoxification program, and Process Strategies, an outpatient provider with integrated behavioral health care, primary care and pharmacy services.
Highland-Clarksburg Hospital Inc., which is a separate company, is not party to the agreement.
"Our mission is to serve the clinical behavioral health care needs of Southern West Virginia, and our board believes Acadia is in a position to provide Highland with the capital and clinical support needed to serve our patients and our region," said Dr. Kiran Devaraj, chief medical officer for Highland.
Persily said Highland has been considering a sale for about a year. Changes to the state's health care landscape, including a shift in who pays for stays at Highland and the state's switch to managed care for its expanded Medicaid population, have negatively affected Highland's bottom line and contributed to its decision to sell, Persily said.
"We're providing more care at lower reimbursement rates, and our payor mix has changed significantly," she said. "The shift to managed care has been significant for us, and all of those things combined let us know that we needed to look for a partner that would be a good partner, both financially and in helping us to meet our community mission."
According to Persily, those changes have made it difficult for Highland to even begin paying off the $28 million debt it took on in 2011 when it constructed its new building.
"In the last few years, the financial aspects of health care have changed so much, due to factors like the Affordable Care Act, the expansion of managed care in West Virginia Medicaid and, certainly, West Virginia's economy," she said. "Certainly, those factors have made it difficult to pay off our bond debt as we had planned back in 2011, when we sold and subsequently constructed the hospital. Most of what we've paid so far is interest."
Another factor that has kept Highland from maximizing its capacity in recent years is that Highland is barred from treating Medicaid recipients between the ages of 21 and 64 - a problem that could be remedied by changes in state policy, Persily said. Highland treated adult Medicaid patients for a time after the implementation of the ACA, but has not been allowed to do so since the demonstration period closed.
"We can no longer care for adults with Medicaid, and that has severely limited our ability to admit adults who have Medicaid coverage," she said. "With the Medicaid, more adults have Medicaid coverage, so that has certainly been another factor."
Persily said Acadia's size and its expertise in the field make it an ideal purchaser and that, while Highland will still be focused on serving West Virginians first, its affiliation with the company also night allow Highland to treat some out-of-state patients and regain some of the losses caused by being unable to treat West Virginia Medicaid recipients.
"It opens up the potential for patients who need our services from wherever they are. Certainly, that would be an opportunity," she said. "The important thing for us is the expertise they bring to the table in terms of mental health services, programming, accreditation, regulation, negotiation of contracts and resources related to quality and benchmarking ... will be instrumental to us in improving the services we provide to our patients."
Reach Lydia Nuzum at lydia.nuzum@wvgazettemail.com, 304-348-5189 or follow @lydianuzum on Twitter.