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Rosecrance at 100
When you’re the CEO of a 100-year-old organization, it might be all too easy to rest on laurels, coast on the well worn paths of the past or ride the current of general momentum. But in behavioral healthcare, such idle attitudes can cause an abrupt end to the business and shatter its mission. In the rapidly changing atmosphere of mental health and addiction treatment, a chief executive has to be as evolutionary as the system itself.
In 1971, Philip Eaton was a new college graduate with a degree in social work, starting his first job treating adolescents at the Rosecrance Memorial Homes for Children. Now 45 years later, he’s the company’s president and CEO as well as its longest tenured employee. Marking its 100th anniversary this year, the not-for-profit Rosecrance organization is a $70 million business that has more than 800 employees and 40 locations in three states.
“When I joined Rosecrance, we had 24 kids, a staff of 14 and an annual budget of $300,000,” Eaton tells Behavioral Healthcare. “I had no idea what I was getting into. Finding myself a parental figure at 22 years old for kids who were 16 or 18 was like ‘oh my god.’ All of the sudden, the realities of dysfunctional families and things that I read about were right there.”
Clearly, things have changed since then for Eaton, for Rosecrance and for the entire industry.
Shifting attitudes
Awareness of behavioral health issues has grown, as have the services and supports to treat them.
“One of the biggest changes has been the public attitude about behavioral health,” Eaton says. “Decades ago, it was viewed as a burden in a community. Homeless people, alcoholics and people with serious mental illness were viewed as a burden, and communities were trying to figure out what to do.”
For example, 45 years ago, a legislator concerned about homeless people sleeping on park benches might react by removing the park benches long before considering any legislative moves to address the underlying issue. But today, lawmakers have a greater understanding of vulnerable populations and the services needed to assist them.
As more families, neighbors and co-workers begin to see substance use disorder (SUD) and mental health touch their lives first-hand, Eaton says, they can relate to those who need treatment with a more enlightened form of understanding. Improved approaches today now emphasize the preference for a community-based infrastructure of support and a recovery-oriented model, reflecting such changing attitudes.
“People with serious mental illness or substance use disorder decades ago would be relegated to care ‘someplace else’ because they were seen as flawed people,” he says.
Individual stories seem to be driving much of the evolution. For example, each of the current presidential candidates, on both sides of the aisle, has discussed behavioral health openly on the campaign trail. Hillary Clinton offered a $10 billion addiction policy early on in the race, and Ted Cruz has often spoke about his half sister who died of overdose.
“This is many steps beyond the Just Say No program of the 1980s from First Lady Nancy Reagan,” Eaton says. “This is up close and personal in terms of the candidates’ understanding of the seriousness of these issues for families and communities.”
And the awareness has made a tremendous difference in policy perspectives. Eaton believes the inclusion of behavioral health services as one of the essential health benefits prescribed by the Affordable Care Act as well as the ultimate progress of parity laws in recent years were all the direct result of societal attitude shifts. He says communities are responding with programs and services because they are motivated to be solution-oriented.
The healthcare industry at large is more prepared as behavioral health disorders are increasingly seen as chronic conditions that require ongoing care.
“We’ve seen progress with physician training,” Eaton says. “Medical schools have come to us to ask if their doctors can do rotations at our facilities. That didn’t happen 20 years ago. Back then, they probably got 20 minutes of training and a handout. And that wasn’t really that long ago.”
Today, primary care physicians who often help to identify behavioral health issues are better equipped not just to ask diagnostic questions about substance use or depression but also to offer resources and referrals to specialized treatment. It’s a significant difference, Eaton says.
And there’s no doubt these new trajectories can be favorable for business growth. The attitude shift was even evident in one of the zoning battles Rosecrance experienced recently as the organization sought to expand its portfolio in Illinois.
The company planned to open a new outpatient clinic with a 30-bed recovery residence on the north side of Chicago, located five blocks from Wrigley Field. Even though several opponents had challenged approvals for the residential space right up until the last possible day, the zoning board granted Rosecrance a special use permit to begin operations in May. The board also resolved that people in recovery are considered a protected class entitled to fair housing.
“The zoning board unanimously approved it, and it was probably one of the most favorable write-ups [prepared] on a controversial subject,” Eaton says. “It was really a good, solid ruling in our favor.”
He believes the organization’s 100-year history of providing services helped influence the positive decision.
Business growth
Rosecrance Health Network has come a long way since its founding as an orphanage for boys in New Milford, Ill., in 1916. The childless Rosecrance family left a legacy for their community in the days before child welfare systems were even available. By the 1950s, the organization had evolved and moved to a new campus, later embracing more complex issues of children in need.
“In the 1980s, we started to see more and more kids where one of the problems on their list was drinks and drugs on a daily basis,” Eaton says. “That became a compelling issue for many kids, but child welfare did not embrace the notion that adolescents could be addicted to substances like adults could be addicted.”
As a response, in 1982, Rosecrance upended its child welfare services and recrafted its mission to focus on adolescent substance use disorders, obtaining a new license, securing new staff with SUD clinical specialization and carving out the logistics a little at a time. One key staffing change: Eaton was named CEO of the newly focused organization that had a mission to provide children and teens with treatment services and recovery resources.
The 20 initial beds grew to 24 then 42 beds, and all of them were full as new referrals starting coming in from Wisconsin, Iowa and Indiana.
Another turning point came in 1992 when the state asked the organization to take over an adult SUD facility in Rockford, Ill., calling for new adult services to be added to the clinical armamentarium. Rosecrance also merged with the Janet Wattles Center, a mental health services provider, in 2011. The moves brought new competencies for the organization and propelled integrated treatment modalities. Growth continued, and now Rosecrance operates more than 40 locations.
Its most recent merger was announced in April, adding to the portfolio the New Life Outpatient Center in Davenport, Iowa, that offers services for adults and youth, including intensive outpatient and family programs. The deal was significant because it marked Rosecrance’s first venture into Iowa—now the third state in its portfolio.
Business strategy
Eaton says when working with kids and young adults, the clinical program has relied on structure and accountability, and as it turns out, those two themes are also the driving force behind the organization’s business strategy.
“A sustainable organization that is built on structure and accountability, sound business strategy, operating practices and principles is central to us going forward,” he says. “We’ve expanded into mental health services and have been very intentional about developing competency there. We see so much overlap.”
Today, about 80% of the adolescents and as many as 70% of the adults treated by Rosecrance have co-occurring mental health concerns in addition to SUD.
And the organization for decades has also worked with public and private payers to maintain access to its services, which Eaton believes is somewhat rare in the industry even now. Half of its services are paid by commercial contracts, and half are covered by Medicare, Medicaid, state contracts and charity care.
Keeping a balance in the blended funding stream has been one of the ongoing challenges for the business. State contracts can be unwieldy at times, and Illinois in particular has struggled to hammer out its budget, resulting in trickle-down program cuts. The Republican governor and the Democratic-controlled legislature’s stalemate has left many service providers embroiled in uncertain times.
For example, in November 2015, Rosecrance cut the service hours by more than half for the triage program at its Mulberry Center. The change was necessary because the state had zeroed out about $1.5 million in operational funds.
“It’s those funding dollars that always seem to be in the eye of the storm,” Eaton says.
The best of times
Even with budget pressure, Eaton believes it’s the best of times in behavioral health. ACA has expanded access to services, for young adults in particular, and outside investors are noticing the potential in this segment.
Many new players are entering the market, but Eaton says he’s seen this type of attention before and knows it won’t last. When a similar trend occurred in the 1990s, the investors ultimately left the market after managed care clamped down on length of stay and reimbursement. Return on investment waned, and so did the opportunity for profit-seekers.
“Those of us that were left, who were trying to develop this balanced payer system, figured out how to get it done,” he says. “We figured out how to work with managed care and the latest funding schemes.”
One key strategy for providers is to earn the status of being a provider of choice among managed care payers with a value proposition that demonstrates high quality, high satisfaction and low costs. Big-picture trends indicate that the shift in reimbursement from quantity to quality will inevitably encompass behavioral health providers and call for them to assume some financial risk.
“We’re beginning those dialogues with our local payers and discussing the possibilities of not only bundled payment but perhaps to go at-risk for certain populations,” Eaton says.
With growing recognition of the chronicity of behavioral health disorders, managed care will increasingly drive new payment models. However, it’s imperative for providers to truly know and understand their delivery costs, especially in risk-based contracts, such as bundled payment. Eaton says it could be a disaster for an organization if its calculation is wrong. Even so, the jury is still out on whether such models will ultimately be effective for mental health and SUD.
“I do believe that there may be ways to achieve that reasonably if the payer is working in good faith with the provider,” he says.
The future
For Rosecrance, the future includes additional expansion—probably outside of Illinois. Ongoing efforts will continue to maintain the balance in funding streams and to engage the support of donors who contribute to the not-for-profit organization.
“One of the things that has allowed Rosecrance to be viable is a mission that’s relevant,” Eaton says. “And it’s led by a board of directors that continues to be focused on the community needs, particularly as they changed over the decades. We’re not an orphanage today. We’re an organization that responds to community needs.”
Julie Miller is Editor in Chief of Behavioral Healthcare.
Photography by Nels Ackerlund.
Picture Day at the Ware Center
Carlos G., a client at the Rosecrance Ware Center, which primarily offers mental health services for adults, was watching with interest as Philip Eaton, president and CEO, posed for the photos included in this feature. Carlos, who had never met Eaton, asked what was going on.
When Eaton introduced himself, Carlos took off his hat, smoothed his hair and clasped his hands in front of himself, as he’d seen Eaton do. He stood up straight and smiled for the camera.
“Some people seldom get a good image of themselves to put in a frame or give to someone they care about,” Judy Emerson, director of communications for Rosecrance, tells Behavioral Healthcare. “We decided that it would be easy to set up our backdrop at the Ware Center and shoot professional photos for clients.”
Eaton gave the go-ahead. The Rosecrance experiential therapies staff will now be offering picture days, which will reinforce the work counselors do with clients regarding self-esteem and good grooming, Emerson says.
“We’ll take appointments and offer tips in advance on what to wear in a professional photo, for instance, avoiding all white and distracting patterns,” she says. “We’ll probably have a staging area equipped with mirrors, combs and hair spray – and maybe even some makeup – to help clients get ready for their close ups. It’s going to be fun. We plan to do it this summer.”
