Money woes threaten Carlyle center
In recent years, the renovated Carlyle Hotel established itself as a model care facility for people with severe mental illness and complex medical problems.
With on-site nurses and regular visits from medical doctors, the 138-bed residential care facility in downtown Spokane won plaudits for its pioneering treatment of its clients and the stunning overhaul of a once-dilapidated building.
But it had a problem: Year after year, the Carlyle Care Center lost money.
“We tried to raise the bar,” said Jim Delegans, who redeveloped the 1893 building with a mix of private and public funding. “They are proud of where they live. The people here are doing better than they ever have in their lives. But this project has lost money since the day it opened.”
U.S. Bank, which backed the project for the past six years, plans to foreclose on the building later this month, barring any last-minute negotiations. According to the Notice of Sale, the building carries $12.6 million of debt, including nearly $1 million from a city loan that directed federal funds to the project. The city may be forced to pay back the loan if the property is sold.
City officials are considering a plan to buy out the bank’s note to keep the building open for medically needy low-income residents, according to officials familiar with foreclosure.
If the building is foreclosed, the city is obligated under an agreement with the federal government to provide the low-income housing, and would have to open a new facility, Councilman Bob Apple said.
“It would cost us a lot more,” Apple said of the alternative of opening another facility. “This whole thing is a nightmare.”
The foreclosure may likely be staved off by a financial restructuring this month, and Delegans said he believes the home will continue to operate.
But the Carlyle’s woes illuminate a far more vexing and persistent dilemma for the public mental health system: At a time when the county spends hundreds of thousands of dollars each month to jail or institutionalize people with mental illness, why is one of its flagship centers facing foreclosure?
“It’s a great building with tremendous services in a central location,” said Commissioner Mark Richard. “But we just don’t have the money, nor are the commissioners willing to increase the bed rate (paid to the Carlyle) at this point.”
In a letter to the county’s public mental health system early last year, Delegans warned that the building could not survive on the reimbursement rate of $39 per person per day.
At the time, he estimated the Carlyle needed to earn an additional $25,000 to $30,000 a month to remain viable.
Other facilities have raised concerns about the county rate. Last year, the Hilltop Center closed its 21 beds, blaming the county’s reimbursement program, saying it was too little money to provide round-the-clock care.
In August, as if to underscore the risk, a nude resident at Oak Hill Home started a fire that caused $250,000 in damage.
“The operators of these places are all good people trying to do the best we can with what we’re given,” said Pam Brault, Oak Hill’s administrator. “I think we’ll all probably go broke if something doesn’t change.”
Beautiful building, challenging residents
The seven-story former hotel – which had deteriorated into a flophouse by the 1990s – received a huge makeover six years ago when Delegans and his wife, Fay, sunk millions into the project.
The renovation focused on creating a building where people with severe mental illness could receive medical and psychiatric care, meals, laundry and cleaning services, as well as the social benefits of living in a community.
Residents keep active with fishing trips, shopping, and other daily activities, as well as a recreation room with air hockey and table tennis. A barbershop allows for weekly haircuts.
The Carlyle’s full-service kitchen tracks the dietary needs of individuals, noting allergies, diabetic patients, or those who have low-salt or high-protein requirements.
In the rooms, the Delegans paid such attention to details that bathroom sinks were reinforced to support the weight of patients so troubled they defecate in them. Washing machines are specially equipped to automatically dispense detergents, and the staff has learned to juggle a population requiring more than 2,000 medications a day, Delegans said.
“It’s been pretty phenomenal for those individuals to get the health care they need,” said Dr. Christopher Goodwin, who makes calls to the Carlyle twice a month. “There are some very complex patients there who would otherwise end up on the streets.”
The staff’s training allowed the Carlyle to take on many of Spokane’s most difficult psychiatric clients.
“It’s been a major referral source for us,” said Susan Hammond, director of psychiatric services at Sacred Heart Medical Center. “They take people no one else will take, and they keep them in the community. If they can do it for $100 a day, they are still far cheaper than a medical center or a jail.”
Donald Piggott, a 78-year-old resident with bipolar disorder, moved into the Carlyle four years ago after being forced out of his previous apartment.
“When I get off my medication, I get a little obstreperous,” Piggott said. “After being kicked out of so many places, it’s been very liberating for me to be here. I have blossomed into a guy who can talk and sing and make friends.”
Anna Marie Fitzgerald, 51, spent more than a decade at Eastern State Hospital battling schizophrenia and depression. She moved into the Carlyle four years ago.
“I’ve really pulled my life together,” Fitzgerald said. “I love this big old building.”
Rates rise, but financial struggles continue
This fall, the county raised its payment to the facilities to $42 per day to provide some relief. But it remained well below the previous rate of $55 per day – which was significantly cut in 2004. County officials pointed out that the higher rate included a client participation fee, which is now negotiated by the care facilities, not the county.
The care facilities operate well below the $500 a day charged by Eastern State Hospital to house Spokane County’s overflow of psychiatric patients. At the jail, where psychiatric medication costs have soared in recent years, the county spends $90 a day for each inmate. Jail officials say they spend significantly more on those with mental illness.
In the past two months, the state fined Spokane County about $500,000 for sending too many psychiatric patients to Eastern.
“It is frustrating and it’s unnerving,” Richard said. “If I’m looking to spend a couple hundred dollars a day here, does it not make sense from a tax investment standpoint to pay $70 a day to a place like the Carlyle?”
Delegans said consultants reviewed the Carlyle’s operations but found little financial waste.
“This facility is an extremely efficient operation,” said Doug Britain, interim administrator at the Carlyle and a senior consultant with Health Dimensions Group, a Minneapolis-based company hired to manage the Carlyle in August. “It’s operating on a shoestring essentially. There’s no fat.”
Richard said the county has been exploring the possibility of adjusting the rate paid to places like the Carlyle, which are referred to as congregate care facilities. That rate could be adjusted based on the severity of a resident’s illness, as well as the level of care provided to them.
Another option, which has had limited implementation in Spokane, is a blending of state and county money to pay for medically complex patients. Under that scenario, the state’s Home and Community Services would pay for the patient’s care, and the county’s regional support network – or RSN – would contribute an additional daily rate.
But negotiations with the county have moved slowly, according to Pao Vue, regional administrator for Home and Community Services, a branch of the state’s Department of Social and Health Services.
“Our department is willing to work with the county and the facility to serve those clients,” Vue said. “But because the RSN has had so much staff turnover in recent years, they didn’t seem to have any institutional memory as to how to do it.”
Christine Barada, the county’s director of community services, said co-funding currently occurs with a few patients but they must meet specific medical guidelines to qualify. Barada said it is unlikely that a large number of the Carlyle’s residents would meet those guidelines.
The Carlyle “needs to get a clearer handle on who they want to serve,” Barada said. “They need to make some choices on what level of care they provide. If they are offering higher nursing care, that is again not for the people we are contracting for.”
The foreclosure proceedings at the Carlyle have unnerved many advocates for people with mental illness.
“They really made it into a place where you’d want to go,” said Linda Petrie, the county’s ombudsman for long-term care. “If we lose it, there aren’t other places in the community who can take these people.”