For-profit companies open psychiatric hospitals in areas clamoring for care

Iowa authorities suspended the Grinnell Health Care Center nursing home in 2020 for failing to repay nearly $25,000 in overpayments from Medicaid, state records show. When the nursing home closed in 2022, its former medical director told the local newspaper part of the reason for its demise was its inability to collect Medicaid reimbursements. Iowa administrators recently notified the owners that the former nursing home owed $284,676 to Medicaid. A state spokesperson said in March that neither amount had been repaid.

The proposal to reopen the building as a psychiatric hospital won support from patient advocates, Grinnell’s nonprofit community hospital, and the regional mental health coordinator.

The only opposition at the state hearing came from Kevin Pettit, leader of one of Iowa’s two other private free-standing psychiatric hospitals. Pettit is chief executive officer of Clive Behavioral Health Hospital, a 100-bed facility in suburban Des Moines that opened in 2021. Pettit told regulators he supports expanding mental health services, but he predicted the proposed Grinnell facility would struggle to hire qualified employees.

He said despite strong demand for care, many Iowa psychiatric facilities are limiting admissions. “The beds exist, but they’re not actually open, … because we’re dealing with staffing issues throughout the state,” Pettit testified.

Overall, Iowa has 901 licensed inpatient mental health beds, including in psychiatric units at community hospitals, in free-standing psychiatric hospitals, and in the two remaining state mental health institutes, according to the Iowa Department of Health and Human Services. But as of January, just 738 of those beds were staffed and being used.

Pettit’s facility is run by Pennsylvania-based Universal Health Services in partnership with MercyOne, a hospital system based in the Des Moines area.

In an interview, Pettit said his hospital only has enough staff to use about half of its beds. He said it’s especially difficult to recruit nurses and therapists, even in an urban area with a relatively robust labor supply.

State inspectors have cited problems at the Clive facility, including four times declaring that deficiencies put patients’ safety in “immediate jeopardy.” Those issues included insufficient staff to properly monitor patients and insufficient safeguards to prevent access to items patients could use to choke or cut themselves.

Pettit said such citations are not unusual in the tightly regulated industry. He said the organization is committed to patient safety. “We value the review by our regulatory entities during the survey process and view any finding as an opportunity for continuous improvement of our operations,” he wrote in an email.

Iowa’s other privately owned psychiatric hospital, Eagle View Behavioral Health in Bettendorf, also has been cited by state inspectors. The 72-bed hospital was purchased in 2022 by Summit BHC from Strategic Behavioral Health, which opened the facility in 2020. Both companies are based in Tennessee.

State inspectors have cited the Bettendorf facility twice for issues posing “immediate jeopardy” to patient safety. In 2023, inspectors cited the facility for insufficient supervision of patients, “resulting in inappropriate sexual activity” between adult and adolescent patients. In 2021, the facility was cited for insufficient safety checks to prevent suicide attempts and sexual misconduct.

Eagle View officials did not respond to requests for comment.

Advocates for Iowa patients have supported the development of free-standing psychiatric hospitals.

Leslie Carpenter of Iowa City, whose adult son has been hospitalized repeatedly for severe mental illness, spoke in favor of the Grinnell facility’s application for a certificate of need.

In an interview afterward, Carpenter said she was optimistic the new facility could find enough staff to help address Iowa’s critical shortage of inpatient psychiatric care.

She said she would keep a close eye on how the new facility fares. “I think if a company were willing to come in and do the job well, it could be a game changer.”