When budget cuts led Western Montana Mental Health Center to start curtailing its services five years ago, rural communities primarily felt the effect. But as the decline of one of the state’s largest mental health providers has continued, it’s left a vacuum in behavioral health care.

It started in places like Livingston, a town of 8,300 where, in 2018, Western closed an outpatient treatment clinic and told more than 100 patients to travel 30 miles over a mountain pass to Bozeman for stabilizing mental health care. This spring, Western closed that clinic too, a crisis center in one of Montana’s fastest-growing cities.

The private nonprofit’s initial closures were attributed to state Medicaid cuts made in 2017. Since then, Western’s financial troubles have spiraled. It cut jobs or retrenched services every year since 2019. In February, Western closed three mental health crisis centers, leaving just two others to serve the rural 147,000-square-mile state.

Western’s money problems have built slowly and are due largely to low reimbursement rates from Medicaid, staffing strains, and rising costs. Former Western board members and employees say poor management has also played a role. The company has said it is losing money by subsidizing crisis services for the state.

“We’ve become the face of the failure of the system because we’re the only organization providing these services,” said Levi Anderson, Western’s CEO.

The decline illustrates a national problem: a U.S. health care system that doesn’t adequately pay for mental health care. Clinics nationwide have shuttered programs they can’t afford and left beds empty that they can’t staff.

“Those are the kinds of stories that I hear every week from every part of the country,” said Chuck Ingoglia, CEO of the National Council for Mental Wellbeing. “More people are experiencing depression and anxiety and are in need of care, and we have this corresponding reduction in capacity. It’s a perfect storm.”

Cracks in Montana’s system have shown up elsewhere. Community clinics can’t compete for staff. Private practice therapists have months-long waitlists. The Montana State Hospital — a public psychiatric hospital and the fallback when local services aren’t enough — lost federal funding after staffing shortages and mismanagement led to patient deaths and assaults.

Policymakers have promised to boost funding for behavioral health care statewide through bills and budget measures. Health professionals, while hopeful, are skeptical that an influx of cash is enough to create lasting changes.

Community crisis centers are a safety net when someone’s mental health spirals, leading to suicidal thoughts or disconnection from reality. They provide services to stabilize patients and prevent recurring crises.

Western opened such centers in Butte, Bozeman, Helena, Kalispell, Polson, Missoula, and Hamilton starting in 2010.

“Of all of the crisis houses in the state, every one of them was started and operated by Western,” said Tom Peluso, a longtime mental health advocate and former board director for Western. “Nobody else was willing to make the investment.”

Still, almost every community in Montana lacked crisis stabilization services, according to a state-funded report released last year. Emergency rooms and the state hospital became ill-equipped alternatives.

Most of Western’s patients rely on Medicaid, a federal-state health coverage program for people with low incomes or disabilities. Health professionals have long said Medicaid’s state-set payments don’t cover the cost of care, which a state-commissioned study confirmed.

Anderson said crisis services never made money. Until recently, Western could rely on other programs to make up the difference, such as case management, which links patients to ongoing care.

In 2017, the state roughly halved Medicaid’s reimbursement for case management. By 2019, Western spent $3.4 million more than it earned.

Then came the covid-19 pandemic, which disrupted school-based mental health services, another Western revenue source, as learning went remote. Simultaneously, competition for health workers spiked, meaning Western had to increase pay or ratchet back services with fewer employees.

In 2020, the company whittled its school-based programs, laid off dozens of mental health workers, and closed at least two sites. In 2021, it emptied a group home in Hamilton and listed two large affordable housing units for sale. Last year, Western closed a crisis facility in Kalispell and struggled to staff its remaining crisis centers.

As services faltered, so did people’s trust in Western. That included Peluso, who left the company’s board last year after roughly two decades. In his resignation letter, Peluso wrote that selling assets “is not a business plan.”

Kathy Dunks, a Western employee for 29 years in Butte, felt a shift around 2018, when Anderson and other new leaders arrived soon after the company’s longtime CEO retired.

“It was the first time it felt like, ‘If you don’t like it, leave,’” Dunks said.

She was laid off in 2019, when Western replaced regional leaders with managers to oversee company-wide programs. Dunks turned down a new role with Western, saying she no longer trusted the company.

Anderson said the goal was to standardize treatment among sites and save money. Around the same time, some of the company’s highest-paid employees got raises, which Anderson said likely happened to retain top-trained staffers at the time.

Anderson said that the company is balancing services clients need with remaining viable and that it tries to incorporate employees’ feedback. He said management restructuring led to some turnover, but the pandemic and low funding exacerbated long-standing pressures.

At its peak, 17 counties paid Western to provide local services. As the company struggled, the participating counties dropped off to just one as of this year.

In 2020, Anaconda-Deer Lodge County ended its contract with Western, which helped it provide crisis response and psychiatric evaluations.

“We started running into problems with them saying, ‘Well we don’t have anybody who can come out now, we’ll send out somebody in the morning,’” said County Attorney Ben Krakowka. “That doesn’t work when somebody’s in crisis now.”

In late 2019, Lewis and Clark County announced it would end its contract with Western to provide services in its detention center. County officials said they’d hire their own staff for better access to data and more control. The county also announced it would seek applicants for its crisis response team, a service Western provided.

Western cut ties with the county altogether, including closing the area’s sole crisis facility. Anderson said the company had been clear: Western needed to provide a continuum of care to do its job well.

While Lewis and Clark County has filled some gaps since, its crisis house remains closed. The one company that applied for the job determined reimbursement rates would cover only half the costs.

Some jurisdictions, like Gallatin County, which ended its contract with Western in 2022, plan to open crisis facilities with different providers at the helm. Anderson said new vendors alone can’t fix Montana’s problems.

“Our current state is not a result of Western not knowing how we could provide good care,” Anderson said. “The current state is a result of the state not funding good care.”

Lawmakers are considering a bill that would spend $300 million over several years toward fixing the state’s behavioral health care system. They’re also considering a constitutional amendment to establish a mental health trust fund. That would be in addition to a fund Republican Gov. Greg Gianforte created to fill gaps in mental health care, though some details remain undecided and competition for those dollars will be high.

State representatives also proposed to raise Medicaid reimbursement rates but haven’t agreed by how much. Mental health workers have said adjusted Medicaid rates are only a stopgap, and crisis services can’t rely on those payments alone.

Montana state officials are exploring a statewide program to fund specially designated clinics that offer local mental health and substance abuse services — paying for the value of the care instead of each service independently.

“We’ve got to change the system,” said Mary Windecker, executive director of Behavioral Health Alliance of Montana.

The Montana Department of Public Health and Human Services received a federal grant to begin making plans to adopt that system. But if that change comes, it’s years out.

Meanwhile, mental health clinics are struggling to keep existing programs from further unraveling.

As for Western, Anderson said the center is still committed to serving clients. Western is using former crisis beds to expand group home programs and began accepting new residents in March.

For now, the company doesn’t plan to return to its former level of crisis services.

“The need is there,” he said. “We just can’t continue to subsidize the program.”

Western’s two remaining crisis centers are in Missoula and Ravalli counties — just 47 miles from each other in the vast state.

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By Katheryn Houghton
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