Strategic Direction

Comprehensive Health and Family Services will play a major role in creating the emerging human service delivery system of public and community primary care behavioral health and will compete successfully with both profit and non-profit human services organizations.

We will accomplish this in part through the creation of multiple comprehensive integrated delivery systems. In all of our endeavors Comprehensive Health and Family Services will work to assure responsiveness to families, including encouraging their participation at all levels of the organization.

We will continue to strive to improve our services through increasingly effective and efficient use of the resources available. We will work to increase quality and reduce costs through extensive use of data, research, analysis and quality systems.

Comprehensive Health and Family Services has the capacity to deliver to all of our funders the best quality products and innovation at competitive pricing.

We will serve as an important interface between government and the communities we serve, and continue to influence public policy and engage in public education. In this role we play an important part in designing the emerging human service system of this new century.

Comprehensive Health and Family Services will maintains an organizational structure with central control and governance that allows other organizations to work with us in designing and developing, competitive, integrated, comprehensive service delivery systems.

Comprehensive Health and Family Services will enter into a limited number of strategic alliances and partnerships with other key profit and non-profit organizations.

Comprehensive Health and Family Services will develop and effectively utilize those qualities, unique to its non-profit nature, which allow us to offer value added services in the market in which we compete.

Managed Care

A pervasive transition to managed care in the public sector has far-reaching implications for nonprofit provider organizations and for the services they currently provide. In regard to social services managed care has three critical features. First, the contracting company agrees unconditionally to provide stipulated services to a specified population of persons at a fixed contract cost. Second, the contracting agency must meet the terms of this contract without regard to costs. If the agency miscalculates the number of persons who will need services or the extent of those services, it must still provide them and cover the cost out of its own reserve resources. The contracting agency must, in short, assume risk.

The third key feature of managed care is a consequence of the first two. The at-risk contract is an insurance instrument and, like all insurance instruments, it depends on the law of large numbers. Even when the contracting agency calculates cost projections correctly, it courts disaster unless the population of enrolled persons is large enough to accommodate statistical variation within the defined population. In small populations, the risk is great that random variation in the needs of the enrolled population could result in a ruinous cost overrun. Hence, to be successful, managed care organizations (MCOs) must have large enrollments.

The term "behavioral health" refers to counseling or treatment of mental illness and psychological problems, especially substance abuse. Until recently, managed behavioral health care has been the province of often very large, for-profit companies operating in the commercial market (not in the public sector). Some of the largest of these companies have member enrollments in the tens of millions.

Capital reserves are often very large. In the early stages of managed care, these organizations tended to limit themselves to financial and administrative operations. They had little involvement in actually providing care. Their function was to provide the capital reserves required (by law) to sign managed care contracts and to administer operations. Care tended to be delivered by provider organizations or individuals under contract with the MCOs. This is changing, however. Increasingly, for-profit managed care organizations are acquiring service-delivery capacity—through purchase, joint venture or partnerships. Of the 12 largest behavioral health managed care companies, over one third own or control a significant service delivery capacity.

The main strength of the provider organizations is that they generally have extensive experience not only in providing care but in contracting with the public sector. This experience, however, has been exclusively under fee-for-service contracts. Nonprofit providers are small or, at most, modestly sized organizations, with slender capital reserves. To compete in the emerging public-sector managed care market, nonprofit providers will have to become much larger and more diversified. The independent "boutique" provider is an endangered organizational species. In addition, and most important, to be successful, nonprofit providers will have to become MCOs themselves. There is no legal obstacle to doing so. MCOs may be either for-profit or nonprofit. There is a financial obstacle, however. To qualify as an MCO, a firm must show that it is able to accept and manage risk, and to do that it must have access to significant capital.

It can be argued that nonprofit provider organizations should simply accept the situation and let the MCOs organize behavioral health care and other human services in the public sector, while the provider organizations do what they know how to do, deliver care. The counter argument is that a clean split between the two kinds of organizations cannot be maintained and has, in fact, already broken down as MCOs acquire service-delivery capacity and nonprofit providers