TRYING TO SINK OUR SHIP
Lack of Motivation
Uneducated or Undereducated Employees
Uneducated or Undereducated Voters
Prices and Supplies
Elements of the Storm That Threaten
Child Residential Treatment
By Mary C. Bromell, UoPhx, MBA 590,2007
Edited by Craig Stevens
The storm in business can be described as anything that threatens the
success of an organization (Westbrookstevens.com, n.d.). This storm is
fueled by the external and negative influences of competition, politics,
society, and government regulations, among others. The negative affects
of any of these influences can alter the success of an organization's
plan. These forces when joined together weaken the organization. The
purpose of this paper is to describe elements of a storm that negatively
affect the ship of residential treatment centers (RTC) for children.
Residential treatment is being rocked by the storms of competition,
government regulations, and managed care organizations. To navigate thru
the storm, you must have an acute sense of your surroundings and all of
the factors that will impact your navigation through the storm.
Before the early 1980’s residential treatment for children was most
commonly known as orphanages, reform schools, or institutions for
behavior and the mentally challenged (Time.com, n.d.). These
institutions were funded mostly by government dollars. The occupant’s
parents either abandoned the children, gave them away, their parents
died at birth when they were juveniles, or they suffered from mental
Today’s residential treatment centers “RTC’s”can be a short-term
living situation for children akin to both an orphanage and reform
school. Children are placed in residential living situations of a
structured environment and provided with counselors who act as direct
care parents. The children and parents are given a required plan of care
for treatment with measurable objectives for success that may include
individual therapy, family sessions, group therapy, and academic
success. Most children with psychiatric diagnosis are offered
psychotropic medication therapy.
Competition is relevant to the storm. The business of residential
treatment was once a thriving and smooth sailing business with few
storms. They were few and number the most successful company marketed
only through word of mouth. The funding per diem rate was above average
and remained that way for several years. Doctor’s groups and small
advocacy groups established most residential treatment centers. The
success of these small mom and pop dorm style RTC’s, market research
revealed, had positive forecasts. The RTC’s had various modalities and
treatment styles and they could be found in almost in city. Surveys
revealed that the 37 percent of children ages 9-12 had at least one
psychiatric disorder and 25% of males and females between the ages 11-15
suffered from depression (Jellinek, Abraham, Muriel, & Swick, 2005).
With this market research RTC’s became one of the most competitive
businesses in mental health.
Competition in residential treatment rose and the average census rate
began to fall. Larger companies began buying smaller struggling
companies and the smaller companies are now fighting to stay afloat. The
larger companies with larger departments developed and initiated
strategic plans that allowed admission of clients from other states.
This change in acquiring clients also caused smaller companies’ daily
census to fall and their business began to sink. The vision and mission
to aid and assist children by addressing mental health issues that cause
acting out behaviors has changed to just meeting the bottom line.
Residential centers began competing for clients. Often RTC’s would
change client admission criteria to accept more challenging clients
without the skilled practitioner to serve them. At the same time quality
of care lowered due to completion, regulations and standard were also
set to control residential treatment centers’ admission practices.
Politics relates to the storms. Even though you can see the trends
and changes before they come many RTC’s are not financially padded
enough to ride the storm. The state and federal regulations seem to
change daily. It is the responsibility of the company to stay abreast of
all these changes. Some changes demand higher quality of care at
often-decreased rates. Private RTC’s have spent millions of dollars into
their business based solely on changes in federal or state regulations.
The cost of residential treatment is expensive. The average per diem
rate is $225 per bed day; approximately $7,905 per client a month. Most
families can not afford this out of pocket expense and companies seldom
support mental health in their insurance plans. The co-payments high and
coverage was limited. At the same time the need and demand for
residential treatment increased.
The governments began financing treatment centers through such
agencies as TENN CARE and Interstate Compact. As the demand increased
the per diem rate for care offered by government agencies decreased. As
the payment levels decreased access to care eroded. More and more
private owned RTC’s began to sink while others struggled to stay afloat.
Managed care is relevant to the storms in that there are steady
streams of information not communicated to caregivers regarding
coverage. Diagnoses are clumped into specialties of care and the
information regarding funding for this treatment is communicated only to
providers within a particular network. The impact of managed care has
been dramatic in the provision of psychiatric care and is most acutely
felt in child behavioral psychiatric services (Jellinek, Abraham,
Muriel, & Swick, 2005).
The forces of managed care on child residential care have raised cost
and decreased availability of services. The original promise of managed
care was to retrain market-driven means of consumer choice and profit
incentives toward the public good (Jellinek et al.). This would increase
access to healthcare, efficiency of services, and accountability of
providers. The reality is that carve-outs of managed care have
encouraged psychotropic management of child mental health illnesses with
inadequate comprehensive care. Judicious use of medication is a valuable
aspect in successfully treating some children (Jellinek et al.).
Psychotropic medication use, driven by carve-out bottom lines, lowers
the level of care and access to general child residential care is
The behavioral health carve-outs are becoming old news in managing
the storms of behavioral health care costs and services. Today’s
marketplace requires payers of certain carve-outs to give up control
over segments of their business, and realize the risks with doing
business with some managed care agencies (corphealth.com, n.d.).
Competition and politics are elements of a storm and are enemies to
the success of residential care for children. Navigating the storm
requires an acute sense of your surroundings and all of the factors that
will impact your navigation through the storm (Ed Crowley, n.d.).
Legislation and changes in the delivery of mental health services have
altered how mental health insurance is bought and sold. Mental health
coverage is not offered in levels equivalent to coverage for other
medical conditions. Not only has legislation altered how mental health
insurance is sold it has also alter the environment of coverage (Barry
et al., 2003). Parity regulations aim to eliminate the difference in
insurance coverage and managed care agencies has transformed the
delivery of services. Mental health plans are frequently contracted out
to specialty managed behavioral health care organizations (MBO’s). Units
of care are clumped together to form a specialty for services to
regulate coverage. Many diagnoses for treatments normally covered by
other programs are not served by MBO’s as a specialty and therefore not
covered. This limits access to treatment. This paper described elements
of a storm, competition, politics, and managed care that when combined
threaten the success and future of child residential treatment centers’
- Barry, C., Gabel, J., Frank, R., Hawkins, S., Whitmore, H., &
Pickreign, J. (2003, n.d.). Design of Mental Health Benefits: Still
Unequal After All These Years. Health Affairs, 22, 127-137.
Retrieved 10/11/2007, from
- Regain Control, Recapture Margins, Realize New Profitability and
Enhanced Mental Health Status: InnoPsych: The Journey to Integrated
Health Care. Retrieved 10/11/07, from
- Crowley, Ed (n.d.). Surviving the Perfect Storm. Retrieved
- Jellinek, M., Abraham, M., Muriel, A., & Swick, S. (2005,
n.d.). Managed Health Care and Child Mental Health Services: Where
is Horton to Hear the Who's? Retrieved 10/11/2007, from
- Time.com, n.d., The Storms over Orphanages, Retrieved 10/11/0,
- Westbrookstevens.com, ( n.d.) Management Models: Step 2,
Navigating Through The Storms of Chaos. Retrieved 10/13/2007, from
The Storms of
Chaos: The Storm and Society
By Lindsay McFarland (UoPhx 2007)
storm relates to the outside forces that complicate, attack and/or
threaten our organizations. These external factors cover a broad range
of possibilities, however the focus here is on societal issues that
disrupt our operations. Society shapes the corporate world. Any change
in societal norms and expectations can make or break a company. People
build an organization. Since people form organizations, they are a
prime factor in creating the storms that may sink the ship.
One social issue is age
discrimination. The role age plays in the business is an element of the
storm. Cornelia Geissler addresses age in the workforce, when she
writes that older individuals find it more difficult to look at
long-term goals and failures in corporations. As some older employees
reach retirement they focus more on accomplishing the current task and
do not always know or care where it fits into the larger picture. This
paper, from a German perspective, focuses on the elements of German
retirement. In Germany, the government weans older employees starting
at fifty-five years of age out of the working world. This is a means to
prepare them for retirement by allowing half days at eighty percent
pay. Companies struggle because there is animosity between workers
causing an uncomfortable work environment. Geissler explains, older
employees feel micromanaged by younger newer managers that may not have
as much knowledge. Younger managers are displeased with staff member
missing half of a working day as mandated by the law. Generational gaps
create large gaps in cultural understanding and inhibit communication
between groups. By slowing progressing people into retirement, the
sense of community dissipates because there are different standards for
differing age groups. This government mandate causes discourse in
corporate communications and negate team building. Without a functional
team, many businesses fail.
An aging concept that many
corporations are not aware of is “middlescence.” Morison, Erickson,
Dychtwald explore a relatively new concept in Managing Middlescence.
This concept focuses on adults ranging from their mid thirties to their
mid forties. This group is in search of new careers. They have become
sedentary in their current positions. They feel incomplete in their
professional lives. They are frustrated with their jobs and they are
not enjoying the work they produce. This group of adults is highly
skilled in their field and brings success to the business. Managing
this group is difficult because they show few signs of a desire to leave
the company and it often comes as a shock to management. Being integral
to the team, corporations suffer from sudden changes in staff. There is
little time for companies to align backup systems for task coverage.
Hiring for these now open positions is not a quick process so there is a
gap in filled positions. Productivity decreases because ultimately
others pick up the slack. This creates a snowball effect when
overloaded employees become discontent as well. As turnover rate soar,
the company begins to suffer.
economic needs with societal needs is one one-way to fight the social
element of the storm. Rodman C. Rockefeller outlines the importance of
this balance in the article Turn Public Problems to Private Accounts.
Managers must ensure that donating to charities is beneficial for
corporate economies and will improve the company’s image in society.
Improving the society image help the organizational ship battle the
businesspersons as leaders and decision makers. Therefore, business
leaders take on the persona of being menders of current societal
issues. However, sometimes there is a major conflict when business and
community goals conflict. Rockefeller discusses that in a perfect world
all societal and economic goals come to completion equally. However,
this is not the reality. Conflict occurs when society holds businesses
responsible. Pressure increases when business have to adhere to the
needs of consumers, employees, and stockholders.
Corporations today enter
the storm often as they must operate with socioeconomic goals in mind
rather than only fulfilling monetary prospects set by shareholders
alone. Rockefeller discusses that not all companies are able to achieve
the appropriate balance. Those companies suffer economically, because
they attempt to solve the problems of the world, or they lack a customer
base due to ignoring the needs of their stakeholders.
It is important to appeal
to the needs of society, however business may not fulfill every need.
This often leaves people wanting more. The company must form standards
for society and manage the evolution of a product. The needs of society
are ever changing. Rockefeller discusses a benefit of being in harmony
with the societal norms and being economically aware. Without placing
emphasis on societal needs, companies cannot stay afloat.
By: Morison, Robert, Erickson, Tamara, Dychtwald, Ken, Harvard
Business Review, 00178012, Mar2006, Vol. 84, Issue 3
Geissler, Cornelia. Harvard Business
Review, Oct2005, Vol. 83 Issue 10, p31-42, 9p, 2c, 4bw
Turn Public Problems to Private Account.
By: Rockefeller, Rodman C., Harvard Business Review, 00178012,
Aug2003, Vol. 81, Issue 8
CHANGING THE WAY
WE CHANGE. By: Pascale, Richard, Millemann, Mark, Gioja, Linda,
Harvard Business Review, 00178012, Nov/Dec97, Vol. 75, Issue 6