LARIMER COUNTY, Colo. — A mental health agency in northern Colorado laid off more than 10% of its staff with one day’s notice.
SummitStone Health Partners CEO Michael Allen said his company is the latest mental health agency to resort to layoffs following changes to Medicaid service rates that took effect July 1.
SummitStone Health Partners, which services patients on Medicaid in Larimer County, laid off 75 employees on Aug. 1. Some were informed individually, while others were notified in groups.
"No severance, with no warning, very out of line with the company that we thought we worked for,” said Anne Avonlee, a former clinical program manager with SummitStone Health.
The explanation given for the layoffs was budget constraints. Allen explained that Medicaid completely changed its reimbursement structure from a per-member, per-month payment system to a prospective payment system, paid by the encounter or client service.
"That's very different than we've ever been paid in the past," Allen said. "So, as we got our rates at the end of June, right before the beginning of the fiscal year, we did financial analysis and realized that we needed to cut several million dollars."
Allen stated that budget cuts were made elsewhere before turning to layoffs, but ultimately, they weren't breaking even.
"The reason we did this is so we can continue to be in our community and sustainable," Allen said. "We were very thoughtful about how we did the reduction in force. We may not have gotten it right. We may have messed it up, but we tried to be as compassionate and empathetic as possible."
Former employees argue that the company mishandled the layoffs, which they believe should not have been so abrupt, and that it was unethical to patients who received no transition-of-care memo.
"Our clients are all Medicaid clients. They're low-income. They have a significant history of trauma," said Katie Rapson-Stecular, a former outpatient supervisor. She gave an example of one of her patients. "This is a client with high needs, history of suicidal thoughts, history of self-harm, and they lost two providers without any explanation from either of us, and so it's irreparable harm."
Allen said they had little foresight on the situation since the new rates were released on July 1. He said they came out after a town hall in which he told employees that layoffs were not under consideration at that point. He added that the decision to conduct layoffs in one day was made to avoid "stressing the system"; however, former employees felt they weren’t given sufficient explanation.
"Their responses were, 'This is what we had to do. … Effective immediately, you need to clear your stuff out, and you have to leave,'" said Liz Edsall, a former outpatient management and treatment navigators supervisor.
Former employees, who were assured the layoffs were not performance or disciplinary-based, speculated that those on family leave might have been targeted. Allen denied this, stating that he made the ultimate decision on who was laid off and was not aware of who was or wasn’t on family leave.
Allen emphasized that the new Medicaid rates are a statewide issue, and that SummitStone Health Partners is the third facility to resort to layoffs. He expects more facilities may follow suit to stay afloat.