BUSI 691 Week 3 Group Assurance of Learning Exercise 2 Example

Build, Partner or Connect? A Group Case Analysis of a Health System Entering Behavioral Health Care

Case Summary

Lakeview Health operates two acute care hospitals with 410 beds in a region of about 380,000 people. Neither hospital has inpatient psychiatric beds, and the nearest psychiatric unit, run by the state, is 90 miles away and usually full. Lakeview's two emergency departments see about 6,200 mental health visits a year. Patients who need inpatient psychiatric care wait an average of 31 hours for a transfer, often in hallway beds watched by sitters, and last year the hospitals spent $1.9 million on sitters and security for these patients. Emergency physicians report frustration, and two community groups have publicly criticized the system. The board has asked whether Lakeview should enter behavioral health care and, if so, how.

Strategic Issue

Our group defined the issue as a choice about scope: should Lakeview expand its services into behavioral health, and if so, which way of entering the service best improves care for patients in crisis while fitting the system's financial and workforce limits?

Situation Analysis

Walston (2018) presents strategic options as choices about where an organization competes and how, including expansion into new services and the methods of entry, such as building internally, acquiring, partnering or contracting. Applying that view, Lakeview's question has two parts: whether to expand at all and which method of entry to use. The case for expansion rests on the size of the unmet need. Pearlmutter et al. (2017) studied 871 patients needing mental health evaluation at ten Massachusetts emergency departments and found that boarding time, not medical evaluation, drove most of their stays; medical clearance accounted for only about 10.5% of total time. Patients with Medicaid or without insurance were more than twice as likely as privately insured patients to stay 24 hours or more. Lakeview's own figures fit that pattern: the longest waits are among Medicaid patients, who make up 48% of its mental health visits.

Lakeview's internal position is mixed. It has strong emergency departments, a large primary care network and a good reputation, but it employs no psychiatrists, has no behavioral health nursing staff and has no experience running a psychiatric unit. Recruiting psychiatrists to the region has failed twice in the past five years. Any option that depends on hiring a large psychiatric staff quickly carries high execution risk. Lakeview also has assets that a partner would value: two busy emergency departments that generate referrals, land on the larger campus, contracts with every major payer and a primary care network that could absorb follow-up care. The external environment adds urgency. State Medicaid policy now pays for crisis stabilization services, payers increasingly measure follow-up after mental health emergency visits and the region's population is growing, so demand is likely to rise whatever Lakeview decides.

Alternatives

Building a unit gives Lakeview full control but takes three years and depends on recruiting a psychiatric workforce it has failed to attract. A joint venture with an experienced behavioral health company would share capital and draw on the partner's recruiting and operating experience, though Lakeview would share control and revenue. Telepsychiatry and a small crisis stabilization unit could begin quickly. Evidence suggests this option can reduce the need for admission itself. Narasimhan et al. (2015) evaluated a statewide telepsychiatry service in South Carolina emergency departments and found that patients who received telepsychiatry were half as likely to be admitted from the index visit as matched patients at other hospitals (11% versus 22%), nearly tripled their rate of an outpatient mental health visit in the month after discharge (46% versus 16%) and had 30-day inpatient costs $2,336 lower. A later review of twelve studies reported that telepsychiatry in emergency departments was associated with shorter waits, fewer return visits and more discharges home (Natafgi et al., 2021).

Recommendation

Our group recommends a phased strategy that combines the second and third options. In the first phase, Lakeview should contract for around-the-clock telepsychiatry in both emergency departments and open an eight-chair crisis stabilization area at the larger hospital, which addresses the most urgent harm within a year. In the second phase, Lakeview should negotiate a joint venture with an experienced behavioral health operator to build a 24-bed adult inpatient unit, with the partner leading recruitment and daily operations. Telepsychiatry treats the waiting, while the partnership builds the beds; the system needs both, but it can start the first next quarter. Building alone is not recommended, because it is slowest and depends on the workforce the system has already failed to recruit. The phased plan also keeps options open: if telepsychiatry and crisis stabilization reduce admissions as much as the South Carolina evidence suggests, the partnership might need fewer than 24 beds, and the board can size the unit using a year of its own data rather than estimates.

Risks and Mitigation

The phased strategy carries three main risks. First, telepsychiatry depends on reliable technology and on emergency staff who know how to use it, so the vendor contract should include training, uptime guarantees and a local liaison. Second, a joint venture partner may focus on more profitable patients, such as those with commercial insurance, while Lakeview's longest waits are among Medicaid patients; the agreement should therefore commit the unit to accept patients regardless of payer and to give priority to transfers from Lakeview's emergency departments. Third, crisis stabilization only works if patients can be connected to outpatient care afterward, so Lakeview must expand same-week access in its primary care clinics, perhaps by embedding licensed counselors in the busiest practices. Naming these risks now lets the board hold management accountable for each.

Action Plan

Within three months, the vice president for emergency services will select a telepsychiatry vendor and set standards for response time, with a goal of a psychiatric evaluation within two hours of request. By month nine, the crisis stabilization area will open, staffed by nurses and counselors trained in crisis care. Over the same period, the chief strategy officer will issue a request for proposals to behavioral health operators and bring a recommended partner to the board by month ten. Measures reported quarterly will include average time to psychiatric evaluation, total emergency department hours for patients in mental health crisis, admission and transfer rates, 30-day follow-up and sitter costs. A goal for the first year is to cut average boarding time from 31 hours to under 16.

Conclusion

Walston (2018) emphasizes that the method of entry into a new service can matter as much as the decision to enter. For Lakeview, a phased approach brings relief to patients in crisis within months while building the inpatient capacity the region lacks through a partner able to staff it. The approach also reflects the system's identity: Lakeview is good at emergency care and primary care, and the recommendation builds on those strengths rather than asking the system to become a psychiatric hospital overnight. Most important, it addresses the patients now waiting in hallway beds, whose experience should be the first measure of whether the strategy works.

References

Narasimhan, M., Druss, B. G., Hockenberry, J. M., Royer, J., Weiss, P., Glick, G., Marcus, S. C., & Magill, J. (2015). Impact of a telepsychiatry program at emergency departments statewide on the quality, utilization, and costs of mental health services. Psychiatric Services, 66(11), 1167-1172. https://doi.org/10.1176/appi.ps.201400122

Natafgi, N., Childers, C., Pollak, A., Blackwell, S., Hardeman, S., Cooner, S., Bank, R., Ratliff, B., Gooch, V., Rogers, K., & Narasimhan, M. (2021). Beam me out: Review of emergency department telepsychiatry and lessons learned during COVID-19. Current Psychiatry Reports, 23(11), 72. https://doi.org/10.1007/s11920-021-01282-4

Pearlmutter, M. D., Dwyer, K. H., Burke, L. G., Rathlev, N., Maranda, L., & Volturo, G. (2017). Analysis of emergency department length of stay for mental health patients at ten Massachusetts emergency departments. Annals of Emergency Medicine, 70(2), 193-202. https://doi.org/10.1016/j.annemergmed.2016.10.005

Walston, S. L. (2018). Strategic healthcare management: Planning and execution (2nd ed.). Health Administration Press.