Originally created 10/01/00

Charter's purchase examined

Some local mental health officials are questioning a recent move by a mental health group to acquire the former Charter Behavioral Health Systems hospital in Augusta.

Officials at Community Mental Health Center and its board had been trying to use a nonprofit company the board formed to acquire Charter without the center's involvement, but now might pursue buying Charter themselves if they get a favorable opinion from the Georgia attorney general's office. Those officials say the move is necessary to expand services for children.

Last month, the Development Authority of Richmond County approved Insight Health Services for Business, School and Family Inc. to move forward on using $6 million in tax-exempt bonds to purchase Charter. Insight is the nonprofit company formed by the Community Service Board of East Central Georgia, which oversees Community Mental Health.

A lender interested in underwriting the bonds would still have to back the project, said Jim Points, the sole officer of Insight.

"If a financial institution somewhere doesn't see this as a viable project, this doesn't happen," Mr. Points said. Any deal also would have to be brought back to the authority for approval.

What has raised some eyebrows is the relationship between Insight and the Community Service Board, which oversees the Community Mental Health Center. Mr. Points is chairman of the Community Service Board and sits on Insight, and Insight originally had as board members mental health center Executive Director Campbell Peery and Chief Operating Officer Mike Brockman.

Insight was originally intended to allow Community Mental Health to pursue other ventures, such as treating the growing elderly population that needs mental health services, Mr. Peery said. The center also was hit hard by a 36 percent decrease in Medicaid revenue and was looking to help make up the loss, Mr. Brockman said.

"Our intent was to create (Insight) to provide supplementary services where we could roll any kind of revenue back into the Community Mental Health Center as a donation," Mr. Brockman said. He and Mr. Peery resigned from Insight months ago, when it appeared that the Charter deal might go through.

"For Campbell and I to stay on the board would have been a conflict of interest," Mr. Brockman said. "The Community Mental Health Center has no ties, both financially, legally or operationally, with Insight Health Services. None."

Mr. Peery, however, was part of the presentation to the Development Authority. And the center does have an interest in seeing Insight acquire Charter, officials said.

"The big question is what is our interest. We want to lease space out there, possibly the whole building, or a portion of the building to provide outpatient (child and adolescent) care," Mr. Brockman said.

"Our intent with Charter is Columbia County is our fastest growing child market," Mr. Peery said. "We've been asked by people in Columbia County, `Why do we have to drive across town?' It was an ideal (situation) because they have excellent outpatient facilities there at Charter - to expand our child and adolescent services to that site for an outpatient service."

The move, however, prompted the Region XII Board for Mental Health, Mental Retardation and Substance Abuse to write the Community Service Board and ask about the not-for-profit company, which it learned about from newspaper reports, said regional board Chairman Andy Lloyd. The regional board contracts with the CSB for about $10 million a year to provide outpatient services and wanted to know if any of that money was going to the new company, which is not included in the contract, Dr. Lloyd said. None of that money is going to Insight, Mr. Brockman said.

The regional board also wanted to know if the center is planning to provide inpatient hospitalization at Charter, because Community Mental Health Centers currently provide only outpatient services meant to keep patients from having to be hospitalized or refers patients to other hospitals or state facilities, Dr. Lloyd said.

The regional board asked the CSB to cite for state officials its legal authority to make these moves. The letter gave the CSB until Monday to respond in writing. Mr. Points said he wanted to sit down and explain the situation with regional officials, but as of Friday no meeting was set.

"I'm still concerned about a conflict of interest," Dr. Lloyd said, particularly if there is going to be a lease arrangement between the two entities. "Is that not a conflict of interest to contract from one's self to one's self?"

But Mr. Points said once it appears that the deal for Charter is viable, a new board for Insight will be appointed and its management will be separate from the CSB and the center.

"At the moment in fact, it looks like it's going to become a realistic entity, it will not be hand in glove (relations) at that point," Mr. Points said. "I won't be at Insight or I won't be here, one of the two."

The center and the CSB, however, are asking for an attorney general's opinion to see if some of its income could be used for a purchase, Mr. Peery said. If so, the center's leadership planned to go back to the CSB to see whether Insight or the board wanted to pursue the purchase, Mr. Peery said.

What funds could be used by those boards to acquire property is also an issue in Smyrna, Ga., where the Community Service Board there is attempting to acquire a former mental health facility. The city of Smyrna tried to block that move by condemning the property, saying the facility would not fit into the neighborhood it is in, Region 4 Executive Director Annette Maxey said. That board has asked the attorney general's office for guidance on whether state funds can be used for the acquisition, Ms. Maxey said.

The Department of Human Resources has also asked for an attorney general's opinion on the issue, said Xenia Wiggins, spokeswoman for the Division of Mental Health, Mental Retardation and Substance Abuse.

The department previously had taken the position that "when state funds are used to purchase property, the property needs to be owned by the state," Ms. Wiggins said. She did not know when to expect the opinion.

Reach Tom Corwin at (706) 823-3213.


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