Larimer County’s mental health center lays off 75 people

Larimer County’s community mental health center has abruptly laid off 75 employees, causing a gap in care for some of the most vulnerable patients and increasing concerns about how far the fallout will spread after a seismic shift in Medicaid funding. 

Connor Grogan had 35 clients at SummitStone Health Partners in Fort Collins when he was told at a mandatory meeting last week that he was among those losing their jobs because of a budget crisis. He had to turn in his phone and laptop on the spot, with no opportunity to say goodbye to his patients. 

“It was unethical the way that it was handled,” said Grogan, who had counseled children, families and adults at the center for more than two years. “At the very least, I feel like it is not trauma-informed, which is something that SummitStone had been preaching about for quite some time.”

The community mental health center, one of 18 statewide, is the latest to lay off employees in the wake of hundreds of thousands of Coloradans losing Medicaid coverage after the end of the pandemic public health emergency and a massive change in the way the state Medicaid division reimburses behavioral health providers. 

Mind Springs, the safety-net mental health center for several counties in northwestern Colorado, laid off 49 people, 13% of its administrative staff, this summer. Centennial Mental Health, which serves 10 counties in the northeastern corner of the state, laid off three of its five top executives in June. And Jefferson Center for Mental Health, which serves Jefferson, Clear Creek and Gilpin counties, is dealing with a $5 million shortfall on a $89 million budget, a deficit so large that plans for a merger with Denver’s mental health center, Wellpower, were called off in June. 

SummitStone had to cut $14 million to break even on its $80 million budget. About $9 million of those cuts came from staff reductions. 

“I’m going to be OK,” said Grogan, who is likely to find a job because he speaks Spanish and is a male therapist. “The piece that hurts the most is that I had zero closure with my clients. I lost yearslong relationships in an instant. I couldn’t even say goodbye. 

“I’m devastated for the most vulnerable humans in our community that were getting better. I worry about suicides rising in our community. I worry about overdoses rising in our community.”

Most of the employees who lost their jobs did not work directly with clients and instead were in other departments, including technology, SummitStone CEO Michael Allen said. The 75 jobs were about 10% of the workforce at SummitStone, which has locations in Fort Collins, Loveland and Estes Park. Executives took a 5% cut in pay. 

The first budget problem for the center was that thousands of Coloradans were dropped from Medicaid insurance at the end of the three-year federal public health emergency put in place at the start of the COVID pandemic. In the past year, the percentage of SummitStone clients without insurance rose to 25%, up from 17%.

On top of that, landmark legislation that brought sweeping changes to Colorado’s mental health system — including how mental health providers get paid — went into effect July 1. 

First effects of monumental change 

The Behavioral Health Act, passed in 2022, was intended to break up the monopoly of Colorado’s mental health centers, opening them up to competition with private behavioral health agencies. 

For years, the centers operated under no-bid contracts with the Colorado Department of Health Care Policy and Financing, which includes the Medicaid government insurance program for people with low incomes. The centers received $437 million in tax dollars per year and were required to treat people in their regions. 

Under the new structure, mental health centers don’t get a lump sum. They must bill the state Medicaid program for every service they provide, per person — a reimbursement for an individual therapy appointment, another for a group therapy session, another for a housing consultation. 

Mental health centers warned lawmakers that communities, especially in rural areas, could end up with fewer services under the new payment structure. They worry providers will offer only services that make money, leaving out help with housing and employment. 

This summer, it seems the effects of the monumental change in policy are beginning to take shape. Mental health experts are wondering if the current structure is beginning to break apart, and they hope the new one that forms in its place will end up more robust and capable of serving more people.

Still, the process is painful. 

The three community mental health centers that have had layoffs “likely won’t be the only ones,” said Kara Johnson-Hufford, CEO of the Colorado Behavioral Healthcare Council, the association for mental health centers. 

“Folks have scraped their reserves,” she said. “They are not filling open positions.” 

Not all community mental health centers are struggling, but some have been hit harder by the drop-off in Medicaid rolls, Johnson-Hufford said. In some communities, Medicaid enrollment has shrunk by 35%-60%, she said. 

Colorado had 1.8 million people enrolled in Medicaid during the pandemic, a historic 30% of the state’s population and up from a pre-pandemic 21%. Medicaid enrollment is now down to about 22% after the federal rules were lifted last year. 

Mental health centers tried to budget for the Medicaid cliff, but they were basing their plans on state projections that were not accurate for every region. That drop-off hit at the same time as the payment structure overhaul. And the new bill-per-service structure does not account for the uninsured, Johnson-Hufford said. 

“Significant reform is hard,” she said. “Bring more providers into the safety net, absolutely.” But, she added, Colorado policymakers need to make sure the system’s funding and structure can support mental health providers who want to serve their communities. 

The changes have amounted to the “perfect storm,” Johnson-Hufford said.

“Not all of this is impacting all of our providers in the same way,” she said. “And it’s not just any one thing.”

Mind Springs, which serves Mesa and seven other counties, spent $1.9 million last fiscal year on treatment for people without insurance, CEO John Sheehan said. Services are already taking a hit — the mental health center had to drop its men’s program when it laid off 49 people this summer. 

The new per-service payment structure, at a time when the number of uninsured is rising, “doesn’t make a lot of sense,” he said. 

“And so far it hasn’t done anything but destabilize the system,” Sheehan said. “The provider network is fragile and has been made more fragile. When you lose them, you can’t get them back.”

It’s hardly surprising that safety-net mental health centers are feeling the loss of Medicaid coverage for 600,000 Coloradans in the span of about a year, said Vincent Atchity, president and CEO of Mental Health Colorado.

“It’s an earthquake that takes a segment out of a highway,” he said. “It’s a crisis for sure.” 

Atchity, who advocated for payment reform and more transparency in public spending on community mental health centers, said it’s likely there is “some seismic shifting that occurs when a system is flipping itself as much as this.” 

But it’s unclear this early on in the transformation why some mental health centers are “complaining vociferously” about the new payment system while “others are shrugging their shoulders.”

“I’d love to get to the bottom of what is actually happening,” he said.

Employees got no severance, clients got no goodbye

SummitStone’s CEO summed up the payment reform bluntly: “The pie didn’t get any bigger but the number of folks accessing the slices of pie did get bigger.” 

Allen expects SummitStone will lose 5%-10% of its clients because “our reputation in the community has taken a hit” when so many people lost their jobs and many clients lost their therapists without notice.

“These are hard things,” Allen said. “It’s a hard conversation to tell the community that we are in an opioid crisis and we are in a loneliness crisis and the largest behavioral health provider in the area is laying off 10% of its staff. That doesn’t make sense.” 

Laid-off employees were invited to mandatory meetings in small groups and were told they could not return to their desks or contact their clients, that they would get no severance pay and that their health insurance would last until the end of the month, according to several former workers who spoke to The Colorado Sun. 

It’s a hard conversation to tell the community that we are in an opioid crisis and we are in a loneliness crisis and the largest behavioral health provider in the area is laying off 10% of its staff.

— Michael Allen, CEO of SummitStone

The CEO said the mental health center operated with a deficit as long as it could and that he tried to avoid layoffs by scrapping plans to renovate buildings, cutting travel and catering budgets and staff incentives. But in June, when the center got its rates and contracts for the upcoming fiscal year that started July 1, it was obvious that there was no way to break even without “dramatic” cuts in staff, Allen said.

“This was a last resort,” he said. “Nobody wanted to do this.” 

The center partners with several other Larimer County agencies to provide mental health services and Allen said he is hopeful that those agencies can afford to pay the full salaries of those workers. The partners included Sunrise Community Health, a medical health center that integrates mental health care, and Outreach Fort Collins, a nonprofit that has a mobile mental health response team for people living outside. 

“It all hurts. It’s all terrible. My heart aches,” Allen said. But, he added, SummitStone had to make the cuts in order to continue “to be here for our community.” 

SummitStone has a contract with Larimer County to provide behavioral health care at the Acute Care Center at Longview Campus, which was not affected by the layoffs, county staff said.

As for client care, Allen said clients typically have a care team — including a case manager and a peer specialist with personal experience dealing with behavioral health issues — that will help them through the transition. 

Former employees, however, accused Allen of not being honest with them about the budget crisis and said the layoffs came as a huge shock. Some said they have complained to state agencies, including the Department of Regulatory Agencies, about the way clients were “abandoned” because of the layoffs. 

“We were all shocked by what was happening,” said Katie Rapson-Stecula, a supervisor who also provided therapy for a handful of clients. “Nobody discussed continuity of care for clients. There was no plan that we were able to be a part of as their providers. There were no warm handoffs. There wasn’t even a conversation to say goodbye.”

Rapson-Stecula said she couldn’t stop thinking about one of her clients who has a long history of suicide attempts. “It’s not how we are supposed to treat our clients in any way,” she said. “It’s unethical.”