Last January, when this magazine reported on Minneapolis-based Allina Health System, the nonprofit, integrated healthcare network was considered a prime example of how to run a healthcare company. Industry observers lauded the company's careful attention to patient safety and its forward-thinking CEO. At the time, CEO Gordon Sprenger was praised for his innovative approach to reducing medical errors, which included creating a "blameless culture" for reporting adverse events.

Now, only 12 months later, it's quite a different story. In February 2001, Allina-which includes 17 hospitals, 47 clinics and a 1 million-member health plan-was charged with fraudulent Medicare billing practices by the federal government-dating back to 1993. That same month, Minnesota Attorney General Mike Hatch began a state investigation of Allina, revealing poor oversight of executive salaries and excessive spending by senior management, including such perks such as spa visits and tickets to sporting events.

The investigation also revealed that Medica, Allinahealth plan, was paying higher fees to some clinics to admit patients to Allina hospitals. The investigation ended in September with promises from Allina to curb management spending and split the health plan from the health system. The company now faces considerable management challenges, including knocking off $22 million in costs; executives have also placed employee concerns high on that list.

"Obviously, the adverse publicity has created a large amount of employee morale issues including physician anger," says David Jones, who took over as interim chief operating officer of Allina Hospitals & Clinics when Sprenger retired in October. "We are going to employee and board meetings and trying to give everyone a sense of stability and a sense that the problems of the past have been resolved," he says. Jones says employees were sent a letter of apology for events occurring in the past year. "We apologized for practices such as excessive spending on things not directly related to patient care."

With the attorney general investigation now concluded, at press time the company was waiting to hear back from the government on its $16 million settlement offer. It is also restructuring its senior management team. "There is going to be a lot more discipline in the planning process and the way we conductbuild a culture that is seen as more egalitarian."
by MICHELLE ROGERS

In an effort to cut costs and provide access to badly needed urgent mental health care, Allina Hospitals & Clinics is closing two of its five behavioral health clinics, but plans to offer immediate appointments at the other three to patients who can't get to a psychiatrist or into a hospital.

Allina, which owns 17 hospitals and 44 clinics in Minnesota, lost $5.5 million on its outpatient mental health services in 2001, said Doug Nemecek, its psychiatric medical director. The problem is not demand -- quite the contrary, he said, demand is high. However, insurance rates are so low they don't cover the cost, he said.

As a result, Allina will no longer employ psychologists and social workers, and will instead focus exclusively on psychiatric services at its three remaining clinics in south Minneapolis, St. Paul and Coon Rapids. It closed one in downtown Minneapolis on Dec. 7 and in March will close another in Edina, Nemecek said.

In all, 42 therapists and 11 office employees will be laid off, he said. Allina officials will help therapists set up private practices so they can continue to see the same patients, he said.

Allina will continue to provide outpatient care at its three clinics, and in the spring will add urgent care for people who need psychiatric treatment but can't get to a psychiatrist. Sandra Meicher, executive director of the Mental Health Association, said such services are badly needed. "I was very encouraged by that piece," she said.

It routinely takes eight to 10 weeks to see a psychiatrist, much longer for adolescent psychiatrists. As a result, patients who need care often deteriorate to the point where they end up needing emergency hospitalization.

Allina hopes to use some therapists, specially trained nurses and psychiatrists to provide a temporary bridge to care. In order to avoid being overwhelmed, the clinics will accept only patients who are under the care of a psychiatrist or who at least have an appointment with a psychiatrist.

The treatment will include suicide and homicidal risk assessment, evaluation of symptoms, a plan for stabilization, medication adjustment and referrals, including recommendations for hospitalization if necessary. Patients can get an appointment within 48 hours of referral, he said. The hope, Nemecek said, is that the clinics can help patients before they become more seriously ill.

Allina plans to initiate the program at one of the three clinics this spring, but it has not yet decided which one. The services will be added to the other two sometime in the next year.

The three clinics that will remain open are at:

• Abbott Northwestern Hospital in Minneapolis, 800 E. 28th St.
• 55 E. 5th St., St. Paul
• 199 Coon Rapids Blvd., Coon Rapids.

• 825 Nicollet Mall, Minneapolis.
• 3400 W. 66th St., Edina.

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