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Behavioral-Health Execs Getting Top Dollar

October 12, 2007

By Josh Brodesky, The Arizona Daily Star, Tucson

Oct. 12–Who says there is no money in being non-profit?

Take the agencies working with Southern Arizona’s mentally ill and alcohol- or drug-addicted populations.

They will share roughly $250 million in public funds next year. Their directors are among Tucson’s best-paid executives.

And some of those same directors who run the agencies that will receive the money also sit on the board that decides how those public funds are divided up.

Such cross-pollination is a bit unorthodox, those in Southern Arizona’s behavioral-health community acknowledge. But they — and outside experts — say there are enough checks and balances to keep the behavioral-health business in Southern Arizona on the up and up, and maybe even a model for the state.

Neal Cash, president and CEO of the Community Partnership of Southern Arizona, said the six-figure agency-head salaries are appropriate for health-care executives who oversee networks or hospitals.

“These are very large, complex community health organizations,” said Pat Benchik, president of COPE Community Services. “I believe you will find we are not overpaid,” compared to the heads other major health institutions.

Arizona has designated five regional behavioral-health agencies to oversee federal and state funds for the severely mentally ill or substance-addicted.

The non-profit Community Partnership of Southern Arizona was created 12 years ago to be the clearinghouse for Pima, Cochise, Graham, Greenlee and Santa Cruz counties. Nearly 51,000 people received services from agencies funded by the partnership.

The CPSA was created by some of Southern Arizona’s largest social-service agencies because its predecessor was struggling with debt.

Agencies such as COPE, La Frontera Center and CODAC Behavioral Health Services feared a for-profit company, which would not put profits back into services and agencies, would bid to become the area’s regional authority, as has happened in three of the state’s other regions.

“CPSA would be viewed as one of the more successful mental-health systems,” said Brint Milward, a professor with the University of Arizona’s School of Public Administration and Policy. “It’s an interesting model. Nobody has an incentive to bid against the other because they are all part of the system that they have created.”

The CPSA was founded by three groups: a conglomerate of Pima County’s behavioral-health providers known as the Behavioral Health Coalition; Tucson Medical Center; and Benson-based Southeastern Arizona Behavioral Health Services, which was the behavioral-health authority for Southern Arizona’s four rural counties.

Each of those three groups appoints five directors to the CPSA’s board.

While none of the groups represents a majority, such a dynamic leads to cross-pollination, in that board members work for agencies that receive CPSA funds.

For example, for the 2005-06 fiscal year, Southeastern Arizona Behavioral Health Services received more than $25 million from the CPSA. Southeastern’s executive director, Dana Johnson, sits on the CPSA’s board.

Another example is Fred Chaffee, chief executive officer of Arizona Children’s Association, who is chairman of the CPSA board.

The Children’s Association is one of two partners in Pantano Behavioral Health Services, which got more than $15 million from the CPSA in fiscal 2005-06. Pantano Behavioral Health then passed nearly $4 million of that to the Children’s Association.

Cash said that on the surface one could look at such dynamics and get the perception of a conflict from board members awarding funds to their own agencies.

What the arrangement really reflects is, “the business is pretty specialized,” he said.

He noted the board does not perpetuate itself. Members are appointed by the three founding groups. Moreover, he said, no group has a majority of votes, and there are board members who are not connected with any behavioral-health agency.

“Everybody’s interest is a minority interest,” said Benchik, president of COPE and a key figure in the CPSA’s creation.

The current setup allows the CPSA to put more money into services because there is no pressure on the umbrella group to make a profit.

Cash said that this year, the CPSA took $2 million from its reserve funds and cut $2 million from its own $11 million in administrative costs rather than cut services.

With recipient agencies holding long-standing seats on the CPSA board, Cash was asked whether the potential exists for institutionalizing service providers such as COPE and La Frontera, which received a combined $50 million from the CPSA in 2005-06.

He said he doesn’t think so, noting the agencies were already established in the community long before the CPSA, and the CPSA contracts with numerous other, smaller agencies.

Still, the CPSA doesn’t always put its contracts out to bid, opting instead to give money to the major agencies it has been doing business with, which may then subcontract.

This is done, Cash said, because the behavioral-health system in Southern Arizona is already established and there are no other competing agencies.

For example, he said, a few years back the CPSA solicited bids for a new substance-abuse treatment provider. But the only organization to bid was the current provider, Compass Health Care.

“If we were to lose any of these provider networks for the services, there aren’t any people lined up waiting in the wings,” he said. ‘It’s not in our best interest to re-procure.”

Milward, the UA professor, said there are some issues with the structure of the CPSA, but there are issues with every organizational structure; and any problems, or perceived problems, are relatively minor, particularly when compared to the organization’s strengths.

“Every system you can devise has strengths and weaknesses,” he said, adding that the CPSA has managed to bring continuity to Southern Arizona’s mental-health system by being vested in its providers. “They bound the hands of the leading providers by making them part of CPSA.”

The top-five recipients of CPSA funds in 2005-06

Recipient Funds Received

La Frontera Center $31,419,944

Southeastern Arizona Behavioral Health Services $25,160,521

COPE Community Services $18,944,791

CODAC Behavioral Health Services $17,165,173

Pantano Behavioral Health Services $15,515,908

Source: 990 forms for 2005-06

Administrative salaries and additional compensation for Tucson’s largest behavioral-health agencies, 2005-06

Name Title and company Salary and additional compensation

Neal Cash CEO of CPSA $340,501 and $54,543 in benefits

Dan Ranieri CEO of La Frontera.* $208,800,

Pat Benchik president of COPE $187,025,

Mark Clark CEO of CODAC $170,020

Dana Johnson executive director, Southeastern Arizona Behavioral Health Services $100,829

* Current compensation. All other figures from 990 forms for 2005-06.

$237,993,

salary for Pima County Administrator Chuck Huckelberry

$198,972

salary for Tucson City Manager Mike Hein.

Salaries as of summer 2007

–Contact reporter Josh Brodesky at 807-7789 or jbrodesky@azstarnet.com.

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Copyright (c) 2007, The Arizona Daily Star, Tucson

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