We need an independent cost comparison in closing developmental centers

We have just reviewed a purported cost-benefit analysis that was submitted to the Legislature last July by the Executive Office of Administration and Finance regarding the planned closures of the Monson, Templeton, and Glavin Centers.

For one overriding reason, which I will explain below, we consider this analysis to be meaningless.  Yet, the Legislature is relying on it in making the decision to approve the closures of these critically important state facilities.  (The Legislature has already given its okay to the closure of the Fernald Center without even requiring the administration to submit any cost numbers whatsoever.)

First, a bit of background about the EOAF cost analysis.  The submission of the report to the House and Senate Ways and Means Committees and the Joint Committee on Children, Families, and Persons with Disabilities was required by language in the Fiscal Year 2010 state budget.

While the Legislature was considering that budget, the administration was lobbying heavily against including Fernald in the cost analysis, and ultimately got its way.  But it’s a puzzle as to why Department of Developmental Services Commissioner Elin Howe, in particular, fought so hard to exclude Fernald, because the cost analysis produced by the administration for closing the three other facilities is so self-serving.

Here’s the key flaw in the analysis:

The EOAF analysis compares what it terms “fully loaded” costs of operating the Monson, Templeton, and Glavin Centers with community-based costs (plus alternative facility costs reflecting “anticipated placement decisions.”)  “Fully loaded” simply means the costs include health benefits and other indirect personnel costs paid for by agencies other than the DDS.

The EOAF report concludes that the community-based and alternative facility costs are lower, and, thus, closing the Monson, Templeton, and Glavin Centers will save $20.3 million a year, based on FY09 rates.

But the comparison is meaningless because the populations being compared are different.  The Monson, Templeton, and Glavin costs were calculated by dividing their total FY09 budgets by the number of residents in each facility.  The community-based costs were calculated by dividing community-based line items in the FY09 budget by the number of residents in the community system.

The problem is that the Monson, Templeton, and Glavin residents are, on average, older, more intellectually disabled, and more medically involved than are residents on average in the community system.  (One of the charts in the EOAF report lists the average age as 62.3 at Monson, 59.2 at Templeton, and 51.1 at Glavin.)

For that reason, the developmental center residents require more care on average than do community-based residents, which means that more staffing is needed per developmental center resident, which means the cost is higher.

But that does not mean that there will be a savings if the Monson, Templeton, and Glavin Centers are closed.  The reason is that when those residents are transferred from the developmental centers to community-based residences, their higher staffing needs will remain.

If, as the administration promises, former developmental center residents will receive equal or better care in the community system, the staffing needed to serve them will need to be higher than what is needed for the average community-based resident.

For that reason, we contend that a more valid approach to the analysis required by the Legislature would involve taking a statistically valid sample of residents in the community system who have the same average age and level of intellectual disability and medical issues as the residents at the Monson, Glavin, and Templeton Centers, and only then comparing the services, staffing levels, and cost of care in the two settings.

In fact, an analysis of 250 cost studies in the journal Mental Retardation concluded that when equivalent populations were compared, cost savings were relatively minor when institutional settings were closed; and, if there were any savings at all, they were likely due to staffing costs when comparing state and private caregivers. (Kevin K. Walsh, Theodore A. Kastner, and Regina Gentlesk Green, Mental Retardation, Volume 41, Number 2: 103-122, April 2003.)

There are numerous other flaws and misstatements in the EOAF analysis.  Here are just a few:

* The EOAF report lists projected capital expenditures that it contends would be necessary if the Monson, Templeton, and Glavin Centers were to remain open.  However, the report fails to list corresponding capital expenditures that will be needed to develop new community-based residences for the Monson, Templeton, and Glavin residents.  The EOAF report projects that a total of 213 residents of those facilities will be transferred to new and existing community and state-operated group homes.

* The EOAF report states that there is “virtually no new demand for facility beds” due to expanded community-based options for individuals created through legislation.  This claim ignores the vast majority of the residents of the Fernald Center who have chosen facility beds rather than to be transferred to community-based housing, and it ignores the 59 residents of the Monson, Templeton, and Glavin Centers, who are projected in the EOAF report itself to chose beds in other developmental centers.

The report also fails to mention that the developmental centers have been essentially closed to new admissions since the 1980s and that people waiting for DDS supports and services have been largely prevented from choosing the centers as residential options.

* The EOAF report implies that community-based options are sufficient for everyone who wants or needs them.  The administration has never explained how it can promise comparable or equal or better services in a community system in which strict Medicaid requirements that apply to the developmental centers have been waived, and which is admittedly under-funded.  The report also neglects to mention that the people waiting for community services in Massachusetts may number in the thousands.

* The EOAF report claims that the DDS’s Quality Management and Improvement System (QMIS) has been “effective in creating safe and healthy environments” in the community system.  What the report doesn’t say about the QMIS licensure system is that it fails to cover the entire group home system in a comprehensive or systematic way.  The House Post Audit and Oversight Committee has reported that only 20 percent of community-based group homes are surveyed for licensing each year.

In short, the Legislature asked the administration for a comprehensive analysis of the costs and benefits in closing the Monson, Templeton, and Glavin Centers and for information about the quality of care in the developmental centers and the community, among other issues. What the administration provided was a public relations document, which attempts to justify the administration’s ideology that all institutional care is bad and should ultimately be supplanted by privatized care in community-based settings.

In our view, it is imperative that an independent auditing agency conduct an unbiased and comprehensive analysis of costs and benefits subject to legislative approval prior to closing any developmental center in Massachusetts.