Survival Pushes Family Services Agency into Merger with LaSalle County-based North Central Behavioral Health System

The Family Service & Community Mental Health Center for McHenry County has been in trouble for “over five years,” according to its new Executive Director Lori Nelson.

Don Miskowiec, Lori Nelson and Sandy Lewis (seen from left to right) address the committee on the merger of Family Services and North Central Behavioral Health System.

That came out in response to a question from County Board member Randy Donley near the end of a meeting of Public Health and Human Services Committee Friday morning.

708 Board Executive Director Sandy Lewis revealed that her property tax-funded agency had had financial concerns about Family Services for two years, even making “a $1 million advance for cash flow purposes.”

Nelson, who replaced recently nominated District 4 County Board GOP candidate Bob Martens as Executive Director, outlined the criteria she and her board devised to find a “partnership with an outside agency” that would allow her agency to continue providing mental health services to local residents.

One was that the agency be fairly sizable with a budget of $40-50 million.

That was the magic number that the McHenry County people concluded was necessary to have a mental health agency that could survive the diminishing resources from Illinois state government and the uncertainties of the Federal government’s health care delivery changes.

But shear size was not the only criterion for what Nelson called “potential partners” for her agency with its “high debt load” for mortgaged buildings at Oak Street and Veterans Parkway in McHenry.

And the very survival of Family Services seemed to be the primary motivation for the 53-year old McHenry County mental health provider.

“Our alternative was to close the doors,” Nelson explained.

Randy Donley listens Lori Nelson explain Family Services' financial situation.

Nelson and her board looked at thirty-three elements, including

  • a five-year history of net 3% (which a for-profit firm would call profit, I believe)
  • six months of cash reserves
  • an (undefined at the meeting) debt ratio
  • measured performance standards
  • presences at the national level
  • primary care integration
  • certified electronic record keeping
  • ability to manage multiple sites
  • understanding of a 708 board

“Ultimately, North Central met and exceeded all of our expectations,” Nelson said.

The result was a decision to agree to a takeover of everything but real estate debt by the North Central Behavioral Health System, based in LaSalle County.

“The entire presentation is about how the mental health system is changing,” observed 708 Exec Lewis.

Sandy Salgado

“Over 30% of mental health agencies will not survive,” she added.

She stressed that it was “not a [hostile] takeover.”

Run by former Iowa head hospital exec Don Miskowiec, North Central plans to continue providing the same mental health services locally, with the current providers who decide to remain on staff.

Sandy Salgado had a line of questioning of the liability of local taxpayers.

“Don’t say we don’t have responsibility for the taxpayers,” she said at one point.

There will, however, be a reduction of staff in McHenry County as overhead functions are shifted south.

“Without this kind of cost sharing, there wouldn’t be the possibility of maintaining [service here},” Miskowiec explained.

Mary Donner

Mary Donner, the County Board liaison to the 708 Board pointed out that overhead now is 20%, but that will be lowered to 10%.

The total cost of that overhead will be about $575,000 a year.

Under questioning Donna Kurtz, a former Family Services Board member, it was learned that of the 97 employees now, 85-87 will remain.

Nelson said “about 18 bodies” will be lost with the planned “economies of scale.”

CEO Miskowiec pointed out that Family Services has 60-65% productivity, while North Central has 72%.  He expects to increase McHenry County’s operational efficiency level for employees to that of the rest of his agency.  The productivity measure relates to the percentage of time that employees spend in direct contact with clients.

The Family Services building on Veterans Parkway in McHenry.

The Family Services board will remain in existence in order to service the mortgages and clean up bills and re-reimbursements which occur after the beginning of the May 1st “transition of service agreement” by North Central.

Leases payments for use of the two buildings, combined with rent from the on-site pharmacy, plus renting out existing empty space are expected to pay back the mortgage holders and maintain the buildings.

An issue brought forward by Donna Kurtz was why Family Services was not merging with a McHenry County not-for-profit organization.

Nelson had explained “other behavioral health providers” in surrounding counties had been examined, as well as health care entities like hospitals, had undergone a financial viability review before North Central had been selected as the best match.

Donna Kurtz

Kurtz was critical of “tax money…going to…North Central and come back here.  Now we have the money.  It [won’t be] a local bank…That hurts the economy.  A lot?  No, but that bothers me.”

Donner explained that most of the deliberations had taken part in Executive Session.

Kurtz also criticized the use of the term “partnership.”

“Partnership is among equals…This is a takeover.”

“Let’s keep it local.

“We have more layers; we have less control,” Kurtz contended.

McHenry County residents will have three of eleven board spots.

In response, Miskowiec said,  “I think there is a severe risk to service delivery here [without the merger].  We’re not here as a hostile takeover.  accomplished].”

Miskowiec stressed that McHenry County money, outside of the 10% overhead, will be spent in McHenry County.

“I can’t cross-subsidize counties.

“There are changes, but not in day-to-day services.”

McHenry County has about 6,000 clients, while North Central has 8-10,000.

North Central currently service clients in a seven-county area, having outpatient centers in

  • LaSalle
  • Ottawa
  • Streator
  • Princeton
  • Canton
  • Macomb

The agency service area stretches almost to the Mississippi River in the area where Western Illinois University is located. Counties covered are Bureau, Fulton, LaSalle, Marshall, McDonough, Putnam and Stark.


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