The rise and fall and rise again of Magellan

Remember Magellan? If you wanted to follow the history of behavioral healthcare over the last 25 years, the almost biblical arc of the history of Magellan would present a most interesting perspective.

Founded in 1969, this for-profit company became quite well-known in the 1980s. For those who worked in our field back then, you probably remember Magellan, along with the Charters of this world, a top company in the rise of for-profit hospitals.

When private for-profit managed care followed on their heels, their hospitals were easy pickings due to their lack of accountability for long inpatient stay, both for mental disorders and substance abuse. Routine 30-day stays for detox became a relic of the past. I, after becoming a medical director in a not-for-profit managed care system, wrote about all these enterprises in The Ethical Way: Challenges and Solutions for Managed Behavioral Healthcare (Jossey-Bass, 1997). Because the challenges seemed to be still with us 15 years later, the book was subject to an unprecedented re-review in the journal Psychiatric Services.

No surprise then that many of these for-profit inpatient hospitals collapsed, as did some of the companies that owned them. If the company traded on Wall Street, their stocks had also risen, then collapsed.

Somehow, I lost track of Magellan after awhile, only to hear about it again recently, reincarnated as, guess what: a managed care company. And, perhaps a thriving one at that.

However, it is not easy to get the full picture as some information is in business sources, some in healthcare sources and, like most businesses, some is trade secrets. Here's what I have found so far (Please comment and correct if you know more.):

For the business part, you have to go no further than the Business Day section of the September 13, 2013 New York Times. In the "Company Information," it describes Magellan Health Services, Inc. as involved in the "specialty managed healthcare business." In that business, their main focus is on behavioral health management, along with a secondary focus on radiology and specialty pharmaceuticals. Quite an interesting combination. As of 2011, it reported serving over 54 million members, with over 30 million in behavioral healthcare. Apropos to behavioral healthcare is Magellan Complete Care of Arizona, which is said to have been formed to managed integrated mental and health care for the seriously mentally ill and Medicaid beneficiaries in Maricopa County.

At the same time, Magellan is in a recovery plan, which could end up including filing for bankrupcy. Referring back to the 1980s, it is selling its interest in six hospital-based joint ventures, as well as two psychiatric hospitals in London and Switzerland.

At this turning point in its business history, Magellan may be at the cutting edge of changes in behavioral healthcare. With the emerging Affordable Care Act recommending more integration, Magellan is doing just that in Arizona.

However, they have had some criticism along the way, like most for-profit managed care companies. For instance, one customer review on February 1, 2012 stated:

"The company dropped a therapist that I was using, and didn't TELL me until I had charges in the hundreds of dollars. When I called to discuss the issue and try to get a single-case exception, they said they would call back and NEVER did! After years of going to a particular therapist they didn't CARE that I had a relationship with my doctor. Magellan does NOT care about their policy holders. HORRIBLE company!"

Now, as I discussed in my book, this review begs the point as to why the organization did not tell the patient that the therapist was out of the network. Nor did the patient seem to contact any regulating agency. The healthcare ethical blame, if there is such, seems to be spread around.

More recently, a psychiatrist wrote to me in an e-mail on September 13, 2013:

"I got out of private practice in TX because of managed care and they were the worst! (when I interviewed with them for my position, I let them know they still owed me $12,000.. However, they are very different now."

Searching to confirm that optimism yields much to be optimistic about. One source is www.magellanofaz.com. If you click on Suicide Prevention, you'll likely be impressed by their suicide prevention program, which included a major endeavor during the recent National Suicide Prevention Week. After scouring other endeavors that try to prevent suicide, they set up a new, brief screening questionnaire which found unrecognized high suicide risk in 5-10% of established patients. With a comprehensive, quick response system, they report that they are well on the way toward a best practice zero suicide system, just like our airlines try to do with crashes.

Nationally, Magellan may be on the cutting edge of using IT for educating all involved in mental health via their Resiliency and E-Recovery Learning Center, which can be found at www.magellanhealth.com/training/. Included are courses, continuing education, professional development, and Webinar recordings. If all this sounds too good to be true, it could be. One would like to see some of this published in the peer-review professional literature to be more sure.

Time will tell if Magellan will succeed both financially and therapeutically. Paradoxically, we and Magellan now seem to be in a situation where there are too few inpatient beds and too short a stay for those who do get hospitalized. If they end up succeeding, they may become an important example, of which there are precious few, of how business ethics and healthcare ethics can actually complement and enhance each set of principles, and that managed care can not only reduce costs, but increase quality as we reach for the holy grail of behavioral healthcare.