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In response to high volumes of patients from Michigan in recent years, Indiana-based NeuroPsychiatric Hospitals LLC is proposing a $37.4 million psych hospital in Kalamazoo. In response to high volumes of patients from Michigan in recent years, Indiana-based NeuroPsychiatric Hospitals LLC is proposing a $37.4 million psych hospital in Kalamazoo. COURTESY PHOTO

Indiana firms offer competing proposals for new psych hospitals near Kalamazoo

BY Sunday, October 13, 2019 08:45pm

KALAMAZOO — An influx of patients referred to Indiana to access inpatient mental health care led a South Bend operator of adult psychiatric hospitals to propose a new facility in Kalamazoo County.

Cameron Gilbert, founder, chairman and CEO of NeuroPsychiatric Hospitals LLC, estimates that 70 percent of patients at the organization’s Mishawaka facility come from Michigan on referral from care providers, often an emergency room.

That blocks local ERs from referring patients and led NeuroPsychiatric Hospitals, which operates four inpatient facilities in Indiana, to pursue development of a psych hospital in Kalamazoo, Gilbert said. Patients are referred to northern Indiana because of what Gilbert calls an “incredible shortage” of adult psychiatric beds in Michigan.

“We have a couple of hospitals in northern Indiana that routinely are filled up by Michigan patients. We have so many patients coming from Michigan, we thought we might as well open up in the state of Michigan to serve these patients better,” he said. “We deal with this issue every single day of having a significant number of Michigan patients being forced to come to northern Indiana for care. That makes a compelling argument of why we should just do this and keep these patients at home.”

NeuroPsychiatric Hospitals is behind one of two competing proposals vying for state approval to develop a new facility in Kalamazoo County.

The organization proposes developing a psych hospital at a cost of $37.4 million that includes 31 adult psychiatric beds and 33 beds for people with developmental disabilities, according to documents filed with the Michigan Department of Health and Human Services that seek approval of the project under the state’s certificate of need regulations. NeuroPsychiatric Hospitals wants to develop the new facility on a 4-acre site southwest of Elm Valley Drive and 9th Street in Texas Township.

Pair of proposals

NeuroPsychiatric Hospitals filed the application Oct. 1 under Medical Behavioral Hospital of Michigan LLC, a corporate entity formed June 14, according to state records.

A competing proposal comes from Kalamazoo Psych Operator LLC, a company state documents show was formed Sept. 5. Kalamazoo Psych Operator initially filed two letters of intent with the state for different sites: a 31-bed adult psychiatric hospital at 9th Street and Elm Valley Drive and another at 9th Street and Tall Oaks Drive. Each filing estimated the cost of a 22,000-square-foot facility at $15.2 million.

Kalamazoo Psych Operator subsequently filed a full CON application Oct. 1 for the 9th Street and Elm Valley site. CON documents list Leo Brown Group LLC, an Indianapolis commercial real estate developer that specializes in senior living and health care, as the applying organization. The state filing indicated that Kalamazoo Psych Operator would lease the facility from a real estate company that would own and construct the building.

An executive for Leo Brown Group declined to comment when contacted by MiBiz, writing in an email: “We typically do not comment on projects that are under review for a CON. We can provide additional color on the project after the CON is awarded.”

The opportunity for both organizations to seek CON approval came after the Michigan Certificate of Need Commission updated standards for psychiatric beds. The update resulted in more licensed psychiatric beds becoming available in the state-designated Southwest Michigan health services area, as well as in other markets of the state.

“We have this big influx of patients today that’s a real issue, so when we became aware of the beds available in Kalamazoo, we said: ‘We’re right here. Shame on us if we don’t do it,’” said Gilbert of NeuroPsychiatric Hospitals. “That was all of the analysis that took place. We need to step up and do this.”

Serving a need

Founded in 2004, NeuroPsychiatric Hospitals specializes in treating psychiatric patients who also have a medical or neurological situation such as severe diabetes, hepatitis or autism. More than half of its patients are in the hospital under detention orders after a judge determined they were so impaired that they need hospitalization, Gilbert said.

The organization approaches their treatment with a mix of psychiatric, internal medical and neurological care, he said.

“We really do take the most ill patients psychiatrically, medically and neurologically that exist,” he said.

In addition to the Kalamazoo site, NeuroPsychiatric Hospitals has plans for facilities in Houston and Austin, Texas; Phoenix, Ariz.; and elsewhere in the U.S.

If NeuroPsychiatric Hospitals earns CON approval from the state Department of Health and Human Services, it could lead to additional projects or expansion in Michigan, Gilbert said. The proposal for the Kalamazoo facility “won’t be near enough beds, but in a year, two years or three years after opening, we can address additional beds,” he said.

“We’ll start in Kalamazoo and see how it goes from there,” Gilbert said. “I think that there are a lot of locations that desperately need this type of inpatient hospital services.”

The need for increased access to mental health care in Michigan runs deep, according to a study by Ann Arbor-based Altarum. The study, commissioned and funded by the Michigan Health Endowment Fund, cited a serious shortage of psychiatrists and other mental health care providers in the state. It also detailed how 650,000 people with a mental illness and more than 500,000 with a substance use disorder fail to receive any treatment. 

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