Texans seeking help for substance use can call the Substance Abuse and Mental Health Services Administration’s free help line at 800-662-4357. They can also access services in their region through the Texas Health and Human Services website.
On Tuesday, the director of Phoenix House Texas announced that due to the state’s unreliable funding, the nonprofit organization will be shutting down all six of its outpatient clinics and its final residential treatment center for teenagers. This decision comes after years of providing assistance to low-income Texans battling substance addiction.
The organization, which has been in operation for 28 years, heavily depends on state-administered federal block grants to cater to its predominantly low-income adolescent patients. Unfortunately, this nonprofit is now facing the consequences of a growing funding crisis that is affecting residential treatment centers in Texas. This crisis is occurring at a time when the state is grappling with alarming rises in overdose deaths, particularly among the youth.
“Our hearts sink at the thought of the timing,” expressed Drew Dutton, CEO of Phoenix House Texas, an institution solely dedicated to serving adolescents. “Right when Texas needs our aid the most, we find ourselves in the unfortunate position of having to shut down and refuse patients.”
The residential treatment center, Phoenix House Dallas, will be shutting down and ceasing its services for the 30 current residents by Friday. This closure marks the end of the only available residential treatment option for unfunded teenagers in North Texas. It follows the recent closure of the group’s Austin residential center, which was also closed in an attempt to sustain the network.
Dutton noted that the Phoenix House center was the sole residential treatment facility in Central Texas catering specifically to unfunded youth struggling with drug addiction.
According to Dutton, the organization plans to close its outpatient drug treatment services for adolescents at all of its six locations in Austin, Dallas, Houston, Round Rock, and San Antonio, along with its virtual services. Instead, they will be redirecting their efforts towards preventive services and raising public awareness. It is worth mentioning that their virtual services currently cater to hundreds of patients annually.
According to officials from HHSC, a significant number of patients at Phoenix House do not have insurance and are unable to afford private pay rates. As a result, the centers heavily depend on federal funding. The block grant amounts received by Phoenix House tend to vary from year to year, and the state has occasionally increased rates in certain areas, like outpatient services, based on the availability of funds. This information was shared with the Tribune by HHSC officials.
According to Dutton, the payments to residential centers have increased by a mere 5% over the past ten years.
According to an emailed statement from HHSC spokesperson Mike Parker, the agency determines the rates for block grant qualified services by considering the funding grants that are currently available.
Parker mentioned that the Tribune was unable to conduct a phone interview with agency officials for this story.
Parker mentioned that his agency provides resources for adolescents aged 13-17 who require treatment, especially in regions where no options are available. They effectively coordinate placements and enhance accessibility by utilizing telehealth alternatives.
According to Parker, the state works in partnership with school districts to assist students in overcoming challenges related to time and transportation for treatment. Additionally, Texas conducts prevention and awareness initiatives throughout the state.
However, according to providers, it is still necessary to have a designated facility to accommodate these patients. The recent announcement by Phoenix House has caused other addiction treatment providers in Texas, primarily focused on women and adults, to urgently work on expanding or establishing new facilities to cater to the increasing number of younger patients who are unable to afford treatment and can no longer depend on Phoenix House Dallas.
After years of coping with stagnant state reimbursement rates and an inefficient state pay structure that depletes their resources as expenses increase, those other providers are now encountering similar financial challenges.
Officials at Youth180, a nonprofit organization situated in Dallas, have announced their interest in incorporating residential treatment beds into their existing range of prevention, intervention, and outpatient treatment services for adolescents and their families. This decision comes in response to the closure of Phoenix House.
Keri Stitt, president and CEO of Youth 180, expressed concern over the impact of this situation on adolescents in the Dallas area who rely on government-subsidized insurance programs or lack insurance altogether. She emphasized that their access to fair healthcare is greatly reduced solely because of their financial limitations.
Stitt stated that Texas is at the forefront of the nation in terms of both the quantity and percentage of children lacking health insurance. This becomes a dire situation when these children encounter an underfunded healthcare system.
According to Stitt, one of the 15-year-old patients at her clinic experienced a drug overdose at school last Friday. The young patient received treatment at a nearby hospital over the weekend, but due to the absence of Phoenix House Dallas, an organization that provides care for uninsured teenagers, she was discharged and sent back home on Sunday.
According to Stitt, the low-income family finds it impossible to make the two-hour journey to the closest residential treatment center for girls.
She mentioned that the family was unable to travel to Tyler or Houston, leaving them with nothing to do.
Stitt mentioned that following the gradual reduction of services by Phoenix House and the news of their upcoming closure, their organization experienced a twofold increase in referrals within a week.
Katharine Neill Harris, a drug policy fellow at Rice University’s Baker Institute, highlighted that facilities like Phoenix House, which specialize in serving young individuals, frequently experience high occupancy rates.
Harris expressed concern over the closure of Phoenix House, stating that it worsens the issue of limited treatment options. The timing of this closure is particularly unfortunate, considering the rising number of drug-related deaths in Texas and the growing exposure of young individuals to potent synthetic opioids such as fentanyl. Harris emphasized that this closure serves as a stark reminder of Texas’ lack of preparedness in addressing the overdose crisis.
Funding problems
For years, treatment centers, especially those offering residential services, have been urging Texas Health and Human Services to grant them increased access to federal block grant funds. These funds are specifically allocated to cover the costs of substance abuse treatment for uninsured individuals in Texas.
“We are actually looking at a capacity crisis looming ahead,” Cynthia Humphrey, executive director of the Texas Association of Substance Abuse Programs, testified in a Sept. 15 HHSC hearing on the rates earlier this month. “It’s the residential providers that are bleeding the most, and are really at the precipice of whether they can continue providing services.”
According to providers, staffing has become increasingly challenging due to the difficulty in offering competitive pay rates. In fact, during a hearing with HHSC officials, a provider from Victoria revealed that their staff had faced pay reductions in recent years in order to sustain operations at their facility.
Dutton, the CEO of Phoenix House, stated that it is difficult to initially attract staff due to the increasing opportunities for counselors and other employees to work remotely through telemedicine. This perk of working from home is usually not available in a residential setting.
Dutton stated that in addition to this, due to the increasing prevalence of fentanyl usage or the presence of fentanyl in drugs, many of the younger patients now necessitate more extensive and expensive medical interventions.
Every year, the rates for each patient per day are determined by HHSC. Providers are allocated five-year block grants from the Substance Abuse and Mental Health Services Administration, which is an agency under the U.S. Department of Health and Human Services.
According to Dutton, the costs for Dutton’s have increased by over 30% in the last ten years. However, the state’s allocations have not kept up with the inflation rate. Dutton mentioned that in 2014, the state provided $161 per patient, per day as reimbursement to residential treatment centers. Presently, that rate has risen to $168.49 per patient, per day.
Dutton pointed out that while others argue it is nearly impossible to find a hotel at that price, our facility offers round-the-clock licensed professional care, nursing, psychiatry, counseling, school services, three meals, and two snacks all within that rate.
The majority of patients at Phoenix House centers are now uninsured, causing them to operate at a loss whenever they admit a new teenager eligible for block grant reimbursement, as the state reimbursements only cover less than half of the treatment cost for unfunded patients.
For several years, Dutton and other agency officials have consistently requested support from Texas HHSC for a minimum 20% increase in reimbursement rates.
Alternatively, substance abuse treatment providers desire to receive the complete allocation from block grants upfront rather than in yearly installments, as this would allow them to access the funds during critical periods of need.
Heather Ormand, CEO of Nexus Recovery Center in Dallas, questioned HHSC officials during the hearing about the lack of opportunity for us, who use these dollars, to fully utilize them. For three years, I have been asking this question, but no one has been able to provide an answer. The purpose of these dollars is clear, and we require them to continue delivering the high-quality services that we do.
Dutton stated that Phoenix House had been able to utilize less than 60% of their annual funding for the preceding three years in 2022. This resulted in a surplus of over $3 million in unutilized funds allocated for adolescent treatment.
HHSC officials in an email said they are still reviewing public feedback and testimony from treatment centers and others delivered during a hearing two weeks ago on their latest rates for block grant reimbursements. This time, the agency staff proposed a potential 16% rate increase for residential centers.
Dutton and others informed the residential providers during the hearing that, although the official announcement of the new rates is not expected until next week, the latest proposals indicate that there are no significant indications of any changes this time.
He said that HHSC staff suggested an even larger increase for residential centers last year, however, their request was rejected and there was no alteration.
Dutton expressed his growing doubt that we would be able to accomplish this correctly.
At the hearing held two weeks ago, HHSC officials were urged by multiple providers to carefully consider the potential consequences on the state if treatment centers were to cease operations.
Gary Jenkins, president of the board of directors of the Alcohol and Drug Awareness Center for the Concho Valley, expressed concern over the severe consequences that will arise from the closure of long-established statewide service providers. This closure will result in a significant void in crucial substance abuse treatment services, leaving thousands of Texans without access to the help they desperately need. Jenkins urgently appeals for assistance in addressing this pressing issue.
For the past three years, Ormand from Nexus Recovery Center has been actively working towards boosting residential reimbursement rates for their organization.
She stated that our current and proposed reimbursement rates account for 65-80% of our costs, varying based on the program or level of care. Since 2020, Nexus has deliberately pursued a variety of revenue sources to bridge the gap between costs and rates.
Diversification primarily involves obtaining private funding, along with additional public funds sourced from Dallas County via the American Rescue Plan Act, which are set to expire by 2025.
She stated that Nexus had successfully raised private funds to cover 30% of their operating budget for FY23, which concluded on August 31, 2023, and they plan to continue doing so. However, if funds are diverted from sources like ARPA, the financial gap will become even larger if the proposed rates remain unchanged.
According to Dutton, Phoenix House was experiencing similar fundraising levels. However, due to escalating costs and a significant portion of their patients lacking insurance, it became challenging to offset the increasing expenses with the donations they were able to obtain.
Harris, a member of Rice University, expressed his disappointment at the closure of youth services at Phoenix House, stating that while it is incredibly unfortunate, it does not come as a surprise.
She mentioned that in Texas, the long-standing problem lies in the unsustainably low reimbursement rates paid by HHSC to providers who care for uninsured patients.
Earlier this year, concerned parents who tragically lost their children to drug overdoses passionately called for heightened state funding towards drug treatment and prioritized investment in substance abuse services for the youth during the regular session of the Texas Legislature.
They were denied, she said.
She stated that instead of investing in this area, the legislature had the option to utilize a portion of the $32 billion budget surplus to tackle the issue through state funding for provider rate increases.
Ormand explained that her organization, along with other groups, is currently evaluating the community’s requirements resulting from the absence of Phoenix House. They are dedicated to diligently addressing these needs and striving to bridge the gap effectively.
Ormand, whose center exclusively caters to pregnant and parenting women, stated that they will intervene to prevent any adolescents requiring residential or outpatient services from being overlooked.
Stitt warned that if the state does not intervene with improved funding, the predicament concerning Texas youth will only deteriorate further.
Stitt emphasized that childhood is an enduring struggle that shapes our entire lives. He urged the state to take action in safeguarding the welfare of our children, as they are the key to our future. Failure to do so would only exacerbate the current issues of youth drug use and overdoses, which are merely the beginning of a much larger problem.
Disclosure: Rice University has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
