Psychiatric services for children grow. Private and federal insurance money fuels the expansion

After several suicide attempts, Tina Burwell had had enough. One day at the Delaware County Juvenile Court, she stood up and asked for the best treatment money could buy. Judge Thomas Louden sent her to a private psychiatric facility in Minnesota. Sherry Herdman did not want treatment, but when she failed all the other programs, Judge Louden sent her to the same place, the Golden Valley Health Center in suburban Minneapolis.

Increasingly, juvenile judges and parents are sending troubled children to psychiatric hospitals, drug-abuse clinics, and a whole range of out-of-home programs. These are the ``new guardians,'' so called because they temporarily take over for society's traditional guardians. Their growth has been dramatic in the past 10 years.

For-profit hospital chains have made the most aggressive inroads. Since the early 1980s, the four largest chains have nearly tripled the number of their facilities offering children's psychiatric programs. Charter Medical Corporation, based in Macon, Ga., leads the pack with 58 such hospitals, up from 11 in 1980. It is followed by Nashville-based HCA, with 46; Los Angeles-based National Medical Enterprises Inc., with 42; and Community Psychiatric Centers in Santa Ana, Calif., which has 33.

The growth of child psychiatry has spilled over into not-for-profit hospitals as well. Many are propping up sagging revenues by offering programs for drug and alcohol abuse, both of which are now considered psychiatric disorders. Some for-profit corporations, such as Comprehensive Care Corporation in Irvine, Calif., offer to manage such facilities in an underused hospital wing.

This growth is part of a general expansion in adult psychiatric facilities, particularly in burgeoning Sunbelt states with few restraints on hospital construction. For example, a year after Utah dropped its requirement that hospitals demonstrate a need for new beds, Salt Lake City had eight new private psychiatric hospitals, says Mark Schlesinger of the health policy and management center at Harvard's Kennedy School.

Private and federal insurance money has nurtured this growth. Unfortunately, most professionals agree, what has resulted is a skewed and piecemeal system of mental health care.

For example, of the 7.5 million children who might need some kind of treatment, only about 2 million get outpatient help and some 100,000 get inpatient care in a hospital or residential treatment center, a report by the Office of Technology Assessment has found. Many observers and professionals are convinced that many of those 100,000 children receive overly expensive and restrictive treatment, not because they need it, but because their families have the means or the insurance to pay for it.

``We have too many kids in the system,'' says Preston Garrison, executive director of the National Mental Health Association. ``And I'm afraid that the right kids that ought to be in the system aren't in it.''

Adds James Egan, chairman of the psychiatry department at Children's Hospital National Medical Center in Washington, D.C.: ``Some of them don't deserve to be in the hospital, clearly. The question is: Why are they there if they really don't need to be there?''

The reason is a lack of alternatives, Dr. Egan and others say. A comprehensive 1982 study for the Children's Defense Fund suggested that up to 40 percent of emotionally disturbed children may be inappropriately hospitalized in the public sector because few alternatives exist.

To make up for that lack in Delaware County, Judge Louden in the past 2 years has turned to the new guardians in the private sector. Of the 600 children who passed through his court last year, the judge sent 10 out of state, seven of them to Golden Valley.

Tina says she owes her life to Golden Valley. After 4 difficult months of treatment, she emerged drug-free and much happier. ``I walked out of there with a different hair style. I walked out of there walking ... and talking different,'' she says. Next month she plans to be married.

For the Herdmans, however, Golden Valley was a disaster.

``When we were done, we were looking at $60,000 and an 18-year-old who was still a problem child,'' says Marsha, Sherry's mother. ``They couldn't tell what the problem was. They always fell back on `she's got a behavioral problem.' Well, I didn't need $60,000 to know that!''

The Herdmans' insurance ended up paying for the treatment at Golden Valley and an earlier local hospital, but not before a major battle left the Herdmans uncertain whether they'd be charged.

In fact, insurance companies play a major role in limiting who gets treated by the new guardians, and how. When a Miami store manager put his 16-year-old daughter in a private psychiatric hospital, his insurance company paid the $120,000 tab and then canceled the policy. When his younger daughter needed less restrictive care a few years later, the father could not find an insurance company to cover the costs of a day school, even though it charged one-fifth as much as the hospital.

In Massachusetts, Blue Cross and Blue Shield typically pay for 60 days of inpatient psychiatric care, which can total $100,000 or more a year, but only $500 a year for outpatient care. So many Massachusetts alcoholics and addicts turn down intensive outpatient treatment, which might cost $2,000 or less, and sign up for a $6,000 to $10,000 residential program that their insurance will pay for, says Gerald Shulman, vice-president for clinical programs at Addiction Recovery Inc., in Waltham, Mass. ``Now something doesn't make sense there.''

The dramatic growth of the new guardians is pushing this skewed, piecemeal system toward a crossroads. Insurance companies and large employers are starting to crack down on inpatient psychiatric benefits. ``It's clearly our opinion that 80 percent of these [admissions] really aren't appropriate in a hospital setting,'' says Gary McIlroy, president of Health Risk Management, a Minneapolis-based consulting firm.

The new guardians, meanwhile, are beginning to open residential treatment centers as a less costly alternative. ``I think there'll be opportunities in scaled-down residential care,'' says James K. Don, president of HCA Psychiatric Company, a division of HCA.

The next step is unclear. A crackdown by the insurance companies could shrink the private system of new guardians that has been built up during the last 10 years, says Mr. Schlesinger of Harvard. But if the new guardians are successful, they may expand their services.

Ultimately, it all depends on what the public will buy into. Judge Louden clearly has bought into the new guardians. ``I like private enterprise,'' he says. ``That's been missing in mental health.''

Sue D. of Minneapolis found an alternative for her son, David. Physically abused by a relative four years ago, he now comes to the Youth and Family Center to talk things out and play.

Unlike the new guardians, there are no locked-in rooms, no system of privileges or restrictions, no philosophy of control. ``Our way of working with kids is to really listen - to listen to them, hear where they're at, and then work for changes,'' explains Sister Betty Wurm, who along with Sister Martha Merriman recently opened the residential and day-counseling facility. ``Adolescence is necessarily a time when there's insecurity. They're trying out a whole lot of things. And they need to be accepted.''

David, 14, says he's making progress. ``I've learned to control my anger ... [and] that I'm really a good person.''

Next: Judge Devine's community approach.