Working as a psychiatrist at Prairie St. John’s hospital in Fargo over a decade ago, Dr. Stephen Setterberg kept getting waves of children and teenagers from the Twin Cities in dire need of mental health treatment. The metro area’s limited number of hospital beds for young psychiatric patients contending with bipolar disorder, schizophrenia, aggression, depression or suicidal thoughts were usually full, and desperate parents would drive their children wherever there were openings: Rochester, Duluth, Fargo, Sioux Falls.

Though they ultimately got the crisis care they needed far from home, it wasn’t ideal. It put enormous strain on families to have very sick kids hundreds of miles away, and it was difficult to make progress with follow-up care after doctors addressed their immediate situation. Setterberg and his partners saw a solution.

Determining that about 30 percent of the psychiatric hospital’s patients came from the Twin Cities, Prairie St. John’s opened an outpatient clinic in Minnetonka (since relocated to Edina) in 2005 to fill the gap in care. Ever since, it’s been a case of “if you build it, they will come” for the provider, now called PrairieCare. The fastest-growing provider of child and adolescent psychiatric services in Minnesota, the physician-owned, for-profit company has five locations in the Twin Cities and Rochester, plus a 50-bed hospital on the rise in Brooklyn Park.

The pressing need was quickly apparent when PrairieCare opened its 25-bed hospital in Maple Grove in 2011. It admitted five patients in its first four hours, and it’s been essentially full and turning away kids in crisis ever since, says Todd Archbold, chief development officer.

“What we’ve tried to do is offer more than just minimal services, and I think because of that, we’ve probably grown faster,” says Setterberg, founder and president of Maple Grove-based PrairieCare. “Our reputation has been good. We’re not perfect, but when people interact with our services—other clinicians and families and patients—they feel like they are getting very good care.”

In less than a decade, PrairieCare has emerged as a major player in Minnesota mental health care. It filled the void when others retreated, and it continues to branch out, geographically and by adding more services that cover the full continuum of mental health care. Now affiliated with the University of Minnesota Medical School, PrairieCare strives to innovate and forge strong partnerships with other providers, school districts, the state and advocates.

An urgent shortage

PrairieCare arrived on the scene just as some inpatient providers in Minnesota reduced their beds for young psychiatric patients—from 132 to 114 between 1999 and 2005, according to the Minnesota Department of Health. For adults, the state saw a drop in its psychiatric beds as well, according to the Minnesota Department of Human Services (DHS).

The decline in mental health beds reflects nationwide trends. Federal and state support for residential psychiatric hospitals waned in the 1980s and 1990s, to be replaced by more community-based services. And many people seeking mental health care encountered managed care policies that slashed hospital stays, from 30 to 90 days down to three to nine, Setterberg says.

“At the same time the Twin Cities were undergoing a substantial reduction in psychiatric care, the reimbursement per day was being cut,” he adds. “And for large hospital systems that could always make more money on something else, there was even less of an incentive to provide it. Practitioners could not keep up with the change in expectations in what hospitalization meant.”

The deficiency of services for youth was apparent to Dr. Charles Schulz, head of psychiatry at the University of Minnesota Medical School, when he moved to Minnesota about 15 years ago. “I would get calls from people asking for services for their children, and they were saying it would take months to get in for an appointment. It was shocking that these young people couldn’t get care,” says Schulz, who also is executive medical director for behavioral health at University of Minnesota Health. “One of the reasons PrairieCare has been successful is the high demand for services for children and adolescents. Minnesota is well below average [in the number of] child psychiatrists for our population.”

About three years after entering Minnesota, Setterberg and his Prairie St. John’s co-owners concluded there was plenty of demand to fill a new inpatient psychiatric hospital. Collecting data on youth and psychiatry in Minnesota, “I realized we had 20 times the bed density in Fargo with 40 beds, and we were full a good part of the year,” says Setterberg. “We weren’t full because we were out in the streets rounding people up; [patients] had real problems, they were suicidal and they were coming from ERs. Once I did that math, I thought, ‘This is not rocket science.’ ”

In 2007, Prairie St. John’s requested an exemption to the state’s statutory ban on new hospitals. (A 1984 moratorium requires the Department of Health to approve any new facilities to prevent excess capacity and safeguard the public interest.) Setterberg envisioned a 114-bed specialty psychiatric hospital in Woodbury for adults and children, to open in 2009 with 96 beds. Still handling Minnesota’s overflow in Fargo, Prairie St. John’s leadership wasn’t expecting forceful lobbying against their plans. But legacy Twin Cities health care providers, the Legislature, and the state were strongly opposed.

The Minnesota Department of Health, which makes recommendations to the Legislature, shot down the plan. It argued that it was not in the public interest to open the Woodbury hospital, stating, “Although Minnesota’s mental health system does not always serve patients as well as possible,” it was too large for the documented need and might spread the state’s mental health providers too thin. It also defied efforts to move away from inpatient services toward community-based treatment.

Despite Prairie St. John’s offer to scale back its plans, the proposal didn’t make it through the Legislature.

The political winds shifted a year later. When Setterberg returned with a proposal for a 20-bed hospital in Maple Grove just for children and teens, the plan flew through the Legislature. To fund this new hospital, he sold his share of Prairie St. John’s, spinning off PrairieCare and the PrairieCare Medical Group as stand-alone entities in 2009. “They said, ‘OK, it’s a private initiative solving a public problem, and that’s a good thing,’ ” recalls Setterberg. “Operating in North Dakota, it’s a free-market mentality, and if you want to start a hospital and it meets regulations, go for it. Because we came out of that political environment, we were just absolutely blindsided by the politics. It took a couple years to get our bearings after the first go-around.”

PrairieCare’s Growth Chart

Physician-owned PrairieCare current dossier of operating and planned Twin Cities facilities.

Woodbury, 2006
Adult intensive outpatient program, psychiatric services, family, individual and group therapy.

Edina, 2007
Partial hospitalization for children and adolescents, as well as outpatient programs for adults. Other services include behavioral therapy programs, medication management, individual and family therapy, evaluations and support groups.

Maple Grove, 2011
A 25-bed inpatient hospital for children and adolescents, which also provides partial hospitalization, therapy, assessments and support groups.

Chaska, 2014
Partial hospitalization for children and adolescents, outpatient psychiatry, therapy for individuals and families, assessments and medication management.

Rochester, 2014
Outpatient programs for children and teens at an intermediate level of care between hospitalization and therapy; integrative medicine, family therapy, individual and group therapy, evaluations and psychiatric services.

Brooklyn Park, 2015
PrairieCare’s second hospital; will have 50 beds for children and adolescents. It will be the largest youth facility of its kind in Minnesota, also providing partial-hospitalization services, various types of therapy and assessments.


Large Mental Health Providers for Youth in the Twin Cities

Child (under 12) inpatient psychiatry:
Abbott Northwestern, PrairieCare, University of Minnesota Medical Center (formerly Fairview Riverside)

Adolescent (12-18) inpatient psychiatry:
Abbott Northwestern, PrairieCare, United Hospital, University of Minnesota Medical Center

Child (under 12) partial-hospitalization program:
PrairieCare, University of Minnesota Medical Center (only accepts step-downs from inpatient programs, not direct admissions)

Adolescent (12-18) partial-hospitalization program:
PrairieCare, United Hospital, University of Minnesota Medical Center (United and U of M Medical Center only accept step-downs, not direct admissions)

Growth spurt

For PrairieCare, getting its bearings didn’t mean drumming up patients. They flooded in, fueling the company’s expansion in services and across the Twin Cities. Since 2010, when PrairieCare had 15,617 patient visits at its clinics, patient visits have grown an average of 35 percent a year, to 36,009 in 2013. By the time it opened its first hospital in 2011 in Maple Grove, Minnesotans were familiar with the provider and its continuum of care. The hospital, for children and adolescents, received the imprimatur of the independent nonprofit Joint Commission, which evaluates and accredits more than 20,500 health care organizations and programs in the United States.

“We’ve been running at capacity since the day we opened,” says Archbold, a former school social worker. “Every day we probably get three to 10 phone calls from other hospitals saying that a kiddo just presented irate, agitated, violent and in need of help. We have to say we’re full and put them on a waiting list. It’s a really sad shortage, and we don’t have it anywhere else in health care.”

PrairieCare now offers a full range of mental health care services for youth and adults, from inpatient treatment for children and teens to partial hospitalization and intensive outpatient programs for people who are stable enough to return home at night. The company also provides a wide variety of services such individual and group therapy, medication management and support groups.

The company is profitable—though just recently so—going from red to black in late 2012, says Archbold, who has an MBA. It has poured that profit back into its new facilities and services, including a $20 million hospital for children and adolescents, under construction in Brooklyn Park. Mirroring this growth in facilities and services, PrairieCare also established itself as a major mental health care employer. It has 230 full-time staff members, who run its operations, facilities and functions such as marketing and development. Its sister company, PrairieCare Medical Group, is the clinical arm of PrairieCare. It employs 65 staff, primarily clinicians, including psychiatrists and psychologists, as well as social workers, licensed therapists and advanced-practice nurses. The company will hire 200 employees for its Brooklyn Park hospital.

To continue easing high demand, PrairieCare has been on an expansion tear this year. It became the primary provider of mental health services at the Two Twelve Medical Center in Chaska in an 18,000-square-foot office, and it opened an 8,500-square-foot facility in Rochester. Mayo Clinic is already providing inpatient services for youth, and PrairieCare complements those services with intensive outpatient programs for about 250 children and teens, and a clinic that is expected to serve hundreds more annually.

Its privately funded hospital in Brooklyn Park will open next fall. There, clinicians will treat 1,500 patients annually in 72,000 square feet at Highway 610 and Zane Avenue, offering inpatient, partial hospitalization, and outpatient services. Generally, PrairieCare operates with a 77 percent youth and 23 percent adult caseload, grounded in the company’s intention to provide services to people who need them most, says Dr. Joel Oberstar, a child and adolescent psychiatrist and CEO and chief medical officer of PrairieCare. There is a pressing shortage of services for youth, he adds.

“PrairieCare has worked hard at seeing a need and meeting it, especially when the state is underserved for children and adolescents,” says Linda Vukelich, executive director of the Minnesota Mental Health Community Foundation. “Its leaders are smart people who know what they are doing, and they care about patients and the community.”

Surveying the landscape

Even with PrairieCare’s offerings, the state still faces a severe shortage of psychiatric beds and community-based treatment, according to a DHS report to the Minnesota Legislature released this spring. Minnesota also lacks adequate, coordinated community services to prevent people with mental illnesses from cycling through emergency rooms and county jails.

To address these concerns, providers like PrairieCare, Allina Health, University of Minnesota Medical Center, Amplatz Children’s Hospital and HealthPartners have ramped up their partial-hospitalization and intensive outpatient services. They are cost-effective ways to provide follow-up care after a hospitalization, and it’s a way to keep mental health issues from escalating, Oberstar says.

“Intensive local services delivered outside the hospital for children and adults is one key need,” says Glenace Edwall, a clinical psychologist and director of the adult and children’s mental health divisions for DHS. “I’m happy to say that to the extent that PrairieCare has created inpatient beds and services like partial hospitalization, it could be seen as helping to create more of that community-level of services, so kudos there.”

HealthPartners recently spent $36 million on a new mental health building at its Regions Hospital in St. Paul, while Allina Health expanded its inpatient mental health and partial-hospitalization programs at Abbott Northwestern Hospital in Minneapolis, Mercy Hospital in Coon Rapids and United Hospital in St. Paul. Allina Health also aims to provide a full continuum of care for its mental health patients, says Dr. Paul Goering, a psychiatrist and vice president of mental health for Allina Health. That means broadening its community services so that people don’t land in the hospital just because they can’t find enough consistent follow-up care from transitional and community-based programs, he adds.

One significant reason PrairieCare has been able to grow quickly, Goering says, is because it does not devote its resources to offering expensive emergency-room psychiatric services. Allina operates psychiatric services at eight of its 12 ERs, despite the cost. Ever since Goering joined Allina Health in 1992, it has added mental health services, and it will continue to expand its offerings to further flesh out its continuum of care, from the least severe issues to the most entrenched. “There are community needs, and we can all answer them differently. We have to be a good steward and make sure we have a full range of services,” says Goering. “No patient wants to be in the hospital if they can be at home, and that’s where we’re putting our attention.”

Providers large and small also have focused on mental health services in schools, thanks to additional state resources. Starting in 2008, the Legislature funded $4.8 million for community mental health organizations to bring providers into schools to do early intervention, therapy, care coordination and referrals. The initiative makes mental health care more accessible to families by removing logistical barriers. Impressed by early results, the Legislature boosted funding to $7.2 million this year, and it will rise to $9.6 million a year in the next four years. The additional dollars will bring services to more than 35,000 children in 257 school districts, up from 18,000 served before, DHS reports.

These school-based services are crucial in providing children mental health care sooner, notes Sue Abderholden, executive director of the National Alliance on Mental Illness Minnesota. “Of all the kids served so far, half had never had treatment before, and half of those children had serious mental illnesses and were not doing well in school,” she says. “We look at mental illness from a public health approach. You can’t prevent every illness, but we can make sure it doesn’t become a disabling condition.”

Demand for mental health services for all ages should continue to mount; Affordable Care Act measures, which took effect this year, require that insurance plans provide coverage for mental health and substance abuse services in parity with their medical and surgical coverage. Previously, nearly 20 percent of people with insurance had no coverage for mental health services and one-third had no coverage for substance abuse, according to the U.S. Department of Health and Human Services.

In addition, a key tenet of the Affordable Care Act involves cutting costs and improving quality. A big part of that will involve integrating mental health with primary care. After all, “there is not a plexiglass plate dissecting the head from the body, and we’re finally recognizing that. It’s all one,” notes DHS’ Edwall. “Behavioral health needs are huge drivers of hospitalization and emergency room costs. With the Affordable Care Act, these are consistently measures that we need to drive down.”

PrairieCare intends to play a big part in integration by continuing to partner with primary care providers on mental health services, because the vast majority of people with mild to moderate issues see their primary care physician for treatment, Setterberg says. In fact, primary care doctors prescribe 70 to 80 percent of psychiatric medications in the United States. Plus, the overall cost of care for people with an untreated psychiatric condition goes up by a factor of five—say, diabetics who are too depressed to take their medications or see the doctor—so it will be essential to improve coordination of care among clinicians.

“If you want cost containment in primary care, you have to address mental health,” says Setterberg. “The incentives have not been there. Hopefully with the Affordable Care Act, the incentives will be. The integration of mental health care and primary care is a huge opportunity for us and from the public health point of view.”

An unlikely specialty

By focusing solely on mental health, PrairieCare has thrived in ways traditional health care providers have not. PrairieCare is profitable because “all we do is [mental health],” says Setterberg. “That’s the most important fact in how PrairieCare can be successful, when for decades psychiatry has been considered a money-loser. We’re able to see clearly what the real costs are. It’s harder to embed psychiatry in general medical environments and manage them and make sense of them financially.”

In health care, psychiatry often plays second fiddle to revenue-generators such as orthopedics and cardiology. But a psychiatry-only hospital doesn’t have to pay for operating rooms, diagnostic tools like MRI machines, other expensive equipment or 24/7 emergency room care, so its costs are quite low, Oberstar says

“We’re a relatively small organization, and that means we have a relatively modest level of administrative overhead,” says Oberstar. “We can manage our costs in ways that are enhanced by having a singular mission.” That means using flexible staffing to match demand, streamlining billing, diversifying its mental health services and scaling infrastructure to exactly match those services.

Archbold believes another key to PrairieCare’s rapid growth is its strategy to offer the full continuum of mental and behavioral health care—in sharp contrast to typically fragmented mental health services and agencies. PrairieCare also strives to get evidence-based mental health care to patients early, long before it becomes a crisis, and to offer services to youth in need who haven’t been receiving care.

This early treatment is critically important, especially with about one in five children experiencing a diagnosable mental illness in childhood. “There is a recognition that 50 percent of all adults with serious mental illnesses began experiencing symptoms before they were 14,” says Abderholden. “If we wait until they are adults, we’ve waited too long.”

PrairieCare’s facilities also attract patients. The buildings have a consistent design aesthetic, and the company invests in materials to make its spaces warm and inviting, from natural light and cozy furniture to huge murals on the walls, and higher-end touches like granite countertops and stone fireplaces. Partial-hospitalization patients have school-style lockers for their belongings, group and individual therapy sessions are held in comfortable offices, and there are indoor and outdoor areas for play.

“We work hard to make it not feel like a hospital,” says Archbold. “We like our spaces to be bright, welcoming and warm. It goes a long way to help with healing.”

Prime partner

Not only are PrairieCare’s services in demand from patients, other organizations have come calling, too. Its success pairing medication with psychotherapy made it an attractive partner for the U’s medical school, says Schulz. Seeking to both mitigate the shortage of youth psychiatrists and provide a fertile training ground for future providers, the university made PrairieCare’s hospital and clinics a significant part of its two-year post-residency fellowship in child and adolescent psychiatry. Nearly 20 psychiatrists have completed the fellowship since 2009, and many have stayed on as PrairieCare clinicians.

It’s also how the provider ended up in Chaska. Ridgeview Medical Center planned an expansion of its Two Twelve Medical Center, and it wanted to bring psychiatric care to its southwest metro clientele. After touring some of PrairieCare’s operations and getting to know the leadership team, Ridgeview decided it would be a good partner, says Mike Phelps, COO of Waconia-based Ridgeview. PrairieCare now rents an entire floor of the expansion, operating as an independent provider.

To Ridgeview, it made abundant sense to outsource mental health care services to a provider with that sole focus. “For a smaller health care system like us, we can’t be everything to everyone,” says Phelps. “Here is an organization that is doing it and doing it well, so let’s move them to our geographic area and serve the needs of our community. It benefits all of us, because we’re keeping kids out of the emergency room, keeping them healthy and letting them live productive lives in the community.”

PrairieCare isn’t done. Its strategic plan calls for measured expansion, especially in the northeast metro, where mental health services for children and teens still are lacking. Setterberg also sees a need for more inpatient adult beds in the Twin Cities, though right now PrairieCare is more focused on youth services because it’s where PrairieCare still sees the most glaring need, says Oberstar.

As Archbold says, “I see our trajectory of growth continuing. One of our keys to success is being able to respond to the community need . . . . It’s like we can open any program and be busy because there is such a shortage. ” And that makes for a promising future.

Suzy Frisch is a Twin Cities writer who regularly covers business and health care.

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