Union targets community-based health providers over low pay for staff

AFSCME says executive pay at some behavioral health operations has soared while caregivers barely keep up with inflation
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Large behavioral health providers in New Jersey have gained new financial stability in recent years, but frontline caregivers continue to struggle with low pay and poor working conditions, according to a labor organization seeking to unionize staff at these facilities.

In a few cases, executive compensation at the nonprofit, community-based operators grew significantly over a five-year period, while the salaries and benefits for counselors, social workers and other direct-care staff barely kept pace with inflation, the union alleges. The result, it says, is high workforce turnover and staffers who feel undervalued — a situation that diminishes the quality of care for individuals with mental-health and substance-use disorders.

In a white paper scheduled for public release soon, the American Federation of State, County and Municipal Employees calls for greater government oversight and public transparency around how these operations spend money. They receive millions in state and federal funding each year in return for providing care to low-income and elderly patients and with additional COVID-19 relief money on the way, AFSCME says the issue is particularly urgent.

“Staff turnover and vacancies have done more than disrupt the continuity of care. The providers’ lack of accountability — and their mismanagement of the workforce — has also corroded the quality of care provided,” reads the white paper, which AFSCME New Jersey shared with NJ Spotlight News in advance of its public release. The union represents 22,000 public workers in New Jersey, including health care providers at state and county psychiatric hospitals.

Leaders of some of the state’s community-based behavioral health groups consider the union’s effort misdirected. While revenue may have increased for some organizations, they note mental-health and addiction-treatment providers statewide are also facing additional costs. The federal and state funding they receive is tightly restricted, they add, and the industry is already highly regulated by government agencies and professional organizations.

‘Underpaid industry’ from top to bottom

Nonprofit executives agree their frontline staff — whose wages start at $13 to $15 an hour — deserves higher pay, but argue the funding stream to boost compensation doesn’t exist. They note executive pay is scrutinized by a board, pegged to responsibility and professional standards, and increases may reflect big changes in the organizational structure.

“We’re looking at an underpaid industry,” said Joe Masciandaro, longtime president and CEO of CarePlus New Jersey, a large behavioral health provider based in Paramus, noting that means everyone from the front line to the executive team.

At CarePlus, Masciandaro said frontline staff organized 44 years ago under the banner of 1199J, which is part of AFSCME, the AFL-CIO and the National Union of Hospital and Health Care Employees, something that’s also happened at a handful of other nonprofits. He called the relationship “harmonious” and “collaborative” and said turnover among the frontline workforce “is not a big concern” for the organization.

“We believe in investing whatever we can in the workforce,” Masciandaro said, but noted the benefits of unions at nonprofits like his are not black and white.

CarePlus is one of hundreds of community-based providers that contract with the state’s Division of Mental Health and Addiction Services, within the Department of Human Services, to provide behavioral health services to tens of thousands of adults each year. These range from in-patient residential treatment, to full-day treatment programs, to outpatient counseling or group therapy sessions. Services for children and teens is provided by similar organizations under agreements with the state’s Department of Children and Families.

The agencies are paid through a complex mix of funding streams, including federally funded Medicare for seniors and some disabled individuals; Medicaid, which depends on a mix of state and federal dollars to cover low-income residents, and private insurance reimbursements.

Change in funding model

The state also provides additional dollars for individuals who don’t have other coverage, switching in recent years from a monthly stipend to a fee-for-service model.

The shift to fee-for-service — designed in part to boost federal Medicaid funding — was highly controversial, with many provider organizations warning the state it would force them to cut programs, turn away patients or even close their doors entirely.

But according to AFSCME, things turned out differently: “Contrary to such grave predictions, however, the financial condition of the state’s behavioral health providers has vastly improved in recent years,” the white paper reads.

In its analysis, AFSCME reviewed Internal Revenue Service documents filed between 2014 and 2018 by the 30 largest behavioral health providers in New Jersey, a mix of agencies focused on mental health, substance abuse and children’s services. It also drew on a 2019 report from the New Jersey State Auditor, which raised questions about state oversight of substance-use disorder programs, and statements and testimony from provider organizations, among other sources.

The union said it found that in those five years nearly nine out of 10 of these leading providers improved their financial performance, with lower debt and greater assets and savings. During that time, spending on the top executive increased an average of nearly 29% at these organizations; one entity, Family Intervention Services, appears to be an outlier with executive compensation jumping 270%, to more than $735,000 annually.

Representatives of Family Intervention Services did not respond to multiple requests for comment, including voicemail messages left Tuesday evening with several public relations officials. According to the website, FIS is a division of the Center for Family Services, another nonprofit provider it joined in January 2020, which operates more than two dozen programs in 12 counties. Jeanne Warnock, who has decades of experience, currently serves as FIS’s president and CEO emeritus.

Despite these gains, per-employee spending on salaries and wages for frontline program staff at the 30 organizations increased 0.7% over the five years, while inflation grew 5.7%, the white paper states. (At some larger organizations, this spending on these workers decreased by 2.5%.) When the cost of benefits is added to the mix, frontline compensation rose 1.4% in that time, the group found.

Pushback from industry leaders

AFSCME provided NJ Spotlight News with a copy of the report in advance but did not allow the full document to be shared with others. NJ Spotlight News provided detail from portions to industry leaders and some of the organizations singled out in the report in order to get their input.

Some industry leaders in New Jersey suggested this analysis distorted the facts. Debra Wentz, president and CEO of the state Association of Mental Health and Addiction Agencies, which represents community-based providers, called the comparisons raised in the report an inaccurate portrayal of the situation.

Wentz, Masciandaro and others representatives of the providers said that while the fee-for-service model has worked for some, it has proved challenging for others. Rate increases helped smooth the transition for some agencies, they added.

But larger organizations that provide multiple services, with different funding streams, are better able to navigate the change, while smaller, more specialized groups have struggled, they said. “I would not call fee-for-service a success story,” Masciandaro said.

Nonprofit leaders also bristled at the suggestion their pay was outlandish, noting they could go work in other industries and be paid many times more.

Advisory “boards aren’t just giving out money. They’re doing their due diligence. They want strong leadership in times of change and transition,” Wentz said. Running these agencies involves “a lot of responsibility for peoples’ lives. This isn’t making widgets.”

“It’s not a question of pitting staff against leadership, just as it wouldn’t be in any business,” she added, raising questions about the compensation of AFSCME leadership.

Jocelyn Alcox, a spokeswoman for AFSCME New Jersey, called that a “false equivalency” and maintained the union’s executive director makes closer to $200,000, or “less than half” of the salary earned by several of the higher paid behavioral health CEOs included in the white paper. The union is also dedicated to raising standards for its workforce, she said.

A matter of priorities

Steve Tully, who serves as executive director of AFSCME New Jersey, said it comes down to a question of priorities. Much of the public financial support for community-based behavioral health care is restricted, but he said agency leaders do have discretion with certain funds and should invest them in boosting compensation for frontline caregivers.

After all, he said, Wentz and the members of the state industry association frequently cite the low pay and high turnover as industry problems when testifying in budget hearings in a quest for additional state funding.

“It’s not because the money is not there. It’s because of what the providers are choosing to do with the money that is there,” Tully said. “You should want to invest in the workforce first.”

Noting massive staff turnover, he said: “You need to get to the root of the problem, which is they (agencies) are not paying (frontline staff) enough.”

$15.50, after 21 years

Residential counselor Sharon McLean could be the poster child for this problem. She’s worked for SERV Centers of New Jersey, a large residential provider, for nearly 21 years and recalls monitoring combative clients with severe addictions, negotiating violent interactions, and cleaning up urine, feces and dead mice at group homes when no one else would do it.

McLean said she was impressed by the company at first, which gave her four weeks of training at the start — unheard of in the industry, she said — despite her 11 years of experience elsewhere. But turnover was high among her co-workers and their supervisors, who she said often knew less about the job than she did.

Two decades later, McLean earns $15.50 an hour.

“They didn’t give me a raise for like eight years,” McLean said. “And when they did, they gave me 20 cents. They gave other people a penny. A whole freakin’ penny.”

McLean also said holiday bonuses were recently phased out.

Officials from SERV also did not respond to multiple requests for comment, although their director of communications and public relations promised to alert the CEO to a reporter’s request late Tuesday.

Trying to make a ‘miracle’

According to the AFSCME report, compensation for the top executive at SERV rose 77% to more than $422,000 between 2014 and 2018, while salaries and benefits for program staff declined 1%. The organization also saw fund balances soar more than fivefold during that period and benefited from other financial improvements, the union said it found.

“At SERV, you always feel like you’re trying to make some kind of miracle happen,” recalled Dana Lugassy, a former employee who now works for a public-sector provider she declined to name. “You never have 100% for what you need to really provide the kind of services each individual needs in the day,” she said, describing how there were never enough counselors to meet the treatment recommendations clinicians outlined for clients.

“Money is the answer. More funding. More hiring, more support for those staff,” said Lugassy, the AFSCME leader at her current employer. “They should be compensating people for the challenges they have to take on.”

AFSCME’s campaign is driven by the difficulties these workers face, Tully said, and is part of the union’s national effort to organize nonprofit behavioral health care providers under the banner “United We Heal.”

Tully said AFSCME started to engage workers at SERV’s Mercer County location in recent years, but the nonprofit tried to thwart those efforts by retaliating against staff members and hiring a “union avoidance consultant.”

“This behavior does not reflect a provider culture that respects its workforce or is connected with raising standards to recruit and retain dedicated personnel,” the white paper notes.

Call for more state oversight

AFSCME calls in the report for providers to disclose all spending, including emergency COVID-19 payments from the federal government, and to invest more in training, retention efforts and staff development.

It also urges greater state oversight of these funds. A DHS spokesman said the department has taken multiple steps to improve oversight based in part on the State Auditor’s report, which focused on the role played by the department’s Division of Mental Health and Addiction Services in regulating billing at adult programs, now in full compliance when it comes to monitoring provider claims.

Tully agreed that some providers in New Jersey have taken steps to boost pay and improve opportunities for advancement, but also said SERV was not the only agency of concern.

“There was a commonality of issues that were brought to us among the workers,” he said, recalling forums they held a few years ago. “It wasn’t just one bad employer — it was widespread throughout the state.”

“Accountability is critical to the public,” Tully said, “and workers need to have a voice in that.”