La Frontera, an Arizona firm brought in last year to care for the mentally ill and those struggling with addiction across Southern New Mexico, laid off or fired 20 employees last week.
About half were laid off to reduce expenses; the rest were fired for “performance issues,” according to Dan Ranieri, Tucson, Az.-based CEO for La Frontera New Mexico.
Another six workers, including two “director level” staffers, have resigned since mid-March, Ranieri said Tuesday.
La Frontera has lost about $200,000 per month since January, which prompted last week’s decision to reduce staff, Ranieri said. He added that he believes the firm will break even by the end of May.
The 26-employee reduction since mid-March decreases La Frontera’s New Mexico workforce to 344, or about 14 percent lower than the 400 people La Frontera inherited last summer when the firm took over for six New Mexico behavioral health service providers, Ranieri said.
And more layoffs could be possible. Ranieri confirmed that La Frontera has given notice it will not renew the lease of a Las Cruces facility that provides transitional housing to mental health clients when the lease expires at the end of June.
The facility employs 10 people. The non-renewal notice was “precautionary,” Ranieri said.
La Frontera’s staff reductions coincide with action by another Arizona firm that took over services in part of northern New Mexico last year, Agave Health. Earlier this month, Agave cut hundreds of employees' salaries and reduced other costs, including reimbursements for travel, saying it had been operating at a loss each month.
A third Arizona firm the state contracted with, Valle del Sol, laid off three therapists at a Los Lunas facility last October because of shrunken revenues.
The N.M. Human Services Department contracted with La Frontera, Agave, Valle del Sol, and two other Arizona firms last summer to serve tens of thousands of people with mental illness and other issues including addiction. The state agency needed the firms to take on that role after it suspended Medicaid funding for 15 health organizations providing those services in New Mexico. Officials justified that action in part with an audit they said found potential overbilling and possible Medicaid fraud.
Services won’t decrease, La Frontera says
Services to clients wouldn’t decrease due to last week’s layoffs and firings, Ranieri said. He added that it was his belief that the health organizations La Frontera replaced after last year’s audit were “overstaffed” in some areas. The workforce reductions merely brought staffing levels in line with the amount of services provided, although Ranieri could not pinpoint the number of clients La Frontera currently serves.
An HSD report with December data said that the number of consumers served by La Frontera grew 42.5 percent compared to the number served by its predecessors – from 2,915 pre-transition to 4,154 clients afterward.
“The most pertinent issue is the amount of valid services delivered, and basically we staff based on the amount of services we produce,” Ranieri said. “And the amount of service we produced since we’ve been here is not enough to justify all the staff.”
Ranieri said La Frontera would not want to reduce services to clients in part because what the company collects from Medicaid, the government’s health insurance program for the low-income, is based on the amount of services it provides to clients.
“First of all, that’s the wrong thing to do and, second, that’s how we get paid,” Ranieri said. “It’s horrible professionally and it’s horrible from a business standpoint. Our goal is to increase services, and the quality of services, but you have to do that in a way that makes sense.”
State ‘satisfied’ with La Frontera’s staffing plans
Last week’s layoffs occurred on Good Friday following a face-to-face meeting April 17 in Santa Fe in which Ranieri informed Human Service Department officials of the staff reduction plan.
State officials were “satisfied” with La Frontera’s staffing plans, HSD spokesman Matt Kennicott said Tuesday.
“It didn’t sound like all the staff and the clinical folks had a full caseload, if you will,” Kennicott said. “The state doesn’t get involved in those business decisions. It seemed to us that they had a solid plan in place to make sure all consumers continue to receive care.”
Employees who provide direct services to clients are expected to provide about 100 hours of service per month, Ranieri said, adding, “…The truth is that most people weren’t doing that.”
Nine of the employees who lost their jobs were behavioral management specialists, while eight others managed clients’ cases.
“We had over 70 people in that particular category,” Ranieri said, referring to behavioral management specialists. “Given the clients and the current demand, we were grossly overstaffed.”
Four of the job losses occurred in Alamogordo, where La Frontera took over The Counseling Center. An investigation by the office of Attorney General Gary King cleared The Counseling Center of Medicaid fraud, but HSD still is seeking reimbursement of $323,000 in alleged overpayments, said the nonprofit’s CEO Jim Kerlin.
La Frontera provides services in Lordsburg, Deming, Silver City, Las Cruces, Alamogordo, Ruidoso, Mescalero and Anthony. It took over management by Border Area Mental Health, TeamBuilders, The Counseling Center, Southern New Mexico Human Development, Families and Youth Inc. and the Southwest Counseling Center.