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Private foster care adds profit to mix of helping children
Private foster care adds profit to mix of helping children
By Kathleen Chapman Palm Beach Post Staff Writer Monday, November 28, 2005 Compassion is meeting capitalism as big companies move into the business of caring for children and the poor in Florida. Since the state privatized its foster-care system, it has been at the vanguard of a national trend in outsourcing social services once monopolized by government and charities. Providence Service Corp., an Arizona for-profit corporation traded on the Nasdaq, now cares for 2,000 abused or neglected children in Palm Beach County and the Treasure Coast. The company operates here under the name of a subsidiary, Family Preservation Services of Florida Inc., and has amassed millions in state contracts. In Southwest Florida, a nonprofit agency managed by Providence oversees the region's network of services for children in state care. Providence does the work once handled by the Department of Children and Families, finding homes for the state's foster children and helping them toward adoption or reunion with their biological families. Social workers, once eligible for state pensions and union membership, now have stock options and 401(k)s. Providence runs programs for children, welfare recipients, juvenile offenders and struggling families in 24 states and the District of Columbia. Company leaders say they are improving on state-run social services while making a modest profit. But some critics are uneasy about the company's involvement in Florida foster care. They worry that shareholders will demand higher earnings, forcing Providence to make cuts in programs for the most vulnerable children. Others don't understand how any contractor can make much money in the difficult field of social work. Nonprofit agencies in some parts of the state are struggling to break even, they say. "If you can make a profit on anything we are doing, then that means we are doing something wrong," said Evelyn Lynn, R-Ormond Beach, a member of the Senate Committee on Children and Families. "Because it's not going to the children." Others, even some who have reservations about for-profit companies, say Providence should be judged by its performance. "One thing is clear," said Andrea Moore, executive director of the statewide advocacy group Florida's Children First. "Things couldn't continue the way that they were. Because they were only getting worse." Providence founder and CEO Fletcher McCusker said he hopes to gain business in Florida wherever invited. Company President Boyd Dover moved to Clearwater in 2004 to oversee operations and expansion here. This summer, Dover stepped in to lead the Treasure Coast's foster-care agency United for Families, after its first leader resigned. Last fiscal year, the Providence subsidiary Family Preservation Services made $1.3 million in profits — about 7 percent of $19.2 million in revenue on state foster care contracts in Palm Beach County, the Treasure Coast, Gainesville and Southwest Florida. The company also has a management agreement with Camelot Community Care Inc., a nonprofit agency that handles $42.8 million in contracts all statewide. Providence takes a fixed fee or 10 percent of Camelot's revenue to provide management services including human resources, accounting and tech support. Providence took in $3.9 million in management fees from Camelot last year in Florida, and kept $142,000 in profit. Camelot's biggest contract is in Southwest Florida, where it earns $23.2 million a year to oversee programs for abused and neglected children. Camelot subcontracts more than $3 million to Family Preservation Services to provide therapeutic foster families, work with families who have lost their children and manage children's cases in Collier, Hendry and Glades counties. Critics say that the company is essentially awarding contracts to itself, creating conflicts of interest and freezing out other qualified agencies. McCusker dismisses that criticism as sour grapes from contractors that didn't win state business. The contracts were competitively bid, he said, and the head of Southwest Florida's foster-care initiative reports to a local board. According to DCF statistics, the agency in Southwest Florida performed at or above most state measures of child safety and well-being in the last year. McCusker says his company makes money by slashing overhead, not by skimping. His biggest concern in founding the company, he said, was how investors would respond. "Wall Street loves profit. They love improvement in profits," McCusker said. "But most private companies have been flashes in the pan. They enjoyed a year or so of success, but then state governments start terminating their contracts because in my opinion they just get greedy. We are trying to educate Wall Street that this is and will be a low-margin business. We are not going to make 15 percent profit." Slashing corporate costs McCusker and Dover met nearly four decades ago while working at a nonprofit agency for foster children and single mothers. McCusker went on to found a health-care company; Dover was appointed to lead Arizona's health and child-welfare agencies. Both eventually worked for Youth Services International, the publicly owned juvenile justice company that McCusker says made 20 percent to 25 percent profit in its heyday. In 1997, McCusker started Providence with $50,000 and $500,000 in loans from family and friends. Providence won state contracts to provide therapy and case management to children with behavior problems and families on welfare or struggling with mental illness or drug abuse, and acquired similar companies all over the country. The company went public in 2003 and reported $97 million in annual revenue for 2004. Providence expects to take in at least $137 million this year. Many of Providence's predecessors made their money off state contracts in part by dumping state pension plans and slashing or freezing wages for workers. A recent study requested by Florida legislators found that for-profit contractors pay workers who guard and mentor juvenile offenders about $18,000 a year, $2,000 less than nonprofit contractors. "If you look at other for-profit companies," McCusker said, "you will find there is an undercurrent of greed, and outrageous executive compensation." But he said that Providence will not cut caseworker salaries or programs for children. Like most social service agencies, he said, Providence relies on a young, enthusiastic workforce. The company pays caseworkers an average $32,000 to $35,000 a year, comparable to state workers and local nonprofits. The company makes its money by lowering overhead and "blowing up the corporate office," McCusker said. Its main office in Tucson has seven executives and three support employees. McCusker makes $250,000 a year, and owns 5 percent of the company. Door opens to for-profits When Gov. Jeb Bush introduced his plan to privatize foster care, he pitched it as a way to involve local communities. He touted a model program in Sarasota, where local nonprofits banded together to provide better care for foster children. He called it "community-based care." The regional agencies that oversee foster care services must be nonprofits to receive federal money. But when legislators privatized foster care statewide, they left the door open to for-profit companies as subcontractors. And as counties faced deadlines to privatize, they found there were not many local nonprofits able to back large start-up costs, or risk large losses. Providence, which registered to do business here in 1998, had plenty of capital. It offered hundreds of thousands of loans to fledgling foster-care agencies. Robert Barker, who founded Child and Family Connections, the private nonprofit foster care agency for Palm Beach County, said he initially had a bias toward nonprofit agencies. But when nonprofits such as Girls and Boys Town declined to take on big financial risks, he turned to Family Preservation Services. The company gave Palm Beach County's foster-care agency a $125,000 loan and a line of credit. Child and Family Connections paid back the loan and secured its own line of credit. Family Preservation Services still contracts to provide case managers for about half of the 2,000 Palm Beach County children in state care. Leaders in the Treasure Coast, Fort Myers and Gainesville made similar decisions. And the effort that was touted as a way to give more control to local communities brought in board members and caseworkers who report to corporate headquarters in other states. Family Preservation's local employees are dedicated and professional, Barker said, and the company is held to high standards. The company's contract in Palm Beach County requires one caseworker for every 19 children, and imposes fines if key positions are vacant for more than 30 days. Profits make some uneasy In an era where corporations are taking over charter schools, hospitals, juvenile lockups and psychiatric programs, some say it is inevitable that the care of the state's vulnerable children would fall to a for-profit company. But some find it distasteful that a company would be allowed to profit on the care of foster children. Nonprofits have overhead and administrative expenses too, said Palm Beach County United Way President Scott Badesch, but their primary responsibility is to the community, not to shareholders. "I just kind of get in knot in my stomach when I think that we don't have enough money to serve kids and somebody is making a profit," Badesch said. "Let's not make profits off the kids in this society." Others said the company should be measured by results. "I have no problem with a for-profit, if they do a good job and are accountable for the public dollars that are being spent," said Nan Rich, D-Sunrise, a member of the Senate Committee on Children and Families. http://www.palmbeachpost.com/search/...ence_1128.html Defend your civil liberties! Get information at http://www.aclu.org, become a member at http://www.aclu.org/join and get active at http://www.aclu.org/action. We cannot defend freedom abroad by deserting it at home. |
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Private foster care adds profit to mix of helping children
I've been warning about this since 1994 or 95 in state offices in three
states. And, here in these newsgroups for about four years. One: a cps staff person doing foster care oversight is subject to working directly in the office where the responsible workers and their supervisors, and both of their managers can SEE his or her work product. Contracting puts yet another layer on top of the point of service delivery...isolating it even more from the decision makers and top adminstration. Two: it's far less expensive, even with state employees that receive high quality benefits packages (and not all do...that's for sure) and union contract negotiation, to have CPS empoyees do this work. Three: There is an incentive to keep the child in care longer, and a profit motive that is very REAL as opposed to the delusional fabricated one that some in these newsgroups create about CPS workers. I lost my battle with the states I lobbied over this. Let's see if Florida wakes up. And let's see of the scumbags in this ng that promote such bs as this ever get honest and moral again....though I doubt it. Kane wexwimpy wrote: Private foster care adds profit to mix of helping children By Kathleen Chapman Palm Beach Post Staff Writer Monday, November 28, 2005 Compassion is meeting capitalism as big companies move into the business of caring for children and the poor in Florida. Since the state privatized its foster-care system, it has been at the vanguard of a national trend in outsourcing social services once monopolized by government and charities. Providence Service Corp., an Arizona for-profit corporation traded on the Nasdaq, now cares for 2,000 abused or neglected children in Palm Beach County and the Treasure Coast. The company operates here under the name of a subsidiary, Family Preservation Services of Florida Inc., and has amassed millions in state contracts. In Southwest Florida, a nonprofit agency managed by Providence oversees the region's network of services for children in state care. Providence does the work once handled by the Department of Children and Families, finding homes for the state's foster children and helping them toward adoption or reunion with their biological families. Social workers, once eligible for state pensions and union membership, now have stock options and 401(k)s. Providence runs programs for children, welfare recipients, juvenile offenders and struggling families in 24 states and the District of Columbia. Company leaders say they are improving on state-run social services while making a modest profit. But some critics are uneasy about the company's involvement in Florida foster care. They worry that shareholders will demand higher earnings, forcing Providence to make cuts in programs for the most vulnerable children. ......snipt for brevity............... |
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Private foster care adds profit to mix of helping children
wow..what a concept....
That's really already been done. Group homes are private orginizations and supplied readily with "clientele". One that I worked for, well hell...the director and his wife go to Europe every year, own 8 houses, their kids go to private schools. Seems business ain't too bad... |
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Private foster care adds profit to mix of helping children
Mistchf wrote: wow..what a concept.... That's really already been done. Group homes are private orginizations and supplied readily with "clientele". One that I worked for, well hell...the director and his wife go to Europe every year, own 8 houses, their kids go to private schools. Seems business ain't too bad... Gosh the ones I know, that do not have other income, are run mostly by old retired military types on a pension..... PENSION ..... and the wife is old enough to also be on SS from any former employment and still they have trouble affording to pay for a few days of respite coverage...and they DO have to pay for their own. You know for a fact that couple didn't have other income, right? And can document it? Come on. I expect YOU of all people here to be honest. I know a number of attorneys that spotted profit in providing group homes for CMI's (chronically mentally ill) folks that were shifted from the state hospitals to the community with meds and subsidies (and SSI) and set up companies with many such group settings, with college kids mostly as attendents. I turned down a chance to manage a string of them. Were they need though. Yes, of course they were. I noticed the attorneys still had other income though. I hear they haven't had any staying power as income sources, what with the true exspences. Most were finally sold off to folks not as smart as the attorneys. And we STILL need them. I wonder, smirk if we need those group homes? What was your experience. Did the kids need to return "home?" (and before you answer, recall that I worked for some time in a treatment setting with adolescents in a mental health environment -- group home). 0:- |
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Private foster care adds profit to mix of helping children
Mistchf writes:
wow..what a concept.... That's really already been done. Group homes are private orginizations and supplied readily with "clientele". One that I worked for, well hell...the director and his wife go to Europe every year, own 8 houses, their kids go to private schools. Seems business ain't too bad... Hi, Mistchf! Yes, group homes are run by private organizations intent on collecting the relatively high fees -- upwards of $155 per day per foster child (Krebs & Pitcoff, 2003). Many of these group homes are part of chains run by large corporations. Regardless of whether the private organizations operate under for-profit or not-for-profit structures, tales of personal profiteering like you mention are rampant. Ronald Taylor wrote in his book, "The Kid Business," about some California group-home directors that pulled off what you are talking about. "Several nonprofit corporations operating child-care facilities were found to be legally skimming large amounts of government money through lease-back arrangements. Operators not only owned the land and leased it to the nonprofit corporation; they often paid themselves handsome salaries and had the free use of homes, cars and credit cards. "The level of care and treatment in far too many of these group homes was minimal at best, because the money was being skimmed off for personal gain" (Thoma, 2001). Ira Schwartz comments in his book, "Kids Raised by the Government," that despite nationwide efforts to reform the overcrowded and abusive foster care system, state childwelfare agencies insist on holding on to their questionable ties with huge, multi-state corporations that run foster care group homes (Schwarz, et al. 2001). As the result of class action suits brought on behalf of foster children, foster care systems have been taken over by the federal courts in 27 jurisdictions across the land. Federal courts have faced major resistance by the group home operators in trying to impliment reform of the foster care systems put into receivership. In Washington, D.C., the federal court finally issued a restraining order and order to comply against the child protective agency to reform the operation of group homes (GAO, 2000). Part of the overriding problem is the subculture in group homes. Foster children learn that attention in the overcrowded institutional setting is given those children who fabricate the most dramatic maltreatment by their families (Krebs & Pitcoff, 2003). Those that act out emotional disturbance get the cookies. Lawyers charged with advocating in foster children's behalf noted that while much effort by group home staff is given to having children recount past dysfunctions of their family, almost no effort is made to help the children develop skills for their futures. Institutional rules and bureaucratic restrictions in the group homes often hamper foster childrens independent efforts to prepare for the future. "An example of this phenomenon is the story of Diana, a bright and personable nine-teen-year-old in the Youth Advocacy program who wanted to be an attorney. She obtained what she thought was the perfect ªrst job, working in the accounting department of a law ªrm in midtown Manhattan, in order to save money for college. However, because of the obligations of her job, Diana was unavailable during the day to meet with the group home's staff and social workers whenever they might call, and she was unable to attend the weekly sessions where group home residents aired their complaints about one another. In the eyes of the group-home staff, Diana had become a problem. "As punishment for her absences because of work, Diana's visits with her family were suspended and one day she came home from work to ªnd all of her belongings packed into garbage bags. The supervisor told her she was placed on "serious house restriction," required her to wear pajamas throughout the day, and allowed her to change clothes only at the discretion of staff. The supervisor also instructed her to quit her job. When Diana protested, the supervisor told her she could either follow the rules or sign herself out of foster care. Diana walked out of the group home without a place to go, and with her college dreams suddenly severely hindered." (Krebs & Pitcoff, 2003). Interested in the bottom line, many private organizations that operate group homes and "treatment centers" will hire workers with undergraduate degrees to do clinical work with children and teens. They often misrepresent their credentials. Attendants at these facilities are usually grossly underpaid and are often college students with little training. The child welfare system reacts out of a "bed available" basis in assigning foster children to housing. In an overcrowded, abusive foster care system, children need to be screened into categories to qualify for various levels of funding. If the only bed available belongs to a group home who is certified for level 2 foster kids, then suddenly the child is labeled with the problems that would qualify him for this more expensive level of care. The corporations that own these chains of group homes are willing players in the game. "Some children are labeled "dependent" or "neglected" and are placed under the jurisdiction of the Department of Social Services, other children are labeled "delinquent" and are under the Juvenile Court or Probation Department, still others are given a psychiatric label and sent to the Department of Mental Health, explained Mark Soler, Executive Director of the Youth Law Center, to a Congressional Subcommittee (Thoma, 2002). "Among the conditions the Youth Law Center identified were children in an Arizona juvenile detention center tied hand and foot to their beds; a Washington State facility in which two children were held for days at a time in a cell with only 25 square feet of floor space; children hogtied in State juvenile training schools in Florida -- wrists handcuffed, ankles handcuffed, then placed stomach down on the floor, and wrists and ankles joined together behind their backs. "In the training school in Oregon children were put in filthy, roach-infested isolation cells for weeks at a time. In the Idaho training school, children were punished by being put in strait jackets, and being hung, upside down, by their ankles (Thoma, 2002)." "Children continue to be assigned labels arbitrarily, and often on a bed-available basis. "A recent South Carolina audit reveals that a percentage of foster care wards have been labeled as in need of therapeutic placements because of a shortage of conventional foster homes (Thoma, 2002). Efforts to reform the child welfare system continue throughout the country. Child and family advocates need to develop tactics to convince policymakers to break up the alliance state child protective agencies stubbornly insist on maintaing with private organizations running foster group homes. Mistchf, I appreciate your contributions to this forum and the opportunity to discuss these issues with you. You have added a lot of much-needed wisdom to this discussion group. Your observations about problems in the present system are helpful in designing reform efforts that will produce the solution. What are your thoughts about what can be done to reform the system that rewards the owners of foster group homes, Mistchf? SOURCES: Krebs, Betsy & Pitcoff, Paul (2003). Reversing the failure of the foster care system. Harvard Women's Law Journal, Vol. 27, pp 358-366. Available at the Jim Casey Youth Foundation website. http://www.jimcaseyyouth.org/docs/re...he_failure.pdf Berliner, Uri (1994). Mining riches from troubled kids," San Diego Union-Tribune, June 5, 1994. Available at http://www.liftingtheveil.org/fosref09.htm#6 Thoma, Rick (2002). A critical look at the foster care system: The group homes. Lifting The Veil. Available online at: http://tinyurl.com/d7n64 Government Accounting Office, (2000). Testimony before the Subcommitte on the District of Columbia, Committee on Government Reform, House of Representatives. Foster ca Status of the District of Columbia's Child Welfare System Reform Efforts. Washington, D.C.: Author. Available online at: http://www.gao.gov/archive/2000/he00109t.pdf |
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