Dr. Robert Carroll, Highland Hospital's founder, probably would have been surprised to see his secluded mountain clinic for the mentally ill joined to a corporate chain linking 15 hospitals from Connecticut to California.
Major decisions at the 74-year-old hospital, a collection of ivy-covered Victorian buildings on 75 wooded acres in northern Asheville, will soon be made by lawyers and accountants scanning computerized profit and loss statements in downtown Washington, D.C.
The corporate officials, 500 miles from the hospital, will decide what color to paint Highland's walls, who will provide insurance and where to send lab specimens for analysis.
The prestigious hospital, where Zelda Fitzgerald, author and wife of writer F. Scott Fitzgerald, died in 1948, is going the way of hundreds of American hospitals -- corporate.
The new owner, Psychiatric Institutes of America (PIA), is the nation's largest chain of phychiatric hospitals, controlling more than 1,000 hospital beds in 10 states. Created 12 years ago by a group of Washington, D.C., psychiatrists, PIA is moving rapidly into the South.
The chain already manages and has an option to buy Appalachian Hall in Asheville. In South Carolina last year, it opened Fenwick Hall, a private alcoholic treatment center near Charleston, and began negotiating with the Medical University of South Carolina to manage the psychiatry department's teaching facilities.
PIA's expansion illustrates a growing trend. According to a study by the National Institute of Mental Health, the number of chain-owned psychiatric hospitals rose 66 percent from 1968 to 1975. Chains now own more than 57 percent of the nation's 180 private psychiatric hospitals.
"These chains are in business to make money," says Wymine Valand, head of North Carolina's task force on mental health and vice president of the National Association for Mental Health. "They're not just doing it for love of humanity. I don't like to see the small hospitals gobbled up."
PIA hospitals around the country have a reputation for quality care and high prices. For example, one month's total bill at Highland, including nearly all medical treatment and personal expenses, averages $4,000 for adults. At PIA's Brawner Psychiatric Institute in the Atlanta suburbs, the monthly bill is $5,600. The bill is $10,000 at two PIA hospitals in the Washington area.
In contrast, Sheppard Pratt Hospital outside Baltimore, one of the country's most prestigious psychiatric hospitals, charges $4,851 for a month's care. It is a nonprofit hospital, with all operating costs coming directly from patient fees.
Few professionals question the quality of PIA care. Dr. Keith Brodie, chairman of Duke University's psychiatry department and secretary of the American Psychiatric Association, said leading psychiatrists gave PIA "a clean bill of health."
One indication of PIA's quality comes from the Joint Commission on Accreditation of Hospitals in Chicago, an independent group. Jan Shulman of the commission said only about 17 percent of the nation's 6,000 psychiatric clinics and hospitals are accredited. But every PIA hospital in operation for more than a year is accredited.
"Obviously, they feel a commitment to consistently upgrading and offering the best possible care," Shulman said.
But the financial side of PIA continues to raise questions, some health experts say. PIA officials have refused to answer any questions.
PIA's first hospital, Psychiatric Institute of Washington, was built in 1967 with support from Washington health officials enthusiastic about PIA's plans for low-cost psychiatric care. But in the first four years, daily room rates shot up 143 percent, from $35 to $85. Today, monthly rates, including medical and psychiatric services, range from $10,000 to $12,000.
In 1976, PIA received state approval for a 50-bed hospital in Boulder, Colo, despite the objections of the county commissioners.
"The feeling here was the community would be left with nothing but a for-profit psychiatric hospital," says Dr. Floyd Martinez, director of the Boulder County Mental Health Center, which treats outpatients. "People were afraid there was no incentive to keep bed rates to an absolute minimum.
And when you're in the business of making money, the tendency is to keep the patients longer. Our philosophy is the opposite -- they do much better if you keep them in the community."
Three years later, Martinez says, "All our predictions have come true." Monthly rates at the Boulder Psychiatric Institute are about $5,900, and Martinez says, "We've been less than pleased with the way the quality of care has gone."
There's renewed interest in a public psychiatric unit at Boulder General Hospital.
Also in 1976, PIA opened Springwood at Leesburg in Loudoun County, outside Washington. PIA had applied for a 60-bed hospital for adults and adolescents that would accept referrals from local social workers. The estimated daily rate for adults was $85.
It opened with only 30 beds -- all for adults, most of them celebrities and executives, who pay $10,000 a month. The hospital brochure advertises putting greens, limousine service to Washington airports, and formal dinners in the dining room of an 1840 manor house.
When The Washington Post wrote about the hospital in early 1978, PIA refused comment. But recently PIA Vice President John Silverman said that problems with construction and sewer permits forced the corporation to change its plans.
Dr. Stephen Baker, Loudoun's mental health director, isn't convinced.
"The initial proposal was misleading," Baker said. Baker told The Post in 1978 he wouldn't have supported PIA's application if he'd known what kind of hospital they would build.
"I'm not as angry now," Baker said. "The hospital is providing some service to the community, accepting some people who are not wealthy but have good insurance."
Nevertheless, Loudoun Memorial Hospital, a nonprofit community hospital in Leesburg, is now building a 10-bed psychiatric unit.
Recently, a review panel of the Connecticut State Commission on Hospitals and Health Care recommended denying the request by Elmcrest Psychiatric Institute, a PIA hospital about 15 miles south of Hartford, for an 18 percent rate increase. The panel granted 9 percent, according to a staff member, saying PIA drew enough profit from management and patient account fees without taking more profit from room rates.
In addition, the staff member said, the panel felt the $100,000 salary of the hospital director, a PIA partner, was excessive.
Financial statements show PIA made a 31.5 percent return on equity last fiscal year and 26.6 percent this year, Brodie says. That sounds high, Brodie says, but it's in line with the national average of 29.9 percent for all hospital chains.