MHM Services

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MHM Services, Inc. is a privately-held mental health services provider in Tysons Corner, VA. The company's principal customers are state and local governments.

Contents

1 Divisions
2 Business environment
3 History
4 Locations
5 Sources

Divisions

The firm is divided into at least three functional divisions:

MHM Correctional Services contracts with state departments of correction to provide mental health services to inmates. MHM bills itself as a cost leader that saves prisons money. According to marketing brochures, MHM psychiatrists accomplish much of this savings by prescribing generic drugs rather than newer, proprietary medications. In 2004, this division was serving 140,000 inmates in more than 125 facilities.
MHM Solutions provides extended assignment/permanent staffing programs to public sector healthcare groups, primarily at the county level.
MHM Services is the corporate branch, providing marketing, human resources, and other administrative support to the rest of the company.

Business environment

MHM is the only national company providing mental health services to the corrections market. Most of its competitors are local groups of psychiatrists or psychologists who enter into contracts with individual prisons. These small operations generally do not have sufficient resources to make statewide contracts with Departments of Corrections.

MHM biggest national competition comes from the physical health providers such as Correctional Medical Services and Prison Health Services, which do mental health services along with their physical health programs[link].

MHM's size enables it to hire lobbying firms to represent its interests. These interests are frequently opposed by state employees' unions whose members' jobs would be threatened by privatization.

History

MHM was originally founded as Mental Health Management in 1981. According to a Wall Street Transcript interview with MHM CEO Michael S. Pinkert, the company started out developing mental health units in general hospital settings and quickly grew to become the country’s largest provider of inpatient psychiatric care in general hospitals. It then grew by adding freestanding psychiatric hospitals. In 1986, the company was sold to Pennsauken, N.J. Mediq, Inc.

In 1993, the company was spun off by Mediq and became a publicly traded company. MHM sold off all of its inpatient operations, including its freestanding hospitals, in order to focus solely on providing mental health services in correctional institutions[link]. In 1996, MHM bought Liberty Bay Colony Health Services Inc., a Boston, Mass.-based behavioral management services company specializing in the treatment of older adults. In an interview with Washington Business Journal, Pinkert said he planned to use the approximately $10 million in cash from the sale of MHM's hospitals to buy more businesses.

Meanwhile, Mediq continued to hold an $11 million note against MHM. In 1997, MHM sought to have the note cancelled, claiming Mediq breached its obligations to MHM by forcing MHM officials to sign a note that "unjustly enriches Mediq at MHM's expense"[link]. The suit also asked the court to require Mediq to pay back $4.5 million MHM had already paid. Pinkert called the note "a tremendous cash drain that we could have put to more productive uses."

A New Jersey Superior Court judge ruled against MHM, putting the company in serious financial trouble. Mediq told reporters that it would pursue collections; meanwhile, the American Stock Exchange threatened to delist MHM. According to a 1998 MHM press release, the company's independent auditors cited going concern problems in their report. A 1998 Georgia Department of Corrections audit noted the resolution of the matter with this statement:

It should be noted that on July 16, 1998, just prior to the release of this report, MHM Services Inc. issued a press release reporting that it had settled a nearly $12 million debt with a creditor for a lump sum of $3 million. MHM indicated that as a result of this action, it expected its shareholder equity to increase from a negative position of nearly $8 million to a positive position of approximately $1.7 million.

This move helped assuage the nerves of MHM's customers, and the company subsequently signed several new contracts. By 2000, its profits were improving markedly, according to MHM press releases. The company went private soon thereafter.

Locations

In 2004, the company headquarters moved from Westwood Drive to a new office on Spring Hill Road. The firm also has regional offices in:

Some of the smaller regional offices consist of a regional manager and an administrative assistant working out of their homes.

Sources

[MHM Services, Inc.]
[MHM Services' goal is to double its size every year for the next three years], The Wall Street Transcript, Sep. 29, 2000.
Inpatient approach is on the outs at MHM Services, John Lombardo, Washington Business Journal, Nov. 15, 1996.
[MHM seeks to void note for $11M held by Mediq], John Lombardo, Washington Business Journal, Feb. 21, 1997.
Ruling hazardous to health of MHM, John Lombardo, Washington Business Journal, Dec. 5, 1997.
Selection Process and Effect of the Mental Health Service Contract, George Department of Corrections, July 1998.
MHM Services, Inc. Reports First Quarter Profits Up 123%, MHM press release, Feb. 14, 2000.

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