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Posted: Mar 29, 2010 12:01


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By Larry Stednitz

The downturn in the economy has impacted nearly all of us who work with families needing help with their children. Many of the conversations we have center upon the current strength of the Parent Choice Schools and Programs and the changes that are occurring as a result. The economy is demanding changes, and these changes are not all bad! We see the adjustments in services like consulting, psychological testing, costs of programs and the development of new services.

Consultants at Woodbury Reports teleconference every two weeks, keeping up with the changes in our work and to get everyone's thoughts on complex consultations. Today, we had some good news. We, like most consultants have feared that our consultations might have fallen off by 20 percent or so. Knowing how the reductions across the board might impact us, we were pleasantly surprised to learn that after all the numbers were in, 2009 was a better year than 2008. We were grateful for that information. We think that parents need even more assistance in making difficult decisions due to the impact of the economy.

One of our consultants received a notice today that one of the many fine psychologists in the industry has reduced his fee for a full battery of psychological assessments. I think it is safe to say that the downturn of the economy has impacted this valuable service. Most consultants value these evaluations and it would be a great loss to lose the information the psychological testing provides. Our group agrees that full psychological evaluations are worth the money and not to have one when needed would be a great loss to our families. Many have refined their practice to provide timely and useful information that is invaluable in determining an appropriate program for our clients.

Similarly, programs show signs of the troubled economy. Of late, it is no mystery as to why it was easier to place an adolescent this past year than at any other time over the last several years. Many programs now have been willing to modify (lower) their monthly rate to bring in residents. A couple of years ago, few programs would consider reducing their monthly rates.

Programs and schools in our network have steadily increased their rates each year for some time now. We don't doubt that they have needed to do so in order to maintain a quality service for our families. It is not uncommon to quote a monthly cost for a program, and to get a response from parents that $6,000 a month is "outrageous." Others may complain that programs and schools make "a ton of money." Not true. Consider this example: We have worked with programs and schools that charged $6,000 a month. One such program would require at least a census of 60 to meet their basic costs with no profit until there was a census of 61 and upwards. Sounds good, but a large graduation might reduce their census overnight to 50 enrollees, creating a loss of over $60,000 a month until they are able to build back up to profitability. A prudent school or program would reduce costs by cutting the least harmful losses in staff and other expenses. We find the most painful cut is to layoff staff. Layoffs cause rumors about the stability of programs, making placements more complicated. The solid programs are able to make the adjustment at a lower census without damaging the quality of care. We pay a lot of attention to those programs that are able to manage fluctuations in an uncertain economy.

Those programs that have the greatest demand operate with the best margin possible. They often are the ones who have solid reputations and have ample room for error or census flexibility. They also have directors who have mastered downturns in their business and know how to manage their revenue and expenses on a daily basis. The competition is fierce and perhaps only the strong will remain standing.

Our consultants pay attention to the programs throughout the country, looking for facts and trends. In 2009, at least 40 programs/schools closed. Most of these closures were due to the economic down-turn. Some closed due to pressure from licensing or accreditation violations, but most closed due to the inability to compete in the changing market place. Some simply disappeared with no word of why.

There have also been twelve new programs that were developed in 2009. A few brave souls started new wilderness programs, increasing the competition in the field. The new programs and services were mostly substance abuse programs or transition substance abuse services. We welcome the substance abuse programs. With nearly all special purpose programs and schools enrolling youth who have substance abuse issues, there is a need for more sophisticated substance abuse treatments and services.

Transition programs have the potential to help those families who are choosing to work with their child at home and in the community. A trend is for these programs to provide services that may help keep the child at home, before or after, out-of-home treatment. The private sector is working very hard to be successful in these endeavors. We applaud them and look forward to seeing how the private sector can achieve success.

The Parent Choice Schools and Programs are making painful decisions. Consultants are working harder to be more accurate in their recommendations, psychologists are paying attention to their cost, our programs and schools of today are exploring adjustments in costs, and all have to make adjustments to the down-turn in the economy. However, the best, most creative and well funded will survive and thrive.

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