Menninger Calls Off Texas Move, Looks for New Partner

The marriage is off. After months of negotiation Menninger has decided that its future does not lie in a much-ballyhooed union with Baylor College of Medicine and Methodist Health Care System.

The merger agreement, which was announced last fall, would have seen the prestigious psychiatric hospital leave its Topeka, Kan., home of 76 years and relocate to Houston where it would form a new alliance with the medical school and hospital system (Psychiatric News, November 2, 2000).

The proposed move caused considerable consternation in Topeka, where Menninger is a major employer and source of pride, and in psychiatric circles throughout the U.S., particularly among the hundreds of psychiatrists who received their training at Menninger.

Menninger and its Houston partners had planned to establish a “national center” for state-of-the-art psychiatric care and a research institute to conduct brain and behavioral research. As part of the partnership agreement Baylor’s psychiatry department was eventually to be renamed the Menninger department of psychiatry. Menninger’s psychiatry residency program was to move to Houston as well.

In announcing its planned affiliation last September, Menninger officials indicated that their move was motivated by financial concerns, which they attributed to the changing U.S. health care reimbursement climate. The hospital has watched its income decline for several years as a result of shrinking inpatient stays, fewer patients being admitted, and a steady erosion in payments from insurance companies.

Maintaining its 242-acre campus, which has served as Menninger’s home since 1925, as well as the buildings on it has also become an increasing expensive proposition.

The income drop combined with skyrocketing operating costs forced Menninger to dip into its $100-million endowment to the tune of $12 million in 1999, and its trustees see no hope for a reversal of those trends.

Even though Menninger has laid off half of its 900 Topeka-based employees in the last year, it has not been able to return to profitability.

Menninger CEO Walter Menninger, M.D., said in a July 31 statement announcing the end of the negotiations, “Everyone involved with the three institutions worked hard, but there are some differences we have been unable to resolve. The parting is amicable. The details of the negotiations will remain confidential.”

He explained in a press conference that “There were some changes as negotiations went on in terms of money, in terms of control, and the like, most of which we were able to reach some agreement to, but I can’t be more specific” on what the snags were that led to the deal falling apart.

But for Menninger’s psychiatry residents and a couple of its leading lights, the decision to relocate to Houston has become an irreverisible one. On July 1 nine of the Menninger adult psychiatry residents and four in child psychiatry moved to Baylor. Others decided to transfer to other programs with the knowledge that the Topeka training program would be shut down.

In addition, two of Menninger’s most prominent clinicians and educators, Glen Gabbard, M.D., professor of psychoanalysis and education at the Menninger School of Psychiatry, and John Sargent, M.D., director of education and research, picked up stakes and moved to Texas, expecting it to be just a matter of time before their Menninger colleagues joined them. Gabbard is now a professor of psychiatry at Baylor, director of psychotherapy training, and director of the Baylor Clinic. Sargent has become the head of child psychiatry at Houston’s Ben Taub Hospital, one of Baylor’s teaching hospitals.

Gabbard told Psychiatric News that he is “disappointed” in the failure of the negotiations between Menninger and Baylor. “I anticipated that the rest of the clinic would be coming when I made my decision to move to Baylor.” By the time word of the negotiation failure reached him, Gabbard said he “was already ensconced” in his new position and enjoying his new work. “I decided to stay on” at Baylor, said Gabbard, who had been at Menninger for 26 years.

Walter Menninger acknowledged in his statement that his organization “had a marvelous opportunity, and it slipped through our fingers.”

He noted that Menninger will continue its Topeka operations for at least the next year while it conducts a search for a new “major medical school” partner that will allow it to relocate to a metropolitan area with a much larger population of potential patients than Topeka can offer.

“There has been no interruption in our national clinical services during the period of negotiations, and there will be no interruption in the future,” Menninger said. With no move now planned before next summer, the delay, he noted, “will allow us to assure all concerned—patients and their families and the clinicians who refer patients to us—that our services will be available to them without interruption.”

Gabbard explained that he had no information on whether his other Menninger colleagues planned to remain in Topeka and wait for news of negotiations with another potential partner. “I know many of them are frustrated after a year of waiting to move and start over,” he said.

A statement issued by Methodist’s president and CEO Peter Butler said that while the agreement was motivated by his organization’s and Baylor’s desires “to increase understanding and treatment of brain disorders,” the end of the negotiations with Menninger “does not dampen our enthusiasm for pursuing this important clinical area to serve the Houston community.”

About two weeks before Menninger announced it was calling off the negotiations with Baylor, U.S. News & World Report published its annual survey of “America’s best hospitals,” and the magazine gave Menninger Hospital the number-three ranking among hospitals providing psychiatric care. This moved the hospital up one slot from the 2000 rankings. (Massachusetts General, a Harvard Medical School teaching hospital, led the 2001 list.)

The hospital has been licensed to have 143 beds, but as of last month its directors had reduced its licensed bed capacity to 95, and there were 60 inpatients at that time, according to a report in the Topeka Capital-Journal. ▪