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Sometimes size really does matter.

That’s the message David Guth, CEO of Centerstone, is spreading about the effort to most effectively and efficiently assist behavioral health patients.

With Centerstone already the largest community-based mental health provider in the nation, Guth said that his company isn’t big enough to achieve all its goals for the clients it serves.

“Community mental health has been limited by the paradigm of its historic size,” he said. “Think about it … what if the largest hospital in the country was no bigger than 100 beds?”

Centerstone, which has served clients for the past 50 years, underwent significant growth a decade ago when five community health centers merged. An academic center was later added, and since then, the company has continued to expand. Even with more than 1,000 employees and $70 million in annual gross revenues, Guth said the not-for-profit organization is “too small.”

“We cannot take comfort in the fact that we’re one of the largest community mental health providers in the country,” he noted. “The entire industry is undersized given today’s technology and treatment environment.”

Beginning this month, however, Centerstone and two partners in Indiana are taking steps to create a larger practice model that will support the types of training, technology and array of services envisioned by the leadership.

With approval by the Tennessee Attorney General and the unanimous agreement to join forces by the boards of Centerstone, the Center for Behavioral Health (CBH) and Quinco Behavioral Health Systems, the expanded company launched under the banner of Centerstone of America on May 1. Merger talks between CBH and Quinco, both based in Indiana, were already under way when Centerstone entered the picture by approaching Dennis (Denny) Morrison, PhD, the chief executive at CBH, to ask him to consider leading the new Centerstone Research Institute.

In the fall of 2007, leadership teams from both CBH and Quinco came to Nashville to discuss Centerstone’s past merger experiences and strategic vision, while working through their own merger plans. The result was that the three companies decided their common mission and goals could best be served by operating under one umbrella.

“It all moved very quickly from there for the three-way merger,” said Guth. He added that while mergers are often thought of as a solution for companies facing problems, this merger is born of shared vision and a belief that the larger system will ultimately enhance patient care.

“Here, healthy, successful organizations are coming together,” he said, adding that the boards share “a commitment to absolute excellence in care given.”

Guth continued, “To be excellent tomorrow requires a different infrastructure than what was sufficient yesterday. To actually keep all these populations (which are served) in clear focus and to keep all these services operating at top level, it requires an organization that has size and resources.”

The pre-merger leaders of the three companies will play key roles in the combined company. Guth has been named CEO of the parent organization, Centerstone America, which will remain headquartered in Nashville. As originally discussed, Morrison (former CBH CEO) has been tapped to lead research efforts. Robert Williams, PhD, the former CEO at Quinco, will assume the role of CEO for Centerstone Indiana, and Centerstone’s current president Robert Vero, EdD, will become CEO of Centerstone Tennessee.

“This merger is very exciting for Quinco, CBH, Centerstone and our clients,” said Williams. “As one organization, we will have the ability to combine our collective experiences to advance behavioral healthcare — in each of the regions we serve and nationally.”

Guth noted that the new, larger company has already had the opportunity to examine best practices, differences in approaches and outcomes. He said that the expansion puts the infrastructure in place to “cross-fertilize program development” and quickly implement changes across the geographic footprint.

In its new incarnation, Centerstone America has more than 120 locations covering 33 counties in Indiana and Tennessee. The company employs more than 1,500 people serving approximately 70,000 clients a year with a combined annual gross revenue of $110 million.

With the company still not to the optimal size, Guth said he would ultimately like the company to be in four states and nearly twice the size as Centerstone America on May 1.

“It’s not about our being the biggest, it’s about being correctly sized. My fervent hope is that when we turn around 10 years from now, we’re not the largest provider of community mental health services,” Guth concluded. Instead, he added, his hope is that other providers will follow Centerstone’s lead to leverage size in an effort to optimize research, technology, service lines and outcomes.



May 2008

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