Centers for troubled teens sold
Brown Schools, under scrutiny for patient
deaths, says it plans to focus on education
By Jonathan Osborne and Mike Ward
Friday, February 14, 2003
The Brown Schools, the Tennessee-based company
whose Texas centers for troubled teens have been cited by
authorities in the deaths of several youths, announced Thursday that
it will sell its behavioral health-care business for $63 million.
Texas centers in the deal include the Oaks
Treatment Center in Austin, the San Marcos Treatment Center and the
Laurel Ridge Hospital in San Antonio. All treat emotionally and
behaviorally troubled children and adolescents.
In the sale, three residential treatment
centers in Virginia, Colorado and Oklahoma will be turned over to
Psychiatric Solutions Inc., a publicly traded company also based in
"We are focusing our business solely on the
educational side, and this will allow us to benefit from a more
focused business strategy," said Marguerite Sallee, the company's
president and chief executive.
Currently, Brown operates 13 public and private
education schools and programs, including eight boarding schools in
California, Idaho and Vermont, and five public education programs in
partnership with local schools and juvenile justice systems in
Florida and Texas.
Of those programs in Texas, two are in Houston
and one is in Dallas.
None is included in the sale.
The Brown Schools, one of the oldest providers
of behavioral health care to youths, was founded in 1940 in San
Marcos. Until a few years ago, the company was headquartered in
In the past two decades, some of its operations
have come under scrutiny by various states and law enforcement
agencies because of restraint-related deaths and licensing and human
Most recently, 17-year-old Chase Moody of
Richardson died in October after being restrained at the company's
now-closed Hill Country wilderness camp in Mason County. The
incident is the subject of a criminal investigation.
Sallee said more than two-thirds of the 1,000
people employed in the company's Texas facilities will transfer with
Joey Jacobs, president and chief executive of
Psychiatric Solutions, said the centers are a natural fit for his
"There is a tremendous need for these services,
and this is a business that we are focusing on," Jacobs said. "They
fit our family well, and this (purchase) makes us a major player in
the behavioral health-care business."
The deal also will significantly increase
Psychiatric Solutions' presence in Austin and Texas. In November,
the company purchased the Brown Schools' Texas NeuroRehab Center in
Austin, and earlier had acquired Brown's Cypress Creek and West Oaks
hospitals in Houston.
Since 1988, five youths, including Moody, have
died after being restrained while in the Brown Schools' care. Two of
the deaths occurred at the Laurel Ridge facility in San Antonio. The
other two occurred at facilities that have since been sold by the
In addition, the Brown Schools of Virginia
facility has been cited more than 100 times for human rights and
licensing violations since it opened in January 2001.
Some of the accusations were that staff members
used unnecessary physical restraints, acted physically aggressive,
punished residents by refusing to let them use the bathroom and
injected residents with medication to control them before exhausting
other de-escalation options. In one case, a staff member was accused
of grabbing a boy by the neck, throwing him to the ground and
threatening to kill him.
The Brown Schools' license to operate the
facility in Virginia was nearly revoked in 2002. The company has
since cleaned up its operation there for the most part, state
officials said. All three Texas facilities being sold also have been
cited for licensing violations, which have included failure to
properly document incidents, physical and sexual abuse, and the use
of improper physical restraints.
Sallee said that neither the recent death of
Moody, nor the problems in the past had any bearing on her decision
to sell the centers.
Brown Schools officials decided last summer to
concentrate on educational programs, Sallee said, and had been
seeking buyers since then. Six other offers were considered besides
that of Psychiatric Solutions, she said.
Psychiatric Solutions will have to apply for a
new license to operate each Texas facility.
Last year, the six Brown School centers
involved in the sale produced combined revenues of $76 million,
Psychiatric Solutions officials said.
A company spokesman said the sale is scheduled
to close by March 31. In addition to owning five hospitals — all
acquired within the past 18 months — the company also manages 48
units in acute care hospitals in several states.