Editor’s note: This story has been updated to include information about a special meeting scheduled for Thursday, Jan. 17.

A year after Western Highlands Network became one of the first mental health groups in the state to convert to a managed care organization, the organization is in the process of reorganizing again and hiring new leadership.

The agency’s board of directors interviewed three finalists for the CEO post Friday. Mitchell County Manager and Board Chairman Charles Vines said the board plans to call a special meeting later this month and to make a decision on the new CEO at that time. The board is also in the process of advertising and interviewing for a new chief financial officer.

The Western Highlands board will hold a special meeting at 9:30 a.m. on Thursday, Jan. 17, to consider CEO finalists. The meeting will be held in room 312 of the administrative offices, located at 356 Biltmore Ave., in Asheville.

This comes after the organization was at the verge of being taken over by the state after a budget shortfall reaching $4.5 million was revealed last July.

State mental health officials met with the Western Highlands board to discuss how to address the budget gap and how the organization could meet state expectations for providing mental health, substance abuse, and developmental disability services in Buncombe, Henderson, Madison, Mitchell, Polk, Rutherford, Transylvania and Yancey counties.

The agency serves thousands of people across the region. According to a recent report [PDF] for June 2012, it served more than 7,000 clients in the eight-county area.

When the agency’s board learned that the chief executive and financial officers knew about the budget shortfall but didn’t notify board members, CEO Arthur Carder Jr. was fired and the CFO later resigned.

The board appointed Charles Schoenheit, the chief operating officer for Western Highlands Network, to serve as interim CEO while a search began to replace Carder.

Last September, leaders also hired the Massachusetts-based Mary Thornton & Associates consulting firm to  concentrate on the financials and recommendations made last year by Mercer Government Human Services Consulting, which was asked to perform a financial and related review of Western Highlands by the state’s Division of Medical Assistance.

Mercer’s recommendations included improving reporting by WHN staff to identify potential risk factors and areas of opportunity and weekly and monthly monitoring of finances, along with several other recommendations related to services and claims. See the report at the end of this post.

The consulting group has not completed its report, Vines said. He said the agency’s staff and board have worked diligently to address the recommendations made by Mercer, but, most importantly, the budget gap has been corrected.

In fact, he said he expects a budget surplus through the end of the fiscal year

The agency has implemented a hiring freeze, with the exception of the CEO and CFO positions, and used its fund balance to help cover the shortfall, Vines said. As of Jan. 1, Western Highlands also has received an increase in Medicaid dollars, which is based on the number of clients the organization serves per month.

“We’re in the black quicker than I thought we would be,” Vines said. “The increase in Medicaid reimbursement has made a tremendous difference. If the number of clients increases, that increases what Western Highlands has to do, but the Medicaid dollars are based on that, so they will increase along with the number of clients.”

The next step will be to hire the CEO and CFO, Vines said.

“After that is done, we can begin looking at reorganization of the organization to better meet what the state reform principals suggest,” he said.

He said the reorganization will include looking at where the organization may be overstaffed or understaffed and that the agency hires people with the right experience in managed care.

Vines said that now that the budget problems have been addressed, he is confident that Western Highlands will not face those same problems again.

“We’re on the right track,” he said, “and we’re beginning to pull ourselves together.”

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Peggy Manning is a contributing reporter for Carolina Public Press. Contact her at

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