Penikese, a wilderness rehabilitation facility on Penikese Island for young men with substance abuse disorders, opened in August with high expectations, but closed suddenly last week due to lack of funding.
The program was a co-venture between Springfield-based Children’s Study Home and the Penikese School board of directors. The facility was intended to house up to 12 young men between the ages of 18 and 24, who would spend anywhere from 90 to 180 days on the 75-acre Island, where they would embrace the wilderness and learn mindfulness as they built the foundation for their recovery.
Over the course of six months, only six patients were treated at Penikese. All were on full scholarship. All had been placed into inpatient rehab by court order.
The Times spoke with Jennifer Smith, director of children and families at Children’s Study Home, and Matthew Sutherland, chairman of the Penikese board of directors.
As is often the case in a failed relationship, the two sides had very different takes on the situation.
Ms. Smith said the facility closed because the funding promised by the Penikese board never materialized. Mr. Sutherland said funding had been provided, but Children’s Study Home did not hold up its end of the bargain by producing a revenue model that included funding other than Penikese donations.
Financial support missing
“From the start, the agreement [with the Penikese board] had been that they would do a tremendous amount of fundraising to support the first six to 12 months of operation,” Ms. Smith told The Times. “We didn’t get anything from the Penikese board. The fundraising was never done. After six months, we had invested a lot of money and decided that was enough. In the month of December, we had to set a benchmark for the fundraising piece, and that just didn’t happen. So by January, we’d reached our tolerance level.”
Ms. Smith said Children’s Study Home was expecting the Penikese board to contribute about $75,000 a month, per their agreement. She estimated that direct and indirect costs paid by Children’s Study Home totaled roughly $250,000, which included paying a complete staff — three shifts of four people per day, including two recovery counselors and a clinician. In addition, there were a nurse, clinical director, director of operations, and a consulting psychiatrist.
Ms. Smith said that marketing for Penikese had been minimal.
“The heavy-duty marketing was going to come later; the fundraising was supposed to be ongoing,” she said. “We ended up funding six clients at $500 a day.”
Ms. Smith said she still believes the wilderness-based rehab model has great promise. “If we can take the special elements from that program, and create a rural program, possibly in the Berkshires, then we’d like to do that,” she said. “We’re very sad Penikese didn’t work. We loved that island and that program. I think that’s why we stayed in as long as we did.”
Business model missing
Matthew Sutherland contradicted Ms. Smith’s statement that the Penikese board provided no financial support.
“The Penikese board spent just north of $300,000 for the program, on the facilities, on food, on any number of items.” he said. “In total, both groups spent a tremendous amount, over half a million dollars, but with a $1.3 million budget, that’s not going to get you there. Our goal all along had been between to raise between $200,000 and $300,000 dollars, and we exceeded that in six months. We would have loved to have raised the entire budget, but at the end of the day, it’s probably not best for the donors or for the long-term health of the program.”
Mr. Sutherland said Children’s Study Home had failed to provide a revenue model that included billing insurance companies for substance abuse treatment. “That’s why we started talking to other groups several months ago,” he said. “We could see the writing on the wall. We really need to have a solid, proven business model in place. There was no insurance billing. There was no private pay. There were no referrals, there was no marketing budget. Without that, it’s hard to run a program, especially one like Penikese.”
Mr. Sutherland said it was never the intention of the Penikese board to take an active role in managing the program. “They’re a wonderful group of people from all walks of life. But I don’t believe any of us have experience in insurance billing. Penikese as an entity would not have the experience to run a program. That’s why we needed to outsource it to a third party.”
Mr. Sutherland believes Penikese will be resurrected soon.
“We’re in negotiations with two groups that specialize in substance abuse treatment,” he said. “They specialize in the billing of it and have created successful revenue models for these kinds of programs. The board is optimistic that we can forge a relationship with one of those entities in the near future, hopefully in one to three months. We met with the staff from the [Penikese] program this past Monday, and many of them want to stay, so we want to move as quickly as we can to keep them.”
Penikese was a reincarnation of the Penikese Island School, which was built in 1973 by retired Marine Major George Cadwalader as a wilderness program for “delinquent young men.” It was shuttered in 2011, then reopened as a rehabilitation facility under the management a of New Hampshire–based nonprofit, Becket Family of Services, then shuttered again in November 2014, also due to financial difficulties.
Mr. Sutherland said he still believes Penikese can work as a rehab facility if the board can find the right partner.
“At the end of the day, if one of the groups we’re talking to now thinks a program can be run on the island and essentially break even, and can utilize the Penikese donor base to compliment it, not fully fund it, then I think we’ll be successful,” he said. “We’re going to push as hard as we can. Given the scope of the opiate crisis in Massachusetts, and on the Cape and Islands, now is not the time to be closing beds.”