Hazelden CEO looks to navigate a merger and a changing market

hazelden-addiction-drugs-alcoholLooking out over a grassy lot in St. Paul’s West Seventh neighborhood, Mark Mishek can see much more than the Mississippi River Valley off in the distance.

Since 2008, Mishek has been chief executive of Hazelden Foundation, a Minnesota nonprofit addiction-treatment provider that for decades has drawn patients from across the country to its Center City campus.

Next summer, Hazelden expects to begin transforming this grassy slope into a $25 million outpatient center that will augment its existing facility in the West Seventh area.

Looking over the site, Mishek easily transitions from describing the recovery industry to regulatory trends behind the proposed center’s development to historical tidbits that only a fourth-generation St. Paul resident might know.

“If you go to the St. Paul Cathedral, they have a bronze plaque that lists the contractors (who built the structure), and the roofing contract went to Thomas Finn Roofing,” Mishek said, pointing to the site. “Well, this is where Thomas Finn Roofing was.”

Mishek, 62, can tell many stories about the history of the Twin Cities, but the tales he knows best involve the evolution of its health care system.

He played a role in creating Minneapolis-based Allina Health System, which is one of the Twin Cities’ largest networks of hospitals and clinics, and served five years as CEO of United Hospital in St. Paul. Now, through a recently announced merger with California-based Betty Ford Center, Mishek is helping expand Hazelden — a center that he credits with helping himself and his father recover from addiction.

So Mishek truly does speak from experience.

“What Hazelden did for me was, it gave me my family of origin back,” Mishek said. “It gave me my dad back. It let me live in a family that was cohesive and loving, versus chaotic and out-of-control. … If you haven’t lived in an alcoholic family, you don’t know what it’s like — it’s really bad; it’s awful.”

He’s giving back by trying to help Hazelden transition to a changing market where more patients are treated at outpatient centers close to home, rather than through longer stays at residential centers. The deal with the Betty Ford Center, which is based in the California desert, is both a catalyst for and a response to that changing market.

Because Hazelden faces challenges.


Residential addiction service providers have catered to patients who, in some cases, would travel from far away for an intensive 28-day stay in Center City, or one of Hazelden’s residential treatment centers in Plymouth, Minn.; Oregon; or Florida.

But times are changing. Patients want care close to home. The federal government is pushing new financial arrangements that encourage independent treatment providers to partner with one another as well as with insurance companies.

Some addiction specialists question the necessity of residential care.

“There will always be a role for residential treatment in addiction care, but it’s diminishing in importance,” said Dr. David Frenz, medical director of the HealthEast mental health and addiction center at St. Joseph’s Hospital in St. Paul. “The services that they offer were developed out of necessity 50 or 70 years ago.”

“I feel their pain,” Frenz said of Hazelden. “They have a brand that they’ve developed over many decades. How do you morph that brand to keep it contemporary … without alienating your supporters?”

Mishek believes that with more outpatient clinics, Hazelden can flourish while expanding its corporate footprint. It’s not unlike what independent acute-care hospitals had to do in developing networks that include multiple medical centers as well as outpatient clinics.

“The days of the free-standing residential addiction-treatment provider are numbered,” he said. “Generally speaking, residential care is not covered that well by health insurance. … It’s important that you’re offering the full level of services. Not every patient needs residential care, and not every patient can make it with outpatient.”


Mishek’s great-grandfather emigrated from what’s now the Czech Republic to St. Paul’s West Seventh neighborhood in the 19th century.

He was a zither maker but found there wasn’t a market for the old-world musical instrument even in St. Paul’s strong Bohemian community. So, he found work shoveling coal into the furnaces of the James J. Hill mansion on Crocus Hill.

Mishek’s grandfather worked as a regulator for the Interstate Commerce Commission before taking a job with Hill’s Great Northern Railway. The family moved up from the West Seventh neighborhood to a house near the corner of Ashland Avenue and Syndicate Street.

Mishek’s father was a family physician who practiced in the West Seventh neighborhood. Born in Merriam Park, Mishek attended St. Thomas Academy and then the University of Minnesota, where he earned undergraduate and law school degrees.

It was during Mishek’s college years that his father spent 28 days at Hazelden in Center City to deal with alcohol addiction. It was the fall of 1971, and the treatment “was a gift to our family that we celebrate to this day,” Mishek said

Mishek himself credits a recovery group with helping him get sober about two decades ago, although part of his recovery involved a weeklong visit to Hazelden.

“Just about everybody in my life was in rebellion,” Mishek said. “My spouse, my teenagers, the employees who worked with me … everyone agreed: ‘You know, you might want to go have this checked out.’ That’s the way it always starts — you don’t say, ‘You’re an alcoholic! You’re an addict!’ You say, ‘You know what, you probably need to have this checked out.’ “

An assessment showed that Mishek had a problem. He started attending group meetings, and found he had to keep attending to cope with cravings to drink again.

There was a time, Mishek said, when he found it awkward to talk publicly about his struggles.

“I feel, in my position, by being out there, hopefully I can help other people come forward and either get the help that they need or themselves talk about it to help others,” he said. “I’ve been sober for 18 years, and I’m proud of that fact.”


Hazelden is a bit like the Mayo Clinic in Rochester in being a Minnesota health care provider that’s known around the nation. Founded in Center City in 1949, Hazelden became synonymous in the 1960s with the “Minnesota Model” for treating addiction.

Daniel Anderson, a clinical psychologist, developed the approach at Willmar State Hospital and brought it to Hazelden, which had been established previously as “a sanatorium for curable alcoholics of the professional class,” according to the nonprofit’s website.

Facility doors were unlocked on Anderson’s theory that addicts could recover only if they wanted to. A new group of professionals called addiction counselors were given control over treatment teams that helped patients get sober. Counselors set the stage for 12-step programs that would help patients stay sober over the long run with help from Alcoholics Anonymous.

During the mid-1960s, the bed count at Hazelden in Center City jumped from 26 to 157. In time, the treatment center started attracting celebrity patients who helped build its reputation. Hazelden started publishing books in 1954, and went on to stake a claim to the burgeoning market for self-help books in the 1980s with “Each Day a New Beginning” in 1982 and “Codependent No More” in 1986.

“(Anderson) brought the science of psychology and married it with the tenets of AA and the … 12-step method to really develop a clinical model you could write down, you could manualize it and you could repeat it,” Mishek said. “It was something that wasn’t vague, and wasn’t subject to a lot of interpretation.”

As first lady in the 1970s, Betty Ford publicly battled cancer and alcoholism. Before she started her addiction treatment center in 1982, the wife of former President Gerald Ford visited Minnesota and consulted Anderson. During the 12-month period ending June 2012, the Betty Ford Center, based in Rancho Mirage, Calif., had income of just over $1 million on revenue of $40.2 million.

During 2012, Hazelden had operating income of $6.9 million on $133.7 million in revenue. About $105 million came from patient service revenue, while Hazelden’s publishing business generated sales of $21.7 million.

Hazelden employs 1,316 people, with about 75 percent working in Minnesota. The Betty Ford Center has about 300 employees.

“With Betty Ford now, and with the stronger balance sheet we’re going to have, we’re going to be able to fund more outpatient clinics, more locations, so that when an Aetna comes to us and wants us to be a center of excellence, we’ll have locations in convenient places around the country,” Mishek said.


Mishek has a long track record in setting strategy for medical centers.

After graduating from the U law school, he worked for a law firm where he developed an understanding of health care law on the side. Ultimately, Mishek was hired as an in-house attorney for a now-defunct hospital in Minneapolis called Metropolitan Medical Center. During the 1980s, that hospital merged with United Hospital in St. Paul to create a health system called HealthOne, which went on to include Mount Sinai Hospital in Minneapolis.

“Mark Mishek was the general counsel for all of this,” recalled Dr. Daniel Foley, who retired at the end of 2012 after 25 years as the medical director and vice president of medical affairs at United Hospital.

HealthOne then merged with a group called HealthCentral, which included Unity Hospital in Fridley and Mercy Hospital in Coon Rapids. In time, Abbott Northwestern Hospital in Minneapolis joined the network, which became known as HealthSpan. In 1993, the hospital network merged with the nonprofit Medica health insurance company in a deal that created Allina. In some ways, the Allina model was a precursor to the insurer-provider co-branding currently happening in the Twin Cities with HealthPartners and other organizations. But it drew scrutiny at the time from then-state Attorney General Mike Hatch.

In 2001, Hatch accused Allina executives of spending millions on items such as golf trips, spas and image consultants, and asked the nonprofit to hand over thousands of financial documents. Hatch said his review found questionable multimillion-dollar life insurance policies as well as payment of executive bonuses even when financial goals weren’t met.

Ultimately, Hatch forced a split that separated Allina’s hospitals from Medica, which had a business relationship with the growing for-profit insurance company United Healthcare. There were big changes in the Allina leadership with the corporate divorce, but Mishek survived.

“We came in, and it was highly contentious — a lot of table-pounding on both sides,” Hatch said. “Mark, to his credit, maintained … credibility and decorum, which was very important. That’s one of the reasons that he survived. They needed someone like that to steady the ship.”

Foley, the United Hospital medical director, said of the chapter involving Hatch: “There is so much about the integrity of Mark Mishek that comes through in that deal. … That whole thing was very difficult for Mark because he had to tell (Allina leadership) what the law said, and he had to stick with that. Those of us who were around all of this know that’s what he did, and we were very afraid that that would cost him.

“It didn’t,” Foley added. “He survived. The others did not.”


As Allina and its predecessor organizations grew over the years, Mishek always kept United Hospital as a legal client within the organization because of his St. Paul roots. So, following the Allina-Medica split, Mishek was asked to become United’s chief executive officer.

“I didn’t know what I didn’t know and said, ‘Yeah, I can do that,’ ” Mishek said.

Mishek and Foley worked together to create a network of outpatient clinics in the east metro that complemented hospital operations in St. Paul. That background makes the challenges facing Hazelden seem somewhat familiar.

In the coming years, Hazelden expects to put more money toward bricks and mortar in the drive to build more outpatient facilities. Betty Ford Center draws many patients from Arizona and Texas, so the merged organization could open outpatient centers in those states, Mishek said.

But for now, the clearest example of the outpatient push comes in the West Seventh neighborhood that Mishek’s great-grandfather called home in the 19th century. For decades, Hazelden operated a halfway house in St. Paul in the old Bannholzer Van Hoven family mansion at 680 Stewart Ave.

Over the years, the campus grew to include a new one-story building that will be replaced by the construction project scheduled for next year. Currently, Hazelden in St. Paul provides outpatient substance-abuse treatment, residential intermediate care and structured sober housing.

“Outpatient care has really become a huge growth area for Hazelden,” Mishek said while sitting in a second-floor conference room in the mansion. “There’s no better place to show that than here.” Article Link…


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