Michigan residential treatment providers warn of collapsing capacity, rising assaults and property damage

At a joint oversight hearing of the House Oversight Subcommittee on Public Health and Food Security and the Children’s Welfare Subcommittee, leaders of three Michigan residential treatment providers told lawmakers that residential capacity has fallen sharply since 2020 and that assaults, property damage and staff injuries have risen sharply, straining the child welfare system.

The testimony matters because fewer available and stable residential beds for children with severe trauma can increase waits for treatment, shift high‑need youth into foster care or the community without adequate services, and raise costs for providers and local governments, witnesses said.

Stacy Bowens, executive director of Spectrum Child and Family Services, said Spectrum operates multiple residential programs and that “we are the last remaining private provider of secure residential treatment for boys in the State of Michigan.” She told the committees that Michigan’s system has fewer beds now than earlier in the decade, leaving children with higher levels of need concentrated in the remaining programs.

Dan Gowdy, president and CEO of Wedgwood Christian Services, presented data showing a drop from about 1,200 youth in residential beds in December 2020 to roughly 500 two years later, and 423 contracted beds for the state at the time of his testimony. He said the Residential Collaboration Technical Assistance Unit (RCTAU), a department tool that scores risk for childcare institutions, had a median score of 4.4 before a new contract took effect and a median of 10.25 by April 2025, an increase he described as a “133% increase.” Gowdy added, “Behind every number is a child, and a family that that child represents.”

Kathy Prudhom, president of Eagle Village, said her organization has reduced licensed capacity from pre‑COVID levels (84 beds) to improve staffing sustainability and program quality; she described rural and urban programs and said staffing shortages and repeated aggressive behavior by residents have made care more difficult.

Providers testified to steep increases in incidents and costs at their agencies. Wedgwood’s incident tracker, as described at the hearing, showed year‑over‑year increases: assaults +64%, suicide precautions +54%, self‑injury +107%, property damage +133%, hospital interventions +451% and police contacts +457%. Spectrum reported staff injuries rising from 15 in 2023 (11 caused by youth) to 38 in 2024 (32 caused by youth), and 21 staff injuries in the first quarter of 2025. Property damage reported included roughly $11,000 in damages at a small group home in 2024 and reported facility damages of $328,000 in 2023 and $663,000 in 2024 at a juvenile justice facility.

Witnesses tied part of the stress to three policy and operational changes: (1) emergency licensing rules adopted after a prior incident that limit physical intervention for property damage unless there is a life‑threatening harm threshold, (2) the revised child protection law language around “threatened harm,” which providers said has been interpreted in ways that can lead to substantiations of staff even when staff and investigators agree intervention was necessary, and (3) a new state placement contract and placement process that providers said requires them to accept referrals they consider mismatched or face a financial penalty.

On contract penalties, providers described a service‑unit financial rule that can impose a $101 per day charge for a unit if a provider declines a placement; one witness illustrated that declining a placement for a six‑bed unit could amount to about $18,000 for a month, creating a financial disincentive to refuse a youth they judge they cannot safely serve.

Lawmakers asked about operational consequences and options. Representatives and the chair pressed witnesses on where displaced youth are placed; providers said many are pushed into foster care, day treatment or into communities without adequate services, and that foster care capacity is under strain. Witnesses proposed a multi‑year capacity‑building plan focused on many small, highly specialized six‑bed residential settings, limiting high‑acuity placements per milieu, and investing in training and onboarding (witnesses said competency‑based onboarding can be six months).

Providers also urged legislative and regulatory changes: clarify the “threatened harm” language in the child protection statute, revise emergency licensing rules to allow proportionate intervention for property damage before situations escalate, extend protections such as “Lisa’s Law” (discussed at the hearing) to private residential staff, and create a stable appeals path in the placement process so providers are not forced into placements they consider unsafe.

Committee members acknowledged the testimony and said the issue is being watched by budget leadership; the session ended after several procedural motions.

The testimony presented was discussion and requests for legislative or policy action; no new statutory change or formal direction to the department was recorded during the hearing.