Frustrated by Mecklenburg County's refusal to give prompt approval to its plans for a new psychiatric hospital, Carolinas HealthCare System has threatened to build the hospital in another county instead.

"...Our desire is to add these psychiatric beds in Mecklenburg County," hospital system CEO Michael Tarwater wrote in a letter to county commissioners this week. "However, if the (county) continues to withhold approval, we will need to seek other options including the building of the beds in another county..."

Earlier this year, CHS presented county staffers with plans for a 44-bed hospital in Huntersville to meet the growing need for psychiatric care. An Observer investigation last year showed that soaring demand on Mecklenburg's mental health system has made it harder for dangerously ill patients to get hospital beds.

But the hospital system's proposal met with a lukewarm reception from county officials, who questioned whether a new hospital could wind up costing taxpayers more money - even if CHS picks up construction costs and operating losses as it promised.

Some county officials questioned whether a new hospital in Huntersville would draw paying patients away from CMC-Randolph, a county psychiatric hospital that treats thousands of people each year. That could increase the need for government subsidies, which come mostly from the county.

CHS has previously pledged that it would take steps to ensure the new hospital doesn't hurt the county financially. Now, by announcing that it may be forced to build elsewhere, the hospital system appears to be playing tougher.

But some commissioners said they don't want the county pushed into a hasty decision. Democrat Harold Cogdell said the county manager's office shouldn't be pressured "to move the negotiations along without knowing all the relevant facts."

Some top Mecklenburg officials say they believe the county should look for ways to spend less on psychiatric treatment. The county spends more than $40million of its $1.35billion annual budget on mental health. That's far more than any other N.C. county.

About $16million of that goes to CMC-Randolph, helping to pay for the hospitalization of patients who lack health insurance or the means to pay.

Mecklenburg County owns the Billingsley Road hospital but contracts with CHS to run it. No other N.C. county owns a psychiatric hospital.

Mecklenburg General Manager Michelle Lancaster told the Observer that county officials should examine that arrangement to determine whether it needs to change.

"It's worth a conversation to figure out if this really is a business the county should be in," Lancaster said. "Is this what the board of county commissioners wants to allocate a significant amount of money to?"

Lancaster said she doesn't expect such questions to be resolved before next year's budget is finalized next month. But she would like county officials to spend much of the next year examining the issue, possibly with the help of a consultant or task force.

Among the options: letting CHS run the existing psychiatric hospital on its own without any county funding.

Jail them or help them?

Commissioner Bill James questions why the county is paying so much to run a psychiatric hospital.

"We're in a business we have no business being in," said James, a Republican. "We've gotten into a business we cannot afford."

James called CHS' bottom line "humongous" and said the system could easily operate the existing psychiatric hospital without county money. CHS' net income was $428 million last year.

But fellow Republican Neil Cooksey said the hospital system might not be willing to shoulder the full cost. "Then we have people going without care at that point," Cooksey said. Others, including commissioners Chair Jennifer Roberts, said that spending government money on psychiatric care is a wise investment. It allows the county to reduce other expenses - such as jail spending, she said.

"The truth is, people who aren't treated wind up costing everybody more," said Roberts, a Democrat.

Advocates for the mentally ill say that county funding cutbacks for psychiatric care could be devastating, because it's unlikely other branches of government - or CHS - would make up for the lost money.

"I don't think it would be moral to cut the funding any more. Hell, we're giving minimal service right now," said David Rains, a member and former president of the Charlotte chapter of the National Alliance on Mental Illness. "...If the cuts go through, we'll be back to jailing the mentally ill instead of helping them."

Over the past decade, the number of community psychiatric beds across the state has declined dramatically.

That's one reason top state officials have supported the CHS proposal for a new hospital in Huntersville. CHS is seeking to transfer 44 beds from Broughton Hospital in Morganton to its new facility - a plan that requires the approval of both the state and county officials who oversee mental health.

Lanier Cansler, secretary of the N.C. Department of Health and Human Services, gave his blessing to the plan on March 10. But Mecklenburg officials have yet to approve it - a fact that is testing the county's longstanding relationship with CHS.

Tarwater contended the county appeared to be withholding its approval of the needed beds in an effort to change its contract with CHS. In his letter, he called that an inappropriate "conflict of interest."

Said Cooksey: "I haven't seen anything to indicate staff is doing anything contrary to the needs of the people of Mecklenburg County."

Lean funding proved costly

Mecklenburg County opened its first outpatient mental health center in 1970. It was a time when many clinicians had concluded that most who suffered from mental illness could and should be treated closer to home, not simply warehoused in hospitals far from their families and friends.

County residents soon signed off on a proposal to expand and improve local mental health care. In 1972, county voters overwhelmingly approved a $2.1million bond referendum for a 125-bed residential facility in southeast Charlotte. That hospital, now known as CMC-Randolph, was intended to take pressure off Broughton, the overcrowded state psychiatric facility in Morganton.

While the county paid the construction costs, the state was expected to provide much of the money needed to operate the hospital.

But many of the state dollars never came. The result: Many of the anticipated beds didn't materialize.

Concerned about financial problems, thin staffing and poor morale, county commissioners in 1986 turned the psychiatric hospital over to the managers of Carolinas Medical Center.

Since then, as population grew and beds in state and private psychiatric facilities closed, demand for CMC-Randolph's services has surged. The hospital had nearly 17,000 emergency room visits in 2009 - roughly six times the number in 1987.

The Observer's 2010 investigation found that CMC-Randolph suffers from perennial overcrowding, and that some patients who threaten themselves or others are simply given medicine and sent home - occasionally with disastrous results.

Kenny Chapman, a 33-year-old package handler, twice sought help at the 66-bed hospital in early 2010. The first time, in February, he told staff he wanted to harm his wife. The second time, he said he wanted to kill her.

Both times, records show, Chapman eventually told clinicians he wouldn't act on his threats - and doctors sent him home with prescriptions for medication.

On March 16, 2010, just hours after Chapman left the hospital, police say he made good on his threat - killing his wife and two children. He forced two surviving children to carry on for two weeks as though nothing had occurred.

Staff Writer Karen Garloch contributed.