Legislature(2019 - 2020)CAPITOL 106
03/28/2019 03:00 PM HEALTH & SOCIAL SERVICES
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|Presentation: Alaska Children's Justice Act Task Force|
* first hearing in first committee of referral
= bill was previously heard/scheduled
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HB 86-MENTAL HEALTH HOSPITAL: CONTRACTS/BIDS 4:16:17 PM CO-CHAIR SPOHNHOLZ announced that the final order of business would be HOUSE BILL NO. 86, "An Act relating to a state-owned inpatient mental health treatment hospital; and providing for an effective date." 4:16:45 PM REPRESENTATIVE DRUMMOND moved to adopt the proposed committee substitute (CS) for HB 86, labeled 31-LS0623\U, Marx, 3/26/19, as the working draft. 4:17:04 PM CO-CHAIR SPOHNHOLZ objected for discussion. 4:17:06 PM REPRESENTATIVE ZACH FIELDS, Alaska State Legislature, stated that the proposed bill would prevent wholesale privatization of Alaska Psychiatric Institute (API), although it would not prevent partial privatization of individual services or components within API, some of which already existed. He noted that there was concern for "a rush to judgement in terms of contracting with a specific company whose record I'll get to in a little bit." He shared that public forums in Anchorage had made clear that workers at API were committed to the public mission of API and committed to their patients, although they had lacked the resources and managerial support to do their jobs safely and to provide for the safety of the residents. He declared that the purpose of proposed HB 86 was to provide for a safe environment for both residents and workers at API, which he opined "requires public management." He stated that the proposed bill would not undo the temporary contract with Wellpath, nor would it prevent privatization of individual components of services which was consistent with the consultant report on privatization directed by the Alaska State Legislature under Senate Bill 74. He presented a PowerPoint titled "CS House Bill 86," and paraphrased slide 3, titled "API: Background," which read in part: Opened in 1962 as part of Alaska Mental Health Enabling Act of 1956. 4:19:13 PM REPRESENTATIVE FIELDS moved on to slide 4, "Patient Population and Care," which read: It is a 24/7 safety net provider of inpatient psychiatric care Patients who need acute psychiatric care, Title 47-involuntary commitment Title 12-criminal/forensic patients awaiting court ordered examinations ADRD (Alzheimer Disease and Related Disorder) patients, often placed inappropriately because there is no community placement available Others are patients who are experiencing intellectual/developmental disabilities and where there is no community support API is key for broader health system reforms and cost savings REPRESENTATIVE FIELDS addressed slide 5, "Background Literature on Privatization," and slide 6, "2017 Legislative Study recommends against privatization," which read in part: 1999 Praat and Maahs metastudy of 33 cost effectiveness studies found that private facilities were no more cost effective than public studies 2016 the US Department of Justice cited lack of cost savings and lowered delivery of services in private prisons as reason for cessation of private prison usage. Alaska's own Legislature mandated a privatization study in SB 74, working with the Alaska Mental Health Trust and Public Consulting Group Conclusion: Continue state management to attain cost savings while preserving services Cost benefit analysis showed that full privatization carried risks of decreased quality of services, higher cost over 5 year contract period REPRESENTATIVE FIELDS emphasized that inadequacy of staffing was an important safety issue and a threat to workers safety often had a ripple effect resulting in less patient safety at API. 4:21:38 PM REPRESENTATIVE FIELDS directed attention to slide 7 "A Brief Timeline of the GEO Group, Correct Care Solutions, and Wellpath" and stated that it could get a bit confusing when attempting to ascertain the relationship between Wellpath and GEO Group and Correct Care Solutions. He stated that Correct Care Solutions and Wellpath were largely the same company, and that the GEO Group had been part of Wellpath going back in the corporate history. He pointed out that these had been the same companies at different points in their history. 4:22:14 PM REPRESENTATIVE FIELDS shared slide 8, "Death on the Wards," and declared that Wellpath had a "profoundly disturbing" record as it had been sued about 1400 times. He noted that he had a "full set of media clippings and some of them are horrifying to read through." He shared the story of an individual in a Wellpath facility who contracted a cold, which progressed into pneumonia with vomiting and bleeding, and was never provided any care beyond cough drops. The individual died without receiving any care from Wellpath. He stated that the 1400 lawsuits were direct results of "a profit model that sacrifices patient safety for profits." 4:23:11 PM REPRESENTATIVE FIELDS reviewed slides 9 - 12, "Wellpath's history of negligence, deaths," and stated that "this is the record of Wellpath. It is a very consistent, it's a very troubling record... " He offered his belief that this troubling record was the reason to pass proposed HB 86. 4:23:35 PM REPRESENTATIVE TARR asked if most of the lawsuits had been associated with the Wellpath prison facilities and not with their mental health facilities, as indicated by Wellpath testimony. 4:24:31 PM REPRESENTATIVE FIELDS replied that both facilities had lawsuits, adding the Geo Group had the prison contracts and Correct Care had the private mental health hospital contracts. He offered his belief that both groups had serious problems. 4:25:02 PM REPRESENTATIVE FIELDS added that there were "voluminous media reports from locations around the country where Wellpath has operated these facilities." He declared that it was "troubling" where there were credible detailed media reports from multiple facilities about highly specific incidents of negligence and death as a result of inadequate care. He shared his concern that there had not been any assurance from Wellpath for staffing levels or adequacy of care. He pointed to slide 13, "Wellpath has "no plan," loses key staff," and stated that the news was consistent with the company's record for not having a plan for adequate staffing. He emphasized that the history at API had shown that adequate staffing was essential for safety to both patients and workers. He declared that he did not have a fundamental objection to a different management structure at API, although he had "extreme concerns" about for-profit management through a company with a long record of negligence having a flat budget as a significant amount of money would be siphoned off for profits. He added that the ownership of Wellpath was a "highly leveraged private equity firm," explaining that private equity firms extracted profit by shortchanging care, driving down costs, and typically flipping companies. 4:27:43 PM REPRESENTATIVE FIELDS directed attention to slide 14, "Putting Alaskan's First," and he highlighted that outsourcing API to a private equity firm and Wellpath was a bad idea. He pointed to an earlier study by the Alaska State Legislature for the potential savings by privatization, which had specifically cited Wellpath as a reason not to privatize. He read from the feasibility study: "The expected margin for a for-profit contractor is eight percent. This estimate is based on reporting form South Florida State Hospital." He reiterated that there was a flat funded API budget, and that, as the Department of Health and Social Services had not put any "side boards" on the profits for Wellpath in the contract, there was no guarantee for the amount of money being spent on care versus profits for the company. 4:29:17 PM REPRESENTATIVE TARR shared that she was troubled with this cycle of change with the formation of new companies relative to the lawsuits. REPRESENTATIVE FIELDS acknowledged that it was "fairly common." He emphasized that Correct Care Solutions had a very long and very troubling history, and that Wellpath was substantially Correct Care Solutions. He pointed out that the Geo Group also had a long and troubling history, although it was not currently associated with Wellpath. 4:30:25 PM CO-CHAIR SPOHNHOLZ shared her personal concern that a "really solid company with a great reputation is gonna want to keep their name the same for a long time because you build brand equity over time." She said that the level of frequency for re- branding, acquisition, or sale over the years indicated that there was not a lot of brand value and they were not building any brand equity with a good reputation. She stated that this was a red flag for her. 4:31:07 PM REPRESENTATIVE FIELDS expressed his agreement and stated that this was actually "a toxic brand." He noted that legislative bodies in other parts of the United States had cancelled pending contracts with Correct Care because it had such toxic history and was such a toxic brand, and he offered his belief that this was the reason for the re-naming as Wellpath. 4:31:30 PM TRISTAN WALSH, Staff, Representative Zach Fields, Alaska State Legislature, paraphrased from the "Sectional Analysis for HB 86" [Included in members' packets], which read: Section 1. This section amends AS 36.30.300 to add a new subsection (f) that prohibits creation of contracts relating to the ownership or operation of an inpatient mental health treatment hospital established under AS 47.30.660 (c) (see Section 4) Section 2. This section amends AS 36.30.310, the State of Alaska's Emergency Procurement Statutes, to prohibit the use of these statutes to solicit or obtain private contracts to run an inpatient mental health treatment hospital established under AS 47.30.660 (c) (See Section 4) Section 3. This section amends AS 47.30.660 (b) to correspond with a new subsection in AS 47.30.660 (c), that is established in Section 4. Section 4. This section amends AS 47.30.660 to add an additional subsection, (c), that requires the Department of Health and Social Services operate and maintain an "inpatient mental health treatment hospital" in the State. It prohibits the state from delegating or contracting for the ownership, operation or management of such a facility. It also prohibits the state from using the single source procurement statutes in AS 36.30.310 to procure supplies or services for this facility. It also defines "inpatient mental health treatment hospital" for the purposes of this section. Section 5. This section amends the uncodified law of the State of Alaska to define the applicability of new subsections established in Section 1, Section 2, Section 3 and Section 4, to contracts entered into, extended or renewed after the effective date of this Act. Section 6. This section amends the uncodified law of the State of Alaska to state if this Act takes effect after March 1st 2019, it is retroactive to March 1st 2019. Section 7. This section provides for an effective date; it would take effect immediately on passage under AS 01.10.070 (c) 4:34:10 PM MR. WALSH paraphrased from the "Summary of Changes: CS for HB 86" [Included in members' packets], which read: Several changes were made between version M and the Committee Substitute (Version U) of House Bill 86 (introduced on 3/16/19). The administration voiced concern that it would be unable to contract out for various services handled by local vendors, such as maintenance, security, and laundry. The Committee Substitute sought to address those concerns by making the following changes: Section 1. Deleted "operation" and "maintenance" to allow the department to continue to use this limited competition procurement statute for certain aspects of the operation and maintenance of the hospital. Section 2. Deleted "operation" and "maintenance" to allow the department to continue to use this statute for emergency procurements for certain aspects of the operation and maintenance of the hospital. Section 4. Deleted "operate" and "maintain" to allow the department to continue to contract out for certain aspects of the operation and maintenance of the hospital. This meant that section 4 (c) was reduced to one subsection. Section 6. This change reflects the accurate retroactive date for Alaska Psychiatric Institute. 4:35:34 PM CO-CHAIR SPOHNHOLZ removed her objection. CO-CHAIR SPOHNHOLZ said that HB 86 would be held over. 4:36:08 PM REPRESENTATIVE PRUITT asked if Section 4 of the proposed committee substitute would prevent any outside management or ownership of API. REPRESENTATIVE FIELDS said that he would consider a friendly amendment for limited management of API to either a state or a non-profit operator. This would allow the department to retain the authority to go through a competitive procurement process for non-profit management. He offered his belief that this would address his concerns for patient and worker safety and allow for partnerships to provide better services.