03/28/2019 03:00 PM House HEALTH & SOCIAL SERVICES

          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  ZACK  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 Wellpath                                                               
had  been part  of  the GEO  Group 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
" [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 "operat    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 to the  motion to adopt                                                               
the proposed  committee substitute  (CS) for  HB 86,  labeled 31-                                                               
LS0623\U, Marx,  3/26/19, as the  working draft.  There  being no                                                               
further objection, Version U was before the committee.                                                                          
                                                                                                                                
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.                                                                              
                                                                                                                                
[HB 86 was held over.]