State privatizes API management with no-bid contract

The Dunleavy administration is privatizing the management of Alaska’s only psychiatric hospital. Wellpath Recovery Solutions will take control immediately with oversight by the state. Some legislators have raised concerns about the Department issuing a no-bid contract to a company that’s been sued hundreds of times and accused of causing multiple deaths.

The Alaska Psychiatric Institute is currently being investigated by the Centers for Medicare and Medicaid Services for nearly 90 deficiencies, many involving patients rights.

“While serious efforts have been made towards addressing the deficiencies identified by federal and state authorities, progress is not being made quickly enough,” Department of Health and Social Services Commissioner Adam Crum said during a press conference on Friday.  “We have determined immediate steps are needed to protect patients and staff.”

During the press conference, Crum could not provide any details about the cost of the new contract, which was not put out to bid.

Crum said the department chose Wellpath at the suggestion of the National Association of State Mental Health Program Directors. Representatives from the Alaska Mental Health Trust Authority, Fairbanks Memorial Hospital, and North Star Behavioral Hospital appeared at the press conference to show their support for the decision.

A 2017 study commissioned by the state legislature looked at the costs and benefits of privatizing API and said that privatization would not save the state money nor necessarily improve care.

Deputy Commissioner for Family, Community & Integrated Services, Albert Wall, said that study was completed before “services took a nosedive at API with regards to capacity.” He said the facility’s lack of available beds has negatively impacted health services across the state.

Some lawmakers are raising concerns about how the contract was awarded and the choice of Wellpath.

Senator Bill Wielechowski (Anchorage-D)  spoke about the contract on the Senate floor Friday and expressed concerns about the sole-source, no bid contract and it’s vetting. Though DHSS has not released the official contract amounts, employees at API were told it was one million dollars per month.

“Now a million dollars a month could have certainly gone a long way towards remedying the situation at API,” he said.  “So it certainly could have gone a long way towards hiring some more much-needed staff. I’m told we need a 118 new staff there, and that could have gone a long way towards doing that.”

Representative Zack Fields (D-Anchorage) sent a letter to Crum expressing concern about the company. Wellpath is a merger between Correct Care Solutions and Correctional Medical Group. Correct Care Solutions has been the defendant in nearly 1,400 federal lawsuits since 2003, according to court documents obtained by the nonpartisan Project on Government Oversight and news reports. The company primarily manages health programs inside prisons and is blamed for multiple inmate deaths.

Fields said the state needs to more strongly vet who provides care at state facilities.

“Clearly we need to improve management at API,” he said during a phone interview. “But handing over control to a company with a long record of negligence and on-site deaths would only take us in the wrong direction.”

He said he will ask the legislative legal department to review the contract.

Other lawmakers expressed support for the decision. “I am cautiously optimistic that the leadership transformation announced today will be successful in turning things around at API,” Representative Ivy Spohnholz (D-Anchorage) wrote in an emailed statement to the press.

Senator David Wilson (R-Wasilla), chairman of the Senate Health and Social Services Committee, also expressed support in an emailed statement.

Wellpath officials said the company has a track record of improving facilities, like a prison for men with mental illness in Massachusetts. The company says they dramatically decreased the use of restraints and seclusions there. Kevin Huckshorn, senior consultant to Wellpath said their main concern is staff and patient safety.

“The only way you can retain your staff in a way that they trust you enough to continue training and the continue to come to work is to make things better,” she said. “So that’s the first thing you do. The second thing you do is you really look at the markers of injuries and seclusion or restraint data and you set very clear goals and objectives that you monitor every day.”

Commissioner Crum said Wellpath will assume administrative management of the hospital until the end of June. The department will evaluate the company’s progress and if they find it acceptable, the company will take over full management, he said.

Crum told reporters he does not know if the management of the facility will be opened up for bidding at that time.

Crum also addressed concerns about the state’s budget director, Donna Arduin, who has links to Wellpath’s previous owners, the GEO Group. He said she was not involved in the contract decision.

“In the interest of full transparency and making sure Alaskans have trust in our state’s leadership, I asked for an ethics opinion from the Alaska Department of Law on this topic,” he said. “And we have determined there is no ethics violation involving the OMB director as she had no input on the selection of Wellpath.”

A management team from Wellpath will start on Monday. They are trying to hire staff to fill the facilities numerous vacancies. Currently, only 35 of API’s 80 beds are being used because of understaffing.

Correction: This story originally said Correct Care was the defendant in nearly 1,400 lawsuits since 2013. It was 2003.