The Kansas Department for Aging and Disability Services is considering privatization for a troubled state psychiatric hospital that has now passed an initial step toward regaining some federal funding.
KDADS Secretary Tim Keck said the department was considering a bid from Correct Care Recovery Solutions, which runs other mental health facilities across the country, to rebuild and privately run Osawatomie State Hospital.
The department also announced in a press release Wednesday that the acute care unit at the state psychiatric hospital had passed an initial survey required to get that part of the hospital re-certified by the federal Centers for Medicare and Medicaid. The hospital lost its certification in December 2015 and has been missing out on $1 million each month in federal funds. The announcement came after KDADS Secretary Tim Keck presented the bid from Correct Care Recovery Solutions on Tuesday.
Keck said he thought Correct Care Recovery Solutions would be able to effectively run the hospital because the company’s national footprint allows it to draw staff on a larger basis than the state can currently. He said the company employs about 13,000 people nationally and takes care of 275,000 patients.
Some lawmakers, however, have been skeptical of privatizing either of the state’s psychiatric hospitals. Under law, they must sign off on a privatization plan.
Senate Majority Leader Jim Denning, R-Overland Park, said he thought oversight would need to be built in if the hospital is run by an third-party. He said the state would also need to maintain control of the building in case it had issues with a private company managing the facility.
“If the third-party vendor doesn’t turn out well but they control the building, then we don’t have a mental health hospital,” Denning said.
House Minority Leader Jim Ward, D-Wichita, said he was glad the Legislature had to sign off on a privatization bid. He said he thought other privatization efforts, such as KanCare, had resulted in poorer service for constituents.
Keck said the contract could be finalized around the end of the year or by January and the state could choose to either issue bonds and build the hospital itself or have a private company build the hospital and lease it to the state. The state would then buy back the hospital at the end of the lease. He said he could not yet say the cost of running the hospital privately but placed the price tag for the rebuild between $100 million and $175 million.
In the meantime, the department is working on re-certifying 60 of the hospital’s existing 206 beds. According to the press release, Osawatomie passed the re-certification survey with no deficiencies, a “first step toward re-certification.”
“It’s been a long time coming to get to this point,” Keck said.
The hospital failed a previous re-certification survey in May because CMS found it was not meeting regulations that govern how it hands out medications, prepares food and treats patients. At a legislative meeting earlier this month, lawmakers expressed frustration that the hospital had failed the survey. Keck told them he expected another one “any day” and that staff members were prepared.
“We need to keep going forward on improving our treatment for the patients,” Keck said. “We can’t let up. We can’t slide back.”