The Department of Health and Social Services wants a cost analysis on privatizing the Alaska Psychiatric Institute, potentially the second review in three years.

Last week, the department posted a request for proposal, setting an Oct. 24 deadline for any submissions. A contract worth up to $185,000 would be awarded on Nov. 11, according to the department’s proposal request.

It’s also the second time this year the state pursued such a feasibility study.

On Oct. 2, the same day the state issued the proposal request, it also cancelled its first effort to have consultants analyze placing API under private management.

The cancellation deemed bids from the August proposal request to be “not in the best interests of the state,” while failing to “provide for consideration of all factors of significance to the state.”

In February 2017, the state released a feasibility study originally ordered by the Legislature under Senate Bill 74 in 2016.

In a 98-page report, PCG Health examined several privatizing options including:

  • Full privatization: PCG wrote the option would cost the state more money. Additionally, “staff reductions needed for budget neutrality would likely diminish the quality of service delivery.”
  • Joint operating agreement: Considered “a variation of full privatization,” PCG ruled this “option failed to generate cost savings for the same reasons.”
  • State management: The consultant wrote a more efficient administration and adjusting staffing “could deliver the greatest amount of cost savings of all the options.”
  • Comprehensive outsourcing: PCG wrote this option fails to save money while facing higher costs to cover the privatization.

Department spokesman Clinton Bennett said this study is essentially outdated because of developments that have happened since, including several national court cases that he said speaks to API’s operations, even if not part of the lawsuits.

Since the PCG study, Bennett said, there were also “significant failures at the Alaska Psychiatric Institute (API) that led to the closure of more beds (API reached an all-time low census of 19), being placed on provisional licensing with the state, and being out of compliance with Centers for Medicare and Medicaid Services (CMS) standards, putting the facility at risk of decertification and losing federal funding.” 

House State Affairs Committee Co-chair Zack Fields, D-Anchorage, said another study within less than three years is wasting money.

“The underlying issue is simply resources and capacity,” he said. “The safety issues for patients and the safety issues for employees have been related to understaffing. There are a bunch of dedicated state employees who are there because they believe in the mission. We just need to provide enough capacity. The notion of outsourcing it really is a distraction.”

Fields added he thought the administration keeps trying for a proposal that fits its mission of privatizing API’s operations.

“The administration is fixated on privatization rather than being focused on results and safety,” he said. “What they should be focused on is the end goal, which is safety and then figure out the resources that are necessary to get there.”

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