Push to privatize troubled hospital could hide problems from view


State leaders have quietly taken steps over the past year to privatize a troubled psychiatric hospital, a move that, if successful, could hide much of its work from public view.

Earlier this month, the Department of State Health Services solicited bids to operate Terrell State Hospital, a Northeast Texas psychiatric facility that houses about 250 people with severe mental illnesses. The hospital came close to losing millions of dollars in federal funding last year after Medicare investigators said widespread problems threatened patients’ lives.

The state has unsuccessfully tried to privatize its psychiatric hospitals multiple times over the past decade, saying a for-profit company might help save taxpayer money while caring for some of the most vulnerable people in Texas. This time, state leaders say they’re not seeking to save money, but rather to improve patient services.

But paying an outsider to run Terrell State Hospital would make it much harder for the public to know what goes on there. Even when they take taxpayer money, the Texas Public Information Act doesn’t always apply to privately owned companies, which can withhold basic information that state hospitals are typically required to release.

Many of the problems afflicting the hospital came to light because of newspaper reporting based on such public information requests.

Mental health advocates say the state’s request for proposals blindsided them.

“I have no idea why they would do it this way,” said Gyl Switzer, public policy director at Mental Health America of Texas. “I can’t think of one good reason.”

Health and Human Services Executive Commissioner Kyle Janek says officials did have good reasons: The state wanted to issue a broad proposal, and soliciting public input would have been premature. Janek said that keeping the bid options broad allows interested parties to compete for the chance to run different parts of the hospital, which has a $56 million budget and employs more than 900 people, he said.

The state doesn’t have to accept any of the offers it gets. But if it does, and the experience goes well, it could open the door to privatizing the other nine state-run psychiatric hospitals, whose total budget is $836 million and which house about 14,000 people each year.

It’s possible that an outside provider — which can make changes more quickly because it can bypass public hearings and other state requirements — can do things better, Janek said.

“There’s no harm in having someone take a look,” he said.

Four groups have expressed interest. Three — GeoCare, Timberlawn Mental Health System and Green Oaks Hospital — are for-profit companies. The fourth, UT Health Northeast, is a public hospital that is part of the University of Texas System.

The winning bid, if there is one, is expected to be chosen in August. The state would turn over hospital operations in September.

The idea of privatizing a state hospital has come up multiple times over the past decade. In 2011, legislators ordered State Health Services to look for someone to run one of the hospitals for 10 percent less than the state pays. And because they did it in such a public way — they put it in the state budget — mental health advocates had plenty of time to weigh in before the state even issued a call for bids.

But while privatization opponents say they don’t like the way the state kept them out of the loop on its current plans, they also can’t deny that the state psychiatric hospitals have serious problems.

“There are legitimate concerns,” said Seth Hutchinson of the Texas State Employees Union, which is also worried about the potential loss of state jobs and benefits. “But turning the system over to a private company is not the way to improve care.”

The state’s 10 taxpayer-funded hospitals have struggled with serious problems for years. Since 2011, the American-Statesman has documented unauthorized medical research on patients, psychiatrists with a history of inappropriate sexual behavior, patients using illegal drugs, hospital violence and other issues. In 2011, former Austin State Hospital psychiatrist Charles Fischer was fired after the state said he sexually abused several children in his care.

Fischer was later charged with two counts of sexual assault, nine counts of sexual assault of a child, seven counts of indecency with a child by contact and five counts of indecency with a child by exposure. He has yet to go to trial.

Public information requests have been crucial to public and media scrutiny of the hospital. Over the past few years, State Health Services has provided to the American-Statesman thousands of documents that ultimately led to the newspaper’s investigative reports.

Though the state hospitals can withhold some information from the public — such as internal investigations into patient deaths — they generally release documents such as employee personnel files, disciplinary actions, salaries, internal emails and memos. A private company might not have to do that.

Different rules might apply to UT Health Northeast, as it receives substantial money from the state and is part of the public university system, said Health and Human Services spokeswoman Stephanie Goodman.

But no matter who runs the hospital, the public would still have access to information such as statistics on patient restraints, the names of the hospital’s top leaders, licensing inspections and other documents related to contract performance.

Still, it’s unclear exactly what a private provider would have to release to the public; the issue is still being fiercely debated. Prison Legal News magazine recently won access to documents from the now-shuttered Dawson State Jail after a Texas judge ruled that its former private operator, Corrections Corporation of America, had to abide by the public information law.

Ironically, the American-Statesman’s public information requests for Terrell State Hospital helped lead to the current push to privatize the hospital.

In April 2013, the newspaper wrote about the case of Ann Simmons, a 62-year-old Pittsburg woman who died of a pulmonary embolism at the hospital after being restrained for 55 hours. The newspaper’s report spurred federal authorities to investigate Terrell. Conditions were so bad that the Centers for Medicare and Medicaid Services threatened to cut off the hospital’s federal funding if things did not improve.

The hospital escaped that fate. But that’s when Janek says he decided to see if a private provider could do a better job.

“Just because we own it doesn’t necessarily mean we should operate it,” he said.

Calls for privatization have traditionally attracted companies such as GeoCare — a private company recently acquired by Correct Care Solutions, a Nashville, Tenn.-based prison health care business — which has come under fire for problems with its mental health care at hospitals and correctional facilities.

Almost two years ago, GeoCare was the sole bidder in an effort to privatize Kerrville State Hospital. State Health Services killed that plan when it saw Geo’s proposal to slash the staff by 21 percent.

Even though the state isn’t requiring bidders to save taxpayers money, private companies still have a profit motive that threatens patient care, Hutchinson said.

Janek said the state is now ready to hear what the public has to say about the possible privatization.



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