State-funded, privately run psychiatric hospital up for sale

Two years after opening its doors, the only state-funded, privately run psychiatric hospital in Texas is up for sale.

Geo Group a Florida-based corrections company that also provides in-patient psychiatric services, is offering $35 million to buy the 100-bed Montgomery County Mental Health Treatment Facility in Conroe. County officials say they expect to make a decision within the next 30 days.

Geo Group has been trying to land a contract to run a state psychiatric hospital for years. Just last fall, the Department of State Health Services rejected the company’s proposal to operate the Kerrville State Hospital, saying Geo’s staffing levels would endanger patients. Concerns about patient care have continued to dog the company because of reports of problems at Geo-run prisons in Texas and other parts of the country.

Geo gained a foothold in running a publicly funded psychiatric hospital two years ago by contracting with Montgomery County to run the Conroe facility.

Now the question is whether Geo would be able to parlay ownership of the Montgomery County hospital into a long-term relationship with other state mental health facilities. More immediately, it leaves up in the air the fate of up to 400 psychiatric patients each year if State Health Services refuses to continue funding the facility once it is owned and operated by Geo.

State Health Services spokeswoman Carrie Williams said that county officials have not contacted the agency about the potential sale, so she could not speak specifically about any complications that might arise.

“Our contract is with the county, and they haven’t told us about any offer,” Williams said. “If the county wants to step out of the relationship, it could be problematic and would bring up questions about how those services would be provided.”

Geo Group spokesman Pablo Paez said he could not comment because negotiations are in progress.

Geo Group is known in Texas for its problems in the prison system. In 2007, officials shut down the company’s Coke County Juvenile Justice Center in West Texas, citing unsafe and unsanitary conditions. In 2009, inmates at the Reeves County Detention Center, also in West Texas, rioted over the quality of health care and other complaints.

In addition to the one in Montgomery County, the company’s subsidiary, Geo Care, runs mental health hospitals in Florida.

Geo has had a relationship with Montgomery County for years. Besides the psychiatric hospital, Geo Group manages the county’s jail and is now offering to pay $65 million for that operation.

Montgomery County Judge Alan Sadler said commissioners want to sell the Conroe hospital because it is outside the county’s expertise and never did what it was intended to do, which was to greatly reduce the number of patients the sheriff’s department had to drive to other psychiatric hospitals, including one more than 100 miles away.

“It’s not the normal, natural duties of the county,” he said. “I think that maybe I’m having second thoughts on whether we should have done this in the first place.”

The Conroe hospital was authorized through a 2009 state budget rider that permitted the creation of a state-funded, privately run mental health facility. It authorized State Health Services to pay Montgomery County to serve patients otherwise headed to one of the state’s 10 psychiatric hospitals.

Since then, State Health Services has paid Montgomery County $15 million a year to care for patients who are accused of crimes and are not competent to stand trial. The state contracts with the county, which pays Geo Care to run the hospital.

In 2010, while the Conroe hospital was being developed, Geo Care bought 23 acres less than one-tenth of a mile away from the mental health facility. The company has managed the hospital since its 2011 opening.

That move was heralded by the company as a way to get traction in the state. In its annual report that year, Geo stated that “the opening of this facility provides entry into Texas, which we believe may provide additional growth opportunities.”

Some county commissioners eventually started questioning Montgomery County’s role in the hospital business. Last summer, just 16 months after the facility opened its doors, officials publicly entertained the idea of selling it. Since then, the county has continued to push the idea.

“If we have a chance to sell it, I think we should do it,” Sadler said.

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