The Department of Health & Social Services (DHSS) announced Friday, February 8, that it is privatizing Alaska Psychiatric Institute (API), the lone State-run psychiatric hospital.

In a statement, DHSS Commissioner Adam Crum said that Wellpath Recovery Solutions will immediately assume management of API under contract, likely taking over completely on July 1, the start of the new fiscal year.

“I recognize this decision may take Alaskans by surprise, but it was not made lightly.  Changes have been needed at API for a very long time,” Crum said.  

Attorney and former Anchorage Assemblyman Bill Evans conducted an independent investigation of API in 2018, finding that API presents “an unduly unsafe work environment for its staff.” 

Evans cited scheduling practices that resulted in inadequate staffing, an increasing number of violent patients who are not mentally ill, and a lack of consequences for patients who assault staff.

Evans also noted that while API management adheres to a strategy of patient intervention that discourages use of restraints and seclusion, “many staff members believe [it] does not provide a realistic ability to safely control a patient who is behaving violently.”

An investigation by the Centers for Medicare and Medicaid Services (CMS) found more “substantial deficiencies” at API than any other hospital in the nation, as reported by the Anchorage Daily News (ADN).  CMS corroborated Evans’ finding that staff were overly reliant on restraint and seclusion.

“During the course of recent investigations at API, we determined immediate steps were needed to protect patients and staff and ensure complete compliance with federal regulations, which also allows the facility to continue to receive federal funds,” Crum said Friday.

Crum assumed management of API under AS 47.32.140(d)(9).  Subsection (e) clarifies that the DHSS commissioner may only take over a hospital if s/he “has reasonable cause to believe that continued management by the entity while the entity is attempting to cure a violation would be injurious to the health, safety, or welfare of an individual who is receiving a service from the entity.”

However, there are doubts that Wellpath will be able to guard the health and safety of API staff and patients.

“I am rising today to express grave concern over what is happening at our psychiatric institute,” Sen. Bill Wielechowski (D-Anchorage) said on the Senate floor.  “I’m concerned when I see a company whose objective is to make money come in.  They have incentives… to treat patients in a way that monetizes that treatment and makes money for the company, as opposed to taking care of the patients and helping them get better.”

Wielechowski said that API has been consistently underfunded, only filling 35 of its 80 beds because of staffing.

DHSS announced in October that API could not accept more patients “due to high patient acuity, workforce shortage and increased staff injury rates.”

“It was set up for failure,” Wielechowski declared.

Yet Wielechowski quoted DHSS Deputy Commissioner Albert Wall in a week-old ADN article saying of API, “I’m already seeing a turnaround.” 

The message from DHSS Friday was radically different.

Wielechowski said the contract for managing API will pay Wellpath $1 million per month in the short term.

“$1 million a month could certainly have gone a long way towards remedying the situation at API,” he said.  “It certainly could have gone a long way towards hiring some more much-needed staff.  I’m told that we need 118 new staff there.  That could have gone a long way towards doing that.”  

Wellpath Has History of Patient Deaths, Connection to OMB Director

“Wellpath is not a nationally recognized healthcare company; they are a healthcare company that has existed for exactly four months,” Wielechowski said Friday.  “It appears that this was a sole-source contract.  It appears that this was not put out for a request for proposal [RFP].  There’s always a danger in any situation like this where you have sole-sourced contracts.  There’s no vetting of the company that’s being contracted.”

According to DHSS, Wellpath was recently formed via a merger of two private correctional health care companies, Correct Care Solutions and Correctional Medical Group Companies (CMGC).

In what appears to be a pattern of inadequate treatment, Correct Care Solutions has been blamed for inmate deaths from Washington to Colorado to Georgia.

In 2016, CMGC Director of Business Development Todd Murphy acknowledged to The Guardian that private prison health care contracts are “typically not cheaper, but it’s always better.”

Yet CMGC and its subsidiaries across the country have been sued for wrongful death in custody, including by the parents of a woman in North Carolina who died of cardiac arrest after ingesting meth.  Though a nurse recognized symptoms of pacing and profuse sweating, no one called for emergency services.

Wielechowski noted that Correct Care Solutions has ties to GEO Group, a private prison and immigration detention company for which Correct Care provides health care.

Office of Management and Budget (OMB) Director Donna Arduin sat on the board of trustees for CentraCore Properties Trust, the real estate arm of GEO Group, according to filings with the Securities and Exchange Commission (SEC).

PR Watch reports that GEO Group received a no-bid contract to operate a California prison while Arduin was finance director for the State of California.

Arduin was also an economic consultant for then-Florida Speaker of the House Marco Rubio (R-Miami) when $110 million was inserted in the budget for private prisons, money that fell suspiciously to GEO Group.

The FY 2012 budget that Arduin built under then-Gov. Rick Scott (R-Florida) would have privatized 29 Florida prisons and three State-run mental hospitals, a move PR Watch called “ideally suited for Geo Group’s correctional/mental health care subsidiary, Geo Care, already the largest private provider of such services in the state.”

The union representing Florida prison guards sued, keeping the move out of the budget.  A subsequent bill failed.

GEO Care did take over operation of South Florida State Hospital in 1998, months before Arduin became director of the Office of Policy and Budget under then-Gov. Jeb Bush. 

In 2012, Florida investigated three preventable deaths at the hospital under GEO Care’s watch, including a patient who was scalded to death in a bathtub.

Current Wellpath CEO Jorge Dominicis formerly served as president of GEO Care, earning his bachelor’s degree at Florida International University.

“I am deeply concerned about the privatization of API,” Senate Minority Leader Tom Begich (D-Anchorage) tweeted.  “Not only will it not save $, it won’t solve the deep problems with psychiatric care in AK.  What’s worse, it shouldn’t be privatized by sole source to a company w/ ties to OMB Director Arduin.”

“Alarming news today that administrative oversight of API will be turned over to the for-profit company Wellpath without a public review process.  Wellpath is a Tennessee-based company that is deeply rooted in the private prison industry and has ties to OMB Dir. Arduin,” Rep. Sara Hannan (D-Juneau) echoed in her own tweet.

Last week, the six members of the Senate Minority, along with Rep. Ivy Spohnholz (D-Anchorage) and Rep. Zack Fields (D-Anchorage), sent a letter to Gov. Mike Dunleavy asking for clarification on Arduin’s ties to GEO Group and similar firms.

Wielechowski didn’t mention Arduin on the Senate floor, instead focusing on the impacts privatizing API will have on mental health patients.

“I hope this is not something that this legislature will rubber stamp, but rather take a deep, deep look at to decide what is truly in the best interests of the people of Alaska,” he told senators.

In contrast, Spohnholz, chair of the House Health & Social Services Committee during the last legislature, said in a statement that she is “cautiously optimistic that the leadership transformation announced today will be successful in turning things around at API.”

“DHSS quickly identified the limitations to the facility’s current capabilities and accessed the necessary tools and resources to keep patients, workers, and Alaskans safe,” applauded Senate Health & Social Services Chair David Wilson (R-Wasilla) in a press release.

Unions Kept Out of Loop

DHSS announced that staff at API will remain State of Alaska employees until June 30 while Wellpath operates under the first phase of its contract.

That coincides with the contract of the General Government Bargaining Unit (GGU), administered by the Alaska State Employees Association (ASEA)/American Federation of State, County & Municipal Employees (AFSCME) Local 52.

ASEA is one of three unions on API property and, at over 8,000 members, by far the largest State employee union, according to a presentation this week in Senate Finance by the Department of Administration.

In its biennial convention last year, ASEA members passed three resolutions highlighting that API is a “chronically hazardous workplace” per the Occupational Safety and Health Administration (OSHA).  The resolutions called for hazard pay, 20-year retirement, and training on access to the State Office of Victims’ Rights for API workers.

Around the time of that convention, DHSS reported to the House Health & Social Service Committee that API and ASEA had established a Labor Management Committee to resolve issues of staffing and safety.

Now, there is uncertainty what will happen to employees at API on July 1.

“We’re disappointed,” AFSCME Local 52 Executive Director Jake Metcalfe said in a phone interview.

Metcalfe said he had heard from union members for several weeks that people from private companies were wandering around API.

Dermot Cole reports that Wellpath consultant Kevin Ann Huckshorn was at API this week, though in an email to API staff, management misrepresented her as the mental health director for the State of Delaware, a job she hasn’t held since 2014.

When Metcalfe contacted Crum about rumors of impending privatization, he got no response.

“There was just a complete lack of communication,” said Metcalfe, indicating that “they’re doing something, and they don’t want you to know about it.”

Metcalfe noted this is the fourth consecutive administration with which he’s worked.

There is no indication that the Dunleavy administration followed the procurement code by putting out a bid for API, he said.  Nor does AS 47.32.140 allow Crum to create a sole-source contract.

“To me, it’s stinky,” said Metcalfe.  “They’re not sharing that information at all.  That’s a lousy way of doing business.”

ASEA, the Alaska Public Employees Association (APEA), and Public Employees Local 71 met with Wall Friday morning, Metcalfe said.  In that meeting, Wall announced a decision on long-term privatization will be made July 1.

But Article 13 of the current GGU contract prohibits outsourcing of ASEA work without 30 days notice.  The union also has a 30-day period to submit an alternative to outsourcing.

“You can’t decide to privatize until that whole contractual process is complete,” said Metcalfe.

No Evidence of Savings From API Privatization

Article 13 also requires a feasibility study.  Former Senate President Pete Kelly (R-Fairbanks) tucked such a study into a Medicaid reform bill (SB 74) that passed in 2016.

The resulting study actually showed that full privatization of API, as Crum has proposed for FY 2020, would increase costs to the State by nine percent, or $17 million over a five year period, if the facility is run by a nonprofit.

If API switches to a for-profit contractor, like Wellpath, costs will increase by 13 percent, or $24 million over a five year period, while service delivery would suffer.

For comparison, the feasibility study holds up South Florida State Hospital as an example of privatization success.

Metcalfe said Wall plans to update the old study, but Metcalfe doubts that update will show savings two years later.  What kind of policy would it be, he wondered, to give large profits to a corporation in Florida at greater expense to Alaskans?

“I think they have a real problem showing that that’s good government,” he said.  “It just doesn’t make any sense.” 

ASEA members ratified a new collective bargaining agreement in December that would last from July 1, 2019 until June 30, 2022.  However, that contract has not been approved by the legislature.

Metcalfe said that while the legislature can always choose not to fund a contract, the terms remain in place.  Therefore, the State must abide by Article 13.

“We will definitely enforce our contract,” he said.

Though he hopes communication will prevent it, if necessary, Metcalfe said ASEA will file a grievance or a charge of unfair labor practices.  If the State violates the procurement code, they may sue.

The Dunleavy administration is already facing an API-related lawsuit.

When Dunleavy asked non-union State employees to submit resignation letters and reapply to indicate concurrence with the administration’s agenda, API Director of Psychiatry Anthony Blanford refused, writing in an ADN letter to the editor, “The state of Alaska hired me for my expertise, not my political allegiance.  My moral allegiance is to the mentally ill and the staff who care for them.”

The Dunleavy administration fired Blanford and another API psychiatrist, John Bellville, who took the same position.

The ACLU of Alaska is suing, accusing Dunleavy and his Chief of Staff Tuckerman Babcock of violating their right of free speech.

Defending the State in a lawsuit would be another cost associated with Friday’s move.

“I hope that the legislature investigates this and reviews it,” Metcalfe said.

Based on the findings of the feasibility study, legislators will be looking for increased API spending in Dunleavy’s FY 2020 budget to be released Wednesday.

They may also be looking to see if there is a proposal to privatize prisons.

This article brought to you by Albert Finney, Aileen Quinn, Edward Herrmann, and Lois de Banzie performing, “Tomorrow.”

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  1. Despite that the state’s website identifies Crum as commissioner, until the legislature confirms him, he just the acting commissioner. Ditto Brune, Vincent-Lang, etcetera.

  2. This is terrible and this article doesn’t even include what’s going on for workers. They will all have to reapply for their jobs. And this company has been sued 1471 times in Federal court. We deserve better than this.

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