85R12161 SMT-D
By: Dutton H.B. No. 2939
A BILL TO BE ENTITLED
AN ACT
relating to contracts with private entities to operate state
hospitals for persons with mental illness.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subchapter B, Chapter 533, Health and Safety
Code, is amended by adding Section 533.050 to read as follows:
Sec. 533.050. PRIVATIZATION OF STATE MENTAL HOSPITAL;
CONSTRUCTION AND OPERATION OF REPLACEMENT FACILITY. (a) The
department shall contract with a private service provider to
operate a state mental hospital if:
(1) the executive commissioner determines that the
private service provider will operate the hospital at a cost that is
at least five percent less than the cost to the department to
operate the hospital;
(2) the executive commissioner approves the contract;
(3) the hospital, when operated under the contract,
treats a population with essentially the same characteristics and
acuity levels as the population treated at the hospital when
operated by the department; and
(4) the private service provider is required under the
contract to operate the hospital at a quality level at least equal
to the quality level achieved by the department when the department
operated the hospital, as measured by the hospital's most recent
applicable accreditation determination from The Joint Commission
on health care organization accreditation.
(b) The department shall report to the executive
commissioner regarding whether the department has received a
proposal by a private service provider to operate a state mental
hospital. The report must include an evaluation of the private
service provider's qualifications, experience, and financial
strength, a determination of whether the provider can operate the
hospital under the same standard of care as the department, and an
analysis of the projected savings under a proposed contract with
the provider. The savings analysis must include all department
costs to operate the hospital, including costs, such as employee
benefits, that are not appropriated to the department.
(c) A contract entered into under Subsection (a) must:
(1) provide that the department retains the right to
assume management of the hospital if contract terms are not met or
if the five percent cost savings requirement is not met; and
(2) establish specific goals for the provider to meet:
(A) in significantly reducing the use of
restraints and the seclusion of patients;
(B) in significantly reducing patient waiting
lists;
(C) in significantly reducing total length of
stay for patients, measured annually;
(D) in increasing access to mental health
inpatient services; and
(E) in reducing recidivism.
(d) The department shall monitor care of patients at a state
hospital operated by a contract authorized by this section. The
department shall develop and maintain information on activities
carried out under the contract without violating privacy or
confidentiality rules. The information developed under this
subsection must include:
(1) the number of incidents in which patients were
restrained or secluded;
(2) the number of incidents of serious assaults in the
hospital setting;
(3) the number of occurrences in the hospital setting
involving contacts with law enforcement personnel;
(4) individual and average lengths of stay, including
computation of lengths of stay according to the number of days a
patient is in the facility during each calendar year, regardless of
discharge and readmission; and
(5) client outcomes.
(e) The department may not enter into a contract under this
section with a private service provider unless the provider has a
documented and verified record of success in:
(1) providing mental health services over a five-year
period; and
(2) managing an inpatient mental health facility with
a population of at least 250 patients.
(f) If the department contracts with a private service
provider to operate a state mental hospital under Subsection (a) or
with a person to finance, design, construct, and operate a state
mental hospital under Subsection (h), the department, the
Governor's Office of Budget and Planning, and the Legislative
Budget Board shall identify sources of funding that must be
transferred to the department to fund the contract.
(g) The department may renew a contract under this section.
The conditions provided by this section apply to the renewal of the
contract.
(h) The department shall enter into an agreement with a
private entity to finance, design, construct, and operate a new
facility to replace one or more state hospitals. The term of the
agreement may not exceed 25 years. The agreement must provide for
the department to acquire the facility under a lease-purchase
agreement with a term not to exceed 25 years and authorize the
private entity to issue certificates of participation or other
appropriate securities to finance the construction of the facility.
The portions of the agreement that govern the provision of services
must meet the requirements for a contract entered into under
Subsection (a). Operational savings used to pay debt service
payments for financing a new facility shall be counted in
calculating whether the proposal meets the five percent savings
required by Subsection (a)(1). The department shall report to the
executive commissioner regarding whether the department has
received a proposal from a person to finance, design, construct,
and operate a facility under this subsection. The report must
include an evaluation of the proposal, including an evaluation of
the person's qualifications, experience, and financial strength, a
determination of whether the person can operate the new facility
under the same standard of care as the department, and an analysis
of the projected savings under the proposal.
(i) The department and each private entity that contracts
with the department under this section shall provide to the
legislature a report on the progress of activities under the
contract and performance of services under the contract. The
report must be provided to the legislature not later than November 1
of each even-numbered year.
SECTION 2. Not later than October 13, 2017, the Department
of State Health Services shall issue a request for proposals for a
private service provider to contract with the department to
finance, design, construct, and operate a state hospital as
authorized by Section 533.050(h), Health and Safety Code, as added
by this Act.
SECTION 3. This Act takes effect September 1, 2017.