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On January 1, 2017, the KHI News Service became part of KCUR public radio’s new initiative, the Kansas News Service. The Kansas News Service will continue to cover health policy news and broaden its scope to include education and politics. All stories produced by the former KHI News Service are archived here. Stories and photos may be republished at no cost with proper attribution and a link back to KHI.org.

House committee demands assurance administration won’t privatize state hospitals without approval

Representative: Lawmakers tired of 'getting bit'

By Meg Wingerter | March 10, 2016

House committee demands assurance administration won’t privatize state hospitals without approval
Photo by Andy Marso Rep. Dan Hawkins said legislators have become cynical about assurances from state agencies.

An administration official said the Legislature’s prohibition on privatizing the state hospitals could hamstring basic contracts like food service, but some representatives indicated they fear mistakenly handing over too much authority.

Most of Senate Bill 449 consists of relatively mundane changes to standardize licensing rules for behavioral health professions. A five-line provision toward the end has created a stir, however, by forbidding state agencies from entering into “any agreement to outsource or privatize any operations or facilities or the Larned state hospital or Osawatomie state hospital” without specific authorization from the Legislature.

Osawatomie State Hospital can no longer receive payments from Medicare because federal inspectors determined it wasn’t a safe environment for patients. Both Osawatomie and Larned have dealt with staffing shortages and high turnover among front-line staff for years, and state officials are looking for ideas to recruit and retain more workers. The hospitals treat people who have been judged to be a danger to themselves or others.

Kelly Ludlum, deputy secretary for the Kansas Department for Aging and Disability Services, told the House Health and Human Services committee on Thursday that the provision could interfere with routine contracts for food service or hiring contract nurses to ease ongoing staffing shortages.

“Those contracts could be imperiled by SB 449,” she said.

Ludlum said discussion about possible privatization should occur when they consider Senate Bill 460, which would delete a provision in state law that the superintendents of the state psychiatric hospitals must be unclassified state employees. That provision would discourage entities that might be interested in submitting a proposal, she said.

“I would ask you to put yourself in the shoes of a potential bidder,” she said. “You can submit the best bid in the world, but you can’t pick your own superintendent, you can’t pick your own medical director.”

Committee members from both parties said they needed more reassurance that the administration wouldn’t seek to privatize the state hospitals without Legislative consent. Rep. Dan Hawkins, a Wichita Republican and the committee chair, said he thought legislators had become “cynical” about assurances from state agencies.

Rep. Les Osterman, also a Republican from Wichita, said he has had to take phone calls and emails from constituents who are angry about authority he voted to give the administration.

“Here in the last four years I’ve been asked to look at things and vote for them without seeing a plan. I’ve been bit one too many times,” he said. “We are all getting bit and we’re tired of getting bit.”

Rep. Scott Schwab, an Olathe Republican, said he wanted Gov. Sam Brownback to state that his administration wouldn’t pursue privatization without legislative approval. He noted the administration had interpreted its authority more broadly than many legislators intended when it entered into a contract to build a new power plant for the Capitol complex to replace one in the Docking State Office Building, which is slated for demolition.

“The concern is that it’s going to be sine die (the last day of the session), and in July we hear it’s going to be privatized,” he said. “Is there any way we get the governor to chime in on this himself?”

“Here in the last four years I’ve been asked to look at things and vote for them without seeing a plan. I’ve been bit one too many times.”

- Rep. Les Osterman, a Wichita Republican

Schwab also seemed unimpressed with the argument that KDADS needed a statutory change to allow a private contractor to hire some high-level staff at state hospitals before the decision to privatize was finalized.

“You have the tools to look at privatization,” he said. “This doesn’t prevent you from doing the (request for information.)”

Photo by Dave Ranney Rep. Jim Ward questioned the need for statutory changes before the state decided whether to privatize its psychiatric hospitals.

View larger photo

Rep. Jim Ward, a Wichita Democrat, said KDADS or a potential contractor could request statutory changes after it had a plan to show the Legislature. He also expressed concerns the agency had decided to privatize despite its statements that it would consider all options.

“How does changing the classification of the head of the hospital change the status quo other than allowing you to privatize?”  he asked.

“We need to not just look at what we need to do over the next six months to a year,” Ludlum responded. “We have not made the decision to privatize. But we think it’s worth exploring that option.”