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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.

KDADS officials: Privatization should be an option for Osawatomie State Hospital

But House, Senate budgets would require legislative approval for such a move

By Meg Wingerter | February 15, 2016

State officials said bills requiring legislative consent before the state could privatize Osawatomie State Hospital would take away one option to address long-standing staffing problems.

Tim Keck, interim secretary of the Kansas Department for Aging and Disability Services, told members of the House Health and Human Services Committee on Monday that the department is working on a request for proposals related to public-private partnerships for the hospital. He said he expects both nonprofit and for-profit health care companies may apply.

Photo by Andy Marso/KHI News Service Tim Keck, interim secretary of the Kansas Department for Aging and Disability Services, told a House committee Monday that KDADS hasn’t decided whether it will pursue privatization for Osawatomie State Hospital but would like it to remain an option.

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The Centers for Medicare and Medicaid Services decertified Osawatomie in December, meaning the hospital no longer receives Medicare payments to care for people who have severe mental illnesses. The decertification costs Osawatomie about $1 million in lost payments each month, Keck said.

Kelly Ludlum, deputy secretary for KDADS, said a decision on whether to privatize would be separate from the effort to gain recertification from federal officials.

The House and Senate budgets passed last week include extra funds for Osawatomie to deal with the costs of recertification and to hire additional staff.

But the budget bills also include amendments requiring the governor’s office to get legislative approval before privatizing Osawatomie and Larned State Hospital. The two hospitals treat Kansans with mental health issues who are believed to be a danger to themselves or others.

Keck said KDADS hasn’t decided whether it will pursue privatization but would like guidance from an ad hoc committee and a consultant. The department also is seeking an exemption from state law requiring that the superintendent of Osawatomie be an unclassified civil servant, he said. An exemption would allow a private entity to bring in a superintendent who wouldn’t be a state employee.

“We need to have as many options as possible to do right by patients,” he said. “You’re taking an arrow out of our quiver” by limiting how the department could pursue privatization, Keck said.

Rep. Jim Ward, a Wichita Democrat, raised concerns that Osawatomie had been mismanaged in a deliberate attempt to push the facility toward privatization, an allegation Keck denied.

Rep. Scott Schwab, an Olathe Republican, said he rarely agreed with Ward, but he did understand concerns about privatization in this case.

“Is privatization a final, last resort or a priority?” he asked.

“Probably somewhere in between,” Keck responded.

Even if KDADS were to form a public-private partnership, it has a goal of keeping the hospital in place at Osawatomie, Keck said.

“I made a very strong commitment to Osawatomie,” he said.

“We need to have as many options as possible to do right by patients. You’re taking an arrow out of our quiver.”

- Tim Keck, interim secretary of the Kansas Department for Aging and Disability Services

Keck also updated the committee on recertification. A consultant conducted a mock inspection over three days last week to prepare the hospital for federal re-inspection, he said. The full report isn’t complete, but the consultant did raise concerns about training, adequate nurse staffing and some procedures.

KDADS also appealed the decertification in a separate procedure, Keck said, but facilities rarely win because they would have to approve federal inspectors were wrong on every point that led to the decertification.

The hospital has made progress on the safety issues that led to decertification, Keck said. Changes include screening patients for the risk they will act violently, training staff to use personal safety alarms and hiring six new security officers, he said.

KDADS also will ask for an additional $1.2 million to $2.4 million in funding, which would be enough to give direct care staff at Osawatomie a 5 percent or 10 percent raise, respectively, Keck said.

It also is pursuing other efforts to increase staff retention and lower the 35 percent staff vacancy rate, he said. Staffing levels aren’t allowed to fall below a certain level, and the state hospitals have been paying overtime and bringing in staff from contracting agencies.

“We can’t just get people in the door. We need to keep them in the door,” he said.