Agency seeks authority to privatize Osawatomie State Hospital

Osawatomie State Hospital

? The Kansas Department for Aging and Disability Services says it wants to seek proposals from private companies or nonprofit organizations to take over management and administration of the state’s largest psychiatric hospital.

Osawatomie State Hospital has been plagued with difficulties in recent years and recently lost its certification to receive federal Medicare funding. And while the agency says it is working to regain that certification, it also wants to explore other options.

“We’re hopeful that we’ll be able to be recertified there in the next few months. We’re making every effort to do that,” KDADS Secretary Tim Keck told the Senate Ways and Means Committee Wednesday.

Keck, who took over as secretary in January, said the agency issued an informal “request for information” on the possibility of privatizing the hospital last year. Based on those responses, he said, the agency wants to issue a more formal “request for proposals,” which is similar to soliciting bids, later this year.

But in the budget bill that Gov. Sam Brownback signed earlier this month, lawmakers inserted a proviso that prohibits the administration from privatizing any state hospital without prior legislative approval.

Keck said the language he is proposing would give authority to review and approve a contract to the State Finance Council, a group that includes top legislative leaders from both parties, plus the governor.

The bill would also amend current laws so that a contractor would be able to name its own hospital superintendent and hire medical staff and other workers. Current law requires KDADS to make personnel decisions.

Most committee members who spoke during the hearing, however, appeared skeptical of the idea.

Sen. Caryn Tyson, R-Parker, whose district includes Osawatomie, said she was surprised the agency would ask for that language, given the budget proviso lawmakers just passed.

“That would be against current legislation,” she said.

Sen. Laura Kelly of Topeka, the ranking Democrat on the panel, questioned whether the hospital could even be marketed in its current condition.

“Generally, when somebody wants to put their house on the market, they clean it up. Spruce it up so it has better curb appeal and higher resale value,” she said, questioning what KDADS had done to address problems at the hospital.

Keck said KDADS has hired a consultant to make recommendations on improvements so it can regain certification, and he said the agency is working to make those changes.

But Kelly said there is a more fundamental problem at the hospital: the lack of adequate staff.

“If I recall correctly, one of the major issues at the state hospital was staffing and the horrendous amount of overtime that folks were putting in, creating pretty dangerous situations,” she said.

Keck said the hospital is working to recruit more staff, especially nurses, and plans to raise salaries by about 10 percent in order to bring them in line with similar positions in the Kansas City-area market. But he was unable to say specifically how many new employees have been hired in recent months, saying those numbers change on a daily basis.

“I’m a little disappointed,” Kelly said. “I think you could have anticipated these questions, and you really should have this information before you come to a committee to ask us to essentially approve privatization of these institutions.”

Rebecca Proctor, executive director of the Kansas Organization of State Employees, a union that represents many of the hospital workers, testified against the bill saying it would allow the hospital to be privatized without public input or debate.

“As I understand (the budget proviso) and the debate that led to it, it was the intent of the Legislature to ensure open and public debate on any proposal to privatize the state hospitals,” she said.

The committee did not take action on the bill Wednesday but is expected to make a decision before lawmakers adjourn the regular session at the end of next week.