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Amend CSHB 2292 by adding the following appropriately 
numbered sections to the bill and renumbering subsequent sections 
accordingly:
	SECTION __.  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.  (a)  
After August 31, 2004, and before September 1, 2005, the department 
may contract with a private service provider to operate a state 
mental hospital owned by the department only if:
		(1)  the Health and Human Services Commission 
determines that the private service provider will operate the 
hospital at a cost that is at least 10 percent less than the cost to 
the department to operate the hospital;
		(2)  the Health and Human Services Commission approves 
the contract; and
		(3)  the hospital, when operated under the contract, 
treats a population with the same characteristics and acuity levels 
as the population treated at the hospital when operated by the 
department.
	(b)  On or before April 1, 2004, the department shall report 
to the commissioner of health and human services 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)  If the department contracts with a private service 
provider to operate a state mental hospital, 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.
	(d)  The department may renew a contract under this section.  
The conditions listed in Subsections (a)(1)-(3) apply to the 
renewal of the contract.
	SECTION __.  Section 533.050, Health and Safety Code, as 
added by this Act, takes effect September 1, 2004.