79(R) HB 3089 - House Committee Report version


                                                                                
79R13974 JJT-D


By:  Dutton, Davis of Harris                                      H.B. No. 3089

Substitute the following for H.B. No. 3089:                                   

By:  Laubenberg                                               C.S.H.B. No. 3089



A BILL TO BE ENTITLED

AN ACT

relating to contracts with private entities to finance, design, 
construct, or operate state hospitals for persons with mental 
illness.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 533.050, Health and Safety Code, is 
amended to read as follows:
	Sec. 533.050.  PRIVATIZATION OF STATE MENTAL HOSPITAL; 
CONSTRUCTION AND OPERATION OF REPLACEMENT FACILITY.  (a)  The 
Department of State Health Services shall [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 executive commissioner of the Health and Human 
Services Commission determines that the private service provider 
will operate the hospital at a cost that is at least five [25] 
percent less than the cost to the department to operate the 
hospital;
		(2)  the executive commissioner of the Health and Human 
Services Commission 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 Accreditation of Healthcare Organizations (JCAHO).
	(b)  The Department of State Health Services [On or before 
April 1, 2004, the department] shall report to the executive
commissioner of the Health and Human Services Commission regarding
[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)  A contract entered into under Subsection (a) must:                 
		(1)  provide that the Department of State Health 
Services 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 of State Health Services shall monitor 
care of patients at a state hospital operated by contract.  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 of State Health Services may not enter 
into a contract under this section with a private service provider 
unless the provider has a documented and verified successful record 
of:
		(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 of State Health Services [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) [(d)]  The Department of State Health Services
[department] may renew a contract under this section.  The 
conditions provided by this section [listed in Subsections 
(a)(1)-(3)] apply to the renewal of the contract.
	(h)  The Department of State Health Services 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 agreement may be for a term not to 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 of 
State Health Services shall report to the executive commissioner of 
the Health and Human Services Commission 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 of State Health Services 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 14, 2005, 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, 2005.