79R8276 JJT-D

By:  Gallegos                                                     S.B. No. 1760


A BILL TO BE ENTITLED
AN ACT
relating to contracts with private entities to 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 [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 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 on and the seclusion of patients; (B) in significantly reducing patient waiting lists; (C) in significantly reducing average length of stay for patients; and (D) in increasing access to mental health inpatient services. (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 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 a 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, 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, build, and operate a new facility to replace one or more state hospitals. The agreement may be for a term not to exceed 20 years. The agreement must provide for the department to acquire the facility under a lease-purchase agreement with a term not to exceed 20 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). (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. The Department of State Health Services shall issue a request for proposals for a private service provider to contract with the department to operate a state hospital not later than October 14, 2005. SECTION 3. This Act takes effect September 1, 2005.