Honorable Dianne White Delisi, Chair, House Committee on Public Health
John S. O'Brien, Deputy Director, Legislative Budget Board
HB3089 by Dutton (Relating to contracts with private entities to finance, design, construct, or operate state hospitals for persons with mental illness. ), Committee Report 1st House, Substituted
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The bill would require the Department of State Health Services (DSHS) to contract with a private service provider to operate a state mental hospital under certain conditions, including a determination by the Health and Human Services Commission that the private provider would operate the hospital at a cost of at least five percent less than the cost to the department. Any contract entered into would be required to contain certain performance goals. DSHS would be required to monitor the care of patients and would only be authorized to enter into a contract with a private provider with a documented and verified successful record of providing mental health services over a five year period and managing a mental health facility with at least 250 consumers. DSHS would be required to issue a request for proposal not later than October 14, 2005.
The bill would require DSHS to enter into an agreement with a private entity to finance, design, build and operate a new facility to replace an existing facility. The agreement would be required to provide for the department to acquire the facility under a lease-purchase arrangement over a term not to exceed 25 years.
It is assumed that a contract would be entered into for the private operation of an existing state facility by fiscal year 2007. DSHS estimates the savings associated with the operation based on the average annual cost to operate a state hospital ($31 million in General Revenue). The private provider would have to operate the facility for no more than $29.4 million to achieve a 5 percent savings of $1.6 million. DSHS further projects a monitoring cost of approximately $60,000 per year, for a net savings of $1,540,000 per year.
DSHS assumes for the purposes of the fiscal note that the cost of building and equipping a new 300 bed hospital would be $58 million and the lease-purchase agreement would be extended for 25 years. It is assumed that the annual cost to DSHS, including financing of the project, for the lease-purchase would be $5.0 million per year. DSHS projects that it would take approximately three years to design, finance, build, and equip a new hospital.
529 Health and Human Services Commission, 537 Department of State Health Services, 539 Department of Aging and Disability Services
JOB, CL, KF