State of Alaska launching feasibility study into privatizing API

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ANCHORAGE (KTUU) - The State of Alaska is asking for a contractor to determine if it would be feasible to privatize the Alaska Psychiatric Institute.

The contractor would need to see if privatization would save the state money and whether a private model could provide the same quality of care.

“A private operator of API would be required to maintain or improve patient or hospital outcomes, such as clinical quality outcomes, average daily census, length of stay, and cost per occupied bed,” read the notice published online Monday morning.

The study would see if some or all of the services currently provided by the State could be managed by a private company. The contract offered by the State has a ceiling of $185,000 to conduct the study.

In 2017, the Alaska Legislature commissioned a study looking at whether API should be privatized. The report found that a full privatization model would likely cost the state more than a public option over a five-year period and "likely diminish the quality of service delivery."

"It is probable that savings can be maximized by privatizing some or all of these non-core services, with direct care services remaining under state management to prevent harm to service delivery or quality outcomes," read the report on the option of partial privatization.

The 80-bed acute care facility is the state's only public psychiatric hospital. It has had a controversial recent history, including complaints by patients and staff of unsafe conditions and poor management.

In February, Wellpath Recovery Solutions, a for-profit company, temporarily took over management of API.

Wellpath had been poised to take over long-term management of API but the State turned that over to a competitive bidding process in April.

The change to the contract stemmed in part from a lawsuit filed by the Alaska State Employees Association calling for the contract to be halted.

According to the State’s online notice, representatives from the federal Centers for Medicare and Medicaid (CMS) toured the facility on July 22. “The exit briefing was promising, indeed indicated API passed the survey,” read the notice.

A formal survey result will be finalized at the end of August. The online notice calls for contractors to give their proposals into studying privatization before Aug. 26.

A final report into whether API should be privatized will be due Dec. 1.

Gov. Mike Dunleavy and Adam Crum, the Department of Social Services Commissioner, addressed the media Monday afternoon at 1:00 p.m.

The governor announced that API is meeting federal and state certification requirements.

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