State rejects GEO's bid to manage psych hospital


What exactly was it that tanked the GEO Group's proposal to take over management of the Kerrville State Hospital? Was it the patient found dead in a scalding bath at a GEO facility in South Florida, his body discovered with skin “sloughing” off his face? The rehab programs at GEO's Montgomery County psychiatric facility, which the Texas Department of State Health Services recently described as “bedlam”? Or the company's management of a juvenile lockup in Mississippi, which a federal judge claimed “allowed a cesspool of unconstitutional and inhuman acts and conditions to germinate”?

None of the above. And the real reason DSHS today rejected GEO's bid to privatize the Kerrville State Hospital gives us some insight into just how companies like GEO manage to cut costs for states looking to save cash by privatizing jails, psych hospitals, and youth correctional facilities: by slashing staffing levels at the expense of quality care.

Following the Legislature's directive last year to solicit bids to privatize one of the state's psychiatric hospitals, GEO Care, a wholly-owned subsidiary of the private prison behemoth, was the only company that submitted a proposal, saying it could run the Kerrville State Hospital at 10 percent below current costs.

In a letter sent to the Legislative Budget Board and Gov. Rick Perry's office today, Department of State Health Services Commissioner David Lakey outlined why he's rejecting GEO's proposal. “Although many of the issues identified in the proposal could possibly be addressed, the savings in the proposal were achieved primarily through reductions in staffing and benefits to a degree that would put both our patients and the State of Texas at risk,” he said.

To lower costs the GEO Care proposal would have cut the Kerrville facility's staff by by 21 percent – from 542 hospital staffers to 428. GEO also would have cut psychiatric nusing assistant staff from 167 to 118, a 29 percent reduction. “It is my belief that these staffing levels are not sufficient to serve the individual needs of patients at this facility or to ensure a safe environment for patients and staff,” Leakey wrote in his letter.

In a summary assessment of GEO's bid sent to us this afternoon, DSHS said GEO's proposal “did not ensure compliance with fundamental requirements of operating a facility as indicated in the RFP and as required by law.” Some of the policies submitted by GEO  didn't live up to the rules governing state mental health hospitals, as outlined in the Texas Administrative Code, the agency said.

Additionally, DSHS also expressed concern that GEO's proposal wouldn't meet minimum staff-to-patient ratios set out for the state's psychiatric hospitals. Current state hospital staffing patterns, including those at Kerrville, were implemented because of a federal class action lawsuit (RAJ v. Gilbert) filed in 1974 that accused the state of an array of serious violations at its psychiatric hospitals. The case was settled in 1997 after Texas implemented new staffing patterns to ensure quality care and patient safety.

DSHS included a chart showing GEO's proposed staffing levels, compared to current staffing at Kerrville:

The GEO Care proposal would have saved an estimated $3,359,621 largely through layoffs and reduced benefits for staff. GEO, according to DSHS, also planned to cut spending on patient medical care and client services. -- Michael Barajas


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