Another twist in the API saga

One of the hardest political acts is to admit when you’re wrong. In canceling a long-term, no-bid contract for private mental health firm Wellpath to manage Alaska Psychiatric Institute, Gov. Mike Dunleavy’s administration has opened itself up to criticism that it never should have agreed to the deal in the first place, but it has also done the right thing. And what should matter to Alaskans, at the end of the day, is doing the right thing.

The long-term deal was part of a no-bid management agreement announced in February that had Wellpath take control of API because of care and safety issues that had the state’s flagship mental health facility in crisis. In the first phase of that agreement, which has twice been extended and now runs until the end of this year, Wellpath is being paid $1 million per month to manage the facility, correct immediate issues and return it to its full 80-patient capacity. The second phase of the contract — the part now canceled — would have paid Wellpath about $43 million per year to manage the facility in the long term, for the next five years after the first phase ended. Critics of the deal said it appeared to violate state procurement rules that mandate a competitive process and involvement of affected unions — Alaska State Employees Association Local 52 sued to block the deal on those grounds in mid-April.

Rather than fight to defend the agreement in court, the state has opted to vacate the second phase, fund a study on the costs and potential benefits of privatization, and go forward with a competitive bidding process if privatization of the facility looks like the proper course to take. That’s the right move.

Those critical of the long-term phase of the agreement have said it should never have been made to begin with, which is a fair argument and a valid point of view. But it isn’t as though the state has lost substantial time, money or effort because of it. Even under the original architecture of the deal, the second phase wouldn’t have yet started, so no money has gone to Wellpath that wouldn’t have otherwise. And the end of the first management phase has been extended as Wellpath has dealt with challenges that make returning API to full capacity difficult — as of April 22, there were still only 33 beds in service.

Department of Health and Social Services Commissioner Adam Crum estimated the privatization study will cost $50,000. Budget hawks may point to the fact that such studies have been performed before, most recently in 2017, but it’s far better to adopt a “measure twice, cut once” philosophy when it comes to facilities like API, which cost millions of dollars per year to operate and which serve some of Alaska’s most vulnerable residents.

Efficiency in budgeting is important, and particularly so when the state is facing a significant deficit, as is the case this year. But what’s most important in considering API’s plight is getting the facility to a position where it can effectively and safely care for Alaskans experiencing mental health issues. Even at full capacity, API won’t address all of Alaska’s — or even Anchorage’s — needs for mental health services. That’s just the first step. In choosing a long-term plan for the institute, Alaska should prioritize efficiency, but not to a degree that patient care is compromised. That’s what got us into this mess in the first place.