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Studies recommend against privatizing psychiatric hospital or juvenile jails

Alaska would not benefit by using contractors to run its juvenile jails or the Alaska Psychiatric Institute, according to a pair of Legislature-ordered reports on privatization written by consultants.

The feasibility studies were mandated as part of a health care bill passed by the Alaska Legislature in 2016.

With Alaska facing a $3.2 billion budget crisis, the privatization studies were supposed to examine whether the state could hand over management of its only psychiatric hospital and its short-term juvenile jails to private groups and save money without threatening the quality of services.

The answer for juvenile jails was an unqualified "no."

Rather than corporate prison companies like Geo Group, which the Department of Corrections uses to run halfway houses around the state, the state seemed to be looking for a different approach for running detention centers where arrested teenagers are held short-term.

Evaluators sought out and interviewed "social service, tribal and health-care organizations" in each of the six communities with detention facilities to see if they would be interested in taking over the jails. 

None of them said it could. The organizations cited their lack of experience in managing a detention facility, along with the risk and costs.

The evaluators also said the "highest and best use" of the Kenai, Nome and Mat-Su facilities would be to keep them as jails.

It also recommended a long-term treatment program be offered at Nome jail, a place where "difficult to manage" youths could be housed with "little or no additional cost for the state."

In a state response, Commissioner of the Department of Health and Social Services Valerie Davidson noted that the studies didn't take into account factors such as Alaska's budget deficit.

Alaska's Department of Corrections already leans on the world's largest private prison company, Geo Group, to manage all but one of its halfway houses.

The state has a fraught history with private prisons. A federal investigation into Bill Weimar, the owner of a chain of halfway houses, and his efforts to promote a private prison in Alaska opened the major federal corruption probe known as "Polar Pen."

For the juvenile jails study, the state contracted with Carter Goble Lee Inc., a company specializing in government facility planning and design based in Miami. The study cost $250,000, according to the proposals.

For the overburdened Alaska Psychiatric Institute, privatization might end up being more expensive than state control, the study found. Handing over management of the psychiatric hospital to a private company or a nonprofit would cost more "even after significant staff reductions," according to a letter on the study's findings sent by Davidson to legislators.

It would be better, the evaluators found, if the state continued to manage the hospital that is supposed to serve as Alaska's safety net for mentally ill people.

The study said that API, which has 80 beds and is the acute care facility for the entire state, is already under heavy stress, leading to a revolving door of patients who stay for only a short time to make room for others.

"The hospital appears to be already operating more like a private provider, with a focus on short-term stays for acute patients," the study said.

But changes like outsourcing front desk staff and altering nursing shifts to cut overtime could make the hospital less expensive to run, the report found.

Evaluators from Boston-based Public Consulting Group said the best choice for API would be to continue state management of the hospital but "implement efficiencies" in administration and nursing staffing. The state agreed.

"A blended approach to privatization is in the best interest to API and the state," Davidson wrote to legislators.

The API study cost $185,000.

A third ordered privatization study, of the pharmacy that serves the six Alaska Pioneer homes, was never done because no bid met the state's requirements.

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