State ends Wellpath contract to run psychiatric institute, could open up contract for bids

Department of Health and Social Services Commissioner Adam Crum talks to Department of Public Safety Commissioner Amanda Price before a cabinet meeting with Gov. Mike Dunleavy on Jan. 8. Crum said Tuesday that the administration changed its contract with Wellpath because it wants to ensure trust in government. (Photo by Rashah McChesney/Alaska’s Energy Desk)

The Alaska state government has changed its plans for the Alaska Psychiatric Institute.

Wellpath will not operate API under a controversial no-bid contract for the next five years. Instead, the company will continue to work at the facility through December. The state also has hired a contractor to study whether it makes sense to privatize API. If the state then moves forward with privatization, it will seek bids.

Alaska Department of Health and Social Services Commissioner Adam Crum said Gov. Mike Dunleavy’s administration made the move because it wants to ensure trust in government.

“There’s so many questions and skepticism surrounding this contract, it’s important for us to resolve those questions, that our process aligns with our intentions. And we just have been working on this, thinking about this decision about what is right,” Crum said.

Wellpath agreed to the change, which the state made public Monday in court, where the union representing API workers was seeking a restraining order against the Wellpath contract. The lawsuit said the no-bid contract violated state labor laws.

Crum said that if the state seeks another contract, it will use the study to determine what it looks for in a contractor. But he expects experience running a psychiatric hospital will be important.

“Our biggest concern throughout this entire process is to make sure there’s stability for the patients,” Crum said. “We want to make sure that they are taken care of.”

The state also announced it hired Matt Dammeyer to be the CEO of API. He has worked as an administrator at Central Peninsula Hospital in Soldotna.

House Health and Social Services Committee co-chair Rep. Ivy Spohnholz, D-Anchorage, questions Chief Procurement Officer Jason Soza of the Department of Administration in a joint meeting with the House State Affairs Committee in Juneau on April 2, 2019. The committee was examining procurement procedures that led to a controversial contract to manage the Alaska Psychiatric Institute. Rep. Jonathan Kreiss-Tomkins, D-Sitka, co-chair of the House State Affairs Committee is on the right.

House Health and Social Services Committee co-chair Rep. Ivy Spohnholz, D-Anchorage, questions Chief Procurement Officer Jason Soza of the Department of Administration in a joint meeting with the House State Affairs Committee in Juneau on April 2, 2019. The committee was examining procurement procedures that led to a controversial contract to manage the Alaska Psychiatric Institute. Rep. Jonathan Kreiss-Tomkins, D-Sitka, co-chair of the House State Affairs Committee is on the right. (Photo by Skip Gray/360 North)

Crum noted that Dammeyer has a doctoral degree in psychology.

“He is a clinician himself, and so both in hospital administration (and) behavioral health and psychiatric care, he’s a very well-experienced guy who’s spent a lot of time in Alaska,” he said. “He understands the kind of unique issues we have up here.”

API has had staffing shortages, reports of mistreated patients, and substandard working conditions for employees. The state hired Wellpath in February, after the federal Centers for Medicare and Medicaid Services said it planned to revoke API’s certification. That could have forced the hospital to close.

Bethel Democratic Rep. Tiffany Zulkosky said she’s glad the state made the change.

“Process is important,” she said. “I think that’s come out in several hearings that we’ve had, both in making sure that we protect state employees, but (also) caring for some of the most vulnerable Alaskans at a very critical institution.”

Anchorage Democratic Rep. Ivy Spohnholz said she hopes Providence Health and Services will be considered if there’s another contract. She said it will be important that the state require quality measurements in its request for bids. That includes making sure patients are appropriately transitioned between care providers, which is called a “warm handoff.”  

“We know you get what you measure when it comes to contracts,” she said. “And if you’re not measuring, you know, health and safety, if you’re not measuring patient readmission rates, you’re not measuring warm handoffs, then you’re not going to get better results.”

She said lawmakers could hold an oversight hearing on API after the legislative session ends.

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