State Rejects GEO Care’s Bid to Privatize Psychiatric Hospital


This story was produced as part of a joint venture with Reporting Texas, an online publication at the University of Texas-Austin’s School of Journalism.

The Texas Department of State Health Services announced Wednesday that it would not accept GEO Care’s bid to privatize the Kerrville State Hospital, citing concerns over the company’s plans to cut operating costs at the state psychiatric hospital.

GEO Care, a subsidiary of the infamous prison operator GEO Group, was the only company to submit a bid to privatize a mental health treatment facility earlier this year. While the bid met the main proposal requirement, promising to generate ten percent savings over 2011 fiscal year costs for a minimum of four years, DSHS Commissioner David Lakey criticized the bid for lacking detail.

In a letter to Gov. Rick Perry and the Legislative Budget Board, Lakey expressed concern that main cost reductions would be “achieved primarily through reductions in staffing and benefits to a degree that would put both our patients and the State of Texas at risk.”

DSHS said in a report that the programs GEO Care proposed were not appropriate for the long-term care needed at the Kerrville State Hospital. Furthermore, DSHS did not believe that the proposal would ensure staffing requirements required by law. GEO Care proposed cutting overall staffing from 542 to 428— a 21 percent reduction—and decreasing psychiatric nursing assistants 29 percent, from 167 to 118. The staff to patient ratio, set by a 1997 settlement in a federal class-action suit against the Texas Department of Mental Health and Mental Retardation, would not have been maintained with GEO Care’s proposed changes.

Wednesday’s decision is a win for advocacy groups that had long opposed privatization of the state psychiatric hospital by GEO Care, whose parent company GEO Group has a troubled history of prison operations in Texas.

“This is a testament to the role that advocacy can play in shaping decisions,” said Bob Libal, executive director of Grassroots Leadership. His organization, along with the American Civil Liberties Union of Texas, the Center for Public Policy Priorities, the Texas Criminal Justice Coalition and the United Methodist Church stated their opposition to GEO Care’s bid in a letter to DSHS, the Legislative Budget Board, and Gov. Rick Perry earlier this year. “The reason the proposal was rejected is telling of the problems with privatization—you make your money by cutting staff and paying them less while the care of your patients suffers,” Libal said.

In his letter, Lakey stated that DSHS will continue to support legislative efforts “to find innovative, effective and efficient models of providing psychiatric care” for the mentally ill in Texas, working with elected officials and community groups to balance cost and effectiveness.