Montana hires private consultant to oversee state hospital

Montana has hired a private consulting firm to oversee the operations of seven public health facilities, a move that follows a major restructuring of the state Department of Health and a deepening crisis that prompted federal health officials to stop funding the state adult psychiatric hospital month in Warm Springs.

Department of Public Health and Human Services spokesman Jon Ebelt said Monday the department has finalized its deal with the New York-based company Alvarez & Marsal Public Sector Services LLC last week.

Ebelt on Tuesday directed Montana Free Press to file a formal request for records for the consultant’s final contract with the state. A call for proposals posted on the state’s vendor website last winter says $2.2 million is available for the contract through June 2023.

The decision to hire an outside company to manage state facilities came after DPHHS Director Adam Meier reorganized the department last fall to bring all of the state’s public health facilities under one department. It is also a significant step in dealing with the Gianforte administration the emergency situation in Warm Springs, where staff and patients are feeling the strain of high staff turnover and the pandemic. The state was informed Friday that the hospital would lose an average of $7 million annually in federal Medicaid and Medicare hospital benefit reimbursements after inspectors found multiple patient deaths and injuries related to inadequate safety protocols.

Even before the federal funds ceased, the state hospital was confronted with a number of difficulties. The Warm Springs Hospital serves some of the most needed patients in the state and does not have the legal right to refuse admissions. The hospital has been operating for several months with a vacancy rate of around 40% is approximately $7 million over budget for the current fiscal year, also because of the fluctuation, the focus is increasingly on temporary workers with higher tariffs.

Meier has said in previous comments to lawmakers that he hopes the third-party contract can help the state address the build-up of challenges and forecast how the state’s facilities will be managed going forward.

“For me, it’s not just about making a visible, high-profile step based on emotions,” said Meier in March. “[We] really want to make well-reasoned, strategic and data-driven decisions that recognize the true complexity of the issues and the breadth of those issues.”

Blake Emidy, who teaches in the University of Montana’s Department of Public Administration and Policy, said working with a third party can help the state government bring experts with specific skills to the table. Appointing a state employee to manage seven different facilities may not be something DPHHS can do now, he said. But asking a contractor to steer key parts of state government carries some risk.

“You’re essentially outsourcing your strategic planning process to a company that hopefully serves the interests of the state,” Emidy said. “But it makes me nervous when I hear that.”


In a “scope of work” document posted to the state’s provider portal as part of the department’s bidding process for the contract, DPHHS said it was seeking a private contractor “to provide temporary management in areas that are relevant in terms of hiring and retention are critical and operational bandwidth.” The contractor’s listed responsibilities included “the day-to-day running of its healthcare facilities, stabilizing the facility’s staff and providing comprehensive consulting services to create long-term sustainable operational plans for the facilities”.

In addition to Montana State Hospital and group homes in Warm Springs, the contract includes management of the Montana Chemical Dependency Center in Butte, the Montana Mental Health Nursing Care Center in Lewistown, the Intensive Behavior Center in Boulder, and the Montana Veterans Home in Columbia Falls, the veterans’ home of Eastern Montana in Glendive and the Southwest Montana Veterans Home in Butte.

DPHHS indicated that the successful contractor would nominate and engage an Executive Facilities Director who will have direct oversight of all listed facilities. That person is expected to be in the role for “at least” 18 months, the document said, and “may be transitioned to a supporting leadership role if the state … determines it is appropriate to hire a state-employee director.”

Ebelt, the spokesman for DPHHS, did not respond to an email asking if Alvarez & Marsal had hired a senior facilities director for the role prior to the release.

The state said the director of the facility should have “experience in management services for behavioral, long-term care or skilled nursing facilities,” among other things. The state also said it “greatly desires” a director with experience leading “transformation efforts” at healthcare facilities “to improve operations, efficiency, cost-effectiveness and patient outcomes.”


In its scope of services document, DPHHS outlined specific “challenges” for each state facility. For Montana State Hospital (MSH), which has 270 beds between two locations and additional group homes, the state has listed specific hurdles that have made operations difficult.

“Manpower is a major challenge in the region as the MSH competes with the state prison and three community hospitals for clinical and direct care workers,” the state said. The state also pointed to the “[h]highly unionized workforce, with most employees covered by five different local unions.”

Other difficulties have included the hospital’s inability to refuse admissions and its obligation to treat both forensically and civilly indentured patients – that is, those who have been charged with criminal conduct and those who have not. The latter challenge focused on the hospital’s practice of “serving a small geropsychiatric population who have been denied access to other providers.”

The department’s assessment of the challenges was largely reflected in a letter sent this week to the staff of Meier and Gov. Greg Gianforte by the unions representing MSH workers. The working groups identified wages, working conditions, reliance on contract staff and poor management as key issues fueling the hospital’s problems.

“These conditions have resulted in the worst staffing shortages, lowest morale and most dangerous conditions in MSH history,” wrote officials from the Montana Federation of Public Employees, the Montana Nurses Association, Teamsters Local #2 and IBEW Local #233. “Immediate steps must be taken to ensure the safety of patients and staff, and we implore leadership to take swift action to remedy the situation.”

Understaffing is affecting other facilities covered under the new Alvarez & Marsal deal. DPHHS said in its scope of services document that 30% of the positions at the Lewistown Mental Health Care Center were vacant. The Veterans Home in Columbia Falls also had a 20% vacancy rate, limiting the number of people the facility can accommodate — the state said the home is “70% operated with more than 100 people on the waiting list.”

In addition to directing staff recruitment and analyzing wage rates, the state said the contractor is responsible for providing the state with monthly reports on each facility and preparing strategic plans “with recommendations, considerations and options” for how governance can be improved the use of facilities and patient outcomes.

While the state provided an extensive list of responsibilities for the successful contractor, it’s unclear how these translated into specific tasks for Alvarez & Marsal in the final contract. UM’s Emidy said the state’s ability to hold the advisory group accountable for achieving specific outcomes, such as staff retention and patient safety, depends on the precise language of the contract. These provisions, including for the head of the facility, can help ensure that government money is spent wisely.

“If the idea was for this person to act as some kind of superhero, come in and allow for better terms or more favorable terms,” ​​Emidy said, “then there have to be measures of accountability in that contract that can make sure that actually happens.”

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