News Release
January 7, 2015
Contact: Sydni Mitchell
(512) 463-0103
Nichols asks for review of contract management for HHSC

Austin, TX – Today, State Senator Robert Nichols (R-Jacksonville) requested that the Texas State Auditor's Office review the procurement processes of the Health and Human Services Commission (HHSC) in tentatively awarding a contract for the operation of Terrell State Hospital to a private firm.

"I believe that if we are considering privatization of one of our state hospitals, we need to be able to show that it will not only save money for the state, but that better services will be provided," said Senator Nichols. "I hope that through this review some of our questions will be answered, and we will be able to determine the best next step forward in this process."

In addition to requesting confirmation that HHSC's contract practices are following good businesses protocols and are competitively awarded, Nichols has also asked the Auditor's Office to review the following questions:

  1. Does the tentative contract awardee demonstrate equal or better service than is provided currently by the Department of State Health Services?
  2. What protections exist to ensure the tentative awardee is compensated based on patient outcomes, rather than patient days?
  3. What exit plan is included to address a situation in which costs exceed that which have been projected?

There is no state statute which directs the HHSC to pursue the privatization of state hospital operations. In 2011, the Texas Legislature authorized the HHSC to consider whether privatization is the most cost effective way to deliver services in state hospitals. The agency has, up to this point, rejected all previous bids for privatization because they have failed to guarantee the outcomes the Legislature demanded.

"I believe that any question of whether the operations of a state hospital should be privatized, should be considered by the Legislature not a state agency," said Nichols.

The Sunset Commission report identified major agency failures from HHSC in implementing critical contract management tools. These range from best practices to risk analysis.

"To enter into any major new contracts without first implementing these tools is a disservice to all Texans who demand accountability and transparency from their government," said Nichols.

In the Texas Senate, Nichols serves on the Senate Health and Human Services and is a member of the Legislative Audit Committee, which oversees the State Auditor's Office.