Department of Public Health and Human Services DPHHS
Credit: Eliza Wiley / MTFP

The Montana state health department has expanded its contract with a private consulting group hired to oversee the struggling Montana State Hospital and other public health care facilities. The price tag for the amended contract with Alvarez & Marsal LLC, slated to conclude in September 2023, has also swelled to nearly $7 million dollars, up from the prior agreement’s figure of $2.2 million, negotiated earlier this year.

The revised contract, effective Oct. 1, was obtained by Montana Free Press through a public information request. The document lays out some of the New York-based firm’s strategies for helping the state health department stabilize its federally unaccredited state psychiatric hospital in Warm Springs, a facility with a roughly $51 million budget for the current fiscal year and a 47% staff vacancy rate last month, and improve operations at other state-run facilities.


In an emailed statement Tuesday, Department of Public Health and Human Services Director Charlie Brereton indicated that increasing the contract to $6,966,873 is justified.

“DPHHS is making substantial investments in our state-run health care facilities after years of neglect, as well as working to ensure that our patients are being served in the most clinically appropriate settings,” he said. “We look forward to continuing to implement these significant, overdue, resource intensive reforms.”

According to the agreement, the state funding will pay for the consulting group to staff a three-person “Transformation Management Office” to help the health department with facility assessments, staff hiring, training and overall operations at the Montana Mental Health Nursing Care Center in Lewistown, the Montana Chemical Dependency Center in Butte, and the Intensive Behavior Center in Boulder.

At the state hospital in Warm Springs, the updated contract says, consultants will provide “direct oversight” of a 12-month effort to regain federal accreditation from the Centers for Medicare and Medicaid, which was revoked in April following federal investigations into patient deaths, injuries and insufficient safety protocols at the hospital. The contract says consultants will also “identify roadblocks” and create an “audit and monitoring program to track progress” toward recertification, an apparently strong commitment to recertification after months of noncommittal consideration by state officials. 

The contract also says A&M will help the hospital “restructure patient placement,” including assessing clinical needs, levels of patient care, and “current admission and discharge criteria.” While the contract does not specify a precise goal for reducing patient census, it says consultants will work with hospital leadership to assess different treatment options for the elderly patients in the Spratt Unit and help the facility create a team to “manage the transition process for patients to the extent that transfers are feasible.” 

In its topline summary of the amended contract, A&M obliquely references the possibility of transferring patients to other facilities, saying it will assess the populations at different facilities “with the goal of adjusting patient census as DPHHS continues to enhance community-based service capacity, including through the planned establishment of regionalized behavioral health facilities.”

Speaking to state lawmakers in August, Brereton said the health department was “very interested” in exploring a regional model for mental health care services. The state has not since released any formal plan to transition to such a system.

Bernie Franks-Ongoy, executive director of the patient advocacy group Disability Rights Montana, said the revised contract’s references to recertification and moving patients out of the Spratt Unit appears to reflect an understanding by state officials that the hospital “really does need to be overhauled in a very substantial way.”

“They’re recognizing that people that are present in that facility are not getting the quality of care that their family members and the public expect when they’re committed to a hospital,” she said in a Tuesday phone interview.

She said the contract’s reference to a regional behavioral health care system is also “gratifying,” as Disability Rights Montana believes patients are better treated in smaller facilities closer to their homes and communities.

Despite those positive reactions, Franks-Ongoy described the contract’s $7 million figure as “very concerning” if the state does not plan to implement substantial changes to how the Warm Springs facility operates.

On the other hand, she added, the contract could eventually lead to a better system for patients. 

“If that investment results in community services, regionalized plans, moving people out of Spratt and a downsizing of our institution, that’s an investment we can stand by,” Franks-Ongoy said.

The state’s plans for addressing shortfalls at the hospital and other public institutions may solidify as the January legislative session gets underway. In November, Gov. Greg Gianforte pledged his support for improving operations at the facility, rather than closing it, and for investing $300 million in budget proposals toward shoring up the state’s behavioral health care services. 

A&M’s monthly report cards on the facilities in its portfolio can be viewed on the state health department’s website

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Mara writes about health and human services stories happening in local communities, the Montana statehouse and the court system. She also produces the Shared State podcast in collaboration with MTPR and YPR. Before joining Montana Free Press, Mara worked in podcast and radio production at Slate and WNYC. She was born and raised in Helena, MT and graduated from Seattle University in 2016.