The Montana state health department has inked a contract that will likely pay millions of dollars to a private consulting group to coordinate a mammoth two-year effort to reform mental health, addiction treatment and developmental disabilities services across the state.
The agreement with Alvarez & Marsal Public Sector Services LLC, obtained by Montana Free Press through a public records request, charges the New York-based group with overseeing multiple projects initiated by the Department of Public Health and Human Services under the Gianforte administration, including strategies to decrease pressure on the Montana State Hospital in Warm Springs and other intensive hospitalization and residential settings.
The contract stipulates that the state will pay Alvarez & Marsal a range of hourly rates for individual employees: $632.50 per hour for senior professionals, $517.50 per hour for junior professionals, and $460 per hour for support staff. As demonstrated in one cost projection detailed in the application, 60 hours of work for three employees, one from each level, would cost the state of Montana $96,600. The contract was signed on Sept. 1 and is slated to expire in December 2025, with the opportunity for one-year extensions.
Alvarez & Marsal was the top-scoring applicant out of three companies that submitted bids for the proposal in July, including the Public Consulting Group LLC and ItyÂ. But the successful group was also the most expensive — PCG, the bidder with the next-highest costs, proposed paying a senior professional $310 an hour, less than half the rate awarded to Alvarez & Marsal.
In its application, the contractor emphasized its ability to quickly undertake projects and tasks directed by the health department because of its work experience in Montana. The company was hired in 2022 to oversee reform efforts at state-run health facilities, including the Montana State Hospital. The public psychiatric facility, a cornerstone of Montana’s emergency mental health system, lost its federal accreditation last year after investigations into patient falls, deaths and widespread safety issues.
The consultant’s scope of work includes supporting Montana’s seven state-run health facilities, advising on other initiatives and providing guidance to the newly established Behavioral Health System for Future Generations Commission tasked with recommending systemic changes to the governor and uses for $300 million over several years.
“These multiple concurrent initiatives provide a natural opportunity to design a cohesive behavioral health system and developmental disability service strategy that meets the needs of Montana,” the contractor said in one part of its application. “DPHHS is looking for an experienced contractor to align agency and division initiatives, reconcile efforts by contracted support, and incorporate stakeholder preferences to drive service excellence across the behavioral health and developmental disability services.”
After the health department announced plans for the strategic planning contract during the first meeting of the behavioral health commission in July, agency spokesperson Jon Ebelt said that the payment would come out of the $300 million pot appropriated by the Legislature. The budgeted amount for hiring the consultant ranges between $5 million and $10 million, Ebelt told MTFP and other media outlets at the time.
During September presentations to the behavioral health commission and lawmakers on interim budget and policy committees, Alvarez & Marsal introduced five people who will be dedicated to the Montana project but did not specify the hourly rate of pay for each person.
Speaking Wednesday to lawmakers on the health department’s interim budget committee, state health department director Charlie Brereton described the consultant as helping oversee the general priorities of the behavioral health and developmental disabilities services division at the agency, as well as the work of the behavioral health commission. That group of lawmakers and governor appointees is scheduled to present a first round of recommendations to Gov. Gianforte in the spring of 2024, which Brereton said would be informed by the consultant’s expertise.
“What this team will primarily be focused on is the development of two strategic plans, and these are the plans or the reports that will be submitted to the governor,” Brereton said. “And each plan will also have an associated set of implementation recommendations.”
Ebelt defended the contract, and the state’s selection process, in a statement Thursday.
“Not unlike other procurements, an independent evaluation committee, excluding the [health department] Director, was assembled to thoroughly review and score [request for proposal] responses. It ultimately selected A&M, with support from the BHSFG Commission, due to the firm’s deep subject matter expertise, experience in working with states to overhaul and transform behavioral health and developmental disability service delivery systems, and other factors,” Ebelt said.
The contract details sparked mixed reactions from some lawmakers and behavioral health providers Thursday, including criticism from those who had warned against heavy reliance on private contractors during the legislative debate over the behavioral health commission.
“There are Montanans smart enough to do this work, yet this administration continues to send our tax dollars, millions and millions, to East Coast corporate consultants,” said Rep. Mary Caferro, D-Helena, a member of the interim budget committee, in a statement Thursday. “The outsourcing of Montana jobs and businesses is happening in so many different parts of our government it makes my head spin. And all on the taxpayers’ dime.”
Rep. Bob Keenan, R-Bigfork, who chairs the behavioral health commission, said on Thursday the contract figures were “eye opening.”
“It’ll be a bargain if we fix this problem,” Keenan said in a text to MTFP. “Looking at this in a granular perspective can create a negative reaction, but in the macro view, if $5-7 million gets us to a three-branch-of-government agreement of a solution, it’ll be worth it!”
Other observers of the behavioral health commission reflected that the cost of the contract raised the stakes for the Gianforte administration’s already highly watched reform process.
“I think there is a lot of hope and commitment from a lot of folks evidenced by the participation in the panels at the last hearing, the 100 plus [public comment] responses and attendance at the sub-committees,” said Jeff Folsom, director of policy and special projects at the University of Montana’s Center for Children, Families and Workforce Development. “The investment the department is making on the A&M contract further raises expectations and the bar for success.”
The company is required to deliver regular reports on its progress to the state health department and be a consistent presence at upcoming behavioral health commission meetings. The commission’s schedule, upcoming agendas and other documents are available on the state health department’s website.
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