The attempt by the Dunleavy administration to turn over the Alaska Psychiatric Institute to a private company without competitive bidding deserves an immediate investigation by the Legislature.

Any doubt about the direction the state is taking was eliminated when the governor introduced a budget calling for the elimination of the 268 budgeted state positions at API as of July 1. The employees would have to apply with the private company to continue working there.

One of the most suspect aspects of the Wellpath Recovery Solutions contract is why the company should get an annual $43 million contract starting in July without competitive bids. The Dunleavy administration has given no good reason for this sole-source deal, which would last until 2024.

A feasibility study is required before privatizing API. Two years ago a study concluded that it would cost the state more money under a private operator. A new study would probably say the same thing.

The state has found a different approach—declaring an emergency to try to get around the provision in the union contracts that requires a study.

Long-time employees tell me that rather than work on fixing immediate problems at the hospital, API managers who favor privatization and hope to work for the new contractor helped exacerbate the alleged “emergency” used to justify the no-bid contract. These are serious charges that need examination.

On Wednesday, the acting CEO of API sent an email to employees that the Centers of Medicare and Medicaid Services decided not to “decertify” API, the threat of which had been one of the prime arguments for declaring an emergency.

At a hearing last week, Albert Wall, deputy health commissioner, told lawmakers, “We could at any day get a report from (the Centers for Medicare and Medicaid Services) we have been decertified.”

The email to employees this week said that CMS would check back again in the summer. “As of this time, CMS has determined not to decertify API. I believe this is a direct result of months of hard work by you, the staff, helping to improve how we operate and how we document the good work we do,” wrote acting CEO Gavin Carmichael.

The Alaska State Employees Association, which represents 218 employees at the hospital, said that years of mismanagement, understaffing and inconsistency are to blame for the troubles at API.

“The current administration has contributed to this mismanagement, getting rid of the CEO at API less than three weeks after taking office in December,” wrote ASEA business agent Doug Carson, and firing two staff psychiatrists, “for failing to pledge loyalty to the new governor.”

“In other words, at the moment API was attempting to get back on its feet, the new administration crippled it even further. Coincidentally, it crippled API at the same time it began negotiations with the company that was awarded the single bid sole source contract to completely privatize the facility six weeks later,” Carson wrote in the grievance.

The union filed a grievance asking that the July 1 transfer of API to Wellpath be held in abeyance.

It is one thing to say that immediate managerial help is needed to stabilize the hospital. I can understand why a no-bid contract with Wellpath might suffice for temporary assistance until June. But it is suspicious that the state contract calls for a total takeover in July without more steps to ensure this is the best approach.

It’s not only a question of what is best financially for the state, but also what is best for the vulnerable Alaskans who need care at the hospital.

Everyone seems to agree the hospital needs more staff and better management to become fully operational. It makes sense to fix those problems first and then conduct another study to show whether privatization is preferable.

But temporary budget director Donna Arduin, a fan of privatizing state services, is likely one of the big advocates of the Wellpath no-bid contract. The Arduin ideology, which she has promoted in other states, is that a private operation is inherently superior to a state-run facility.

The combination of circumstances leads me to believe that this “emergency” should have been dealt with another way and the no-bid deal should not be extended after June 30. Wellpath is getting $1 million a month for the first phase of the contract.

Employees have been told they can apply to transfer to Wellpath, which is to take over July 1, if the company succeeds in improving API operations.

There is no doubt that Wellpath will succeed as the decision will be made by an administration that wants this to happen and set up a contract that just about guarantees it.