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Oversight Committee Questions MDHHS on Psychiatric Bed Capacity and PIHP Procurement
Summary
Committee members pressed MDHHS Director Elizabeth Hertel about psychiatric bed shortages, the state’s preference not to expand state‑run hospitals, and fairness concerns in a pending PIHP RFP that has prompted litigation and questions about capital reserve rules.
Representative Bierlein and other members asked Elizabeth Hertel whether Michigan has an adequate number of inpatient psychiatric beds. Hertel said there is "a fairly adequate number of inpatient psychiatric beds in the state of Michigan" but added that the state needs more psychiatric facilities, especially capacity for crisis stabilization, short‑term residential and services for people with intellectual and developmental disabilities. She said the department prefers not to expand the state’s footprint on inpatient psychiatric hospitals because the state has difficulty recruiting and retaining staff at state salary levels.
Members questioned a recent decision to reduce planned capacity at a previously authorized facility in Caro. Hertel said Caro was never intended to be 300 beds and that authorizations and authoring language vary; a committee member said the decision reduced a previously funded plan from a larger capacity to 100 beds and pressed Hertel for why that occurred. Hertel replied she was not the decision‑maker for actions taken before her tenure.
Representative Manser raised procurement questions about the department’s PIHP request for proposals (RFP) for behavioral‑health managed care. Manser quoted language in the RFP that treated capital reserves differently depending on contractor governance: private nonprofits and public universities would have no upper limit on capital reserves, while public bodies could be capped and required to return reserves to the state at contract end. Manser argued the language created unequal incentives across governance types and said the RFP language on disposition of capital reserves could advantage some bidders. Hertel said she could not comment on specifics because there is pending litigation and an open RFP.
Hertel said community mental health organizations (CMHs) play a role in delivering services and that the PIHP model has operated in Michigan for about 25 years as an organized, Medicaid‑funded system, though she declined to discuss specifics of the active procurement because of litigation.
Ending: The committee detailed concerns about inpatient capacity, the consequences of relying on private providers for psychiatric services, and the fairness and transparency of procurement terms; Hertel said she would not comment on an open solicitation and litigation but described system priorities including a spectrum of behavioral‑health services and partnerships with CMHs.
