AUSTIN – As Texas scrambles to meet a crisis in resources for mental health patients, marked by months-long waits for hospital beds and rising costs of treatment, a robust new safety net hospital in Dallas is nearly completed – but sits empty.
The reason: A last-minute decision by Republican state leaders earlier this year to ditch an initial plan for the UT Southwestern Medical Center in Dallas to run the 292-bed psychiatric facility it helped plan, design and build – and, instead, throw open the opportunity to the most attractive bidder.
North Texas has a shortage of inpatient psychiatric beds that would be bridged by a new hospital designed and built by UT Southwestern. Local officials have expressed concern that the Legislature’s efforts to reduce operational costs have delayed the opening of that hospital.
Now it’s up to the Legislative Budget Board and the Texas Health and Human Services, which closed the request for information from potential contractors in mid-November, to decide who will run the new facility with 200 beds for adults and 92 for children.
HHS operates nine state hospitals and one residential youth center for people with mental health issues. Several expansion and new construction projects are underway, including the Dallas state hospital.
Political Points
UTSW Medical Center is the clear top contender to run the Dallas facility, throwing its hat back in the ring alongside two other applicants – neither of which expressed interest in running the entire facility.
Recovery Solutions, which runs a mental health facility in Montgomery County, north of Houston, submitted information to run the entire facility as requested but prefers to run only the adult wing of the hospital, according to its proposal. The third bidder is Desiree Williams Consulting, a private leadership consultant applying to be a subcontractor but not offering to run the facility.
UTSW officials said in a statement they were proud of their involvement in standing up the hospital, which will be the first state acute-care psychiatric hospital serving North Texas communities and “advance the shared goals of increasing access to care and improving patient outcomes statewide.”
“We appreciate the thoughtful consideration by the Legislature and HHSC as they evaluate options for managing and operating this new behavioral health hospital,” the statement said. “With construction nearly complete – and subject to guidance from state leaders in collaboration with HHSC — UT Southwestern stands ready and eager to assume responsibility for operating this state-of-the-art facility and delivering essential behavioral health services to Texans in need.”
The deadline for the bids was Nov. 18. A decision is due in April but expected much more quickly – as the facility on the corner of Harry Hines Boulevard and Medical Center Parkway is nearly complete and ready to start being staffed as early as January. An actual opening will have to await several more months of ramping up services and staffing, human services officials have said.
Portions of the new psychiatric hospital under construction on Thursday, Nov. 20, 2025, in Dallas.
Christine Vo / Staff Photographer
The news that UTSW is back in the running was anticipated by Dallas County Judge Clay Lewis Jenkins, who has expressed concern that interruption in the plan, hatched in 2021, to have UTSW helm the critically needed facility not only delayed the hospital’s opening, but threatened the ability of the facility to give top-notch care directed by experts.
“You’ve got to be realistic about what things cost and what you’re going to get for those things,” Jenkins said in November. “I’m not saying HHSC couldn’t run their own hospital, but you’ve already got a proven track record of successful hospitals in Dallas under the auspices of UT Southwestern. Why wouldn’t you want to use that strength, that the state’s already paid for, to run this — as opposed to having someone for whom it is not their core mission try to do this for the first time?”
The UT Southwestern plan “was designed to be really an incredible facility,” said Jenkins.
Without an operational entity in place, the state was poised to begin actively recruiting the hundreds of people – from doctors to support staff – they would need to run the facility, a process that could take months, Jenkins said. As it stands, he said, the delay in UTSW’s involvement after the lawmakers blocked the original plan has already cost the region months of critical services.
Sen. Royce West, a Dallas Democrat and Senate budget writer, said he appreciates the process is moving forward and UTSW is taking another shot.
“I am pleased that UT Southwestern will have an opportunity to bid on operations of the new state hospital in Dallas,” West said. “I believe UT Southwestern brings a lot to the table for this particular project.”
Portions of the new psychiatric hospital under construction on Thursday, Nov. 20, 2025, in Dallas.
Christine Vo / Staff Photographer
With more than 25,000 employees and an annual budget of $6.4 billion, providers with UTSW deliver care each year to nearly 1 million patients, oversee 5 million outpatient visits, attend to 140,000 hospital patients and treat 360,000 emergency room visitors, officials said.
If UTSW is awarded the contract, it would take about eight months to start taking in patients after the funding is received, according to the bid to HHS.
The adult portion of the hospital is almost complete. The children’s wing is set to be completed in the spring.
UTSW runs the adult psychiatric unit at William P. Clements University Hospital, and faculty provide psychiatric care at several other institutions, including Parkland Hospital, Children’s Medical Center Plano, Dallas Veterans Affairs Medical Center, and Texas Health Dallas, according to the bid. The UTSW Medical Center has also previously staffed the pediatric psychiatry unit at Children’s Medical Center Dallas.
In total, UTSW faculty staff 155 licensed behavioral health beds in the region, the bid says. UTSW also provides intensive outpatient services to thousands more mental-health patients, the bid says. UTSW operates four schools, including UT Southwestern Medical School.
“UTSW is a renowned academic medical center with extensive experience operating hospitals and psychiatric units, and providing high-quality, patient-centered adult and pediatric behavioral health care across six hospital systems,” the bid with HHS reads. “UTSW providers routinely care for hospitalized patients with difficult-to-treat behavioral health conditions, offering a comprehensive array of evidence-based pharmacological, psychosocial, and neuromodulation treatments, as well as all necessary specialized and subspecialty medical care.”
Texas state leaders and health officials have long acknowledged the state faces a crisis in mental health resources, leading lawmakers to put nearly $3 billion of a historic 2023 state budget surplus to improve access. A year later, the state announced the beginning of seven new projects across the state, including the Dallas facility.
All but eight counties in the state have been designated as mental health professional shortage areas – with the worst gaps being in the availability of psychiatrists for children, UTSW officials said in their bid. In Texas, there are just 10 child psychiatrists for every 100,000 children – well below the recommended 47, the bid says.
According to a presentation made to lawmakers by the Texas Health and Human Services Commission earlier this year, an average of 1,222 people were on a waitlist for a psychiatric bed in December 2024.
The adult wing of the new facility will reserve 75 beds for people going through the justice system, known as “forensic” patients – most of whom have been deemed incompetent to stand trial, and a small number of whom were committed to treatment after being found not guilty by reason of insanity.
Statewide, as of August, the forensic waitlist was at 1,769 people – down by about 800 from 2022, according to HHS.
The Dallas County Jail is facing a mental health crisis, with about 57% of people who were in jail last year having received mental health services from the state.
Local officials and community leaders in Dallas have led the charge for the new hospital, forming a coalition in 2021 to plant the seeds for the idea that the region needs its own safety net psych hospital. The nearest state hospital is in Terrell, and serves the psychiatric needs of 25 counties – among the most populous in the state.
The Legislature approved $237.8 million in federal funds that year for the Dallas hospital, along with $45 million in state funding to plan, design and acquire land for the facility. UTSW was engaged to help with that process and named as its operator. It broke ground in 2022.
In 2023, the Dallas Regional Chamber sent a letter to lawmakers acknowledging that “due to inflation and rising construction costs,” another $109 million would be needed to complete construction in addition to $68.5 million for ramp-up costs.
“The need for behavioral health services across Texas has never been greater in the Dallas region, there are only about five state inpatient hospital beds per 100,000 residents, less than half of the national average,” the February 2023 letter said. “With demand for mental health services surging in North Texas as the result of rapid population growth, a declining supply of service providers, and adverse mental health impacts stemming from the COVID-19 pandemic, patients must often wait days or even weeks for treatment.”
Earlier this year, the Legislature approved hundreds of millions of dollars to expand inpatient psychiatric care across the state, including funding to staff new and existing state hospitals, operate the new Dallas facility and support community mental health centers.
The initial plan was that although the new hospital would be funded and overseen by the state, it would be operated by UTSW, which has one of the largest psychiatric residency programs in the country and the largest residency and fellowship training program in the state, said Sen. Lois Kolkhorst, R-Brenham, chair of the Senate Health and Human Services Committee.
The total amount approved for the Dallas hospital from 2021 to 2023 was $384 million, including the budget for UTSW to operate it, Kolkhorst told The News in a statement. Another $261 million was provided by Children’s Health to build the pediatric wing.
But during budget sessions earlier this year, lawmakers led by Kolkhorst, who is also one of the chamber’s budget writers, nixed the UTSW plan and called for cheaper bidders after its bed-rate projections came in “much higher than any other rate currently paid by HHSC for public state hospital services, and would be higher than what the state would incur to operate the facility itself,” she said.
“In other words, the higher rate proposed by UT Southwestern, along with its significant ‘ramp-up’ costs, would have a powerful and negative budgetary impact on all other state hospital bed rates in the future, as it is an outlier compared to other ‘bed rates’ paid to any entity in the state,” Kolkhorst said in the statement.
The ramp-up costs referred to the nine-month process of getting the facility functional before it could open later in the year, officials said.
Kolkhorst did not say how much UTSW had said it would cost but added UTSW had acknowledged the need for more than was originally budgeted. The current bid says it can open the hospital, which like other state hospitals would be funded by the state every two years, under the current funding. UTSW would be prepared to make the case for any additional funding on top of that in the years ahead if needed, the bid says.
A rider on the state budget instructs the HHSC to issue a “request for information” that would explore the viability of collecting other bids. Similar to a request for proposals, the RFI could precede a contract for running the facility, though it does not guarantee that one will be signed. The Legislative Budget Board, composed of state leaders and budget writers, would need to sign off on it before the commission awards a new contract.
Kolkhorst left the door open for UTSW to operate the hospital, but said her duty lies with taxpayers first.
“As Chair of the Senate Committee on Health and Human Services, one of my constant responsibilities is to ensure that state-funded services are as cost-effective as possible,” she said. “Many Texans are concerned about skyrocketing property taxes and state budget spending, which means that it is vital for the state to explore all options to operate these facilities.”
Jenkins puts his confidence in UTSW’s ability to “respond to the bottom line” laid out by legislators and said the improved outcomes the medical center could generate with its expertise and experience would benefit all taxpayers — not just the patients.
“Southwestern developed what I thought was a very thoughtful operating plan focused on better care and shorter stays, with things like transitional programs, interventional psychiatry … as well as obviously workforce training across the state,” Jenkins said. “It uses best-in-class models, tried and true in other places, to give us better outcomes here in Texas. And ultimately, that’s not just what’s best for the community around the sick person. It’s what’s best for all the taxpayers.”