Oklahoma officials are proposing major structural changes to the state’s health care system, including privatizing some mental health facilities or shifting them to new agency control.
Clay Bullard, who serves as the state’s Secretary of Health and CEO of the Oklahoma Health Care Authority, said the system “redesign” is needed. Shortfalls at the Department of Mental Health and Substance Abuse Services affect his agency, he said.
“We have a situation where one agency’s failure creates a second failure for a secondary agency.” Bullard said. “The secondary agency being the larger agency, which provides services to 1 in 4 Oklahomans.”
The Department of Mental Health was thrust into the spotlight at the end of the 2025 legislative session, when it revealed a multimillion-dollar shortfall that led to the unprecedented firing of its former commissioner.
Despite receiving multiple emergency appropriations, agency officials said they still don’t have enough funds in their budget. New requests include $49 million for Medicaid matching funds and $30.2 million to meet requirements in a federal consent decree. It’s in addition to $22.5 million the agency has already requested to pay for technology upgrades.
Commissioner of Health wants to lead Department of Mental Health
Officials said they need a lawmaker to draft and carry legislation that would allow Department of Health Commissioner Keith Reed to hold dual office, tacking management of the Department of Mental Health onto his list of responsibilities.
Bullard said Reed and his team are poised to help continue stabilizing the mental health department once Interim Commissioner Admiral Greg Slavonic leaves his post in May.
“Once the gavel drops, [it] will be the admiral’s last day,” Bullard said. “We will have no commissioner backfilling him. It’s not an easy job to recruit to.”
Under state law, agency heads cannot oversee two departments at once. Bullard said they do not yet have a lawmaker on board to help them to waive or change the rules.
Slavonic was appointed to lead the agency in June. He said he threw his hat into the ring after he got a call from Stitt’s office, but didn’t know it meant he was the only candidate. Stitt also picked Slavonic to “right the ship” of another state agency in 2023.
Slavonic said the Department of Mental Health’s communication, culture and financial problems have kept him busy. He originally planned to retire in January.
“This by far probably is the biggest challenge that I’ve had to deal with,” he said.
Restructuring the Department of Mental Health
Along with tasking Reed with leading both agencies, officials proposed measures that would further enmesh the Departments of Health and Mental Health.
Changes would gradually reduce the Department of Mental Health’s responsibilities, possibly dissolving the agency altogether.
“All of our consumers and our patients will still get what they need,” said mental health agency spokesperson Jennifer Hogan. “It may be under a different moniker, it may be within a different department, but all of those services will remain.”
Bullard laid out a three-part plan for the shift.
First, he said, efforts to come into compliance with a federal consent decree that tasks the state with fixing a system that keeps people languishing in jail instead of getting mental health treatment should be “siloed” into a separate division, called the “Forensic Services Division.”
“We would move that under the Department of Health,” Bullard said. “The services would still be rendered inside the facilities by the Department of Mental Health and the employees that are in the facilities, but at the direction of the Forensic Services Division.”
Thus far, the department has failed repeatedly to meet deadlines imposed by the consent decree, costing the state more than $3 million in fines and leaving hundreds of people deteriorating in county jails every month.
The second part of Bullard’s plan is to shift all grants, administration and non-facility personnel groupings under the purview of the Department of Health.
Those changes would leave the Department of Mental Health in charge of only state-run mental health and substance abuse facilities, including Oklahoma’s Certified Community Behavioral Health Clinics (CCBHCs).
CCBHCs are federally certified clinics that provide mental health and substance abuse treatment to anyone, regardless of their ability to pay. In return, the facilities receive an enhanced Medicaid reimbursement rate based on their costs of services to meet the needs of vulnerable populations.
Most of Oklahoma’s CCBHCs are privatized, but the department has floated the idea of finding private owners for all of them. Renewed efforts to do so are the third part of Bullard’s plan.
In a press release, the health care leaders said the changes will bring the state “back to the basics.”
“Now is the time to build on the momentum we’ve created and put the system on stable footing for the long term,” Slavonic said.