Tuesday, June 7, 2016

Restructuring DHS business functions just the beginning, director says

Posted By on Tue, Jun 7, 2016 at 8:38 PM

click to enlarge CHANGES AFOOT: DHS Director Cindy Gillespie (center) addresses reporters on Tuesday with Deputy Directors Mark White and Keesa Smith. - BRIAN CHILSON
  • BRIAN CHILSON
  • CHANGES AFOOT: DHS Director Cindy Gillespie (center) addresses reporters on Tuesday with Deputy Directors Mark White and Keesa Smith.

The director of the Arkansas Department of Human Services announced today she will newly centralize many business functions of the state's largest agency under herself: finances, procurement, information technology, human resources, legislative outreach and community engagement.

DHS Director Cindy Gillespie said at a press conference Tuesday that the changes will allow each division of the sprawling agency to better focus on doing their jobs, while also cutting costs for the department. When Gillespie stepped into the role on March 1, she began a full review of the agency. The changes to "core business functions" announced today are just the beginning; throughout the summer and fall, she'll examine programs and personnel in depth.

The restructuring is significant. Currently, there are 10 divisions with the department, each with its own director: Child welfare is handled by the Division for Children and Family Services, most Medicaid programs fall under the Division of Medical Services, and so forth. Business functions  — procurement, IT, etc. — are administered separately by division. That doesn't make sense, Gillespie said.

"Why would child welfare know how to buy technology?" she asked rhetorically. :Divisions can stop worrying about business activities ... and focus on programs."

"As director ... I have to go to 10 different divisions if I have a question about hiring [practices]," she continued. Not only does that decentralized structure create a lack of consistency within DHS, Gillespie said, it overlooks potential efficiencies and cost savings, especially in terms of negotiating with vendors. With a budget of over $8 billion (most of which comes from federal Medicaid dollars) and more than 7,000 employees, Gillespie said DHS is overlooking opportunities to flex its purchasing power.

Gillespie's solution will involve creating seven new positions that answer directly to her: A chief financial officer, a chief information officer, and so forth. Kelly Linck, a state representative who yesterday resigned his elected office to serve in one of the positions, will be the chief of "intergovernmental affairs." Amy Webb, the department's main spokesperson, will be promoted to "chief communications and community engagement officer," a new position that includes both public relations and engagement with nonprofits and faith-based organization. (In creating that office, the director will eliminate one of DHS' ten divisions, the Division of Community Service and Nonprofit Support.)

Gillespie said DHS needs to improve at outreach both inside and outside government: "[We've been] very ad hoc in the way we deal with the external world."

Here's a Powerpoint showing the current and future organizational structure of DHS.
The director promises savings from all of this: The new CFO, Mark Story, has already committed to finding $25 million in savings by centralizing financial services in a single office. The new procurement office won't renew contracts with at least two major vendors — McKinsey and DataPath — that are worth a combined $23 million. 

click to enlarge Cindy Gillespie - BRIAN CHILSON
  • BRIAN CHILSON
  • Cindy Gillespie
Gillespie was more circumspect on the subject of staffing cuts. She said there'd be no layoffs under restructuring, but that eventually the agency's workforce will be smaller (she's not sure by how much smaller, though). It won't be a problem to reduce staff through attrition, Gillespie said, considering the 22 percent turnover rate at DHS — something she also cited as a major problem. "That's not a functional, practical way to operate," she said, adding that attrition was even larger in certain divisions (such as child welfare).

Lowering that turnover rate will be one goal of the next phase of her department-wide review. Low compensation is one reason turnover may be high, she admitted, and said she expects staff eventually will be better compensated as a result of the projected cost savings.

What about the Division of Children and Family Services, where a detailed independent review last year found caseloads for child welfare workers in some parts of the state had reached crisis levels? Doesn't DCFS simply need more hands on deck? Gillespie agreed that (at the caseworker level, at least) that is true. She said an executive working group, which includes herself, was focusing on DCFS specifically, and that it soon would be making recommendations on improving child welfare.

"What's going on with DCFS ... we are tackling as a DHS problem, not just a DCFS problem," she said. That may sound like gibberish at first, but it's potentially significant: When DHS was ran by Gillespie's predecessor, John Selig, the child welfare division seemed to have little direct accountability to the DHS director. If Gillespie takes more direct ownership over the problems at DCFS, perhaps that will change.

Gillespie also acknowledged ongoing issues in the computer system DHS uses to determine eligibility for various benefits, including Medicaid. The "enrollment and enrollment framework" has been a logistical and technical nightmare: Over the past several years, the agency has paid millions in taxpayer dollars to a bewildering array of software vendors to build a system that still routinely malfunctions. Problems with the EEF contributed to last year's "purge" of private option beneficiaries from the Medicaid rolls (a problem made worse by the governor's insistence on maintaining unnecessarily punitive policies). More recently, some families that receive insurance through ARKids have found themselves locked out of coverage. (Arkansas is also not alone in facing technical problems in designing a new EEF system, which is required under Obamacare.) DHS is working on a new RFP, Mark Story said, which should be ready by the fall.

In general, Gillespie said, DHS has been too reliant on outside vendors, especially on IT contracts. Many technical matters, she said, can be taken care of in-house.

There's little doubt DHS is in need of changes, I think it's fair to say. The agency has ran into a long list of troubles over the past several years, from child welfare scandals at DCFS to an ongoing FBI investigation into fraud surrounding summer feeding programs for children (that's the Division of Child Care and Early Childhood Education, or DCCECE, if you're keeping track). There are many other examples. The unanswerable question is whether Gillespie's proposed changes to the department's "core business structures" will introduce much-needed accountability and efficiency to DHS, or whether they'll simply add a new layer of bureaucracy.

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