Monday, May 22, 2006

Storm of Controversy Over Privatizing State Services

Opinion: Storm of Controversy Over Privatizing State Services
Staff Editorial
Austin American-Statesman
In theory, there's nothing wrong with the state hiring an outside contractor to handle applications and enrollment systems for several major state social service programs, including Medicaid and food stamps — if the contractor can operate effectively and save taxpayers' money. Such a change also should make it easier for thousands of Texans who qualify to use such service programs, even if several thousand state employees lose their jobs.
In practice, though, the state's five-year, $899 million contract with an overseas consulting firm, Accenture LLP, is off to a terrible start. So terrible, in fact, that the Health and Human Services commissioner, Albert Hawkins, has been forced to ask about 1,000 state employees who were to be laid off by the end of the year to please don't go — and offered them $1,800 bonuses to stay. The offer came a month after the commissioner postponed any statewide rollout of the eligibility program because of problems.
The problems included too many clients left on hold for way too long, too many employees making too many mistakes in determining eligibility and errors such as dropping 6,000 kids from the children's health insurance program — their parents had not been told of a new enrollment fee. The children were reinstated.
Some legislators are angry and are rightly demanding that state Comptroller Carole Keeton Strayhorn review the program, which was touted as a way to save the state $646 million over five years. Strayhorn, a Republican running for governor as an independent, welcomed the invitation to take shots at a program launched under the incumbent, Gov. Rick Perry.
She's already called the program "a perfect storm of wasted dollars, reduced access to services and profiteering at the expense of Texas taxpayers." Strayhorn's description might be correct, though saying so before the review, not after, could undermine the credibility of her staff's audit. One issue to be determined, for example, is whether the program's problems are the result of profiteering, honest misjudgments or simple incompetence.
The program is one result of House Bill 2292, by former state Rep. Arlene Wohlgemuth, R-Burleson, which in 2003 ordered a massive reorganization of the state's health and human services departments and agencies. The bill included a provision to examine possible cost savings if the state outsourced the process of applying for and maintaining the eligibility rolls of Medicaid, the Children's Health Insurance Program, food stamps and the Temporary Assistance for Needy Families program. And it directed the state to consider possible savings from enabling applicants to use call centers and Internet connections.
Eventually, a contract was awarded to Texas Access Alliance, a consortium anchored by Accenture, an American consulting company officially headquartered in Bermuda. (Locating in Bermuda can help a company reduce the income tax it owes to the federal government, but apparently does nothing to lessen the company's willingness to make money off other American taxpayers.)
Strayhorn is right to take a good, hard look at this program. But she should not let her electoral ambitions interfere with her staff examining the contract performance with objectivity.

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1 comment:

Anonymous said...


Stop throwing good money after bad; fire Accenture,
rebuild health and human services at the local level

Austin- The Texas State Employees Union today called on the state Health and Human Services Commission to fire Accenture and to take immediate action rebuild the state's health and human service delivery network that has deteriorated so badly since HHSC awarded the $899 million call center contract to the Bermuda-based company.

The union made this call after the San Antonio Express News published an article by Guillermo Garcia today saying that HHSC has paid Accenture $91 million even though the agency admits that "the [call center] program is fraught with operational problems."

"HHSC should stop throwing good money after bad," said Mike Gross, TSEU vice-president. "The conservative and prudent thing to do would be to fire Accenture then use the money budgeted for the contract to improve services at the local level."

Because Accenture was performing so poorly, HHSC on May 10 returned most of the work that Accenture was doing back to state employees and announced that 1000 eligibility workers who had received layoff notices would keep their jobs.

Prior to May 10, thousands of cases were backlogged, some food stamp applications were taking three to four months to process, and frustrated clients were complaining to their legislators. During the four months that Accenture was processing CHIP and Medicaid applications, enrollment in these programs dropped substantially. In April CHIP enrollment dropped below 300,000 for the first time since 2001.

"HHSC made a bad decision when it chose to privatize services," said Gross. "It redeemed itself somewhat this month when it returned most of the work that Accenture was doing to state employees."

But HHSC's ability to deliver services is still hampered by its privatization decision. About 1000 employees who once worked in local eligibility offices have quit since July when HHSC awarded the call center contract to Accenture.

As a result many local offices are short staffed. One Houston office that used to have 40 employees is now down to 18 full-time staff. To make matters worse, state employees in local offices are working Accenture's backlog as well as their own caseload.

"HHSC should take the money that it planned to spend on the Accenture contract and re-invest it in its community-based offices," Gross said. "Community-based offices are where people can get face-to-face assistance from knowledgeable, professional state eligibility employees. You can't get the same kind of help from a faceless, call center operator."