DHSS makes efficiency new goal for future

At $1.6 billion, it is the most expensive in the state's budget, but the Alaska Department of Health and Social Services is about to embark on a new course aimed at delivering a better product more efficiently and at less cost.

"It's the most comprehensive restructuring in the history of the department and it might even be one of the largest restructurings in the history of the state government," said Joel Gilbertson, commissioner of Health and Social Services in Gov. Frank Murkowski's administration.

The full-scale redesign includes eliminating whole divisions, consolidating their services under new headings, creating a departmentwide review function and moving a total of five programs from other departments into DHSS and marrying them to related programs already run by his department.

In part, the move will restructure the way the state uses Medicaid funds, allowing Alaska to replace state funds with federal dollars, Gilbertson said.

Meanwhile, roughly $70 million in fiscal year 2004 state budget vetoes by Murkowski have ended the Longevity Bonus grants and cut, among many items, more than $500,000 in behavioral health grants to residential alcohol and drug services in Kodiak and the North Slope Borough, nearly that much in child protection legal services and almost $2.15 million from the Division of Public Assistance.

In many cases, the cuts were made possible by the restructuring, which will eliminate positions, not necessarily services. Nevertheless, the cuts have drawn criticism from opponents who say the administration is taking from the needy while granting tax incentives to oil companies.

"What you don't hear is the work the department did to attract $55 million in new federal funds owed to the state. We're bringing those funds into the department and using them to replace $55 million in state general funds. That's a great story," Gilbertson told a Kenai Chamber of Commerce luncheon Wednesday.

"There are a number of individuals who want to focus on the cuts in spending on these social services. Well, they are cut if they are not replaced with another revenue source, and they were."

Gilbertson acknowledged there have been reductions to specific programs, programs he said weren't working.

"I think we can all agree that we want to measure the programs that are funded with state resources and we want them to work," he said. "But the majority of reductions were reductions in general fund investment of state resources and replaced with federal dollars."

Gilbertson, a graduate of George Washington University Law School and the School of Public Health and Health Services, served on Murkow-ski's U.S. Senate staff, managing policy on several issues, including Medicaid, the state children's health insurance program known as Denali KidCare, Medicare, Social Security and welfare reform.

In an interview following the luncheon, Gilbertson said what drives him.

"The department has a mission in statute," he said. "It is to protect and promote the heath and well-being of all Alaskans," he said. "My personal belief is that the Department of Health and Social Services, in all its operations, should be working to promote self-sufficiency."

A look at the state budget shows the majority of its growth occurs in DHSS. The Medicaid program alone has grown by $100 million a year since 1999, Gilbertson said.

"As we try to finance state operations into the future, you have to take a look at state programs that are growing faster than the state can afford to keep up with," he said. "We have to look at the long-term salvation, for lack of a better word, of the department, a way to make the budget something that the state can afford and make sure the programs are providing the services and that the safety net exists.

"It is only by having less people on welfare, less people on Medic-aid, less people in our detention facilities and less people in our psychiatric institutes ‹ that's how you are going to address long-term this rapid rise in the services being provided by the state and the costs."

The administration is pushing resource development as a way past the current fiscal difficulties. But that will take time. Meanwhile, the belt-tightening is likely to continue. While DHSS is not playing a direct role in resource development, it is invested in the outcome, Gilbertson said.

"A key component of the long-term financial solution for the department is oil and gas development, a healthy timber sector, a healthy fishing industry," he said. "It's bringing natural gas to market. It's opening ANWR, bringing out heavy oil."

Until those things come to fruition, commissioners, division directors and program managers face a challenge to cut costs by promoting self-sufficiency in those receiving state benefits, Gilbertson said.

The restructuring in his department will cut costs by eliminating half the existing divisions. The goal is to improve both the level and efficiency of service, he said.

"We are getting rid of the Division of Family and Youth Services," he said. "We are getting rid of the Division of Mental Health and Developmental Disability, the Division of Alcoholism and Drug Abuse and the Division of Medical Assistance."

The newly created Office of Children's Services will put all child services in one division, including health services currently under the Division of Public Health and behavioral rehabilitation services now in the Division of Medical Assistance. One person will be responsible for making sure the noneducational needs of Alaska's children are met, he said.

Meanwhile, the new Division of Behavioral Health will now provide mental health and substance abuse services. Heading that division will be Bill Hogan, former chair of the Mental Health Board of the state.

"We are just acknowledging what the grantees always knew," Gilbertson said. "That the person receiving alcohol and drug abuse services and the person receiving mental health services are often the same person. Over 70 percent of those receiving substance abuse services in this state have a mental illness."

One move will make better use of available federal Medicaid dollars by tapping those funds to pay for grant programs currently funded entirely with state money. Gilbert-son said many of those grant programs deliver services that are eligible for Medicaid.

"We identified $30 million in grants that are going out right now that are 100 percent funded by the state," he said. "We grabbed these programs and said the grantees should still get the money, they are good programs, but why do we have to have the state paying the entire cost?"

Some $20 million in federal funds will now cut those costs by two-thirds, he said.

"But how does that show up in your budget? It shows up as a reduction of $20 million to grants. That's what we are being criticized for, but that's good management. The money to the grants is the same," he said.

Additional savings will be realized by requiring larger matching funds from some agencies in some grant programs. The state held harmless many small-scale grantees and some in underserved rural areas, while larger agencies will work with the state to find appropriate match levels on a sliding scale, he added.

Restructuring will improve the public health system, invest anti-bioterrorism money in epidemiology, increase staffing of microbiologists and clinical lab workers, beef up primary care and intervention services and provide better equipment to public health nurses, Gilbertson said.

Other efforts include reducing the number of youthful offenders in institutions by focusing on residential settings, boosting assisted-living programs and working with tribal health officials to increase care in rural Alaska.

"We are doing great work," he said. "The safety-net system is still there."

Some of the changes will be apparent July 1, Gilbertson said, while others may take months to complete, such as where whole divisions have to move offices or where service sectors and the workforces that provide them must be integrated.

How will the success of all the changes be measured?

"By living within your budget, reducing the layers of bureaucracy between the frontline worker and a director. By determining if the customers are getting good customer service," he said.

Ultimately, however, decisions will be made that directly affect those customers, perhaps even moving some off state aid entirely. Programs and grants are still being analyzed, he said. At some point the question whether an existing service or grant should remain a state function has to be answered.

"What we have to do is build upon this whole system to provide the maximum possible and not waste resources," he said, "and that's why we try to focus on efficiency.

"We shouldn't make uneducated decisions. We have to have a reason (to make a cut)."

But that takes measuring a program's effectiveness, and Gilbert-son said such measuring is sorely lacking, particularly in the area of substance abuse programs, something he intends to change.

"You'd be surprised at the lack of measurement that goes on in the grants administered by the state," he said.

Gilbertson isn't blaming the grantees that deliver those vital services. It was the state's fault, he said, for not insisting on measurable results.

Asked if he had personal experience with those who receive government aid, Gilbertson said he had.

"It's impossible to have this job and work in these services in this state and to not know people, to become involved with people, to have a personal investment in people who rely upon social services from the state. You can't see the services just as services provide to 'a demographic.' You have to know these are lives and these are people, and that your employees are lives and people, too."

By Hal Spence
24 June 2003

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