Here come the turnaround experts

By Scott Mooneyham | Feb 11, 2014

RALEIGH — That the North Carolina Department of Health and Human Services has hired a "turnaround" consultant to help sort out its Medicaid operations does not say good things about where things currently stand within the state agency.

Obviously, where things stand in the future will show if the move proved to be a smart one.

There are reasons to be skeptical.

The News & Observer of Raleigh reported last week that the state's health agency had awarded a $3 million contract to DC-area consulting firm Alvarez & Marsal.

It is a sole source contract, meaning the company was picked without any formal bidding process.

According to the newspaper story, the consulting firm will help the agency with all aspects of the Medicaid program: contracting, setting Medicaid rates, auditing, budgeting, and managing information technology and privacy concerns.

A nine-person team will come into the agency to help fix the problems.

The most obvious, and well-publicized, of those problem has been the new Medicaid computer claims processing system, NC TRACKS, that has left doctors and other health care providers frustrated and outraged about delays receiving payments.

A memo obtained by the newspaper, addressed to State Budget Director Art Pope, said qualified staff members in the Medicaid division have been consumed with NC TRACKS and that it does not have enough remaining experienced staff to deal with other problems.

"The department has not been successful in recruiting experienced and qualified staff to alleviate this problem," the memo said.

Democratic state Rep. Verla Insko of Chapel Hill, a retired health care administrator, said she has been told that the division is littered with vacancies.

The important question for the consulting firm is will it be bringing in the kind of expertise, people who actually know and understand Medicaid and state government, needed to put the division on a path toward smoother and efficient operation.

Alvarez and Marsal's primary experience involves righting private-sector firms that have found themselves upside down.

A state agency, though, is not a private-sector business.

Unlike former client Lehman Brothers, Alvarez and Marsal won't be advising the agency on any Chapter 11 bankruptcy reorganization.

And unlike at HealthSouth, the state won't be selling off assets to help balance the books.

Government cannot turn away its customers. It cannot close up shop for a while to try to put its financial and operational house in order.

Making things right will ultimately involve putting qualified, experienced government workers in the right positions, with the right systems, and the right work environment to get the job done.

A turnaround consultant might be able to help put that in place.

What it cannot do is the actual job that a reasonably well-run government agency does.

And if it fails to put something in place that improves the program's operations, the McCrory administration will be answering questions about why it was unable to take steps on its own to put qualified workers in key government jobs.

 

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