Governor’s HHSC Strike Force Report: Management Structure or Executive Management Must Change

hhsc buildingGov. Abbott’s strike force has published its report into contracting problems at the Texas Health and Human Services Commission that exploded into public view from the mess with former HHSC chief counsel and deputy inspector general OIG Jack Stick and Austin software firm 21CT last December.

Stick had championed 21CT to get a major contract for Medicaid fraud detection software although the company had no experience in the area, with Stick having a business relationship with one of the company’s lobbyists.  The Texas Tribune has published a story on the report.

On the 21 CT issue, the strike force report concluded:

“that the OIG’s procurement of fraud detection services from 21CT at the very least skirted the limits of permissibility under state law, and represented a case in which OIG executive personnel exercised judgment so poor that it put HHSC’s credibility at risk. It also produced skepticism concerning state contracting and procurement policies in general that could affect the state for years to come.”

“Whether the 21CT procurement represented a useful technology has become less important than the process of its selection. The causes of this breach of managerial responsibility have not been fully explained to date, and may await the completion of investigations by the Public Integrity Unit and State Auditor’s Office. For now, it is enough to understand how the controversy unfolded — and how another can be prevented.”

Report calls for “significant changes either in management structure or in executive leadership”

While the strike force was initially set up to look into the 21CT contracting process, it was given a large leeway in its review of HHSC.

Probably the most important aspect of the report is that it calls into question the leadership of HHSC.  The executive summary of the report states, in part:

The contracting issues at the center of this controversy can be resolved. The agency’s organizational issues, however, are not so easily resolved, and certainly can’t be resolved without a significant departure
from the status quo.

While mistakes can be made at any time in any organization, the ultimate responsibility rests with agency leadership. Under the current management structure, the executive commissioner’s span of control includes dozens of senior staff members, and requires him to juggle dozens of important tasks daily, including budget and hiring decisions; policy and strategy; and meetings with stakeholders, the other HHS commissioners, legislators, legislative committees and representatives of federal agencies.

The executive commissioner had developed an informal “work around” for dealing with these issues by relying on an informal “kitchen cabinet” that created an “us vs. them” environment among senior management and ultimately did not serve the executive commissioner’s needs well.

The structure makes the executive commissioner the linchpin to the effective operation of the HHS enterprise and puts him in a difficult position structurally. For the enterprise to succeed, he must succeed. In our view, this simply isn’t possible without significant changes either in management structure or in executive leadership.

HHSC has a good staff and vital responsibilities. What it lacks is a clear vision for its future and a strategic direction. HHSC’s role is changing. Given the rapid expansion of Medicaid managed care and other changes, a smooth transition from service delivery to strategic oversight is critical. We found little evidence of a path or plan for this transformation. Too often, HHSC’s decisions are reactive.

The full report can be downloaded here.

Governor’s statement

Governor Abbott just released a statement.  In it, he states:

“As Governor, I am committed to addressing these issues head-on.  Upon assuming office, I took the immediate step of directing all state agencies – including HHSC – to implement key transparency and accountability reforms to their contracting and procurement processes. I will take the findings of the strike force’s report into account as I determine what additional actions must be taken to ensure Texans can have the trust they deserve to be able to place in their government.”

Changes may be imminent at HHSC.

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