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Expanding Contracting of Social Services with Private Providers

May 18, 2015
Barry M. Simon

Since the start of the 2015 legislative session, Connecticut’s lawmakers have been considering action on a wide range of issues impacting the state, none more pressing than the state’s budget.  With each passing week, the challenges present in the state’s budget situation become more and more apparent.  As Governor Malloy and the legislature begin the difficult work of crafting a balanced biennial budget, they face an estimated $190 million deficit for the current year, a $1.3 billion deficit in the 2015-2016 fiscal year and a $1.4 billion shortfall in the following fiscal year.   

One troubling outcome of Connecticut’s repeating cycle of budget shortfalls is cuts to key nonprofit community health and human service programs that support the state’s most vulnerable citizens.  From supporting children and adults with intellectual or developmental disabilities to helping residents with mental health or substance use disorders, these programs provide critical services to those that need them most.  Unfortunately, budget cuts in these areas are worsened by the increasing cost of providing services in a setting such as Southbury Training School.  The state Department of Developmental Services (DDS) is gradually moving residents to community placements such as group homes, but in a recent Hartford Courant article, national disabilities expert Allan Bergman predicted that annual costs— currently approximately $365,000 per resident — will surpass $600,000 in three years.  These cost increases have implications not only for near-term budgets, but also for future budgets for the State’s long term debt obligations in retirement and pension costs.  By contrast, private providers offer state-of-the-art levels of care without obligating the state to pay millions in future worker retirement and pension costs.

The difficult budget environment represents both a challenge and an opportunity.  As a provider of services for the disabled, it is very difficult to do business in Connecticut and pay a living wage.  We are a viable alternative to more costly and restrictive levels of care and are fully prepared to provide high quality services for all of Connecticut’s individuals with disabilities; the question is whether the state is willing to purchase those services.  Connecticut’s leaders can choose to continue business as usual and allow costs to provide services in a state setting to grow, or they can choose another path, one that leads to structural reform and reduced short and long-term costs, without sacrificing quality of care.  These changes can be achieved over time through increased contracting of services with private providers.  In a 2012 study, the legislature’s Program Review and Investigation Committee found that on average, costs to provide care in a private setting were less than half of providing care in a public setting.  The study also found that while care in public settings costs more, the quality of care provided was not superior to that of private settings. We should not pit one part of the system against another, since there is need for all parts to perform certain functions, and it can transform over time if strategic management decisions are made. 

Now is a critical moment in time as higher costs and the lack of state support will mean program and service reductions and layoffs at the very moment we should be looking for less costly and more productive alternatives.  Non-profit community providers are part of the solution for the future of the service delivery system and preserving the investment made in quality, cost effective, community care.  We are innovative providers that improve independence and quality of life while also being a part of the solution to provide positive economic impact and to attack the unfunded liability issue for the State. 

Contracting services with private providers is employed with success in Connecticut, and leading organizations have called for its expansion.  In a recent letter to Governor Malloy, the MetroHartford Alliance raised increased contracting with private providers as a much-needed reform to bring stability to the state’s budget.  If done strategically and managed properly, implementing these reforms can deliver near and long-term cost savings without laying off state employees or compromising quality of care.  Rather, these reforms will enhance the sustainability of care for those in need of vital services today while ensuring that the state’s budget situation is sufficiently improved to allow those on a waiting list or in need of services tomorrow to be cared for as well.

Barry M. Simon is President and CEO of Oak Hill, which provides a full range of services to people with disabilities. As Connecticut's largest provider of services for the disabled, Oak Hill addresses the needs of every intellectual, developmental and physical disability for Connecticut residents of all ages, from newborns to seniors.

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