wastes $23M on IPRO contracts
By SHERRY HALBROOK
An analysis, that PEF has just completed, of contracts awarded by the state
Health Department (DOH) reveals it is outrageously overpaying for contracts it
has with the Island Peer Review Organization (IPRO), for services related to the
licensure and regulation of adult homes, and home health care.
Since 1997, DOH has awarded IPRO 24 contracts totalling at least $137.5 million.
PEF’s analysis of one IPRO contract (No. C018447), found charges for labor run
35 percent higher on average than in-house (state-employee) labor costs for the
same services even when the cost of the benefits and overhead of using state
employees was included.
“When we applied that 35 percent bloat factor for labor costs to the other IPRO
contracts, we came up with at least $22.9 million that DOH has overspent by
doing business with IPRO since 1997,” said Tom Cetrino, who heads PEF’s
Department of Civil Service Enforcement, which did the research.
“That’s $22.9 million the state could have saved New York taxpayers if the state
had used its own employees to do this work, rather than IPRO consultants,”
Some of these contracts are still running and by the time they expire an
additional $5 million will have been spent on the excess labor costs, bringing
the total waste to nearly $28 million.
“It’s very clear where the state is wasting tax dollars,” said PEF President Ken
Brynien, “and it’s not on pay, benefits or pensions for state workers. In fact,
the data has shown over and over again, they are one of the few real bargains
the taxpayers get, in spite of all the political rhetoric you hear to the
The 35 percent average bloat-factor for labor costs should come as no surprise
to DOH, Cetrino said, because that agency released data in February 2003 that
revealed it was spending even more — between 56 percent and 91 percent more — on
IPRO contractors than it would spend hiring state employees to do nursing home
“Our analysis confirms the findings of the state Health Department in February
2003,” Cetrino said.
PEF found DOH has wasted at least $177,635 in excess labor costs on contract No.
C018447 with IPRO to staff the Adult Home Hotline and to conduct
(regulatory-compliance) surveys of home health care agencies.
For instance, during state fiscal year 2004-05 IPRO’s charge to the state for
providing a director for the Adult Home Hotline averaged 37 percent more than
the comparable state employee position, or an average consultant hourly rate of
$64.96 versus the average state title range (salary grades 22 and 24) of $45.03
The average hourly rate for all IPRO consultants working the Adult Home Hotline
is $54.46, compared to an average rate of $41.31 for state employees who would
do that work. That’s 32 percent more for the consultants.
The average cost for IPRO’s home care survey consultant (a registered nurse)
title, was 68 percent more than for the average equivalent state titles.
Overall, the average hourly rate for all IPRO consultants performing home care
survey tasks was 39 percent more than for the comparable state PS&T titles.
Contract No. C018447 is only for IPRO’s work in surveying home care and running
adult hotlines, but the company does other work for the state.
No learning from mistakes
In February 2003, DOH released a chart showing the high salaries it paid IPRO
and other contractors when it contracted out for temporary employees to inspect
nursing homes. The chart showed DOH spent an average of $104,898 annually for
each of the private inspectors it hired from IPRO — 56 percent to 91 percent
more than it costs for state employees who perform the same jobs.
PEF members who do the same inspections for DOH are usually in salary grades 15
or 19 titles and received annual salaries plus benefits ranging from $55,063 to
$67,397 at that time in 2003.
The state has dropped 29 employees in the health care surveyor 1 title (salary
grade 15) since 1995. For every IPRO consultant the state hires to fill that
gap, it wastes an average of $37,500 to $49,834 a year.
Is your state agency wasting money on private consultants/ contractors? If it
is, get the facts and share them with PEF. Contact the PEF Department of Civil
Service Enforcement at (518) 785-1900 or (800) 342-4306, ext. 280.
So far, PEF and the NYS Fiscal Policy Institute have identified more than $500
million wasted annually by the state on “deals” with private contractors for
work that could be done better and for substantially less by state employees.