State 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,” Cetrino said.

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 contrary.”

No surprise
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 inspections.

“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 to $49.77.

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.