Wednesday, January 27, 2010

Iowa Gearing Up to Save

Last December, the Governor of Iowa Chet Culver signed an Executive Order to enact cost saving recommendations that have the potential to save the state over $700 million over five years. Recently, the Iowa Efficiency Review Report was completed and made the 40 recommendations on how to achieve cost savings. The report was submitted to the Governor and Lieutenant Governor Patty Judge.

A portion of these measures will affect technology development, health, and medical fields. Some of the recommendations may require legislative action and some of the recommendations may also undergo further review.

According to the report, cost savings would be achieved if telemedicine services were to be reinstated between the Department of Corrections (DOC) and the University of Iowa. Most routine medical care for correctional facility inmates takes place in the prison and is provided by prison physicians with the University of Iowa physicians providing specialty care.

In past years, telemedicine links between the Department and the University provided experts in orthopedics, HIV, internal medicine, urology, cardiology, psychiatry, dermatology and other specialties. However, the University of Iowa provided its last telemedicine consultation in August 2009.

Before the telemedicine consultation program ended, the DOC transported an average of 113 prisoners each week to visit a University of Iowa physician for specialty consultations. The DOC estimates that transportation costs and pay for the overtime required for prison guards to transport inmates to the University medical facilities amounted to $393,000 a year. It was found that about 38 percent of these costs could be saved by using telemedicine. Plus if additional visits were avoided by using telemedicine, even more savings would accrue.

To save money, the state wants to increase the use of technologies and use more “Thin Client Technologies” or sometimes called server-based computing. Computers today have become very complicated and are not always a simple tool to use and as a result, when new hardware and software is released, determining compatibility can be a problem.

To simplify the problem, “Thin Client Technology” (TCT) is a computer or computer program that allows data storage memory and processing horsepower to be located on a computer server. This means that many clients will be able to share their computer work using the same server.

TCT saves money by allowing updates, maintenance, and security to be done at a central location during non-working hours thus reducing the amount of time that the staffs needs to travel to individual sites. TCT also eliminates connectivity problems to satellite offices and provides a secure way for employees to access the state system when they are out of their offices.

Michigan recently converted over 27,000 employees to its TCT system and saved between $3 million and $5 million within its first year of operation. It is thought that by replacing 33 percent of the PCs every five years with TCT, Iowa can save $4.3 million in five years.

The report also recommends that the state consolidate IT professional services contracts. In fiscal year 2010, Iowa is projected to spend $15 million on multiple professional services contracts with private vendors. It is thought that if the state consolidated its projected $15 million multiple contract spending, the state could negotiate lower prices because it would be buying many more services from the same vendor and could take full advantage of bulk purchasing prices for IT services.

Savings could also be achieved by expanding the use of electronic payments in the state Department of Human Services (DHS). Electronic payments are widely used in DHS, but are not used in the Children and Family Services Division. Additionally all Health Insurance Premium Payments and most payments to Medicaid providers are made by paper warrants. Only 25 percent of DHS payments are made electronically.

DHS could save about $156,000 in the first year of full implementation if 75 percents of these payments were made electronically. This takes into account the cost of $149,000 for the system changes that would be required. Total savings over five years would be $780,000.
Other measures that could effectively reduce costs would be to:

• Consolidate information technology planning and operations as feasible
• Consolidate wireless equipment purchasing and service contracts
• Ensure that the state is getting the best purchase prices for required Medicaid medical equipment
• Modify the Medicaid Durable Medical Equipment rental versus purchase policies
• Update Nursing Home Recoverable Cost Regulations to assure that the state’s financial interests are fully protected
• Claim federal reimbursement for eligible inmate hospital care
• Modify Medicaid prescription drug purchasing

Go to to download the report.