Oregon State Hospital consulting firm no stranger to DHS

From the Salem Statesman Journal, January 22, 2011

Kaufman Global is not a household name in Oregon.

But the Indiana-based consulting firm is well known to leaders of the state Department of Human Services.

Since 2007, DHS has awarded Kaufman Global three contracts for consulting services, and the firm has played an influential role in reshaping the state’s biggest agency, which has a $13 billion two-year budget and employs more than 10,000 workers.

The contracts:

    -In 2007, the firm was paid $688,000 to assess the agency’s beleaguered financial department and identify cost-cutting efficiencies.
    -Last April, Kaufman Global was hired at a cost of $742,000 to provide “hands on coaching” for DHS managers.
    -Late last year, the firm landed a $2 million contract to craft a strategy for culture change at the Oregon State Hospital.

Taxpayers are leery about consulting contracts, especially now because of the state’s ailing economy and a projected $3.5 billion shortfall in the state’s 2011-13 budget period, which starts July 1.

However, DHS officials tout Kaufman Global as a consulting success story. They say the firm’s 2007 work for the agency paved the way for cost-saving initiatives that have reaped $100 million in savings.

Now, the state is banking on Kaufman Global to deliver results on a tough task — turning around the troubled state hospital.

READ – Kaufman Global’s contract with Oregon State Hospital to instruct their “Lean Daily Management System”

The firm has started working with hospital leaders and front-line employees to change the workplace culture at the 127-year-old mental institution.

Kaufman Global’s initial “cultural assessment” report, made public on Tuesday, concluded that OSH suffers from deeply entrenched problems, including poor communication, distrust and a lack of accountability.

The consultants pledged to help OSH become a first-class psychiatric facility by fixing the flaws.

“It’s now incumbent upon OSH leadership and stakeholders to help ensure these steps are taken to become the first class organization that it can be,” stated the report. “To that end, Kaufman Global pledges its intent not only to reveal those cultural issues that must be changed … but to roll up our sleeves and help implement those changes.”

Magnet for consultants

The Indiana firm is the latest in a succession of outside experts and consultants enlisted by the state to dissect the state hospital’s woes.

The Statesman Journal previously reported that former Lane County Circuit Judge James Hargreaves received $252,465 in state pay for the year he served as governor-appointed “special master” of the hospital.

His 14-page report, issued in early 2009, rapped hospital management for poor planning, undefined goals and a lack of urgency.

Another hard-hitting assessment of the hospital was issued last year by Liberty Healthcare, a Pennsylvania-based consulting firm that was paid $175,000 to study OSH. In that report, dated Sept. 30, consultants said the hospital has “invested great energy and vigor in striving to improve, but the results to date have been disappointing.

“It is paradoxical that the very efforts to improve the hospital have contributed to the current confusion because changes have been implemented on so many fronts and with such rapidity. The sheer volume of change at OSH would overwhelm any organization, but we believe that the essential problem has been the lack of adequate planning and coordination of these improvement efforts.”

Hospital Superintendent Greg Roberts said in a Friday interview that Kaufman Global’s ongoing work is designed to produce change, not just describe what’s wrong.

“We don’t need more and more assessments of the hospital,” he said. “We need to be focused on fixing the problem, and that is where Kaufman Global is coming from. What we need to do now is move on to take action steps to resolve the issues.”

Under its contract with the state, Kaufman Global’s work at the hospital will continue through June 30. Roberts emphasized that “their work is to help us find processes that will last beyond their contract.”
“Eager for change”

As spelled out in their initial report, the consultants plan to play an active role in prompting hospital change. Targeted areas for improvement include:

    -Strengthening accountability throughout OSH and ensuring that projects stay on schedule and on budget.

    -Providing coaching and mentoring to counter a lack of a shared organizational vision and strategy.
    -Revitalizing and realigning senior leadership.
    -Rebuilding trust and eliminating acts of retribution, real or perceived, through education, coaching and mentoring.
    -Eliminating separate agendas and creating “a blameless environment designed to foster continuous improvement.”

“The report doesn’t just tell us what is wrong; it tells us why and provides some valuable insight on how we can fix it,” Roberts said in a message to members of the hospital advisory board. “The good news coming out of this report is that we as a hospital are eager for change and dedicated to improving patient care.”

Roberts said hospital employees demonstrated their desire to embrace change through a “sometimes overwhelming response” to Kaufman Global’s requests for input. More than 1,500 staff and patients participated in the firm’s cultural assessment, filling out surveys and participating in interviews and other exercises.

“For the next step, we will use the tools we learn from Kaufman Global to develop and implement strategies for bringing about the changes we need to instill positive cultural norms at the hospital,” Roberts said in his message to the advisory board.

Previous work praised

Kaufman Global has a proven track record in Oregon, DHS officials said.

In 2007, the department hired the firm, to scrutinize the agency’s embattled financial department.

Jim Scherzinger, deputy director for finance in DHS, said the state turned to Kaufman Global in the wake of a financial debacle that occurred prior to his arrival at the agency.

“When I came in, DHS was taking a lot of criticism because of its finance system,” he said. “Probably the worst thing was that they told the Legislature that their budget was balanced.”

In reality, the agency had a budget shortfall of more than $170 million. Legislators were stunned to hear about the hole, and they had to hold a special session to plug it. Lawmakers told DHS leaders not to let it happen again.

Kaufman Global, hired through a competitive bidding process, came on the scene in 2007. The consultants introduced “lean tools” to DHS.

Initially devised by Toyota, lean tools and techniques are widely used in the private sector to streamline processes and cut waste.

“Ultimately, what they’re designed to do is not to make people work faster or harder but to eliminate waste in the process,” Scherzinger said.

A state Web site entirely devoted to the Transformation Initiative describes “lean” as the primary tool DHS uses to “do the right work, the right way.”

Agency director Bruce Goldberg, in a message posted on the Web site, says: “Today’s economic climate means more families, seniors and people with disabilities are turning to us than ever before. The Transformation Initiative gives us the tools we need to stretch the public dollar in order to deliver critical services that help people through tough times.”

DHS first applied lean tools and training taught by Kaufman Global to the DHS finance department. By December 2008, officials said, the new efficiencies had generated more than $8 million in savings for the agency, far surpassing the $688,000 cost of the first consulting contract.

Kaufman Global was hired again early last year to provide more coaching for DHS managers at a cost of $742,000.

“What they’re really good at is (providing) training on the lean tools and helping you develop ways of engaging your workers in improving processes,” Scherzinger said.

The 2007 consulting work done by Kaufman Global paved the way for a broader DHS “Transformation Initiative.”

Lean tools and techniques have been applied to dozens of projects — from an accelerated hiring program for nurses at the state hospital to a streamlined intake process for applicants seeking food stamps, medical and day care benefits.

As of Jan. 14, 35 lean process improvement projects had been completed, resulting in savings valued at $99.6 million, according to DHS calculations.

About 100 more projects, all based on the lean process, are in varying stages of completion, officials said.