DHS director announces reorganization of Arkansas’ $8 billion human services agency

The Department of Human Services is reorganizing itself under new Director Cindy Gillespie by reducing its 10 divisions to nine and creating a structure of seven offices to manage some of the responsibilities those divisions were handling individually.

Gillespie said in a meeting with reporters Tuesday (June 7) that the reorganization is the result of a 60-day review began soon after she started working there.

“Every organization has to every few years stop and look at itself,” she said, adding that the elements of the current structure may have been appropriate when they were created.

DHS administers a wide range of services, including those serving nursing homes, developmentally disabled Arkansans, and foster children. It administers Medicaid and Arkansas Works, the program that provides private health insurance to lower-income adults.

Gillespie said the department’s 10 divisions were operating separately, each handling its own procurement, contracts, hiring and information technology. That arrangement limits the director’s ability to manage the department. It also limits the department’s consistency, keeps DHS from taking advantage of economies of scale, reduces opportunity for synergy, and leaves the various departments to compete against each other for talent.

“We have hundreds of different technology systems across this department, and no central vision that pulls it together,” she said. “When one of our divisions needs to improve its technology, they have to wait until their budget will accommodate it.”

The reorganization of the department’s business structure is the first of a multi-phase process overhauling the $8 billion agency with 7,000 employees. Future phases will look at improving client services and reorganizing the personnel structure, including hiring, career pathways, compensation and evaluation. The initial changes take effect July 1.

Gillespie said the changes will result in “enormous savings, and we’re going to see improved efficiency.” She said DHS will not lay off any employees, but the changes will result in a reduced workforce over time. While some positions will be paid more in order to attract and retain talent, the overall dollar figures for salaries should be reduced.

“Overall you do end up spending less on salaries eventually as well,” she said. “The real savings come from, frankly, stopping some of the bleeding that just takes place from being inefficient in the way you’re buying things, and inefficient in the way you’re managing things.”

Gillespie said the reduction would occur through attrition. DHS has a 22% employee turnover rate, which she said is unsustainable. She said the department is looking at reasons why turnover is so high in areas such as the Division of Children and Family Services, where overworked caseworkers serve foster children while burdened with too many administrative duties like making copies. A law passed in the recent session that reduced the amount of paperwork performed by caseworkers was a result of the review, Gillespie said.

Seven central offices, all led by “chiefs,” will provide services for all divisions and handle duties formerly managed by each of them. New positions will require legislative review.

One of those, the Office of Communications and Community Engagement, will absorb the former Division of Community Engagement and Nonprofit Support. Amy Webb, the current communications director, will lead that office. A new assistant director for Community Engagement and Faith-Based Partnership will work with nonprofit and faith-based groups.

Following are the five new offices
• The Office of Finance, to be led by Mark Story, the current Medicaid chief financial officer.
It will include an office of long-term planning to help the agency plan for future challenges. The office will include a payment and program integrity unit. Gillespie said the office has committed to finding an initial $25 million in savings this first year.

• The Office of Procurement, to be led by Misty Bowen-Eubanks.
Procurements are now handled in each division, and the entire DHS lacks a request for proposal professional writer. Gillespie said DHS will build a “procurement corps,” become more transparent, and reduce sole-source contracts. DHS has already cancelled two contracts – one $15 million contract with McKinsey & Company and one with DataPath worth $8 million.

• The Office of Human Resources.
Gillespie said DHS is seeking someone with perhaps a dozen years of senior level experience in the private sector to manage this office. Finding someone with the right skill set will be a challenge, she said, because half of DHS’  employees are involved in direct patient care. The job is slated to pay $100,077.

• The Office of Information Technology, to be led by Jeff Dean.

• The Office of Legislative and Inter-Governmental Affairs, which will interact with the Legislature.
Rep. Kelly Linck, R-Flippin, is resigning his seat to take this position, which will pay $108,243. Gillespie said the department has lacked a strategic focus for communicating with the Legislature and will be starting a unit focused on constituent services.

Tthe Office of Chief Counsel will continue to house the department’s legal team. That office will continue to be led by David Sterling.

Between new positions and higher salaries, the total added cost of the chiefs is $266,536.25. The department plans to turn back 25 positions unfilled since 2012 for a savings of $597,583.