HHS: We'll learn from 2 agencies

LINCOLN — Nebraska officials expect to learn some lessons from the two private agencies that dropped out of the state's child welfare reform effort.

Department of Health and Human Services CEO Kerry Winterer said Wednesday the success of the reform depends on understanding what happened with the two agencies.

He said the department plans to audit the agencies as part of its search for answers.

But HHS won't abandon plans to privatize a major portion of its child welfare services, Winterer told a panel of lawmakers.

“That ship has sailed,” he said, “but at the same time, we can't afford to do this wrong. We can't afford to not learn from this.”

HHS contracted with five private child welfare agencies last fall to care for children and families in the child welfare and juvenile justice systems.

Under the contracts, the agencies are to coordinate and provide a full range of services, in-home as well as outside the home. The goal was to reduce the number of children in out-of-home care and improve services for children and families.

Less than six months after the contracts were signed, two agencies dropped out, saying their payments from the state were inadequate.

Cedars Youth Services of Lincoln canceled its contract in early April, effective June 30.

A week later, the state terminated its contract with Visinet after the Omaha-based agency filed for bankruptcy. Visinet folded April 15.

Todd Reckling, HHS children and families director, said the department had looked at the agencies' financial state before signing the contracts. But it was up to the agencies, he said, to decide whether the money available in the contract worked for them.

Agencies were expected to lose money on the contracts initially but to break even or make money as they began serving a larger proportion of children in their own homes.

State Sen. Mike Gloor of Grand Island questioned the department's reliance on “cost-shifing” or fund-raising by the private agencies to support state child welfare services.

Reckling called the practice a “shared partnership” rather than a shift in cost.

Cedars President and CEO Jim Blue has estimated the agency would have lost more than $5.5 million over the course of its 20-month contract.

A statement from Visinet said the agency was losing about $10,000 per day.

Winterer said HHS officials want to answer such questions as whether the agencies went into the contracts with incorrect assumptions or whether costs were higher for the agencies than for the state.
He said he hopes to have those answers by July 1, the beginning of the state's new fiscal year.

“It doesn't do us any good to string this out,” Winterer said, “but I don't want to rush to judgment.”

The lessons learned from audits and from talking with the current and former contractors could lead to changes in practices and procedures in the remaining contracts, he said.

The changes won't include more dollars for the contractors, though, Reckling said. Plans call for the amount put into contracted services to remain flat.

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