Oregon State Hospital will spend $2 million for consultants

Richard Harris

Richard Harris

From the Salem Statesman Journal, October 8, 2010

Hospital has been criticized for poor turnaround efforts

The state Department of Human Services plans to spend nearly $2 million to hire “change consultants” at the Oregon State Hospital in Salem.

The prospective consulting contract with an Indiana-based firm comes in the wake of a separate $175,000 consulting report that criticized scattershot and disorganized efforts to turn around the troubled psychiatric facility.

DHS officials said Thursday that they intend to hire Kaufman Global, based in Indianapolis, to provide outside expertise aimed at changing the hospital’s culture and spurring reforms.

“The goal is to make this a world-class psychiatric organization,” Richard Harris, the director of the state Addictions and Mental Health Division, told the Statesman Journal.

Kaufman Global was selected from three firms that submitted proposals to DHS for the consulting job, Harris said.

Cost estimates issued by all three firms topped $2 million, he said.

“My hope is to get this down below $2 million, but we’re going to have to negotiate that,” Harris said.

The looming consulting job officially is called the “Oregon State Hospital Excellence Project.”

Harris said “change consultants” is the shorthand term used within DHS to describe it.

If all goes as planned, a contract between the state and Kaufman Global could be finalized within 30 days, Harris said.

The prospective hiring of “change consultants” comes on the heels of a critical report issued by Liberty Healthcare, a Pennsylvania-based consulting firm.

In a report dated Sept. 30, Liberty Healthcare 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.”

At a Thursday meeting of the state hospital advisory board, members of the citizen-led panel briefly discussed Liberty’s critical report and were advised by Harris of the DHS plan to hire change consultants.

Outside the meeting room, Harris provided the newspaper with additional details about the plan to hire Kaufman Global.

He said the firm is “very familiar with DHS” and previously worked for the agency to identify efficiencies in its finance arm, business functions and processes.

Based on that pilot project, DHS initiated an agency-wide effort to transform itself into a “world-class” organization in 2007.

Late that year, DHS contracted with San Francisco-based McKinsey & Co., at a cost of $3.2 million, to visit field offices, talk to employees and collect data about the entire agency.

Efforts to make DHS more efficient became known as the “Transformation Initiative.”

Kaufman Global’s prospective consulting work at the state hospital will expand on, but not duplicate, the recent work performed by Liberty Healthcare, Harris said.

The DHS contracts for consulting work come in the midst of a fiscal crisis that has forced cuts in state agency budgets, unpaid furlough days and layoffs.

It also comes as a new $280 million replacement hospital is being built on the OSH campus in Salem.

The first patient-occupied sections of the new hospital are scheduled to open in late November.

Harris said culture change is crucial for turning around the institution.

“It’s going to require more than bricks and mortar to get there,” he said.

New OSH superintendent Greg Roberts participated Thursday in his first substantive meeting with the OSH advisory board.

Roberts said the hospital will move forward with improvements before the change consultants come on board.

“We’re not waiting,” he said. “I’m not going to sit here until November or December doing nothing.”