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Virtual Ruckus

A Denver company tries a fresh approach to home-care services--and loses a $2 million city contract.

C. Lodge, executive director of Adult Care Management, considers himself an innovative guy. He talks about breaking away from "the patriarchal relationship between provider and consumer" in the health-care field, about "empowering the client," about setting up "virtual offices" and flex time so that employees who are single mothers can work out of their homes and so that money that might have gone to office overhead can be spent in better ways.

All very 1990s--but perhaps a tad too bold for Denver's Department of Social Services. For the past three years, DSS contracted with Adult Care to provide case managers who supervised home care for 2,500 elderly and disabled clients--people who might end up in nursing homes if they didn't have someone to help arrange at-home personal and medical services. But this past summer the nonprofit organization lost its contract with the city, worth roughly $2.1 million a year, to Home Care Management--an experienced, albeit more conventional, for-profit company.

The move has been a critical blow to Lodge's company, which was forced to lay off fifty employees, or two-thirds of its workforce. And it has generated alarm and complaints among some advocates of the aging and the disabled, who have questioned the process by which the contract was awarded, the lack of consumer input in the decision and, most of all, the degree to which the move may have disrupted the services available to ailing, homebound Medicaid clients.

Lodge claims that the decision to put the contract up for bid resulted from philosophical disagreements between his board and Kitty Pring, DSS's director of adult services. "This is about the way the city does business--allowing one person to screw with people's lives so dramatically," he says. "Kitty wanted things done her way, and that was it."

Pring, however, denies any personal motives and defends the move as both warranted and successful. "The transition created a tremendous amount of organizational upset for staff and administrators, but I don't think clients got hurt at all," she says. "I'm convinced they're getting better services now."

Adult Care's contract with the city had been on a year-to-year basis since 1993 and had not been subject to competitive bidding until a few months ago--chiefly because of a lack of qualified bidders, Pring says. But that doesn't mean DSS was entirely satisfied with the company's performance. Last February Pring wrote a letter to Lodge outlining her objections to Adult Care's plans to create a for-profit shell that would manage the company; she also expressed "substantial concerns" about how Lodge's virtual-office concept--for example, having case managers work out of their homes and report to supervisors and DSS by phone and computer--would work.

Lodge says Pring's adamant stance about how the company should operate and how it should be structured "was interfering with our ability to do business. We had an obligation to the people we're serving, not the contract adminstrator. This was micromanagement for personal reasons rather than sound business judgment."

A few weeks after spelling out her concerns, Pring decided to put the contract up for bid. "She told me, 'The only reason we're going through this is to give you a wake-up call,'" Lodge recalls.

Pring says Adult Care was "acting more like a wholly independent agency than a subcontractor" and failing to consult with the city on decisions that affected clients, such as the virtual-office experiment. She cites one "adult protection crisis" that resulted when "the case manager was in a virtual-office mode and had the case file in her car. We couldn't get any information, so we couldn't deal with the problem." Lodge says he investigated the complaint and found it to be "totally bogus," but says he had difficulty reaching Pring to explain the measures Adult Care was taking to make the concept succeed.

In any case, Pring insists that her differences with Adult Care weren't the only reason for seeking other bidders. "Other groups wanted to know when a competitive situation would be available again, and I think all contracts need to have an opportunity for public review," she says.

But the review of the home care contract took a strange turn. A committee of seven current and former metro-area administrators reviewed the proposals from Adult Care, Home Care and one other bidder. Even though a majority ranked Adult Care higher than Home Care, the latter wound up winning the three-year contract due to the vagaries of the scoring process, which allowed two Home Care enthusiasts to sway the decision.

Three of the seven, including Pring, rated Adult Care's proposal slightly higher than the others. A fourth member gave his top rating to the dark horse, Home and Health Care, but still preferred Adult Care over Home Care. A fifth gave the nod, by a slight margin, to Home Care. Yet because the remaining two members scored Home Care as vastly superior, it reaped enough points to carry the day.

"Now that the process is over, I wish we'd taken the time to compare the scores and discuss them," says Lisa Brabo, director of aging services for the Denver Regional Council of Governments and a member of the review committee. "I can't recall ever having been involved in a [contract] situation where people disagreed so radically on the scores."

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