A Simple Idea for Saving on Health-care costs

Plus: Losing credit in Hartford, fed-state stat spat, and more
October 22, 2008 AT 3:00 AM
Barrett and Greene
By Katherine Barrett & Richard Greene  |  Columnists
Government management experts. Their website is greenebarrett.com.

Methods for cutting health-care costs are one of the Holy Grails of state and local budgeting. Sometimes the solutions require cutting people from the Medicaid rolls -- either in public view or through somewhat sneakier back-door means (such as making enrollment forms more difficult to complete).

But here's an idea from the American Society of Anesthesiologists that feels appropriately painless, given its origin. According to a recent study, simply "universalizing the look of medication labels" can make a huge dent in the occurrence of medication errors. These errors cost the health-care industry an estimated $3.5 billion a year. The study's authors suggest that "general use of the international color coding of drug classes used in anesthesia by the pharmaceutical industry for labeling and medication packaging might reduce the number of errors which result from human factors."

We're puzzled by the recent decision in Hartford, Connecticut, to take city credit cards away from all city employees except department heads, as described in a piece in the Hartford Courant.

As far as we've understood it, cities distribute credit cards to employees in order to save money in processing low-level purchases for things like toner cartridges or stationery. The alternative often means going through a cumbersome procurement process (that itself costs money) in order to spend small sums. A spokeswoman for the Hartford mayor told the Courant that "she could not estimate how much the city will save from the policy change."

Seems to us like the only way the city saves money by revoking the credit cards is because they've been used for wasteful or personal purposes. We'd be inclined to keep the cards and eliminate the waste or fraud. But maybe someone from Hartford can explain to us why this wouldn't work. We'll be happy to print such a response.

All too often, authoritative statistics from the federal government vary wildly from similarly solid stats from the states. This is obviously a problem for planners -- and it can't make it too easy for the federal government and the states to come to terms on any given problem.

One good example involves the numbers cited for unemployed Americans. Another similar piece of potentially troublesome discordance was pointed out in a recent state performance audit: The federal Department of Labor states that more than 47,000 new jobs were created in Kansas between 2003 and 2007, while state agencies put that number at 80,000.

"Pay for performance may be the most profound tool available for a government entity. And I've yet to find one that was able to pull it off."

-- Bill Leighty, former chief of staff for Virginia Govs. Mark Warner and Tim Kaine

We're beginning to feel old and a trifle curmudgeonly (though we don't think we look it). We've now been through enough cycles of good times and bad in state and local government that we've come to feel jaded about how budgets are going to work. In good times, governments solemnly promise that they'll never make the same myopic fiscal mistakes they've made in the past. Then come bad times, and that's exactly what they do.

David Smith, county manager for Maricopa County, Arizona, is one of the most thoughtful folks we know. He's put together a list he titles "Favorite Budget Gimmicks I Have Seen." And we'd predict that any number of them is going to be used in coming months. A handful:

o Undisciplined revenue estimates that are inevitably wildly optimistic

o New revenue sources budgeted at unrealistic levels

o Going to two or more year licensing fees, then spending all the money in one year

o Using capital dollars for operating expenses

o Using one-time sources of funds for recurring expenses

o Moving payment for certain expenditures into the next fiscal year

o Projecting unrealistic "efficiency savings" from process changes

o Deferring building and vehicle maintenance to point of failure

Manager's Reading List: Our ongoing feature about books to read, recommended by B&G readers

Our recommendation this issue comes from Ed Barrett, the city manager of Bangor, Maine. Writes Barrett:

"Just finished reading Predictably Irrational by Dan Ariely, a behavioral economist at MIT. He explores the basic assumption that markets (and individuals) behave in a rational manner and, through actual experiments, shows that this is not always the case. Rather, we often make what classical economics would term an 'irrational' decision, but, he argues, one which can be predicted. I found the book a very enjoyable exploration of actual human economic behavior that provided some insight into not only economics, but the human decision making process as well."

More Manager's Reading List suggestions here, here and here.

Years ago, we were impressed by the way an open staircase in Phoenix connected the city manager's office and the mayor's office. It seemed like more than just an effective architectural device, serving as a powerful statement to visitors about the way things worked in that city.

Lately, we've been delving a bit into the science called "behavioral economics," and we've discovered some validation for our thoughts.

A series of lectures on the topic of behavioral economics appears online at edge.org. The following is a comment from the first lecture, in reference to a new building at the Chicago Business School:

"All kinds of small things about the architecture influence the way people use it. For example, there are open stairwells that connect the floors the faculty are on, with a big skylight above them. That open stairwell makes the colleagues on adjacent floors feel like neighbors in a way in which they don't in a building where you have to take an elevator or go into a claustrophobic stairwell. They also get a little more exercise because people always want to use those stairs. They never take the elevator. But if they have to go to one of the floors without an open stairwell, they jump in an elevator."

We've just come across a Web site called howcast.com. When we first discovered it, we were amused and a little excited. Then we got a little unsettled.

Here's why: This site contains "how-to" videos on a range of topics. Many are humorous. Some are genuinely helpful, like how to lower home heating costs or how to haggle over prices (pertinent to us, as we live in fear that we're always paying more than we should for almost everything).

There's a whole section of the site devoted to careers and education. Under education, for instance, the site has items on "how to deliver an interactive lecture." Naturally, we turned to see what we could learn about careers in government.

That's when we got depressed. The list of how-to guides included "how to give a speech without saying anything," "how to backpedal, spin and dodge," and "how to give a great sound bite."

We don't know that this is indicative of anything in particular. But it did make us sad.

In good times and bad, one of the bright spots in New York City's management has been its Mayor's Management Report. It really is one of the best performance-related documents in the U.S. If you haven't seen it, we recommend that you take a look.

The B&G Journalist of the Month award goes to Dave Peyton of the Charleston Daily Mail in West Virginia. (Full disclosure, we both worked with Dave as interns in West Virginia more than 30 years ago. We haven't been in touch with him since, for which we can only say, "Sorry, Dave.")

In the October 6 edition of the Daily Mail, Peyton addresses a question that we've wondered about a lot: "Should employees of a city be required to live in the city where they work?"

Apparently, an estimated 40 to 50 percent the employees of Huntington, West Virginia, live outside city limits. Meanwhile, after years of back and forth on the subject, a recent state Supreme Court decision requires that the city begin enforcing an ordinance that mandates that employees who can't prove residency face dismissal. According to Peyton, the mayor thinks this is a crummy idea, as it likely means that the city won't necessarily get the best applicants.

This seems implicitly true to us, and we think the tradeoff of more jobs for city residents in exchange for lesser employees isn't a good one. The mayor notes that the number of applicants the city has had for civil service exams has dropped since 2002 (when the ordinance was passed and moved to the courts).

Research Assistant: Heather Kleba