Editor’s Note: This article is excerpted from Letting Go of the Status Quo: A Playbook for Transforming State Government, which is designed to help government leaders execute bold reforms.

State human services departments confront the same mandate facing most government agencies today: the need to do more with less. Federal stimulus aid temporarily reduced budgetary pressure in many human services programs, but states will be hard-pressed to meet the increased demand for services as this aid dries up.

Finding ways to work smarter by using technology to automate business processes so that critical human resources can be redirected to the front lines is central to bringing human service programs into the 21st century. Business process re-engineering can help identify more efficient ways to deliver services by streamlining processes and eliminating duplication.

To ensure greatest impact, new workflows should account for changes associated with the technology solutions that are introduced. And by simplifying rules and procedures, human service offices can reduce the volume of office calls or visits. The success of human services programs in an era of austerity doesn’t simply rely on figuring out how to respond to increased demand with fewer resources. Success also hinges on refocusing programs on their intended outcomes: reducing dependence and promoting self-sufficiency. Providing flexibility with how those outcomes are achieved and holding programs accountable for results can help realize these outcomes.

In addition, federal health-care reform provides a platform for state administrators to finally integrate health and human services (HHS) programs. While states have advanced in integrating stand-alone benefit programs and services, historically there’s been a very loose link between the two. Given their common underlying mission — ensuring the basic well-being of society’s neediest citizens — reinforcing the link between both would catalyze a more fundamental shift in focus from delivering stand-alone programs to helping people on the path to self-sufficiency.

Transforming human services against the backdrop of today’s bleak fiscal outlook will be challenging. Recognizing that enabling legislation, existing eligibility and scope of service policy vary by state, here are strategies that can help drive change. These reforms can all be accomplished without large funding increases and in most cases should, in time, result in significant cost savings and service improvements.

1. Increase focus on client outcomes

Today not enough focus is placed on outcomes. Human services agencies must determine how to reframe their attention on achieving the stated aims of their programs — helping clients achieve greater self-sufficiency. First, develop the right outcome metrics and second, engage citizens in shaping the services they receive. HHS clients want to play a bigger role in determining what government services they need, as well as compare experiences with their peers and obtain advice on similar cases. Wikis, blogs and other HHS-focused social networking activities won’t just boost citizen satisfaction; they’ll also improve outcomes by making clients smarter consumers.

2. Equip front-line workers with modern tools

Front-line HHS workers historically have been constrained by the information they can carry with them. Mobile technology gives front-line human services workers real-time access to information that enables better decisions, which may produce better outcomes. More so, mobile devices let workers tap into the expertise of peers, drawing on collective experience rather than individual judgment. Florida streamlined foster care caseworkers’ workloads by giving them mobile computing devices that allow real-time information sharing and data upload. Smartphones and laptops with cameras were distributed to more than 2,300 caseworkers to take digital images that immediately upload to the state’s child welfare online system, cataloging the date, time and location. The goal is to let caseworkers spend more time with children and less time handling paperwork.

3. Increase flexibility to innovate in child welfare

Child welfare innovation has been constrained by federal funding that supports the cost of providing foster care and associated administrative expenses but not delivery of these services. As a result, child welfare departments struggle to find money to improve service delivery. Allocating modest funds for this purpose, or encouraging more federal flexibility on how to spend federal funds, could spur innovation in this area. Several years ago, Florida negotiated a temporary statewide waiver on the use of federal IV-E money [of the Social Security Act to keep kids out of foster care], giving it added flexibility to move to a community-based care system with some privatization and more local authority. As a result, the state witnessed a 30 percent decrease in kids participating in their foster care program.

Innovation in child welfare also can be spurred by evaluating funding streams from state to local governments. Faced with seemingly endless increases in spending on children and family services (one of the state’s largest line items) through the 2000s, Virginia carefully analyzed the entire structure of children and family services spending, including where and why money was being spent. Officials discovered a perverse set of funding incentives that drove local governments (which administer children and family service programs) to channel kids into more expensive and clinically less effective congregate care (group homes and other institutional settings). The problem: Under the state’s reimbursement formula, local governments were getting more money for institutional placements than for lower-cost foster home placements.

Realizing that the state was, in essence, incentivizing local governments to make bad clinical decisions about foster care placements, the Legislature in 2007 voted to reverse the formula. The effect on the budget and on children was immediate: For the first time in decades, the costs of children and family services went down, while outcomes for kids improved. Though some of those savings were being banked by the state in tough fiscal times, some of the savings was also reinvested in more clinically proven and cost-effective community-based care.

4. Revive work focus of Temporary Assistance for Needy Families (TANF) programs

Recent data suggest a disconnect between citizens receiving TANF benefits and their active search for employment, which has been the overriding objective for welfare reform. Devising incentives that place greater emphasis on securing a new job would draw a more direct link between benefits received and enrollees’ demonstrated commitment to finding work. By renewing the work focus of the TANF program, states can reverse this trend and continue the momentum behind welfare reform.

5. Reinvent human services financing models

States must determine how best to empower nonprofit and public-sector providers to scale and sustain program innovation. Right now, financial models for human services embrace cost reimbursement contracting that favors short-term efficiency over long-term effectiveness. The inflexibility reduces focus on service quality and outcomes, promoting the status quo over innovation. Program sustainability is threatened as providers move from one grant cycle to the next, creating and dismantling programs based on funding rather than need. The challenge is to create financing mechanisms to increase capital flow to underfunded nonprofit human-services providers. One state to watch is Massachusetts, which has slowly been moving HHS providers off cost reimbursement to performance-based contracting.

Integrating Service Delivery

Over the past few years, pressure for better HHS outcomes has triggered a drive toward service integration — the idea that formerly stand-alone benefit programs and services should be linked together in ways that magnify their impact and improve their usability. The emergence of Web 2.0 technologies presents an opportunity for HHS agencies to work much more collaboratively with citizens. To do it right, three critical elements must be addressed: service offerings, technology and work force management. Virtual organizations will gradually replace physical locations for service delivery within the network. Effective agencies will evolve toward a “civic-switchboard” concept — where HHS clients are connected to resources within and beyond traditional government entities — to define and deliver the appropriate set of services.

This new paradigm uses technology to link together public and private organizations to create a service delivery network. Furthermore, as HHS agencies start to feel the effects of a massive wave of retiring baby boomers, they’ll need to revamp hiring and growth plans, provide tools to encourage collaboration across organizational silos and capture institutional knowledge. These strategies can help make integrated HHS delivery a reality:

1. Create client-centric access to HHS programs and information

HHS agencies will remain responsible for delivering services, but they’ll make information and services available through different channels — even if public agencies don’t own or directly control them. These new channels will complement existing HHS portals and other e-government initiatives, and over time, they may begin to replace government-only efforts. ACCESS Florida, a Web-based application designed to meet growing demand for public benefits following the 2004 and 2005 hurricane seasons, cut the state’s HHS work force in half. Call centers were established, and community partnerships statewide helped citizens with the new online process for benefit applications.

2. Empower citizens with self-service options

HHS employees devote much time helping citizens with tasks that don’t require their assistance. Expanding automated self-service options for clients would reduce administrative work for staff, freeing them to do more meaningful work. Even more importantly, involving citizens directly in the process turns otherwise passive aid recipients into engaged individuals who are actively trying to become self-sufficient. Massachusetts’ Virtual Gateway is an online portal that serves as a single front door for HHS programs. The Gateway reduces the time and effort required to access services.

3. Promote cross-agency collaboration

One human services organization can’t address all needs of clients and their families, so single-agency portals don’t adequately support service integration. HHS agencies should consider mash-ups — compilations of Web services that are managed by different agencies or organizations and delivered via a single online location.

4. Develop financing models that encourage service integration

Disadvantaged citizens often have multiple needs, while government funding is allocated in discreet streams that discourage holistic service delivery. Fragmentation of funding sources places an unnecessary administrative burden on HHS providers and consumes resources that would be better spent on providing client service. A statewide human services strategy — a common approach to HHS planning across government departments and agencies premised on serving individuals or families — would go a long way in addressing service integration issues.

Meeting the Challenge

With the economy struggling to recover, anti-poverty programs continue to deliver critical services to many citizens. These programs — which serve a record one in six Americans — are becoming profoundly expensive. Increased access to government aid when citizens need it most is a noble undertaking, but these initiatives strain already bleak budgets.

Federal assistance under the American Recovery and Reinvestment Act helped states accommodate growing demand during the recession, creating temporary breathing room to avoid more significant cuts to programs that serve vulnerable people. But it also helped many states defer tough restructuring decisions. With much of this aid now expiring, cash-strapped states must find ways to reduce the costs of delivering HHS programs while accommodating increased demand. The strategies presented here for reforming and integrating HHS programs can help states meet the challenge. ¨

William Eggers is global director for Deloitte Research. Robert N. Campbell III is vice chairman and U.S. state government leader for Deloitte LLP. Tiffany Dovey Fishman is a Research Manager with Deloitte Research.

William D. Eggers  |  Contributing Writer
Robert N. Campbell III  |  Contributing Writer

Robert N. Campbell III is vice chairman and U.S. state government leader at Deloitte LLP. His new book with William D. Eggers and Tiffany Fishman is Letting Go of the Status Quo: A Playbook for Transforming State Government.

Tiffany Dovey Fishman  |  Contributing Writer

Tiffany Dovey Fishman ia a research manager for Deloitte Research.