Answer: The part of the article “The Replication Challenge” by Robert D. Behn that you are probably referring to follows: “… before the innovation can be replicated, someone has to answer two questions.

First: What are the core characteristics of the innovation? To employ the innovation in a different jurisdictional, political or organizational context, the replicators obviously need to know what, exactly, are the driving features of the innovation.

Second: What are the cause-and-effect interactions among the core features of the innovation, the context within which the innovation was implemented, and the consequences that it produced? Because the context in which any innovation will be replicated is bound to be somewhat different from the original set of circumstances, it is necessary to understand how its driving features work. After all, to make the innovation work in a new setting, it will need to be adapted in some way(s) — perhaps conspicuously, perhaps subtly. Yet, to be effective, such adaptations need to maintain not only the core features of the innovation but also the cause-and-effect relationships among these features and the context to ensure that the adaptation still produces similar benefits.

Innovating is relatively easy. Specifying the core components of the innovation and the cause-and-effect relationships among these components in such as way as to permit other jurisdictions to replicate the innovation is, however, a significant challenge.”

I will try respond directly to the challenge of Robert Behn’s excellent article. The “Team Improvement Idea” was implemented first in Japan and then became popular in American industry in the 1980s. It was known mostly as “Total Quality Management” and has since been adopted by some government agencies. The core Idea espoused by the Japanese was to build better quality products. Which was a direct result of the bad reputation that Japanese products had for being cheap and of poor quality in the 1950’s. Since there are few physical products produced by government the core idea has shifted to the Team Improvement idea. I call these “Work Improvement Teams” which focus on improving the processes of the function that they are involved with at the lowest level of the organization. I have expanded the Team improvement Idea to all levels of the government organization. First in the governor’s Blue Ribbon Committee and then to the High level Cross functional team. The key driving element to my recommended approach is in having personnel have responsibility for decision making power at their level in the organization. The result is the pooling of the innovative resources of the entire organization to focus on improving the problems at hand. The process can be stated as the driving down of the decision making process to the lowest level of effectiveness. Another way of putting this is to have those who “own” a problem participate in the solving of that problem. The immediate effect is to awaken the idea within individuals that they can make a difference the exact opposite of a bureaucratic environment where individual initiative is generally squelched.

The second innovation is in determining labor hours and therefore staffing more precisely by budgeting personnel. Budgeting personnel have long estimated the labor hours and other expenses that go into the making of a function’s budget these estimates are at best educated guesses. The following example can best explain this innovation. The key is in requiring all of the WITs to Flow Chart all of the processes of the function they are associated with. This is necessary to describe in detail how improvements to processes are to work. There may actually be two Process Flow Charts one showing the current process flow and one showing the improved process flow. These two Flow Charts are usually presented to management by the team for approval. The Flow Process Flow Charts are then given over to the budgeting personnel to calculate the savings that the team has generated. The man hour calculations although they appear to be estimates are relatively precise because of the need to find the least costly process by the WIT. Staffing of the WIT is even more precise because of the gross decision in deciding the number of personnel required. In other words you cannot staff with one half of a person making the staffing decision much simpler.

The staffing level of both employees and management along with all expenses incurred by the function is summed and divided by the number of either “units produced” or “people served” for a one month period. The result is a funding formula which when multiplied by the estimated future “units” or “people served” becomes the next years budget. The funding formula which may be valid for several years with minor changes can be used as a direct input to the Performance Budgeting system thus simplifying the entire budgeting process while significantly increasing its accuracy. The increased budget accuracy allows law makers to know with greater certainty which functions have failed to manage their budgets. The core of this process is in strengthening the budgeting process by making inputs simpler and more precise.

A. The Blue Ribbon Commission setup by the Governor has the following function to make high level decisions concerning state Health and Family Services (not just Medicaid) and provide oversight for the Medicaid Program as well as other Health and Family Services. The reason for this is that each state has unique problems in this area that vary in degree from other states and to insure that the state family’s needs are met efficiently without duplication. The Commission should meet on a regular basis or as required. Funding for the Commission should be separate. It has the following mandate:
1. Determine what services are legally required of the state mandated by law and by Federal guidelines.
2. Research Censes data to determine the type and degree of the state’s family problems. For example: juvenile crime, drugs, school dropouts, disabled, medical services etc.
3. The commission must then define how available funds are to be spent and in doing so they will define just what the State’s policies are concerning Medicaid and other programs.

B. The Cross Functional Team more appropriately could be called the “Health and Family Services Team” consists of high level personnel from each of the State’s Service agencies. The Team should meet on a regular basis or as required. Funding for the Team should be from the budgets of each of its members. The Team has the following Mandate:
1. They will follow the Commissions oversight recommendations and put in place the high level rules to be followed by the various agencies.
2. In addition the Team will be the watch-dog over its own members to prevent duplicated services and to be sure family services are provided efficiently and timely. The Commission is to be alerted in a timely manner when violations occur.

C. The Medicaid function is budgeted and managed separately from other agencies. The organization of this function should not be the traditional bureaucracy but a flat organization with “Work Improvement Teams” consisting of those personnel who actually deliver the services. Each team will meet weekly to suggest and install approved improvements to the processes of the function. This will provide continuous improvements in providing services to the Public.

Of critical importance in preventing fraud is the State’s computer systems which should provide cross references and positive identification of applicants for Medicaid. I have identified how these computer systems should be structured using SQL Relational Databases in Article 84. “The Failure to Manage State Resources due to Obsolete Computer Systems”. If Your State’s Information Systems Manager insists that these SQL Relation Databases are not warranted you should seek a second opinion from one who understands the problem and does not have a hidden agenda. The SQL Database systems although expensive to install can save the state billions. Without them its nearly impossible to prevent fraud.

The last recommendation is for a comprehensive Performance Budgeting system. Beginning with identification of labor and other operational costs a Funding Formula is developed for direct input into the next year’s Performance Budgeting system. For more on this see Article 85. “A Tutorial Roadmap for Medicaid Management Reform”.

The following excellent article addresses some of the up-front considerations that a state must address in reforming Medicaid.
“Medicaid Management Makeover” by William D. Eggers from Governing Magazine.
“The manner in which Medicaid is administered- how cost savings are identified and realized, how state resources are deployed, how policies are implemented and enforced, and how critical day-to-day decisions affect health and financial outcomes–significantly affects its performance. Transforming how Medicaid is managed may not be as sexy as making new policy proposals, but we won’t solve the problem without it.”

“Sustained cost containment in Medicaid requires states to actively and aggressively manage their programs. But most states don’t do much of this. They tend instead to be reactive — forecasting numbers of eligibles and costs, then loosely tracking the program’s progress and asking legislatures for more money when the rolls increase. Meanwhile, costs go up and up and up.

Three management reforms would vastly improve this situation.

1. State policymakers should start by asking this fundamental question: What should we be doing — and not doing — in our Medicaid programs? Here’s the hard truth: Most Medicaid programs have an identity crisis. Some are primarily claims processors, while others are policy setters, contract managers, or financial stewards. Many are a confusing combination of all these roles. State leaders need to get off the fence and actively decide what they want their Medicaid program to be. This kind of soul-searching process took place with welfare reform when states asked whether AFDC would continue to be a check distribution system or become a program to move recipients to self-sufficiency.

Florida is one example of a state that has created a new vision for its program by moving from claims processor to more of a policy and quality oversight role. Governor Jeb Bush’s new Medicaid initiative, Empowered Care, would allow health care networks to develop their own health care plans to compete for Medicaid patients. The state’s role would be to counsel beneficiaries about which program best matches their individual health care needs and monitor the performance of Medicaid providers.

2. States also need to reexamine their operating models — something mostly taken for granted today. What functions should be done in-house? Which are better performed by partnering with others? Texas, for example, outsources most of its Medicaid operations, including claims processing, IT, provider and client relations, third-party liability and recovery, drug program management, and (soon) even eligibility determination. The Texas model isn’t suitable for every state, but that shouldn’t stop others from asking the make-or-buy question.

3. Most states lack the sophisticated, easily accessible financial information necessary to proactively manage Medicaid. Programs the size of Fortune 500 companies often lack the ability to produce the most basic budget and budget-to-actual reports. Without such data, they can’t even begin to answer real questions such as: “If my state has 25 percent more nursing home beds than it can use, what incentives could I put in place to encourage the nursing home industry to reduce the overall number of beds and still provide adequate care?” Medicaid is simply too expansive — and expensive — to be run on hunches. States need to get serious about implementing financial systems that make intelligent decision making possible.

Informed management and cost control based on sophisticated analysis of real data are beyond the capabilities of Medicaid as it currently exists. To be successful, state programs need to be run with the same financial and managerial discipline used in any modern insurance or health care company. Until this is deeply understood, the Medicaid crisis will persist.”

Tutorial Roadmap for Reform of Medicaid Management
I will attempt to provide you with a detailed tutorial roadmap of just how to approach the reform of Medicaid Management. If you follow this roadmap you will be able to implement a flexible, effective and efficient Medicaid management system. Many of my articles provide extensive and detailed background information and will be referenced throughout the tutorial. I suggest that you read through the tutorial to get the overall view then read the referenced articles for background.

The above article “Medicaid Management Makeover” by William Eggers in Parts 1.and 2. addresses the up front decisions that should be made about the best approach that fits an individual state. Part 3. is all about what is required to manage a states Medicaid program. The best way to approach Parts 1. and 2. is for the Governor to initiate a Blue Ribbon Reform Commission to resolve the above specific issues referred to in William Eggers article. Once the state has determined what it wants Medicaid to “be” is formalized the management reform process can begin. For more information see: Article 27. “Overview of State Government Reform” and Article 22. “Functional Restructuring of State Government rather than Departmental Restructuring”.

The remainder of his tutorial will address Part 3. of the article which begins by highlighting the need for most states to reform their computer systems in order to provide the necessary information for proper Medicaid management.
In my Article 84. “The Failure to Manage State Resources due to Obsolete Computer Systems” I addressed this requirement and described the database computer system that should be implemented. This is an expensive but important step. A state computer system is required which is flexible and capable of providing real-time information needed for the management of Medicaid and just about everywhere else in state government. See also: Article 46. Why some Computer System Implementations Fail.

I have two comprehensive management methods which I have recommended. The first I call “Cost and Schedule” and focuses on making government functions more efficient using a scheduling method. This method applies best to government functions which produce an identifiable product such as in the State Highway Department. The second method which I call “Work Improvement Teams (WIT)” focuses on making government functions provide the best service to the public through efficient management. This method is the same as “Total Quality Management” but I prefer to call it “Work Improvement Teams” which is a better description of what they actually do. The WIT method is the best way to approach Medicaid management. It provides efficient service to the public while addressing the fraud aspect of the problem. In Article 12 ‘Which Approach to use in State Government “Cost and Schedule” or ‘Work Improvement Teams‘?” I discuss the differences between the “Cost and Schedule” method and the “Work Improvement Team” method and where to use them and also in Article 20. “Approaches for Different Types of Organizations”.
In Article 11. “Adaptation of Manufacturing Quality Improvement Techniques to Achieve Efficient Government” I discuss why the WIT method works and give in detail the steps to implement it.

Now lets begin by taking a broad look at the family services that the state provides. A high level Cross Functional team which oversees the management of related social services including Medicaid should be implemented. The reason for this is that many of the same families that require Medicaid also use other family services and are in the same database. Families often require multiple decisions to be made by various state agencies. The Cross Functional team’s primary purpose is to coordinate these services. Each member of the Cross Functional Team comes from a vertical function such as Medicaid, Child Welfare, Juvenile Justus, Health Services etc. For more on Horizontal and vertical functions see Article 26. “Reorganizing (Restructuring) using Vertical and Horizontal Functions or their Processes”. See also: Article 65. Focusing Government Resources on Solving Major Problems Using horizontal Functional Teams

For an excellent example of why a high level team works you have only to recall the failure of the Homeland Security bureaucracy in Hurricane Katrina. When Vice Admiral Thad Allen took the reins he formed a successful team including the New Orleans Mayor and the Governor of Louisiana. I have also recommended that low level teams be formed within the FEMA organization in order allow faster decisions to be made at the disaster site and improve services to victims. See Article 37. “Restructuring Government for Quick Response” which outlines how to fix the Katrina bureaucratic disaster.

The next thing we will discuss is the management of Medicaid using a comprehensive Performance Budgeting system. My articles on Performance Budgeting systems have been mainly about how to enhance the current Performance Budgeting system by identifying real resource requirements at the bottom level and driving these requirements up to determine the cost of operating an entire state function such as Medicaid. The following articles give the revised Performance budgeting method and detailed examples of how to use the method.
Article 23. The Relationship between Needs, Functions, Funding Formulas, and Performance Budgeting
Article 24. Establishing a Funding Formula for Performance Budgeting.
Article 29. Rethinking Performance Budgeting
Article 30. Example of Current Versus Proposed Performance Budgeting
Article 31. Example Work Improvement Team with Performance Budgeting
Article 33. Top-Down versus Bottom-Up Approach to Performance Measurement
Article 35. What’s needed to Make Performance Budgeting work

Finally I need to explain some things to you The “Cost and Schedule” management method referenced above has been well proven by several consulting firms and I have personally used it. The “Work Improvement Team” method I have also used but it is normally not used for determining staffing levels. Note that I have developed a unique way to do this by having the teams create Flow Charts and having budgeting personnel retrieve the data from the Flow Chart. This allows for real costing of labor (not estimated) and provides direct input to a Funding Formula which I have developed for direct input to the Performance Budgeting System. This is a unique enhancement to the Performance Budgeting process. You will only find these unique enhancements at this website. I estimate the savings to each state for a full implementation of these cost saving methods to be in the billions.

This came about mostly by the failure of decision makers in the past who were not computer literate and by the piecemeal stop gap fixing of obsolete stand alone computer application programs. Decision makers in many cases were led astray by self-serving Information Systems Managers who wanted to keep their programmers busy by developing new application programs that could have been purchased off the shelf at a fraction of the cost. Another area where they are lead astray is through “Bench Marking” or copying computer applications that do a function more efficiently. The problem is not with Bench Marking itself but with the misuse of it. Personnel doing Bench Marking focus on gaining efficiency for an individual application program and not how it fits in with the state’s information system. The result many times is in the creation a stand alone computer application.

So why are state leaders not aware of this problem. The answer is that they are but fixing the problem is difficult and costly. Its only when you look at the cost of not fixing the problem do you begin to grasp its significance. The possible saving throughout the state in all of the state’s management areas besides Medicaid fraud is simply not grasped by decision makers.

Here is how the new computer system works.
New way: The new computer system consists of a network of data processing machines (computers) each with application programs loaded on them connected through the net work to a number of databases each with specific related information stored on them. The data bases are called Relational Databases and each uses the Structured Query Language (SQL) in its Database Management System.

An example of how this works is that when an application program calls for information (querying) the request goes through the network, finds the appropriate data in one of the SQL databases and returns the data to the application program for continued processing. The system automatically prevents duplicated data from being stored in any of the data bases.

Old way: Application programs are written with the data they need stored within the application. When data is called for during processing of the application the request goes to a numbered storage location within the application, retrieves the data and sends it back for continued processing.
Note that the numbered location is a unique part of how these obsolete systems work. With hundreds of application programs used by the state each with their own data base storing duplicated information its easy to see why the maintenance of them can cost millions more than with the Database System.

The failure to manage Medicaid can rest on being able to trace fraud and prevent it through an SQL Database management system. This is reason enough to look into the replacement of current obsolete systems besides the significant savings in data processing costs.

From Governing Magazine’s April 2005 issue a reprint of an article titled “Looking for a Real Crisis: Try Medicaid” from the Potomac Chronicle by Donald F. Kettl

“Social Security may be running out of money, but at least it’s a single coherent program. Medicaid is a monster with countless heads.

If you think Social Security’s finances are bad, experts are saying, wait until you see Medicare. In the states, they’re whispering that if you think Medicare is bad, wait until you see Medicaid.

Medicaid has long suffered confusion with its better-known Medicare cousin, which funds medical care for seniors. Most voters don’t know that Medicaid covers 50 million lower-income individuals, that it pays the bills of two-thirds of the nation’s nursing home residents or that it funds more than one-third of all births. And most don’t know that Medicaid has now surged past Medicare to become the nation’s largest health care program.

State officials know all these things, backwards and forwards — and that Medicaid is the fastest-growing part of most state budgets. The Bush administration is trying to reduce the federal government’s contribution to the program, if only modestly. The president’s new budget proposes a $60 billion cut over the next decade — about 2 percent — in exchange for more state flexibility. Stung by past offers of flexibility for cuts in other areas, the nation’s governors are wary of the deal.

Solving the Medicaid problem is deceptively complex because of two key aspects of the program that lie buried deep under the debate. First, Medicaid isn’t one program but many. It provides insurance for low-income children, pregnant women, and some parents. It provides long-term care for disabled, mentally ill and low-income persons. It supplements Medicare for seniors. And it backstops hospitals that serve most of the uninsured.

Moreover, Medicaid is a different program in every state. The federal government created it in 1965 to deal with the chronic problems of poor and older citizens without health care, but state governments have a wide variety of options for adding on.

Alabama pays for patients to visit chiropractors, but Alaska does not. Georgia covers home health speech and language services, but Florida has declined that responsibility. Tennessee finances dental care; Texas doesn’t. Wisconsin recently trimmed some services for autistic children for fear that its generous menu was becoming an “autism magnet” for parents in other states struggling to provide the most elaborate care for their children. The combination of federal minimum care and state options has made the program incredibly complex.

Moreover, many state governments have developed creative accounting methods designed to shift costs back to Washington. The Government Accountability Office has called these procedures “abusive financing schemes,” and the Bush administration wants to rein them in.

Medicaid is one of the most heavily leveraged programs in the government toolkit. The Centers for Medicare and Medicaid Services, the federal agency charged with managing both Medicare and Medicaid, employs just 4,600 people to oversee $485 billion in federal spending (and probably about half of them work on program design and policy analysis issues). The same is true in the states. A relatively small handful of government employees is responsible for a huge chunk of government spending.

The fact is, the government does not actually provide health care in the Medicaid program. Private and nonprofit hospitals, clinics and physicians actually do the work. They submit their bills to private companies, who act as financial intermediaries to process the paperwork for reimbursement.

This indirect system not only adds to the program’s complexity, it also means that the ability of states to control their costs depends heavily on the management skills of a handful of critical state employees and on the sophistication of financial management systems. And as the 2005 Government Performance Project analysis of state management found, the strength of these systems varies tremendously around the country.

‘Medicaid is the monster in the middle of the road,’ Republican Governor Bob Taft of Ohio has contended, “and it’s threatening the viability of every state in the union.” The battles over the balance of federal and state power are critical to taming the monster. But to a degree not often appreciated, stronger state management will provide the whip and chair.” Donald F. Kettl is a professor at the Fels Institute of Government at the University of Pennsylvania.

The following excerpts discuss the results of a Study: “New Medicaid rules to hurt economy” By Shaheen Samavati from the Dayton Daily News Columbus. This article demonstrates the confusion over the effects of Medicaid cuts.

“MEDICAID CHANGES
These changes, according to a new study, may lower the cost of Medicaid to the state budget but will also likely be a blow to the state’s economy.

Ohio is reducing Medicaid services to contain the program’s costs, which had been growing dramatically and threatening the state’s financial health.

But a new study says the cuts will have a larger impact than just on individual care. While they will save the state a projected $745 million, they could result in a $2.4 billion loss to Ohio’s economy, according to the study commissioned by the Health Policy Institute of Ohio.”

“Sen. Lynn Wachtmann, R-Napoleon, chairman of the Joint Legislative Committee on Medicaid Technology and Reform, challenged the report. He said the study doesn’t take into account jobs and economic growth that will be created by putting money into other parts of the economy.”

“William Hayes, president of the Health Policy Institute, said the point of the study is not that the state should be spending more, but to draw attention to effects cuts can have.”

The study was conducted by OSU researchers who analyzed census data, tax and job information from the Ohio Department of Development, and Medicaid information from the Ohio Department of Job and Family Services.

“Hayes said lower spending levels mean less money going to health care facilities, which creates the loss of jobs. Every $1 million spent on Medicaid equals 32 jobs in the Ohio economy, the report said. “Medicaid produces economic benefits as well as health benefits,” Hayes said. “And part of the reason is because it brings in federal money.” For every state dollar spent on Medicaid, the federal government matches it with $1.40, the report said.

“Wachtmann noted, however, that “federal money is not free, it comes out of our pockets.” He said, too, Medicaid should be a last resort, not the first place people turn when they need health care. “People need to take more responsibility for their health,” he said. Wachtmann is supportive of privately run charitable organizations to help provide social services.

“Hamler-Fugitt said nonprofit and faith-based organizations don’t have the resources to accommodate everyone who can no longer turn to Medicaid.”
“We’ve already seen a downturn in donations because people are concerned about their own economics; about their own quality of life,” she said.

Answer: First I would like to thank you for bringing this site to my attention. And yes this site appears to satisfy most my reasons for recommending centralized purchasing. This site has the potential of bringing major savings to State and local budgets as its membership grows. There is more savings than may appear over state centralized purchasing which may require a centralized computer system within the state and in some cases distribution centers. This organization uses a drop-ship method directly from the manufacturer to the purchaser this is much simpler solution.

The key to the success of US Communities is in its management. You will recall from my other articles that I recommend aggressive negotiation a tactic fully developed by Walmart. In fact I recommended that Walmart be used as a guide and as a standard for success. As the membership in Us Communities grows so will its power to negotiate volume purchases and bring significant savings to its members. Us Communities must be able predict and track purchase volumes through its computer system to enhance its negotiation capabilities. If US Communities did not negotiate for lower prices then there would be little advantage for joining.

I would recommend that each state review the Us Communities web site and confer with its management about its purpose and how it operates. If approved by the state then state should recommend that all purchases throughout the state be made through Us Communities. This will significantly increase the Us Communities’ purchasing volume and its power to negotiate lower prices.

Us Communities purchasing involves mostly office and school supplies. Note that I have recommended that a national organization of states be setup to purchase Medicare prescription drugs. Where volume purchases would reduce the purchase costs similar to those savings found in Canadian Pharmacies. This is a significantly different business from what Us Communities is currently doing and will probably involve an entirely separate organization.

Another related recommendation is the coalition of several states in the purchase energy. I don’t recommend that this be a National effort because of the unique regional energy delivery systems of each State. Western States such as California, Washington, Oregon and others should combine their purchases of energy and purchase directly from suppliers rather than through brokers like Enron. The same recommendation can be made for New England states.

The FDA has also arrogantly declared that all imported drugs no matter where they come from are not under the authority of the FDA could possibly be contaminated. They have also declared that prescription drugs purchased in Canada are illegal. This is the Bureaucracy speaking its authority has been threatened and it reacts like a spoiled child. I don’t know of anyone except the drug manufacturing companies and their lobbyists that agrees with the FDA. A large segment of the Public is ignoring the FDA’s warning and are buying their drugs from Canada. See also Reader Question 7. “The Economics of Scale in Volume Purchasing”.

One of the major problems in health care is the lack of doctors especially in small towns. The lure of high incomes and the big cities has left many small towns without doctors. Years ago doctors would diagnose patients using his best educated guess and proscribed treatment for what he thought would cure the patient. The patients never questioned the opinion of the doctor and whether they lived or died there was nothing else that could be done. A second given was that doctors in the past were always men and nurses were always women. When I was a boy that is how you knew which was the doctor and which was the nurse. This aura and stigma about what a doctor is still exists with us today. But times have changed doctors have many ways of testing to determine a correct diagnosis. Medical advice and prescription drug definitions are available to everyone on the Internet. Nurses today are many times more knowledgeable than doctors were when I was a boy.

The bottom line is to let experienced Nurses by taking a special state board examination become General Practitioner Doctors. I can hear the bloody scream from the American Medical Association (AMA) already. If in fact you had to wait for the approval of the AMA it would never happen in our lifetime. They have the duty to protect the medical profession but this also means protecting the income of doctors. If the AMA will not approve this change then it must be done by fiat. Get the approval of the nursing profession and just do it. The need is too great to wait for AMA approval.

Answer: The problem is much larger than just Medicaid look at the total impact of health care costs on the state’s budget first. Try breaking your state’s health care into its functions and processes. Then find out which processes have had the greatest growth rate. Audit these areas to find out where the money is going. For example the purchase of prescription drugs, rehabilitation, doctor fees, emergency room costs etc.

If you suspect fraud you will need to know who is getting the money. If you have the files on a database coded in the Structured Query Language (SQL) you can initiate hundreds of queries in just a few hours. It’s like using Google on the Internet. An example query: find all that received more than $100 thousand and served less than 50 cases. These queries can pop out irregularities that help to hone in on suspected fraud cases saving the state millions. The Chances are more likely that you have an obsolete database and will have to ask your data processing personnel to code each individual query. This will cost you a few thousand for each query. It may pay you to move the files from the old database to the new SQL database. If your data-processing manager has objections get a second opinion from other SQL users. I have found that data processing managers like to keep their programmers busy coding. A second advantage of using SQL databases is that other data processing programs can access and use the same database thus providing for an integrated system.

Rising prescription drug costs are a problem. Try forming an alliance with other states to negotiate with drug suppliers for the best prices. In the California Performance Review recommendations article SO70 “Taking Steps to Contain State Drug Costs” you will find that Illinois and Tennessee are already doing just that. Further recommendations for the state of California was to hire a Pharmaceutical Benefits Manager to manage the states drug purchases. They should try to get the same prices that they sell their drugs for in Canada. If they can make a profit there they should not object. For more information see Reader Question 7. “The Economics of Scale in Volume Purchasing“.

On the subject of increased doctor’s fees do two things: First get the legislatures to put a cap on excessive lawsuit settlements that drive up malpractice insurance. Second if this fails to reduce malpractice insurance rates form an alliance with other states and award the lowest priced insurance rates to a single insurance company. If they stick together and refuse to negotiate pool each state’s contribution into a public malpractice insurance fund. You have to prevent the closing of clinics and doctors leaving your state.

Answer: True the greater the volume the greater the negotiating power. Aside from the fact that your foresight is unlikely to happen there are other reasons why a state may not want to join such a venture. A state is responsible to its citizens and that means protecting its employment base. Goods manufactured within the state should receive greater negotiating points than those manufactured outside the state. But this doesn’t mean that states should not pool their purchases to obtain greater buying power.

Let us assume that a State with a large economy like California should decide that its Medicaid drug purchases should be made using a formula similar to that used by Canada. The Canadian government has enacted legislation governing drug Prices. Canadian law sets drug prices allowing drug manufacturers who market their drugs in Canada a reasonable profit above their manufacturing costs as determined by Canadian authorities. The State of California could do the same after all it has an economy (GDP) almost double that of Canada.

If you think this is not big bucks look at this example: A friend of mine has allergic rhinitis (hay fever) and purchases his nasal spray from a Canadian pharmacy. The retail price is about $134 for a one months supply when purchased in the USA, the price at Walmart is about $79 and the price in Canada is about $34. This amounts to a saving of about 394%. Think of the savings to the state’s budget. Now if all the states would form an alliance and pool their drug purchases they could demand that drug companies sell their drugs at the same price as they do in Canada thus simplifying the whole negotiating process. For some negotiations they may have to resort to a tactic used by the United Auto Workers, target one of the Big Three competitors and the others will fall into line. For drugs that have no competition you might try to shame them into selling at the Canadian price but most of these companies have no shame when it comes to ripping off Americans.