April 21, 2011; Source: Westfair Online | A new state report (PDF) issued by Connecticut’s 28-member bipartisan Commission on Nonprofit Health and Human Services finds that the state could save a lot of money by transitioning services now performed directly by state agencies to contracted nonprofits. The article reports that “In most cases the cost difference between the state and nonprofit providers is so large that even if the wages, benefits and costs of care were increased among nonprofits, as the commission recommends, substantial taxpayer savings remain.” The report compared public and private providers on employee wages, benefits and cost of services.
One of the major cost variables of course is the cost of employee and retiree pensions and benefits but there are other differences that the commission explored. For instance the commission found cost differences between state institutions and nonprofit residential care. At a Department of Developmental Services residential facility, the client cost is $814 per day per client while comparable residential services at a nonprofit were $373 per day.
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Despite the siren call of cost savings, the commission does not appear to see the situation as less complex than it is, asserting that, “true cost savings can only be generated through a thoughtful and strategic planning process that recognizes and balances . . . both the risks and benefits that will impact clients and providers across the continuum of care.”—Ruth McCambridge