Tight budgets lead to questions over high-priced health consultant

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(Host) In an era of tight state budgets, questions are being raised about the Legislature’s use of a high-priced consultant.

Lawmakers defend the consulting contract. But the Douglas administration says the Legislature does not always follow the same competitive bid rules required of the rest of state government.

VPR’s John Dillon reports:

(Dillon) Vermont’s citizen Legislature does not always have the expertise to deal with complex policy and technology issues. So when lawmakers created the Health Care Reform Commission several years ago, they hired consultants for advice.

One of the first to be selected was Hans Kastensmith, a Washington, D.C. specialist on information technology.

Kastensmith signed on with the state for $13,000 a month, plus $25,000 a year in expenses. According to the State Auditor’s office, his firm has been paid about $536,000 over the last three years.

The consulting contract has raised questions among some health policy experts. Jeanne Keller is a health consultant in Burlington.

(Keller) “What exactly is his job? I mean it hasn’t been bid out, and we’re spending a lot of money on the Legislature having kind of a consultant without portfolio going around doing the work that’s the job of the executive branch.”

(Dillon) The state requires that most contracts go through a competitive bid process. But when the Legislature created its Health Care Reform Commission it exempted the commission from those contracting rules. 

Jim Reardon is the Douglas administration’s finance commissioner. Reardon questions why the Legislature hires consultants without making them compete for the work with other firms.

(Reardon) “My initial thought or reaction is that the Legislature should have to follow the same provisions as the executive branch as it relates to contracts.”

(Dillon) Middlebury Democrat Steve Maier is co-chair of the Health Care Reform Commission. Maier says in these tough fiscal times, the Legislature will carefully review all its contracts. But he says the state has gotten its money’s worth from its contract with Kastensmith.

(Maier)“Yes, this is a relatively expensive contract. But I think that the value that we’ve gotten for it is pretty substantial and will continue to pay dividends for us over the coming months and years.”

(Dillon) Maier says Kastensmith has overseen the development of a system to computerize health records.

(Maier) “That’s really put us in place where we think we’re going to be able to compete for dollars that have recently come in terms of the federal stimulus package that may in fact be hundreds of millions of dollars for the benefit of Vermont.”

(Dillon) Kastensmith says he recently agreed to cut his fee by 10 percent. He says his work has saved the state money.

(Kastensmith) “Yeah, actually my first two months on the job, I saved the state $600,000 in contract negotiations. … I saved more than they’ve ever paid me.”

(Dillon) Jeanne Keller, the health policy analyst, says there’s no way to know whether Kastensmith alone was responsible for those savings.

(Keller) “It’s just hard to believe that we couldn’t get adequate assistance on whatever it is that Mr. Kastensmith does for a lot less than $13,000 a month plus expenses and maybe even hire someone from inside Vermont.”

(Dillon) The state employees union has also called attention to state contracts. The union says state government should keep more work in-house, and more state workers on the job.

For VPR News, I’m John Dillon in Montpelier.

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