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Getting at the true cost of DDS care

December 6, 2011

Below is a copy of a letter from the STS Home & School Association to the  Legislature’s Program Review and Investigations Committee:

December 6, 2011 

The Honorable John W. Fonfara
The Honorable T.R. Rowe
Program Review and Investigations Committee
Connecticut General Assembly
Hartford, CT

Dear Senator Fonfara and Representative Rowe and members of the Committee:

It has become a given among policymakers and the media that large, state-run facilities for people with intellectual disabilities, such as the Southbury Training School, are more expensive to operate per client than privatized group homes.

But is that assumption based on a comparison of apples to apples, and would there really be a savings to taxpayers if STS were closed?

We examined cost documents provided by the Department of Developmental Services, which show full-time-equivalent (FTE) levels of staff and the types of services they provide at both STS and a community-based group home program.  As summarized in the chart below, we found a major difference in the level of services provided in each setting.  Without an apples-to-apples comparison of services, we don’t think it is safe to assume there will be any savings in closing STS.

STS provides more services on a per-client basis than does the community-based group home program we reviewed.  Among the services provided at STS for which there was no counterpart in an annual cost report we examined for the group home program were physician and dental services, speech and rehab therapy, case management services, and a range of instructional services.

Moreover, STS had higher ratios of full-time-equivalent staff positions (FTEs) to clients for such things as nursing services and behavioral therapy than did the group home program.   The direct-care staff-to-client ratio appeared to be slightly higher in the group home program than at STS.

In September, your committee made headlines around the state with a preliminary report stating that it costs more than twice as much per client to operate STS and publicly run group homes than it does to operate privatized community-based group homes in Connecticut.

Representative Rowe asserted to the Associated Press that:

The cost for the nonprofits (privatized group homes) is considerably less than the publics (STS and state-run group homes) and the nonprofits are doing at least as good a job in terms of quality, if not a better job. 

But the Program Review Committee appears to have based its cost comparisons solely on per-client rates provided by the Department of Developmental Services for STS and the privatized facilities.  Even though the Committee adjusted its results for level of need, it did not appear to have compared the services provided in each setting.  So, it’s hard to understand how Rep. Rowe could conclude, based on the committee’s analysis, that the nonprofits are doing a better job.

We believe the group home program we reviewed, operated by the nonprofit provider, Grounded in Love, Inc., is typical of the privatized residences whose costs were compared to STS and other state-operated care settings in the Program Review Committee report. 

Staff FTEs per Client
  STS CLA group home
      Grounded in Love, Inc.
  Total FTE FTEs per client Total FTE FTEs per client
Direct Care Workers 733.43 1.726 34.25 2.141
Adult Services Instructors 64.00 0.151 no service
Development Specialists 2.00 0.005 no service
State School Teachers 4.00 0.009 no service
Case Managers 11.80 0.028 no service
Physicians and assistants 5.91 0.014 no service
Dentists and hygienists 4.69 0.011 no service
Nursing 170.24 0.401 1.55 0.097
Occ. Therapy 2.00 0.005 0.01 0.001
Behavioral Therapy 13.00 0.031 0.20 0.012
Physical Therapy 2.00 0.005 0.06 0.004
Speech Therapy 2.00 0.005 no service
Rehab Therapy 8.00 0.019 no service
Other Therapy 1.10 0.003 no service
Dieticians 3.00 0.007 no service
Fire Dept. personnel 13.00 0.031 no service
Other (Unspecified)     1.50 0.094

We would submit that a comparative analysis of services must be done in order to determine whether there will really be equal or better care in  transferring STS residents to privatized group homes and whether any money will really be saved.   Based on our review of DDS cost documents, the only way the Program Review Committee’s projected cost differential would hold true for former STS clients in privatized group homes is if we somehow did away with their medical and dental care and dramatically reduced therapeutic, instructional and other services they received.

STS residents, nearly 80 percent of whom have severe and profound levels of intellectual disability, need a higher level of care than the average provided in the DDS system.  Does the administration and the Legislature really expect to save money by placing these residents in community-based facilities in which they will not receive medical and other services that they had been getting at STS?

We hope legislators understand that former STS residents will still require the same services when they are living in the community-based system and these services will still have to be paid for.  To the extent that the residents do receive medical, dental, therapeutic and other services that are not provided under the group home contracts, those services will have to be provided and funded from different sources, such as Medicaid.

That is one key reason we believe limited cost comparisons between public and private care often fail to get at the true cost of that care and why they therefore provide false expectations of savings that will result if public care is eliminated.

There is no question that another reason for at least part of the cost differential found by the Program Review Committee between public and privatized care lies in the higher wages and benefits provided to direct-care workers in the public than the privatized group  homes.  The Program Review Committee noted that the average hourly wage paid to direct care workers in privatized group homes is $15.53 compared with $24.24 paid to the lowest classification of public direct care workers in Connecticut.  There is a similarly large gap in benefits paid to workers in privatized versus public DDS care settings.  The public direct care workers get better benefits as well. 

But will the Program Review Committee therefore recommend that STS be closed because its employees receive good wages and benefits?  In the same report, the Committee noted that privatized care providers in Connecticut are in a “precarious financial position” and operating dangerously close to their margin.  All of this seems to suggest that more revenue should be given to providers to help their bottom lines and boost direct-care salaries and benefits.  If that were to happen, the current difference in cost between public and privatized care would tend to disappear.

It should be mentioned that there are a number of other costs of community-based care, in addition to the costs of medical, dental, therapeutic, and other services, that were apparently not taken into account in the Program Review Committee’s cost analysis:

1. The cost of the new community-based group homes that will have to be built as more STS residents are transferred into the community system:  In a study in 2002 and an update in 2010, the DDS itself noted “substantial cost implications” associated with “developing an infrastructure to accommodate a parallel service system in the community.”  The DDS study and update declined to project any significant savings in closing STS.

2.  Community-based costs subsidized by STS:  The Program Review Committee did not appear to have examined STS’s budget in undertaking its cost comparison.  Had the committee done so, it would have seen that STS supports dental care for community-based clients.  Also, as the chart above shows, STS pays the salaries of 13 FTEs to provide fire protection to the STS campus.  The salaries of these firefighting personnel, which amout to $863,985 in the current fiscal year,  constitute an indirect subsidy to the Town of Southbury.

We believe STS subsidizes a number of other services for both the Town of Southbury and community-based DDS clients through the use of its ambulance service and recreational facilities and its provision of dietary and OB/GYN services.

3.  Loss in federal Medicaid revenues:  The Program Review Committee pointed out that STS and the five public regional Intermediate Care Facilities in Connecticut brought in $107.6 million in Medicaid reimbursement in Fiscal Year 2010.  This reflects federal reimbursement of $157,344 per resident of STS and the regional centers, compared with only $61,174 per resident in community-based group homes.

Based on the Program Review Committee’s numbers, we calculate the state would lose nearly $66 million a year in federal reimbursement were it to transfer all of the residents currently living at STS and the regional centers into privately run group homes.

4.  Economies of scale and centralized services: STS provides economies of scale in terms of purchases of food, medications, and other supplies.  These economies of scale are not as available in the privatized group home system in which each residence must purchase most of these items separately.

Also, at STS, doctors, nurses, clinicians, and physical and other therapists are available on site to examine and otherwise provide services to residents.  In contrast, residents of group homes in the community-based system must be transported elsewhere for doctors and dental visits.  Those community-based transportation costs are significant.  They also raise questions about the cost of any extra community-based staff needed to help with the transport of residents from group homes and the cost of staff remaining behind.

It should also be mentioned that the Program Review report bases its cost comparisons on average per-client rates at different levels of need.  For instance, a table in the report shows that at the highest level of need (Level 8), there were 42 clients living in private group homes and the average cost per client was $209,188.  This average is based on a minimum cost in a group home of $69,732 at Level 8, and a maximum cost of $525,059, according to the table.  That’s a pretty wide variation, and it shows that there are some private group homes that cost substantially more per client than does STS.

A couple of notes about our analysis:  The per-resident cost of care in the Grounded in Love, Inc. program was $169,920, an amount a little higher than the adjusted per-client cost of $124,443 calculated by the Program Review Committee for privatized group homes, and very close to the per-client cost of $168,786  calculated by the Commitee for Privatized Intermediate Care Facilities.

The Grounded in Love, Inc. cost report was for the year ending June 30, 2010, and specified  a total of $2.7 million in DDS funding (for residential services and a day program) and Department of Social Services funding (for room and board).  The cost report appeared to cover 16 residents living in 4 group homes.  The information on STS services came from a roster of all employees and their salaries and FTE levels as of November 2011.   We assumed the client population at STS to be 425.  We didn’t compare managers or administrators in each setting.  Also, we left out some STS personnel such as Quality Review Specialists and some other positions that were not clearly related to client care.

(Note: more than a month ago, we asked the Department of Social Services to provide us with a typical privatized Intermediate Care Facility contract so that we could compare those services to STS as well.  We have yet to receive a copy of that contract from DSS.)

We would conclude by noting that the Program Review Committee’s preliminary report states that the Committee staff “will continue to explore the factors that influence cost of client care among the [care] settings, and explore whether there are reasons for client well-being to maintain some public capacity.”

We hope the Committee’s final report will address the cost-comparison issues we have raised in this letter.  We strongly believe that if a comprehensive, apples-to-apples comparison is done, publicly provided care will be shown to be both cost effective and necessary for the well-being of many of DDS’s most severely and profoundly intellectually disabled clients.

Thank you for your consideration.


David Kassel
Communications Director
STS Home & School Assn.


From → Uncategorized

  1. The STS Home & School Assn findings with regard to problematic (inaccurate) cost assumptions are consistent with a peer-reviewed study that conducted a literature review of cost comparison studies. “Cost Comparisons of Community and Institutional Residential Settings: Historical Review of Selected Research” (AAIDD, Intellectual Disabilities, 2003) concluded that “large savings are not possible within the field of developmental disabilities by shifting from institutional to community placements”; it often costs more. The study found common problems with studies finding cost savings, including (as noted by the Home and School Assn) an imcomplete accounting of community costs as compared to total facility cost. Other problems included cost shifting (no real savings to a state), the failure of comparisons to adjust for level of disability, and staffing costs (staff in smaller, privately operated homes, are often undertrained and underpaid with high turnover, directly impacting quality). Connecticut’s Legislature’s Program Review and Investigations Committee must conduct an accurate cost comparison and not act on assumptions. Peoples’ lives depend on it. STS provides life-sustaining care to its residents, services which are not available in the community. FMI:

  2. Jay Halpern permalink

    The STS foundation report conveys some very salient points, and I, although an advocate for community/family-based services for all folks with disabilities, have long admired their work and their sustained advocacy for some of our nation’s most disabled citizens. However, I must present some competing perspectives in regard to their arguments:

    1. Following the loss of Brian Lensink, former DMR Commissioner, DMR/DDS has not benefited from the administrative competence to make community-based services live up to their potential cost-effectiveness. Institutional seclusion has been replaced by a large-agency, old boy’s network that protects its prerogatives as vigorously as STS. They fought the supported employment movement, they fought the transition to community-based services, and they fought the inclusion of folks with autism, CP, and other syndromes that has resulted in the name change from DMR to DDS. These tooth and nail fights were only settled by jacking up the cost to taxpayers and enabling the STS foundation to make its fiscal case. I have no doubt that competent central office leadership can pay dividends to the taxpayer and provide quality services to folks living in the community.

    2. The argument against the transference of cost from STS to medicaid isn’t an argument against community-based services: it’s an argument against the fraud and inequities inherent in medicaid. I have always been outraged, decades after the passing of the ADA, that legal discrimination against persons with disabilities continues, with licensed and certified doctors free to refuse to meet the health needs (physical and emotional) of persons with developmental disabilities. I’d like to see in our great nation a law that compels any medical practitioner working in the US to serve any individual in need, regardless of income or disability. By spreading these most needy clients to all practitioners, there would no longer be the outrageously costly and unnecessary overutilization of emergency rooms, emergency services, and emergency transportation. I’m also outraged it took a reporter to discover a dentist billing medicaid for 1,000 procedures in one day, and not a medicaid staffer/analyst/accountant. As long as medicaid patients are discriminated against and served only by a small coterie of “medicaid mills,” medicaid administrators will continue to look the other way so they can find doctors who will accept their clients.

    3. I’d be the last person on earth to minimize the services performed by direct care workers in the severe disability arena. Basic maintenance is tough enough, and going beyond basic maintenance in that arena is a rarity. But it’s not rocket science, folks. And the pay/benefits differential between state/unionized workers and private sector workers is unconscionable. As long as STS staff can work the system to bring home $160K+ through OT, those who do the vigorous maintenance+ work out in the community, always in the public eye, always navigating challenges unknown within the cloistered walls of STS, will always be subject to the ravages of private insurance cost increases and lives lived at little above the poverty level. The closing of STS should – note “should” – redirect substantial funds to employ all the “non-rocket scientists” we are going to need to provide in-home care to our aging Baby Boomers. Personal Care Attendant “projects” should be made viable and permanent, and offer good pay to those who want to be caregivers as a career. The dissolution of STS into community services would be an opportunity to create apprentice programs in disability care services for high school and college credits, replacing some of the burned-out providers with younger and more eager wage-earners. A new vocational school category could be fielded, enabling institutions like STS that have served their era well to fade nobly away.

    4. What’s always left out of the cost calculation of community-based services is the many millions of dollars that would accrue if the STS campus were sold on the open market. As a Columbia grad, I’d love to see a satellite campus to challenge the dominance of Yale here in CT. As a resident who lives near STS, I’d rejoice at the influx young scholars into the moribund, conservative “burys,” bringing with them new business opportunities to market to their needs. Southbury as a college town would simply be delightful, though I’m sure a lot of the “other” old folks would disagree, but still welcome the influx of cash to reduce their tax payments. Suck it up, old folks! The point is, far more could be done with that massive prime property for jobs and local economics than is being done now under the institutional arrangement. And the sale price would enable community-based housing to thrive, if presumably well-spent on the new, rather than be sucked up by the old.

    5. The argument that the STS fire dept. is an adjunct to Southbury’s own services worthy enough to preclude closing the institution is rather specious. Just like the power plant that serves only STS and the STS police force that serves only STS, the STS fire department is not a major player in the community (noted with apologies to any and all who may have critically benefited their services).

    6. What the issue ultimately boils down to is a battle between fiscal sanity and local 1199. As a guy who walked his first picket line at the age of thirteen and who has been a member of two different unions over the years, I am hardly anti-union. I just want persons with disabilities to be best served, and that means, at least to me, out in the community. Go ahead. Expand union membership to those who vote for it: some of the largest private providers are unionized. But don’t think that making STS immortal is a feather in the union cap.

    • Jay, thanks for your thoughtful comments. I haven’t had time to digest them in depth, but I have a couple of questions and comments in response. First, which OT staff at STS brings home $160K? Our information is that those staff at STS make half that amount or less. We got that from an employee roster provided by DDS.

      Secondly, while the STS Home & School Assn. Board hasn’t taken a position on it, I believe they would be quite open to proposals to develop large portions of the STS campus for college satellite campuses and other commercial uses, as long as a portion of the STS campus remains for the care of the current residents.

      To your last point, we don’t disagree that the majority of people with intellectual disabilities are best served in the community. But one size doesn’t fit all. As the Olmstead v. L.C. Supreme Court decision has recognized, there are some people whose disabilities are severe or profound enough that institutional care remains the most appropriate setting for them. Close to 80 percent of the current STS population have severe or profound levels of disability — the highest percentage of those levels of disability of any care setting in the state.

      Finally, for the record, this blog post (and site) and the letter you’re referring to, were written on behalf of the STS Home & School Assn., a family-supported nonprofit organization, which is separate from the STS Foundation (although there may be some overlapping Board memberships).

      • Jay Halpern permalink

        I appreciate your response David, so here goes:
        1. I must be circumspect and confidential re: your first question. The information comes from currently employed direct care staff. It is an endemic situation.
        2. I think we both know that folks at the level of function under discussion are truly indifferent to their environment. As long as there is appropriate medical support, community exposure, and a compassionate staff that believes in giving more than mere maintenance services, such folks will thrive in private group homes. Parents/guardians, though never having been compelled to have “skin in the game” so to speak, don’t believe this. They fear the horror stories that have occurred in the community w/o accepting the truth of similar horror stories at STS. Also, I too often hear the “consistency” mantra, as if an individual at this level of function will decompensate if a long-time staff person is no longer available. The truth is, people do leave jobs, do get hit by trucks, do die. And life goes on. Secondly, there is nothing to prevent a “special staff” from joining the private home as a state-funded aide, if that is deemed appropriate by a team.
        3. It is quite possible that an appropriate learning institution would welcome an active treatment unit on campus for academic purposes. But conflict between the school administration and DDS administrators would have to be planfully avoided, with priority given to the school. That’s an ego bump that will be difficult to surmount.
        4. Thanks for clarifying the difference between the association and the foundation.


  3. Jay, I don’t know what the people you’re talking to are telling you, but the latest DDS employee roster that we have doesn’t list any therapists making anywhere near $160,000 at STS. There are 8 staff members at STS who make over $100,000, including 3 full-time physicians, a dentist, 3 administrators, and a rehab therapy supervisor who makes just above $100,000.

    Don’t forget, executives of the nonprofit providers that run the group homes routinely make over $100,000. Ultimately, there is a lot more opportunity for high salaries as well as waste and fraud in the nonprofit provider system because it is so much bigger and more dispersed than the public system of care, and the financial oversight of the provider system is much weaker.

    There is no question that there are profoundly disabled DDS clients who thrive in the community system. But the STS families and guardians know that the oversight of care in the community system is generally weaker than at STS, the staff are usually less well trained, turnover is higher, and services are generally fewer and harder to get than at STS (which is the point of our letter to the Program Review Committe). STS families and guardians feel they are being condescended to when they are told they don’t understand the community system or that they “fear” it or that they refuse to accept the reality of the situation at STS.

    • Jay Halpern permalink

      1. The nature of overpaying many over the long haul is that it is somehow hidden. The tax collector in my town of Oxford for 24 years just got busted for embezzling $600+K in the last 6 years. Go figure. Not one of my skill sets.

      2. You and I know that after decades of care in the same venue, significant others have an almost religious affinity for that venue. Fear of change is strong, and talk of change is deemed condescending, satanic, heartless, etc. I won’t persist trying to walk down that road: it’s a waste of my time. While I could suggest families actually go visit some of the group homes out there, I know they won’t. Do folks die from poor service in the community? Yes, some do. Have they died, been beaten up, raped at STS? Yes. I remember dealing with an elderly family whose son, in his sixties, had been pushed down a flight of stairs by an emotionally ill staff person with anger management issues. I tried to get the police involved but no, STS has its own police and all processes stopped there. Nothing was achieved. In the community, more folks are visible to neighbors, etc, and when there’s an issue, real cops are called in. I envision a future service system where all families are provided in-home supports: no more group homes, institutions, “facilities,” and then they’ll have the “skin in the game” that I noted earlier was often absent.

      3. Better trained? Care weaker? Services harder to get? Private sector folks have the same certifications that DDS workers have. Are there good workers in each domain? Yes. Are there bad workers, trained or not? Of course. In the private sector, however, they most often don’t have a union steward to run interference between bad workers and justifiable dismissal. Mandated client supports are clearly delineated in each quarterly. Are they implemented? They better be. If, however, you’re trying to make the point that DDS case managers don’t always do a good job monitoring services, I won’t argue with you. But that goes for STS client CMs as well. And community-based providers implement those services OUT IN THE COMMUNITY, not down the hallway. It’s like Ginger Rogers: she did everything Fred did, but backwards and in heels.

      4. Fraud easier in the private sector? Are you kidding? Private sector agencies, unless they’re very big, can’t afford the sort of sophisticated number crunchers that make fraud possible. Every business office I’ve dealt with in the private sector is terrified that they’ll do something wrong. They’re so manic about it, that they lose weight around audit time. That happen at STS? Nope. Are the big boys corrupt? As corrupt as they can get away with. There are always agencies that think they’re “too big to fail.” Tom Briggs in Waterbury learned differently but still did no time. Are there incompetent Executive Directors in the private sector? I’ve met dozens. I’ve also met dozens of incompetents at DDS’s central office and in regional offices. I have, as well, met some of the best human service providers in both those domains.

      5. I won’t argue with families committed to a way of life that has sustained their loved ones for decades. If a different model had been available way back when, they’d be thinking differently and all of this dialogue would be just so much palaver. In the long run, however, institutions are neither sustainable nor therapeutic, considering the many changes in our economy, our demographics, and our technological advances.

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