Across the Digital Nation

Among the traditional seven agency segments within the state and local government market, departments of health and departments of human services are often the largest, most complex entities within the public sector organization. These departments have enormous operating budgets, numerous program-based services, and significant ties across federal, state, county and municipal entities. The sheer size of these organizations can be underscored by super-agencies such as Washington's Department of Social and Health Services, which represents approximately 33 percent of the state's budget. The technology requirements for these agency segments have varied over the years. In many respects, the core systems traditionally utilized by these agencies are based on proprietary development. Over the years, technology implementation has moved from strict reliance on large, internal information services management staffs to greater use of external vendors. Recent reforms have resulted in new business process re-engineering engagements, greater systems and data integration projects, and continued attention to outsourcing traditional functions such as Medicaid claims. Technology development within human services agencies is expected to continue along the upward curve seen over the past five years. There will be greater attention paid to the integration of program services and the extension of federal legislation like the Workforce Investment Act. Given the current economic conditions, there will be added emphasis on providing benefits to newly laid-off individuals and moving these people back into the work force. Departments of Human Services are also focused on the implementation of fraud detection and eligibility verification tools.Although the technology requirements of human services organizations typically overshadow health agencies, recent developments suggest a reversal of this trend. In many respects, 2002 represents a watershed year for state and local government departments of health. This is due in part to the fact that departments of health face the rollout of two key technology mandates: compliance with Health Insurance Portability and Accountability Act regulations and the introduction of new tools to combat bioterrorism. Each of these initiatives will have a major impact on the implementation of new solutions and represents key factors for the accelerated level of new technology spending. However, the funding mechanisms associated with each mandate are quite different. With HIPAA legislation passed in 1996 and time lines for compliance already adjusted, there is little sentiment to provide federal assistance to support HIPAA compliance projects. Despite the current fiscal outlook, state and local governments will need to tap scarce resources to ensure proper security, privacy, and that data dissemination tools are implemented. In contrast, bioterrorism is a chief component of the federal Office for Homeland Security. As the new federal budget is approved and the office makes program objectives more transparent, there will be a host of new federal matching grants to spur new operational and technology developments in this arena. Resource-constrained agencies will need these incentives to help implement the first round of technology projects, such as health alert networks and disease tracking systems.Increasingly, the competitive environment for these opportunities consists of new players to the government marketplace, federally oriented vendors extending down to state and local governments, and HHS business process experts. These vendors will need to assess evolving market conditions in order to best focus resources to capture new opportunities. Delays in federal policy concerning bioterrorism or additional adjustments to HIPAA compliance procedures will directly impact the priority and scale of new project implementation.