Local Politics

Statement by DHHS regarding contract employee

Posted September 6, 2013
Updated January 17, 2014

N.C. Department of Health and Human Services

WRAL made two different requests for information on Friday, Sept. 6, 2013, regarding contract employees at the Department of Health and Human Services. Below is the response from DHHS Communications Director Ricky Diaz. WRAL has edited only for formatting and to adjust how background documents are linked.  

For your story, here is a statement from Secretary Wos:

“The operational, IT and financial challenges at the Department of Health and Human Services are among the greatest in state government, as documented by the State Auditor. To confront these challenges head on, I have assembled a strong leadership team and brought in experts who we knew could deliver immediate results. We continue to look for diverse talent to turn around the Department.” – Secretary Aldona Wos, M.D.

Background information:

Additionally, I am providing the attached contracts, payments and hours for fuller context and transparency. DHHS complied with previously-existing policy and procedures with these contracts and continues to look for diverse talent to turn around the Department of Health and Human Services.

These contracts are a part of the Department of Health and Human Services’ (DHHS) efforts to address severe operational and management deficiencies discovered upon taking office.

When arriving in January, the Secretary was confronted by a number of vacancies and retirements in critical senior leadership positions. Most of the Deputy Secretary positions became vacant early in the administration. More alarming was the fact that the Department had no plan to hire, retain and develop leaders to fill these critical positions.
The challenges at the Department of Health and Human Services are among the greatest in all of state government, and the Secretary has assembled a strong leadership team and brought in experts on contract who are working to fix these deficiencies with a sense of urgency. Among the challenges:

  • The Department, with an $18 billion budget, had no one in charge of overall finances.
  • A performance audit performed by the State Auditor revealed state had overspent its Medicaid budget by $1.4 billion over the previous 3 years.
  • NCTracks, the department’s new Medicaid claims processing program, was hundreds of millions of dollars over budget and years behind schedule.
  • The department did not have a Chief Information Officer in place responsible for some of the largest IT projects in state government.
  • The Office of Internal Audit was understaffed and a year behind in completing scheduled financial and performance audits.
  • Nearly a third of DHHS employees did not have e-mail accounts, making it difficult to receive feedback and communicate critical department directives.

Download payments and hours overview by clicking here: Summary of DHHS Contractor Payments.

Below is a brief description of the contractors. 

Joe Hauck

Joe Hauck has 35 years of distinguished and diverse executive management experience across numerous business operations and communications disciplines. He provides solid business insight with ability to ascertain and analyze organizational requirements, forecast goals, streamline operations, and execute new program concepts. Upon arriving at the Department, he immediately conducted an evaluation of the operations of the Department to identify key weaknesses of the existing structure. Additionally, he assisted the Secretary in restructuring and creating an executive team that will bring long-term efficiency and results to the Department.

Joe also undertook an in-depth examination of financial issues that have historically plagued the Department, and has begun implementing corrective actions, already achieving millions in savings without compromising services. Among his many accomplishments:

  • Created a plan to reduce temporary agency workers in our facilities and hire more health care professionals. This will reduce vacancies in our healthcare facilities while improving the care we provide for our most vulnerable patients, and is additionally estimated to save the state in excess of $1.25 million annually.
  • Developed a plan to achieve $5 million in savings to avoid reductions in services rendered by DHHS supported non-profits.
  • Expanded the Office of Internal Audit, allowing DHHS to increase and improve its oversight and accountability to reduce waste and responsibly manage the hundreds of millions of dollars in contracts it oversees.
  • Is a major participant in formulating DHHS consolidation efforts that is projected to save the state over $1.8 million over the next four years.

Hauck’s contract began on January 22 and is scheduled to expire on November 30. Compensation is capped at $310,000.

Les Merritt 

Les Merritt was brought in to the Department after a number of substantial budget and payment issues were identified in the Division of Mental Health. He is working to analyze and correct the lack of oversight, accountability and poor system processes. Merritt is restructuring the division’s operational structure and establishing new policies.

Merritt is a Certified Public Accountant and former State Auditor for North Carolina having served from 2005 until 2009. Merritt is a member of the North Carolina Ethics Commission. He earned degrees in Accounting and Economics from North Carolina State University. His contract began in May 2013 and expires in May 2014. It is capped at $312,000 and includes two, one year options.

Carol Ransone

Carol Ransone led organizational change for the replacement MMIS (Medicaid Management Information System). Her expertise led to a successful launch of NCTracks and more efficient operations of the project. The successful launch of NCTracks on time is estimated to save the State of North Carolina $3 million per month. Her contract began on February 27 and expired on July 31.

Dennis Barry

Dennis Barry, former president was the President and CEO of Moses Cone Health System, was brought in to evaluate operations, program areas and human resource operations. He is a registered Pharmacist and holds an MBA from the University of Chicago. Dennis is a well-respected leader in the health care industry. His contract began on February 27 and terminated on May 15, capped at 18,000.

Robert Atlas

Robert Atlas serves as an independent expert in Medicaid reform and Medicaid waivers. The General Assembly gave the Department the authority to seek a waiver from the U.S. Department of Health and Human Services in order to implement reforms to North Carolina’s Medicaid system.

Atlas is the founder and principle of Grace Creek Advisors. Prior to that, Bob was President of the Lewin Group, a premiere consultancy in Health and Human Services. He also served as Executive Vice President and Chief Operating Officer of Avalere Health.

His contract began on August 19 and will terminate on November 18, capped at $56,000.

Susan D. Young

Susan D. Young was enlisted by DHHS as a third-party expert to evaluate if NCTracks was ready. Susan also assessed the risk of NCFAST project, identifying gaps and recommending changes for successful implementation. Her contract began on January 7 and terminated on April 19.

Jerry Johnson

Jerry Johnson was the Director of Internal Audit for BellSouth, a $25 billion international telecommunications company. He was brought in to help develop better processes and procedures to meet the needs of the Department. His contract is capped at $107,900.


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