- Associated Press - Tuesday, October 14, 2014

PORTLAND, Ore. (AP) - A report by a corporate turnaround expert hired to fix Oregon’s troubled health-care insurance exchange presents a scalding assessment of Cover Oregon’s past problems.

The draft report by Clyde Hamstreet, made public Tuesday, covers the period from mid-April through the end of August, when Hamstreet and two of his executives tried to straighten up the failing exchange.

The report was released after The Oregonian first inquired about it. It’s dated Aug. 29.

In the report, Hamstreet says he found Cover Oregon “in serious disarray.” Problems included dysfunctional leadership, a lack of accountability among management, ineffective relations with insurance agents, debilitating expenditures on a failed technology, and piles of untouched work accumulating, among other issues.

Cover Oregon’s board of directors hired Hamstreet in April after the exchange launched a glitch-filled website that couldn’t come close to fulfilling the promise of seamless online signups for health insurance.

Hamstreet’s task was to take over the duties of executive director, assess the organization’s business operations and financial management, and recommend a restructuring plan. Hamstreet said he took on the job at the request of Gov. John Kitzhaber.

Two weeks after Hamstreet was hired, Cover Oregon’s board decided to ditch the failed exchange portal and switch to the federal exchange.

Hamstreet efforts included removing ineffective executives, taking control of contracts, cutting expenses, reducing the work backlog, and creating a transition plan, among other steps. He finished work in August, a month after Cover Oregon hired a new executive director.

Officials are still trying to decide what to do with the agency that runs Cover Oregon. Gov. John Kitzhaber has said it should be dissolved.

In the report, Hamstreet doesn’t offer a strong opinion about Cover Oregon’s future - but he says he leans toward letting it remain a free-standing quasi-government corporation. Hamstreet says that if Cover Oregon is allowed to continue, its “strengths will flourish.”

If the agency is dissolved, Hamstreet suggests it should become part of the Oregon Insurance Division, rather than the Oregon Health Authority, because “the culture and bureaucracy at OHA is a deterrent to fresh, efficient operations …”

The report does say it’s important for the state to retain control over its health-insurance marketplace and keep its technology options open. Not developing the technology wasn’t and isn’t an option for Oregon, Hamstreet says, because the savings provided by automated application processing are tremendous.

One option, according to Hamstreet, is for Oregon to partner with a neighboring state to share technology costs and retain control over its marketplace.

Hamstreet is the founder of Hamstreet & Associates, a Portland company that specializes in restructuring struggling businesses. For his work, plus that of two other executives he brought on, Hamstreet charged the state about $600,000.

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