December 5, 2012
Is technology an operating cost to be cut or an investment that creates large-scale savings? The latter is the premise being posed in a report by tech industry specialists in a new report.
A non-profit, educational organization, the American Council for Technology, in conjunction with the Industry Advisory Council, engaged over 100 volunteers in preparing a series of papers that comprise a “Quadrennial Government Technology Review.” The executive summary of the Review highlights three recommendations that the authors believe could lead to annual cost reductions of $220 billion – far greater than the current $80 billion a year the federal government invests in technology (which like everything else is being targeted for budget cuts).
The report notes “Much of the current federal IT budget goes to operate and maintain outdated technologies rather than invest in future capability investments.” It suggests that if a greater share of this funding was invested in longer-term capabilities, that savings would far exceed the investment costs.
To avoid the risk of being too abstract, the summary report frames its recommendations with specific recommendations to three agencies – Center for Medicare and Medicaid Services (CMS), Veterans Affairs (VA), and the IRS. In the summary, it highlights the following:
Recommendation 1: Accelerate the use of data analytics to identify opportunities to reduce government costs.
New data analytical technologies, if applied to the federal government’s vast quantities of existing data, could be used to identify inefficiencies and redundancies. At the CMS, for example, structured and unstructured data can be used to provide actionable information. One study estimates potential savings of $70 billion a year in federal health care costs alone. These same technologies could be applied in other agencies as well.
For example, advanced analytics could help control healthcare costs by expanding “comparative effectiveness” research, which improves patient-doctor decisions on appropriate courses of action. For example, would surgery actually help a breast cancer patient? Also, technology could automate clinical decision support systems, thereby allowing less-expensive physician assistants to make a wider range of medical decisions and reduce the instances of adverse events (such as those caused by drug interactions).
The report recommends investing in pilots and research projects, not diving into “big bang” projects, as the best way to get started.
Recommendation 2: Invest in technology to increase productivity and reduce costs.
The report notes that “innovation is a cornerstone to private sector productivity and success” and encourages adoption of private sector practices where they make sense. It points to a report by the Technology CEO Council that identifies $970 billion in savings over a 10-year period by adopting commercially-proven best practices in improving mission-support functions, such as supply chain management, moving to paperless processes, and energy conservation.
A future blog post will expand on these practices, but the recommendation concludes that “Investing in better IT systems . . . will help all federal agencies meet the 21st century standards expected by the citizens they serve.”
Recommendation 3: Use technology to combat fraud, waste and abuse.
The Office of Management and Budget recently announced that its initiative to reduce improper payments resulted in $47 billion in recoveries or monies not being misspent in the first place. But the ACT-IAC report points to greater opportunities, noting that the “tax gap” of uncollected taxes exceeds $385 billion. If IRS used enhanced IT tools “for better sharing, accessing, analyzing the relevant data,” says the report, IRS could “significantly reduce both improper payments and uncollected taxes.” A 10 percent improvement could reduce the deficit by at least $40 billion a year – and more if other forms of improper payments are included.
For example, the report recommends proactively screening incoming IRS tax filings and outgoing payments, based on historical data, to identify potential fraud or abuse. For example, advanced analytics can confirm addresses of individuals to reduce instances of identify theft, or if they received a government benefit payment but didn’t file a state or federal tax return. To develop these more sophisticated techniques, the report encourages a civilian counterpart to the successful Defense Department’s shared centers of excellence that engage public-private partners in solving complex challenges, such as the development of geospatial analytics.
In conclusion, the seven more detailed papers that comprise the Review are available as well. They were developed under the umbrella of the Institute for Innovation, which is sponsored by ACT-IAC:
Note: This blog post is one in a series on resources for potential federal government reforms in the next few years. The first post can be accessed here.
Image via Stella Caraman/Shutterstock.com
December 5, 2012