Healthcare Services

Staff Up or Contract Out?: The Government Agency Dilemma

Staff Up or Contract Out?: The Government Agency Dilemma

By Jim Bobeck

For any state agency facing new work or spikes in existing work volumes, a critical question must be asked: Do we staff up or contract out? An agency’s workload can change in an instant, for reasons ranging from Medicaid expansion to budget freezes. These three essential principles can provide guidance on the right decision for your unique situation.


  • If the long-term is not clear, then don’t invest for the long-term. If you’re not sure how long a program will last, rent don’t buy. Don’t invest in staffing your agency for short-term projects that may go away. Through a contractor, you rent staff on a temporary basis, which can be short-term or long-term if your circumstances change. When you don’t need a contractor any longer, you end the contract. It’s as simple as that.


  • If you need quick staffing ramp-up, you can never hire fast enough. Particularly for those agencies still working through civil service commissions to hire candidates, you can never hire quickly enough and get qualified candidates with the skill sets you need. However, through a contract, you can immediately access companies in all sectors with experienced personnel ready to work on day 1.


  • If it’s not an “inherently governmental task,” contract it out. When you’re considering contracting work out, consider whether the task is inherently governmental in nature. Setting policies and procedures is clearly a governmental task. But administration of your daily business processing tasks? Not inherently governmental. Answering phones for customer service, processing social service claims and making determinations, and preparing documentation can all be contracted out at a cost-effective rate. When states invest in technology on their own or hire a small army to handle paperwork, it becomes more costly and far more challenging to make scope changes later on. With contractors, you can use change orders to modify work scope. Additionally, you don’t need to worry about software upgrades or making staffing changes, such as firing or hiring.