(September 2025) Arkansas Gov. Sarah Huckabee Sanders’ administration is advancing Arkansas Forward, an efficiency initiative to save money and improve services for the people of Arkansas.

The Sanders administration contracted with McKinsey & Company, an international consulting firm to develop a plan for the efficiency initiative. McKinsey produced a 956-page report that identifies “$300 million in cost-savings and cost-avoidance over the next six years.” The report identifies more than 300 initiatives across 15 departments.(1)

“Our team took a sweeping, comprehensive look at government efficiency in Arkansas,” Sanders said upon receiving the report in December 2024. “Across all state agencies, this team discovered potential ways to save taxpayer money and improve services. Many of Arkansas Forward initiatives are already underway and I look forward to this project continuing and reducing the burden of government on our taxpayers.”(2)

The efficiency initiative has taken on increased importance in recent months. Arkansas policymakers are responding to federal Medicaid funding changes. Medicaid is the biggest program within the state Department of Human Services (DHS), the Arkansas agency with the highest total operating expenditures ($10.2 billion) in fiscal year 2024. (3) DHS’ Division of Medical Services “handles the day-to-day management of the Arkansas Medicaid program,” and received $6.89 billion in federal revenue in fiscal year 2024.

Historical Background

The Policy Foundation led an Efficiency Project (2015-16) review of state government. The Project did not include DHS, which was examined by then Lt.-Gov. Tim Griffin. He recommended a reorganization of the department.

Since 2017, DHS has implemented a variety of organizational changes to create a more efficient organization and align the organization’s structure with the department’s core roles and responsibilities, governance, and performance measure goals. Some examples include:

  • Centralization of DHS shared services to drive productivity and efficiency in areas such as procurement, finance, human resources, and information technology;
  • Periodic reorganization of programs to support collaboration and efficiency (i.e., creation of the Director of Specialty Medicaid Services position to oversee the Division of Developmental Disabilities Services, the Division of Aging, Adult, and Behavioral Health Services, and the Office of Substance Abuse and Mental Health);
  • Realignment of vacant positions to meet urgent department needs.

 

DHS Strategic Management Plan

Under Arkansas Forward, DHS has “placed an emphasis in aligning with these strategic priorities and its “One DHS” initiative, which looks for redundancies, potential synergies, and economies of scale across the agency to deliver a greater return on investment for taxpayers and allow the State of Arkansas to redeploy resources elsewhere to provide better value. Each DHS division is examining how it delivers services and how to prevent individuals from needing services, and developing the strongest team possible by ensuring it has the right leaders deployed in the right roles.”

DHS’ structure was reviewed to identify opportunities in three areas:

  • Changes that would support the department’s execution of its mission;
  • Changes identified through implementation of Arkansas Forward initiatives; and,
  • Changes necessitated by Arkansas’ centralization of certain shared services functions (i.e., information technology, human resources, procurement).

Overview of Efficiency Initiatives

The Arkansas Forward report lists 43 DHS efficiency initiatives. Twenty-four (24) are classified “lower priority.” Twelve (12) are “ongoing,” and seven (7) are described as “high priority.”

Seven initiatives apply to the Medicaid program. Two apiece are described “ongoing” and “high priority.” Three are termed “lower priority.”(4)

High priority Arkansas Forward initiatives at DHS include:

  • DHS-1 – DHS Contract Oversight and Vendor Management Unit;
  • DHS-2 – Redesigned customer service capabilities and staffing model;
  • DHS-3 – Increase awareness of Home and Community-Based Services;
  • DHS-4 – Restructure Medicaid Operations Under a Single Appropriation;
  • DHS-5 – Increase customer contact points in community settings;
  • DHS-6 – Maximize additional federal funding opportunities;
  • DHS-7 – Strengthening payment integrity and FWA function;
  • DHS-8 – Focus on talent targeting and career development;
  • DHS-9 – Deploy internal trainings for DHS and cross-rained departmental staff;
  • DHS-10 – Streamline Medicaid eligibility and enrollment for maternity care.

High Priority Medicaid Initiatives

Three high priority efficiency initiatives refer to the Medicaid program.

DHS-4 (Agile organization) seeks “to enable strategic management of budget across Medicaid divisions and improve organizational effectiveness and ability to develop and execute strategic priorities to advance departmental mission.”

Strategies include providing “early outreach to Legislative leaders” and outlining “in a clear manner the benefits to the State, its taxpayers, DHS, and its beneficiaries and families served.” Another is development of “a fiscal impact analysis that shows cost neutrality.”

DHS-9(Internal trainings)  seeks to “identify areas needed to build (a) long-term talent system” for personnel.  Internal trainings include Medicaid eligibility. DHS “provides very few opportunities for professional development. If promoted to supervisor, there is a requirement for the leader to complete a 12-hour training, but there are no other formal training opportunities to support the new leader in developing a high functioning team.”

One initiative rationale is that “organizations with the greatest chance to exceed desired outcomes and thrive into the future are typically ‘learning organizations,’ meaning they encourage learning and professional development at all levels.”  A learning organization “moves away from basic employee training and shifts its focus to problem solving,” the report notes.

DHS-10 (Maternity care) “seeks to streamline the eligibility and enrollment processes for the maternal health prevention program by increasing enrollment” for pregnant and new mothers. DHS chose “to include this initiative in Arkansas Forward in anticipation that it will be included in the Governor’s Workgroup recommendations to streamline Medicaid eligibility and enrollment for maternity care.”

Other Medicaid Initiatives

DHS-21 creates an integrated purchasing and procurement strategy for Medicaid. One goal is to “reduce redundancies” within the system.

DHS-42 seeks to “identify private sector urgent care health network with low-cost options and network breadth to expand care to (the) Medicaid population, lowering health burden, improving outcomes, and reducing costs from high-cost low-acuity treatment.”

DHS-71 seeks to improve payment integrity and subrogation. It would “introduce or strengthen Third Party Liability (TPL)/subrogation practices and processes for all members.” The initiative seeks to use “internal capabilities” or “specialized vendors, to drive savings to (the) Medicaid plan.”

DHS-95  implements department level policies and programs that integrate behavioral health services in primary care clinics.

Conclusion

The Arkansas Forward project advanced by Gov. Sarah Huckabee Sanders’ administration is an ambitious attempt to improve efficiency at DHS and within the state’s Medicaid program. — Greg Kaza

Sources

(1) The report is posted at: governor.arkansas.gov

(2) “Sanders Receives Arkansas Forward Progress Report.” December 16, 2024. https://governor.arkansas.gov/news_post/sanders-receives-arkansas-forward-progress-report/

(3) https://www.dfa.arkansas.gov/wp-content/uploads/fy2024ActualExpenditures.pdf

(4) The All Initiatives Master Tracker is published at the end of the 956-page report.