Betsey Bayless, director of the Arizona Department of Administration since January 2003, has held several key positions in state government, including secretary of state from 1997 through 2002, acting director of the Department of Revenue and assistant director of the Board of Regents. She was a member of the Maricopa County Board of Supervisors, where she served two terms as board chairman. Selected as the finalist for chief executive officer of the Maricopa Integrated Health System, Ms. Bayless was interviewed in her office Aug. 8.

This is kind of an exit interview. Why are you leaving state government to become CEO of the Maricopa Integrated Health System?

I wasn’t planning on leaving my job. I was asked if I would be willing to talk to the new board because of my background at Maricopa County, including some of the issues I had to wrestle with as a supervisor. I had a frank conversation with the board about how there has not been a serious strategic plan about what the health system is and what it is not. Now that it is separated from Maricopa County, it is going to have to stand on its own. In the past, when the system failed to meet its financial goals, it could be bailed out by Maricopa County. That is not possible anymore because it is cut off from the county and is a special healthcare district. So more than ever, there is a need to establish this strategic plan and determine how it’s going to become and remain financially stable. Over the past week or so, I wanted to see if I was capable of doing the job. I’m not a hospital person, I’m not a healthcare person and I wanted to determine if I could be successful. I decided I want to do it.

Why? Is it the challenge or more money or what?

As a supervisor, I was never able to get my fellow board members to participate with me in doing a strategic plan that took a hard look at the hospital and the healthcare system and to make the hard decisions. In one of my conversations with the board, I was told, that is what you’re going to have to do. I thought, I really want to do this. Maybe it’s unfinished business. Until two weeks ago, it never even crossed my mind to leave this job.

There was an item on the salary, mentioning that it is a pretty good bump for you. Is that accurate?

We haven’t completely finished that yet, but it’s going to be a pretty good bump for me.

Do you know when you will leave here and start there?

Because I did not know that I was going to be changing jobs, I have a vacation planned. So I’m going to Paris for about ten days and then I’ll come back here and I told the governor I would stay here as long as is necessary.

What are the biggest challenges at DOA? Briefly discuss the five strategic issues in your plan for fiscal 2005 through 2009. On the first one: “Attract, Retain and Develop Employees.” What challenges does the state face in retaining employees and what needs to be done to make state work more appealing? Is it more money or better benefits or what?

In state government, paying people is always a challenge. Statewide, I’ve tried to encourage the governor and the Legislature to do more for state employees. When I came in here, nobody was in a position to do much, but we’re in a much better position now. It’s critical to hire good people, retain good people. I always like to promote people from within the organization. Give them a career path. We try to provide a healthy environment. We have a lot of entrepreneurial challenges, and some people like that kind of environment. When you work at the Department of Administration, you work with every part of state government, and that presents a challenge and it’s a lot of fun.

What about the second strategic issue: “Information Technology Efficiencies?”

All of state government needs to do more with technology. And we need to do it smarter. There’s no reason why governments can’t be on the cutting edge of technology, and one of the big problems is always the funding of these things. We have implemented the HRIS system, the Human Resource Information Solution. We’re in the middle of our telecommunications privatization. We’re drawing plans for a new Arizona Financial Information System, a comprehensive new financial system, which will encompass the purchasing systems that are out there now. We should have a more umbrella-like system and fit all the pieces under that. The current system should run out of steam in about five years, so we believe we should be stepping this up.

The third issue is “Cost-Efficient and Effective Public Facilities.” What does that mean?

We have for so long under-funded our facilities, not the construction so much as the maintenance of them. We continually try to find ways to improve our facilities. This building is what we call a PLTO building — privatize-lease-to-own. DEQ, the Health Department and the Health Lab are all PLTO buildings. They’re all built by a private contractor, the state leases them and in 25 years the state owns them. It is maintained and managed by a private company.

Do you have any idea how many state buildings are in need of repair and how much that would cost?

They’re all in need of repair. For all of the buildings we have, we have building renewal money of $3 million. And that doesn’t even scratch the surface. You can’t maintain things; you have to fix things. You hear about a water heater breaking at the Capitol, and people are upset because there is water is on the floor. We should have a schedule of replacing water heaters, and you replace them before they go out.

Tell me about the fourth issue: “Productivity, Cost-Effectiveness and Customer Service.”

I’m a strong believer in accountability. Every employee should know exactly what’s expected of him or her and know to whom they’re accountable, what they’re supposed to produce. And we have tried to instill that up and down the department. We have developed a value and procurement program, which really touches on cost-effectiveness and productivity statewide. For many years there has been in this department a state procurement office. We have changed that to the enterprise procurement services, with an emphasis on the word enterprise. In state government traditionally there have been many small contracts, agency by agency, with some agencies often having procurement staffs much larger than in the state procurement office. We looked at what some other states had done with regard to procurement and we thought Arizona should be buying as an enterprise. So we pulled together the chief procurement officers for all of the agencies and we looked at past studies. They all say the same thing: If you want to improve procurement, whoever you are, do it as an enterprise. But everybody wants to have their little silo.

So it’s a broader base for procuring. If it’s going to be desks, everybody is buying from the same company. Is that right?

Yes. We started with office supplies. We had a situation where every agency was doing its own thing on office supplies. So we did a broad procurement RFP and we signed a contract for 500 items. Every state agency that is dealing with those 500 items, this is what you’re going to buy. That restricts agencies, but it drives the price way down.

How much of a savings is there?

For instance this legal pad of paper is nine cents, which is significantly less than agencies were paying under their old contracts. But you can only get that savings when everybody’s going to buy the yellow one and buy the same thing. It started last November. We came away with $10 million over five years, so that’s about $2 million a year. There are laptops, servers, printers, and that saved $13 million from the 2004 baseline. Of
that, only $2.5 million was state funds. So you have two contracts, and we’ve already come up with $4.5 million. That’s the kind of savings you can get when you buy as an enterprise. We told the procurement officers that they’re going to have to do some of the procurement. We set up strategic contracting centers so that ADOT just did windshields, for example. We draw on whatever the agency was good at. Lottery, Retirement, DES, and AHCCCS are doing some things. And we are growing our compliance unit, beefing up contract compliance functions to make sure everything is being done in a standardized way and according to the procurement code.

The fifth strategic issue is “Security and Safety.” What is that all about?

We’re all more cautious about security and safety. We have had a big emphasis on our business continuity plan statewide. If our data center goes out, if somebody bombs the data center or if there’s a big flood, how are we going to get out paychecks; how are we going to process AHCCCS? We have to have the capability of immediately being in business someplace else — business continuity across the board for every single part of this department. The functions of this office are critical to continuing the operations of the state.

So there is a backup system somewhere?

There is a backup for everything. We had a backup center, but it was in Pennsylvania, so we moved it closer to home

You’ve been in the public sector, mostly, and in the private sector.

I was an investment banker.

Do you have any preference, and how do they compare?

Hard to compare. I started in the public sector as an intern in the state Personnel Department. I was in the private sector for a year or two after I got out of college. Because of my time and place, there was very little interest in women in the private sector. So I started a master’s in public administration and ended up doing an internship in state government. I started at minimum wage. Not only did I find there were women professionals in state government, but it was so interesting, and I decided to stay. I kind of worked my way through state government. If you recall, I was fired when [then-Governor] Mecham came in, and then I went into investment banking after that and I loved investment banking, but I very much missed the public sector.

Why?

Involvement in public issues, a feeling of contribution, making a difference in Arizona.

Do you ever think about running for elective office again?

I have. I’m not doing it right now and I wouldn’t say I never would, but I enjoyed that part very much. I loved being at Maricopa County, I loved being secretary of state and I truly enjoyed that. And then I came back into administration work and I’ve enjoyed that very much, too. So maybe I will someday.

Do you think having served as a Republican in a Democratic administration hurts your chances within Republican ranks?

You never know, but I’m still an elected precinct committeeman in the Republican Party.

What hobbies do you have? What about horses?

I had a horse and a burro, but my horse turned 27 and went to horse heaven, but I still have my burro, Burrito. He’s a sweetheart. I spend a lot of time fussing over him, but you don’t do anything with him. It’s like having a big dog.

Any other hobbies?

I’m a Latinophile. I studied Spanish in college. I spent a lot of time in Latin America. I love anything from South America or Mexico. I’ve spent time in Costa Rica. I hiked the Inca Trail. I love to listen to Spanish radio. Anything Spanish I love.

Thanks for your time, and good luck in your new job. —