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The Brain Trust: Cal Ludeman, Department of Human Services

Growing up on his family’s farm near Tracy, state Department of Human Services Commissioner Cal Ludeman says his childhood conjures images from a Norman Rockwell painting.

“I grew up in a typical ’50s farm family that maybe got to go on Saturday into town every two weeks with a dime in their pocket. You know the story. But it was real to me,” Ludeman says.

Now as commissioner of the largest agency in state government, Ludeman, 57, tries to return each weekend to the farm that he and his brothers still operate.

Among the idyllic images of Ludeman’s early life, he attended a two-room school house in Amorette.

Always the biggest boy in his class, Ludeman was an all-state guard on offense and a linebacker on defense on the football team at Tracy High School.

He wrestled and held the record for discus at his high school for about 30 years.

Ludeman went to South Dakota State University on a football and wrestling scholarship. But he severed his ACL in his knee during the third week of football practice during his freshman year in 1970.

His doctor told him he wouldn’t play football again or get sent to fight in the Vietnam War. But since his doctor didn’t mention wrestling, Ludeman grappled as a heavy weight.

“I used to say there was one guy in Minnesota that had a loud mouth and big head who was a heavy weight wrestler who could win 40 percent of the votes for governor. And it was not Jesse Ventura,” he says with a laugh.

Indeed, Ludeman ran for governor in 1986 as the GOP’s endorsed candidate to run against DFL Gov. Rudy Perpich. Perpich won the election.

Ludeman has a long political career in Minnesota going back to his service as clerk of the Monroe Town Board.

In 1978, when Ludeman was 26 and working on the farm, he ran for the state House because he thought the incumbent, DFLer Russ Stanton, was too liberal for the district.

“I was simply mad at the incumbent,” says Ludeman, though he doesn’t exactly recall whether his discontent concerned a particular issue or an accumulation of grievances. Ludeman still knows Stanton, who is now a lobbyist for a union representing state college professors.

A lot of other Republican candidates were angry during the 1978 election, too. Ludeman was elected to the House in the so-called Minnesota Massacre that saw a Republican sweep, with the elections of Al Quie as governor and Rudy Boschwitz and Dave Durenberger as U.S. senators. Ludeman was part of a “gigantic” freshman class in a state House in which the political divide was initially an evenly split 67 to 67.

“This was a fairly angry crowd coming into the Legislature,” Ludeman says.

He had to make the long trip from western Minnesota to take his seat in the Legislature. He and his wife, Deb, had two young kids, 2 and 4, and a newborn at the time.

Ludeman served on labor relations committees in the Legislature and worked on collective bargaining legislation. He left the Legislature in 1984 but stayed active in politics.

In addition to his gubernatorial run, Ludeman was political director for the state Republican Party in 1984, and chairman of U.S. Sen. Bob Dole’s Minnesota presidential campaign in 1988. In the early 1990s, Ludeman was appointed by Gov. Arne Carlson to a government reform and efficiency commission.

In 1992 Ludeman ran for congress in what used to be Minnesota’s 2nd Congressional District. Losing the hard fought congressional bid was tough. “That hit me hard and I was done,” he says.

Ludeman, who has 9 grandchildren, decided to focus more of his time on the farm.

But in 2003, conversations with newly elected governor Tim Pawlenty convinced him to get back into public life – Pawlenty appointed Ludeman commissioner of the Department of Employee Relations (DOER). At DOER, Ludeman handled the 2005 partial government shutdown as it pertained to state employees.

Since then, DOER has been merged into the Department of Finance to create the newly christened Minnesota Management and Budget.

After former Human Services Commissioner Kevin Goodno resigned in 2006, Pawlenty appointed Ludeman the new commissioner.

DHS was created in its current form in 1984 when the Department of Welfare was incorporated into the state Medicaid agency and hospital system.

The state’s largest agency with an $11 billion annual budget (on an all-funds basis), DHS has about 7,200 employees.

DHS spending makes up about 25 percent of the state’s $34 billion two-year general fund budget. A large amount of DHS spending comes from federally mandated programs like Medicaid and Temporary Assistance for Needy Families (TANF).

DHS is responsible for a staggering amount of services: It oversees 13 state hospitals, has 38,000 nursing home beds and administers 27 health care programs like MinnesotaCare program, which provides health insurance to low-income working families.

“It’s one of the most comprehensive human service agencies in the country,” Ludeman says.

To boil it down, DHS does six key things:

• Administers the national welfare program.

• Handles services for children and families.

• Handles health care administration (Medicaid funding).

• Provides chemical dependency and mental health treatment.

• Manages state-operated services including 13 state hospitals, two other treatment centers and other group homes.

• Treats people in Minnesota’s sex offender program, including a new facility near completion in Moose Lake.

DHS has been trying to improve the quality of health care and the transparency of health care costs in Minnesota; it’s the only Medicaid agency in the U.S. participating in a pay-for-performance model.

“We mean it. We’re here to stay,” Ludeman says.

QCARE, which stands for Quality Care and Rewarding Excellence, was launched in 2006. QCARE has established quality measurements for treating health problems like diabetes. The state makes differential payments to providers that follow the QCARE quality measurements.

Ludeman says that DHS estimates suggest that patients with diabetes in Minnesota had a 6 percent chance of getting the right care before QCare was established. But in some clinics implemented under QCare, he says, quality care measurements for patients with diabetes suggest that 48 percent are getting the right care. The goal under QCare is to push that figure up to 80 percent by 2015.

“That is the most accelerated quality improvement mechanism that we have discovered,” Ludeman says.

Trying to use market-based approaches to health care is more difficult than other methods like a single-payer form of health care, Ludeman says. “The market-based approach is the hardest road to take. But we are more prepared in Minnesota to take that route.”

State lawmakers continued on the path of new programs by passing health care legislation at the end of the 2008 session, including community health improvement; health care homes that meet care coordination criteria; and electronic prescriptions by health care providers by 2015.

“[The legislation] is a base of real change that will take some time to implement,” Ludeman says.

The biggest change from the reform legislation creates more transparency in pricing and quality, according to Ludeman. The legislation creates a new category of data that providers will use to establish peer groups based on quality and efficiency.

“This is the world changer,” Ludeman says.

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