Why the smartest Medicaid states are modernizing in motion

November 14, 2025

Douglas Stewart

Continuity keeps systems running. But here’s what keeps them relevant.

Across the public sector, legacy systems now account for a significant share of technology spending. The U.S. Government Accountability Office estimates that states and federal agencies spend more than $100 billion a year maintaining outdated systems. Many of those systems were first built decades ago, long before cloud infrastructure or real-time data analytics were part of the landscape.

In healthcare specifically, manual processes remain widespread, with nearly half of providers still relying on paper-based or semi-automated workflows, according to a 2024 study by Experian Health. These statistics illustrate a simple truth: doing the same thing, even efficiently, is no longer enough.

When I began working with state health agencies, I learned that the most difficult part of any technology transition was not the code or the infrastructure but the mindset. Each transition carried the same fear: keep everything running, change nothing that might break, and move quietly from one project to the next. That cautious instinct is understandable, especially when millions of residents depend on these systems. But what I have seen over the years is that when we only focus only on continuity, we unintentionally limit progress. This urge to avoid change can become irresistible when systems are changing hands as part of a takeover.

The cost of standing still
Every transition begins with a desire to minimize disruption. Yet continuity, while necessary, should be the starting point, not the finish line. When a takeover focuses solely on replication, the agency ends up with a system that performs exactly as before, preserving function but not flexibility.

Modernization is often viewed as a large-scale endeavor, requiring major investments and long timelines. In practice, most of the real progress happens in smaller, more deliberate ways. A well-planned transition can weave meaningful upgrades into existing processes, strengthening resilience without increasing cost.

Modernization begins in transition
The transition period is where modernization either takes hold or fades away. It is the moment when agencies can identify inefficiencies and align technology with mission goals. The planning phase should be as strategic as any design phase because the decisions made there determine whether the system will simply endure or truly evolve.

I have found that the most successful agencies treat modernization as part of transition planning itself. They ask not only how to transfer operations but how to improve them along the way. When modernization is integrated into transitional activities, every upgrade becomes an investment in sustainability.

A new vendor can look at existing systems from a fresh perspective. Many states have invested in enterprise tools and heightened security policies, but these may not have been adopted in legacy contracts.

During the transition of a legacy system, the right vendor can help turn inertia into momentum while ensuring your modernization investments deliver real value.

Key opportunities include:

Modernized infrastructure: New environments can be more redundant, better monitored, and faster to recover in the event of a disaster.
Strengthened security: Encryption, authentication, and access controls can be updated to align with the latest standards.
Improved quality assurance: Existing controls can be revisited, refined, and reinforced.
Expanded automation: Workflow opportunities can be re-evaluated and implemented to increase efficiency.
Enhanced training and documentation: Gaps can be closed and access to resources improved for smoother adoption.

The mindset shift
Modernization is not a single event but a discipline. It starts when leaders decide that every transition is an opportunity to improve rather than a risk to manage. Agencies that embed modernization into takeovers create more adaptable systems and teams that are better equipped to serve residents. They also signal to federal partners that progress and compliance can move forward together.

In my experience, modernization succeeds when three conditions are met. The technology is aligned with the program’s mission. The partnership between vendor and agency is collaborative and transparent. And progress is measured not by how well the new system replicates the old one but by how much better it supports the people who depend on it.

Moving forward
Every technology handoff tells a story about how government agencies choose to evolve. When agencies use transitions to modernize, they tell a story of resilience and renewal. When they replicate, they inherit the limitations of the past.

The next time your agency prepares for a vendor takeover, ask a simple question: Are we transferring operations, or are we improving them? The answer will shape the success of your program for years to come.

If your organization is planning a transition, now is the time to embed modernization into the process. With foresight and partnership, every takeover can be a quiet revolution in how government serves its residents.

Ready to modernize your Medicaid systems?
Learn how Conduent helps agencies strengthen operations and outcomes through smarter, sustainable modernization. Learn more, or connect with an expert.