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Slide 2 Cheryll D. Lesneski, DrPH Clinical Assistant Professor Gillings School of Global Public Health, UNC Chapel Hill Consultant, US DHHS Slide 3 Describe the process undertaken to financially assess a local public health agency Define financial ratios Articulate the use of financial ratios in organizational assessment Define trend analysis List the Quality Aims for Public Health that relate to improvements in financial performance Describe Quality Improvement methods to address gaps in financial performance Slide 4 BOCC, County Manager, and LBOH request help Organizational assessment Focus on culture, management, programs services, & financial health Team put together (1 faculty &3 students) to assist agency Data obtained from: Interviews Internal and Public Documents Financial Ratios SS County Finance Officers SS Slide 5 Use financial ratios to assess current financial status Look at financial trends of agency over several Fiscal Years Revenues, expenditures, mission critical, community data Examples Revenues & expenditures per capita Federal, state, and local revenues as % of total revenues Administrative & program expenditures as % of total expenditures Slide 6 Slide 7 Comparing Revenues & Expenditures Actual FY Data Revenues & Expenditures increasing trend over 4 FYs Revenues exceed expenditures in FY 07 ($50,000) and FY 09 ($180,000) Expenditures exceed revenues by $288,000 in FY 08 FY 2010 Revenues and Expenditures almost equal Slide 8 How Is Agency Keeping Expenditures in Line with Revenues? Total Margin reports on amount each dollar of revenue generated in surplus or deficit operating dollars Warning Trend Negative values In FY 2008 agency generated 6 cents of deficit for every dollar of revenue earned or allocated In FY 2009 agency generated 4 cents of surplus for every dollar of revenue earned or allocated Slide 9 Types of Revenues and Trends Over 4 Fiscal Years Revenues from County Government- major source of funding. County revenues increased by 78% from FY 2007 to 2010. Medicaid revenues - 2 nd largest source of funding increasing by 21.5% from 2007 to 2008, by 5% from 2008 to 2009, and by 10% from 2009 to 2010. (Note: Percents calculated on SS.) State revenues include federal funds - fluctuated from 2007 to 2010, increasing by 9.9% from 2007 to 2008, decreasing by 17% from 2008 to 2009, and increasing again from 2009 to 2010 by 11.7%. Patient fees for medical services - 8% of revenues FY 2008-2010. Patient fee revenues have been increasing - by 45% from 2007 to 2008, by 12% from 2008 to 2009, and by 10% from 2009 to 2010. Environmental health fees - declining since 2008. The biggest decrease was from 2008 to 2009, 47.5%, and another decline followed in 2010, 21.9%. 83% of the Health Dept.s revenues come from state, county, and Medicaid Slide 10 Ability to Collect Revenue Increasing trend in Ratio, Days of Revenue in Accounts Receivables Increasing % of AR being written off Slide 11 Too Much or Too Little Administrative Infrastructure Administrative costs have been decreasing Organizational assessment revealed inadequate management structure Led to minimal planning & implementation of agencys strategic plan Decisions being made by small group of administrators Putting out fires; system issues not being addressed Benchmarking would be useful tool for peer agencies Slide 12 County Finance Officers Report Large deficits in Dental Health and Adult Primary Care at end of FY 2010 Slide 13 Overall, Agencys financial health is in fair condition, with areas for improvement. Total revenues exceed total expenditures in FY 2010, 2009, and 2007. Steady increases in Medicaid and County Revenues Low general fund balance Declining Environmental Health Revenues Reduction in some program expenditures; however, overall program expenditures are increasing. Non-diversified revenue portfolio- agency is dependent on a few major sources of funding. Slide 14 Inadequate budgeting practices - In FY 2010 11 programs had expenditures exceeding revenues 3 programs had deficits in excess of $100,000 Programs continued to run deficits after budget revisions Over $700,000 county revenue budgeted for specific programs were unspent in those programs (Ex: Bioterrorism, Health Promotion, Maternal Health, Maternity Care Coordination, Animal Control) Further review is needed to assess the agencys budgeting and revenue acquisition processes. Slide 15 Inability to control costs or increase revenues FY2010 Adult primary care deficit of over $388,000 Dental Health and Mobile Dental Health deficit in excess of $330,000 (Revenues did not reach amounts budgeted.) Pediatric surplus of revenue over expenditure inadequate to cover deficits in other programs. No reporting on improvement in health outcomes or community priorities identified in community health assessment reports 2003, 2006. The use of public health resources to improve community health outcomes should be transparent to the community. Slide 16 Transparency reporting on use of revenues Services Outcomes Efficiency and Effectiveness look for ways to reduce costs and maintain quality population- centered prevention services Accountability Alignment of Community Health Assessment Priorities with Strategic Plan and Public Health Services currently being provided Slide 17 National AIMS for QI Potential Gaps-- Ratio Analysis Potential CausesAreas for Improvement Vigilant Transparent Expenditures exceed revenue Minimal analysis and reporting Inadequate budgeting process Inability to track revenues & expenditures to prevent problems Loss of revenue streams Expenditures for medical services exceed revenues Improved surveillance of organizations financial data Benchmarking with PH organizations Stakeholder reports Efficient Proactive Deficits Medical services vs. PH services Health outcomes not improving Inaccurate analysis of program costs/outcomes Inadequate capacity for delivery of population centered PH services Skills needed to deliver population-centered public health services Financial surveillance Build community benefit partnerships with tax exempt hospitals Strategies to implement population-centered services Slide 18 National AIMS for Quality Improvement Financial & Mission Critical Areas for QI MetricsChanges that Lead to Improvement ProactiveReduce occurrence of expenditures exceeding revenues in public health programs by 100% within 12 months Increase by 40% population- centered services within 18 months Total Margin Ratio improvement % of programs where expenditures exceed revenues # of diverse revenue streams Population-based ratios: Revenues & Expenditures per Capita Financial Sustainability Index Ratio of medical care expenditures to population- based expenditures Presence of community health improvement plan developed with public participation Establish process to monitor & control expenditures Implement strategies to diversify revenue streams Acquire dedicated revenues for new programs Have a team for population- centered programs using evidence-based guidelines that can deliver 70% of the health promoting services to the population Cooperate and coordinate w/other PH organizations, hospitals, local providers of health & social services & community members Slide 19 National AIMS for Quality Improvement Financial & Mission Critical Areas for QI MetricsChanges that Lead to Improvement VigilantStandardize financial & mission critical data by using 80% of financial & mission critical ratios Monitor progress using ratios % of financial & mission critical ratios and benchmarking used by a public health organization % of public health organizations in a region adopting financial & mission critical ratios % of increase in expenditures that benefit community health improvement % of programs that show an improvement in community health Collaborative learning projects & educational programs to teach and use financial ratios Benchmark Revenue and Expenditure Per Capita with comparable agencies for reporting Use Epi data to support the design of community benefit improvement programs Slide 20 National AIMS for Quality Improvement Financial & Mission Critical Areas for QI MetricsChanges that Lead to Improvement TransparentWithin 1 year increase access to Public Health financial & mission critical information by creating & disseminating useful annual reports Number of methods used to disseminate financial & mission critical report % of stakeholders reached # of agencies benchmarking public health financial data Communication plan in place for financial & mission critical reporting EfficientOn a yearly basis conduct analysis of revenues, expenditures, and outcomes across similar public health organizations using financial ratio data per population % of programs w/cost analysis % of public health organizations adopting ratios who use the data to improve acquisition, use and management of revenues Training events on cost analysis, ratios analysis Reporting of program costs and benefits Reward public health organizations for producing better health for the population and not just producing more services. Slide 21 Assuring the financial health of local public health agencies also assures the sustainability of valuable public health services. Applying financial ratios trend analysis and quality improvement methods are proven strategies for assuring financial health and quality health services. Slide 22 We appreciate your desire to learn more about Public Health Financial Management For additional information please visit our website at publichealthfinance.org or contact me: Cheryll Lesneski, DrPH lesneski@email.unc.edu