Finance I
Room: Crimson Clover
Tuesday, April 21, 2015, 2:00 to 3:30 PM
Moderator: Patrick Bernet, PhD, MBA
Simone Singh, PhD, MA, BBA
Comparison of Two Methods for Estimating the Costs of Environmental Health Services Provided by Local Health Departments in North Carolina.
Co-Investigator(s): Nancy Winterbauer, PhD & Ashley Tucker, MPH
Background: All local health departments (LHDs) in North Carolina are required to provide a defined set of essential environmental health services. A detailed understanding of the costs of these services allows public health practitioners to provide services in a more efficient manner and to establish a fee schedule that ensures adequate revenues. Research objective: The objective of this study was to estimate the costs of two categories of environmental health services – food and lodging inspections and onsite water and well inspections – using two different costing methods and to compare the results. Data sets and sources: Data for this study came from two sources: We first conducted a survey of 16 LHDs in North Carolina to collect data on both the direct and indirect costs of providing environmental health services. We then complemented our survey data with data on LHDs’ revenues and expenditures collected by the North Carolina Department of Health. Study design: We used two approaches to estimate LHDs’ costs of providing environmental health services: (1) a resource-based approach using cost data from our survey of local health departments and (2) an empirical modeling, which relied on secondary data collected and provided by the North Carolina Department of Health. Our sample consisted of 16 of the 85 LHDs in North Carolina. Data was collected for fiscal year 2012. Analysis: Using the two approaches described above, we estimated the total costs, costs per service, and costs per capita that LHDs in North Carolina incurred in the provision of two categories of environmental health services: food and lodging inspections and onsite water and well inspections. Principal findings: Estimates of total costs, costs per service, and costs per capita were all substantially higher under the resource-based approach than under the empirical modeling approach. Under the resource-based approach, the median cost per service was $140 for food and lodging inspections and $80 for onsite water and well inspections compared to a median cost per service of $45 under the empirical modeling approach. We found similar variation in total costs and costs per capita between the two approaches. Conclusions: Our study showed that the costs of providing environmental health services varied widely depending on the costing approach employed. Cost estimates derived using the resource-based approach were substantially higher than those derived using the empirical modeling approach. Implications for public health policy and practice: A better understanding of the full costs of essential public health services is crucial for decision making regarding how to best organize and finance public health activities at the local level. Existing secondary cost data sources often do not contain sufficient information to estimate the full cost of providing a given service and lack the detail needed by practitioners. Costing surveys, such as the one developed for and piloted in this study, thus represent an important tool for public health practitioners. Understanding full costs allows public health practitioners to make better decisions about how to allocate scarce resources and develop fee schedules that allow them to generate adequate revenues.
J. Mac McCullough, PhD, MPH
Accounts Receivable: Timing of Clinical Billing Reimbursement for a Local Health Department
Co-Investigator(s): William Riley, PhD
Background: Billing for clinical services is a popular method of generating revenue to support the provision of public health services by local health departments (LHDs). However, a range of challenges confront the 80% of LHDs planning to begin or expand clinical billing. One challenge not previously noted is the potential lag from date of service to receipt of reimbursement—an important financial metric known as “accounts receivable”. However, no estimates are available to help guide practitioners in what lags might be expected. Research Objective: The purpose of this study is to report results from a large-county LHD’s experiences with time to reimbursement at its immunization clinics. DATA SETS AND SOURCES Data came from the Maricopa County Department of Public Health (MCDPH) in Arizona. MCDPH operates three immunization clinics and has long sought reimbursement from Medicaid. In 2012, MCDPH began submitting claims to private insurance plans. Claims are submitted through a centralized statewide processor. Study Design: Retrospective analysis of MCDPH billing receipts from January 1, 2013 through June 30, 2014. Analysis: Reimbursement data were compiled and analyzed according to time between date of service and date(s) of reimbursement. Accounts receivable was assessed through 1) days outstanding in accounts receivable, and 2) accounts receivable as a percentage of total assets. Principal Findings: A total of 73,931 transactions were analyzed, representing 61,250 unique immunizations and 29,374 unique encounters. Reimbursements were received after a median of 68 days (range: 12 – 2,350). Daily reimbursement (red line in figure) reached a peak at 52 days after service. In 2013, aging in accounts receivable was 90 days, and represented 20% of total billing charges. Reimbursements (i.e., debits) were sometimes followed by take-backs (i.e., credits). 2,491 transactions (3.4%) were credits. Credit transactions occurred a median of 333 days from date of service. Conclusions: A non-trivial lag exists between service provision and receipt of reimbursement. This may present two challenges for new or expanded clinical service billing. First, as governmental entities, LHDs budget processes may not align with a 3+ month lag. For example, if an LHD begins billing for services on day 1 of a new fiscal year, based on our findings, it should expect to receive only 85% of total reimbursement before the end of that fiscal year. This shortfall is in addition to start-up costs such as billing systems or staff training. Second, some 15% of reimbursements will be received in subsequent budget periods, potentially creating challenges in reconciling expenses with revenues. Credit transactions, taking place an average of nearly 1 year from date of service, are especially problematic. Implications: The lag from service provision to reimbursement can span multiple budget periods, potentially necessitating special consideration in budgetary processes for services that receive clinical billing revenues. Many hospitals and provider groups have well developed metrics for accounts receivable. This study shows that accounts receivable can be calculated for LHD and presents data to begin the process of developing baseline performance standards.
Justin Marlowe, PhD
The Cost of Foundational Public Health Services and Capabilities: Estimates, Variation, and Disparities
Co-Investigator(s): Betty Bekemeier, PhD
Background: In the 2012 report For the Public’s Health: Investing in a Healthier Future, the Institute of Medicine recommended that the public health community define the minimum package of public health services and foundational capabilities “that no local health jurisdiction can be without.” The local public health community in Washington State has defined that package. With those definitions established, a natural follow-up question is: What does this minimum package cost? Research Objectives: This research had three main objectives: 1) Estimate the total costs of each foundational public health service and capability for local health jurisdictions in Washington State; 2) Estimate unit costs for selected foundational public health services and capabilities; 3) Determine drivers of variation in total and unit costs. Datasets and Study Design: We used two main datasets. The first was comprised of administrative data on public health spending for all 35 local health jurisdictions (LHDs) in Washington for fiscal years 2007-2013. Unfortunately, these spending data are not organized according to the foundational capabilities and services definitions. To address this problem, in 2014 we collected original data from a cost estimation instrument distributed to a stratified sample of nine local health jurisdictions. That instrument was designed to identify each LHD’s spending levels for each foundational capability and service area. We also combined these datasets with county-level demographic and socioeconomic data from the US Census, and with data on local public health activities from the Public Health Activities and Services Tracking (PHAST) dataset maintained by the University of Washington. Analysis: For our original data, we simply aggregated the reported LHD spending levels to the level of total spending in each foundational capability and service area. For the administrative data we aggregated each existing spending category according a new typology that approximates spending in the foundational capabilities and services areas. We then combined both sets of estimates with the PHAST data to compute each LHD’s unit costs for selected capabilities and services. We used multivariate regression techniques to estimate the relationship between key demographic and socioeconomic variables and LHD-level total and unit costs. Principal Findings: Our preliminary results suggest three main findings. First, total and unit costs for some foundational public health services are quite similar in space and time. In areas like environmental public health, for example, we find similar spending levels across LHDs and within LHDs across most of the sample period. Second, we find that spending on other foundational capabilities and services varies substantially. This is especially true for foundational capabilities like policy development and business competencies. Third, we find much of the geographic variation in total costs and unit costs associates with socioeconomic factors such as per capita income, and with demographic factors like population density. Conclusions: These findings suggest that the costs of certain foundational public health capabilities and services are uniform and predictable across LHDs. Where those costs vary, they vary in predictable ways related to the underlying population served. Implications for Public Health Practice and Policy: These findings inform a crucial statewide policy discussion. Two of the key questions within that discussion are: 1) How much new money, or how much reprogramming of existing categorical money, will the state need to authorize to ensure all citizens have access to basic public health services; and 2) Are there policy strategies that can mitigate disparities in citizens’ access to those services? These findings have implications for both questions.
Scott Frank, MD, MS
The Cost and Value of Mandated Local Health Department Nuisance Inspection and Abatement
Co-Investigator(s): Katarina Gardner, BA & Sara Tillie, BA
Background: Nuisance inspection and abatement is a mandated, unfunded, essential public health service. This time consuming service often represents the face of the local health department to the community and serves as the most likely interaction of environmental public health with other governmental departments. Under Ohio revised code LHDs are charged with “the abatement and removal of nuisances.” However, there has been no formal effort to quantify, categorize, or standardize nuisance inspection and abatement efforts. Research Objective: Examine the cost and value of mandated local health department nuisance inspection and abatement. Data Sets and Sources: Data used for this research includes abstraction of routinely collected nuisance abatement services data, stored in the Health Department Information System. Original data documenting organizational and community needs was produced from direct observation of environmental health specialists through a structured observational protocol administered by trained student observers at 6 diverse LHDs to assess needs associated with nuisance abatement services. Data merger with the Ohio Annual Financial Report (AFR) will allow correlation with LHD service and administrative costs. Study Design: This comparative case study utilizes a mixed methods approach including interview, direct observation of service delivery, abstraction of nuisance inspection and abatement reports, and a statewide survey generated from observational and abstraction findings will examine the generalizability of this data. Time studies were conducted to measure the delivery of services. A quantitative and qualitative comparison between participating LHDs are used to estimate effectiveness and efficiency of nuisance abatement services. Analysis: Univariate descriptive analysis of the observational and abstracted data was performed. Tests of association were utilized to detect differences based on LHD structure. Analysis was conducted using SPSS v.22. Quantitative and qualitative data obtained from observers and AFR will determine variation in organizational factors of each LHDs to understand influential factors at the systems level. Across these different dimensions, research questions will focus on nuisance inspection: type; quantity; efficiency; unit cost; value; return on investment; and outcome. Preliminary findings: Inspection duration varied by category of complaint, which included animal/bites 34.5%; property 32%; air 23%; water 20%; sewage 17%; trash/garbage 14%. Overall, inspection times were 20 minutes 11%. When discussion took place (79%), it took longer than the inspections themselves: 20 minutes 10%. In addition, at the end of the observation 28% of abatements required further inspection while 23% needed more discussion. Nuisances were not fully remediated at the end of the episode 42% of the time. Perception of service impact and value were elicited. Participating environmental health specialists perceived that more than 60% of nuisance inspections resulted in findings that directly impact health and safety. Health and safety education was by far the most valued part of the nuisance abatement process (96%), followed by problem solving (84%), and working with related departments or agencies (64%). The relationship of the quality and nature of communication to nuisance cost and value is examined. Conclusion: Nuisance inspection and abatement represents an essential public health service, an opportunity for environmental health improvement and a key interface of governmental public health with the public we serve. This study investigates its importance and documents the cost of services and potential cost averted. Public health implications: Findings are expected to inform nuisance inspection and abatement practice, policy, and funding.