by Louis C. Gapenski
Although the field of public health is highly diverse, it can be roughly characterized as a blend of public and private activities dedicated to improving the nation’s health. To accomplish the ever expanding number of mission-related tasks in an era of fiscal scarcity, public health managers must not only seek new revenue sources but also utilize the limited amount of financial resources available as efficiently as possible. These tasks require financial literacy within the public health workforce.
Unfortunately, the education of public health managers in the field of finance has, for the most part, been sporadic and superficial. Finance education in public health academic programs does not provide future managers with the knowledge and skills needed to meet identified finance competencies for two reasons. First, most public health students are not required to take a finance course. Second, the courses that are taken, usually by management concentration students, often focus on generic healthcare finance topics as opposed to those related to public finance or the provision of public health services. Even professional development programs designed for the public health workforce typically emphasize clinical and population health education and offer very little management and finance content.
The quality of public health finance education available in both academic and professional development programs can be improved by the development of educational materials designed specifically for the public health workforce. As a first step, we have created a set of six Public Health Finance Tutorials that cover finance knowledge and skills vital to public health managers. These tutorials are self-contained and can be used either as the basis for professional development programs or to supplement academic healthcare finance courses.
TUTORIAL I - Financing Public Health Services
Theme: How the Nation Pays for its Public Health System
This tutorial briefly introduces the public health system and discusses its financing, with emphasis on the revenue sources of LHDs. In addition to discussing federal and state funding mechanisms, this tutorial includes information on generic reimbursement methodologies used by the third-party payers most commonly encountered by LHDs. Finally, the tutorial discusses the importance of grant submission and management.
TUTORIAL II Estimating Costs and Margins
Theme: Tangelo County Health Department Adult Influenza Immunization Program
This tutorial focuses on cost and margin measurement, including the two primary methods of cost categorization: (1) fixed versus variable and (2) direct versus indirect (overhead). The tutorial also includes underlying cost structure and cost allocation discussions. Finally, the tutorial introduces breakeven analysis, pricing strategies, marginal analysis, and profit and loss (P&L) statements.
TUTORIAL III Financial Planning and Budgeting
Theme: Planning and Budgeting at the Tangelo County Health Department
Although many public health programs are self-sustaining from fees, most are supported by public funding and hence require budget preparation according to prescribed governmental guidelines. This tutorial introduces the basics of planning and budgeting and examines operating budgets, budgetary control mechanisms, and variance analysis.
TUTORIAL IV Financial Evaluation of New Program Initiatives
Theme: Evaluation of Tangelo County Health Department’s New Clinic Initiative
This tutorial introduces the traditional financial concepts of time value analysis, opportunity costs, return on investment, and risk and return. Specific topics covered include breakeven analysis, net present value and internal rate of return, risk analysis, and post audits.
TUTORIAL V Financial Reporting
Theme: Tangelo County Health Department’s Financial Reports
This tutorial first introduces the basic foundations of financial accounting and then discusses the differences between private and public financial statements. Some of the specific topics discussed are financial statement regulation, examples of government-wide financial statements at the county level, and the key elements of financial reporting by local health departments.
TUTORIAL VI Assessing Financial Performance
Theme: Tangelo County Health Department’s Financial Performance
The focus of this tutorial is on the approach and tools used to assess organizational financial performance, with emphasis on the metrics used by local health departments. Specific topics include ratio, percentage change, trend, and comparative analyses. Finally, some of the problems associated with performance analysis are discussed along with the use of key performance indicators (KPIs) and dashboards.