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Slide 2 Mahoning County District Board of Health A Local Health Departments Financial Turnaround After the Great Recession Matthew Stefanak Health Commissioner General Health District in Mahoning County Slide 3 Mahoning County District Board of Health What is a Financial Turnaround? Financial turnaround is a business concept used to describe an organizations ability to regain solvency, or move from a loss to a profit position within one to two years. * * Moore TF, Simendinger EA. Hospital Turnarounds: Lessons in Leadership. Washington, D.C.: Beard Books; 1999. Slide 4 Mahoning County District Board of Health What is Ratio and Trend Analysis? A method of assessing the financial health of an organization that creates measures for monitoring changes in operational and financial status to alert organizational leaders to potential problems. Slide 5 Mahoning County District Board of Health What Drove the District Board of Health to Use Ratio and Trend Analysis? Loss of several state grants, programs with chronic operating losses, residential and commercial construction-related permit fee revenue declines beginning in 2006 contributed to a succession of annual operating deficits. Ratio and trend analysis enabled the organization to identify areas in which to apply turnaround strategies in 2008 and beyond. Slide 6 Mahoning County District Board of Health Financial Ratio Trends 2006-2009 Operating surplus or deficit is calculated by subtracting total expenditures from total revenues. A negative value indicates a deficit position. Slide 7 Mahoning County District Board of Health Financial Ratio Trends 2006-2009 Total Margin is calculated by subtracting total revenues from total expenditures and dividing the value by total revenues. Slide 8 Mahoning County District Board of Health Leading Financial Ratios (Dashboard Indicators) Slide 9 Mahoning County District Board of Health Operating Deficits by Program Area 2006200720082009 Adult Day Services (ADS) ($59,218)($66,913) $4,602$31,695 Laboratory$5,566($80,468)($28,794)$13,708 All Other Agency Programs$18,959($7,251)$238,360$346,449 Total Agency Deficit($34,693)($154,632)$214,168$391,852 Slide 10 Mahoning County District Board of Health Financial Turnaround Strategies* Retrenchment reductions in the size and scope of operations to gain efficiencies Repositioning innovations to generate new revenue streams Reorganization changes in management and staffing structure *Boyne GA. Strategies for public service turnaround: lessons from the private sector? Admin Soc. 2006; 38 (3): 365-388. Slide 11 Mahoning County District Board of Health Retrenchment Strategies Pay freeze and four-day paid workweek for management team Retirement cash incentives for retirement-eligible staff; Layoffs of bargaining unit staff Mandatory cuts in part-time staff hours Solicitation of volunteers for unpaid time off Retire-rehire of senior employees to reduce benefits costs Increase part-time lab staff hours to offer faster turn-around time on results to new clients Elimination of tobacco control program defunded by state Abolishment of health promotion and assessment unit and reassignment of remaining staff to new composite organizational unit Consolidation of disease surveillance duties into new composite organizational unit Deferred supplies purchases, IT upgrades and vehicle replacement Renegotiation of facilities leases and mobile phone service plans Cost analyses on agency programs Slide 12 Mahoning County District Board of Health Repositioning Strategies Re-allocation of clinical, environmental health and support staff time to services reimbursable by Medicaid, grants, and other sources Focus on performance measurement of priority services to stakeholders, e.g., response times to nuisance complaints from local officials, point-of-sale home inspection requests In-sourcing of IT and media consultant services Increases in regulatory and service fees toward the goal of full cost-recovery Recruiting Medicaid-eligible and self-pay adult day care clients to improve payer mix Increasing adult day care daily census to utilize full capacity Solicitation of contributions from clients and family members able to pay Marketing campaign to increase number of public and nonprofit sector clients for laboratory services Investment in new lab equipment to increase productivity Slide 13 Mahoning County District Board of Health Reorganization Strategies Creation of new composite organizational units Creation of strategic plan to maintain financial stability and improve financial awareness among board, management and staff Goals set for cash reserve Elimination of middle-management positions through attrition Pooling of clerical support staff for assignment when and where needed in the agency Slide 14 Mahoning County District Board of Health Turnaround Results 2007-2009 Total Margin increased to 8.7% Laboratory revenue increased 24% while expenditures were held to an 11% increase ADS revenue increased 23% while expenditures were held to an 18% increase Federal revenue increased 31.1% Fee revenue increased 10.2% Total expenditures decreased 8.9% Fringe Benefit expenditures decreased 6.1% Administrative expenditures reduced by 13% Slide 15 Mahoning County District Board of Health Conclusion A uniform set of financial data enables LHDs to conduct timely financial analyses, e.g., dashboard indicators tracking, ratio and trend analysis, program sustainability analysis. Financial ratio and trend analysis can guide the selection of effective turnaround strategies in a local health department (LHD). Slide 16 Mahoning County District Board of Health Contact Matthew A. Stefanak, M.P.H. Health Commissioner General Health District in Mahoning County 50 Westchester Drive Youngstown, Ohio 44515 330-270-2855 x144 mstefanak@mahoninghealth.org www.publichealthfinance.org