Assessing Variation in Revenue-Generating Strategies of Local Health Departments

Sergey Sotnikov, PhD; Huabin Luo, PhD; Timothy Van Wave, DrPHOffice for State, Tribal, Local and Territorial Support

Centers for Disease Control and Prevention

APHA 142nd Annual MeetingNovember 15-19, 2014

Centers for Disease Control and PreventionOffice for State, Tribal, Local and Territorial Support

Background and Research Objective

Local health departments (LHDs) rely on funding from various revenue sources, including state, local, and federal funds, fees, personal services billing, and health insurers.

The purposes of the study were to Describe the relative contribution of these funding sources Evaluate how LHD revenue-generating strategies (broad diversification

vs. reliance on one revenue source) are associated with the overall levels of LHD spending

NACCHO, 2010. National Profile of Local Health Departments. Available at http://nacchoprofilestudy.org/materials/2010-profile-study/.

City Township Town State Tribal Private foundations Private insurance

Federal Medicaid Medicare Patient personal fees Non-clinical fees Fines

Data were obtained from the 2010 National Profile of Local Health Departments Study (Profile study), in which LHD directors were asked to apportion LHD revenues (in %) across the following categories:

Study Design

Study Design (continued)

Each LHD revenue-source pattern can be described on a continuum, from well-diversified to highly dependent on one source.

We calculated a degree of diversification of revenues for each LHD using the Herfindahl index (defined as a sum of squared shares of all revenue sources).

A revenue stream is considered to be well diversified if the Herfindahl index is below the threshold point of 1,500.

Population Studied

A sample of 1,363 LHDs that participated in the NACCHO 2010 Profile study

Principal FindingsPer Capita Spending

LHDs with well-diversified revenues (Herfindahl index <1,500) spent $93/capita, 55% more than the sample’s average of $60/capita, reflecting the sample’s less diversified average revenue portfolio.

LHDs with more diversified portfolios of revenues were associated with higher per capita public health spending in communities served by LHDs.

Neitzel, Stephanie (CDC/OSTLTS/OD) (CTR)

Principal Findings LHDs receiving more than 50% of their revenue from

Medicaid spent $102/per capita, almost twice the sample average.

LHDs obtaining more than 50% of their total revenues from federal or state sources were spending at average per capita levels of $60/person and employing an average number of full-time employees (FTEs).

LHDs getting more than 50% of their total revenues from county and city sources spent 1/3 and 1/2 less than average LHD and employed 50%–75% fewer FTEs.

The number of services provided by LHDs do not vary by revenue categories.

Conclusions

LHDs with well-diversified revenue sources were positively associated with higher levels of LHD per capita spending.

LHDs relying on Medicaid as principal source of revenue were also associated with higher levels of LHD per capita spending.

Implications for Policy, Delivery, or Practice

Diversifying revenue sources might help LHDs maximize available funds for community health improvement.

Implications for Policy, Delivery, or Practice (continued)

LHDs relying on Medicaid as the principal source of revenue were the most successful in securing financial resources for public health spending.

Withdrawing from provision of personal care services (paid for by Medicaid), as recommended by IOM, may have a negative effect on LHDs that are relying on Medicaid as the principal source of revenue.

For more information, please contact CDC’s Office for State, Tribal, Local and Territorial Support

4770 Buford Highway NE, Mailstop E-70, Atlanta, GA 30341Telephone: 1-800-CDC-INFO (232-4636)/TTY: 1-888-232-6348E-mail: OSTLTSfeedback@cdc.gov Web: http://www.cdc.gov/stltpublichealth

The findings and conclusions in this presentation are those of the authors and do not necessarily represent the official position of the Centers for Disease Control and Prevention.

Questions? Comments?

We value your input!Sergey Sotnikovann0@cdc.gov

Centers for Disease Control and PreventionOffice for State, Tribal, Local and Territorial Support