Advancing a Field of Study in Public Health Finance Emory University Rollins School of Public Health September 23, 2005 Peggy A. Honoré, DHA, MHA Chief Science Officer Mississippi Department of Health Funded through an award from the RWJ Foundation

Public Health Finance Advancing as a field of study because of the Sense of Urgency to understand the composition, utilization, and impacts of the finances that fund all components of the public health system Jones & Honoré, 2005

Justifications “Efforts at systematic nationwide studies of financing for public health have failed because of their exclusive focus on the budgets of state and local public health agencies rather than the funding of the public health system” “Almost no data are available on how much would be needed to adequately build and sustain the necessary public health infrastructure” “…Lack of systems of accountability to ensure quality and availability of public health services” The Future of Public Health in the 21st Century, 2003

Public Health Systems Research A field of inquiry examining the organization, financing, and delivery of public health services at local, state and national levels, and the impact of these activities on population health……… Mays, Halverson, Scutchfield, JPHMP2003

Public Health Finance as a component of Public Health Systems Research Focus of this RWJ funded project: PUBLIC HEALTH FINANCE: Advancing a field of study through Public Health Systems Research

Defining Public Health Finance

Public Health Finance is a field of science and practice that deals with the acquisition, management, and use of financial resources to advance the health of populations through prevention and health promotion Moulton, Halverson, Honoré, Berkowitz, JPHMP2004

Questions/Debate persist regarding the Definition

Healthcare Finance Louis C. Gapenski, 2004 The definition depends on the context –Policy maker or manager –Type of healthcare organization Practice setting……….. Healthcare Finance is the practice of finance, including both accounting and financial management within health services organizations

Healthcare Finance Competencies Grounded in financial theory and industry financial management practices Mauer & Grazier, Task force Report on Development of Core Competencies in Health Care Finance

Steps to advancing a similar theoretical and empirical base in Public Health Finance through the RWJ funded project

Public Health Finance Theoretical and Empirical Base Thomas E. Getzen, PhD Rest on three conceptual pillars: I. The theory of investment (Finance) II. The theory of public goods (Economics) III. The theory of population health action (Public Health)

Theory of Investment (Finance) Thomas E. Getzen, PhD Essential Elements Risk and Timing What risks exceed market capacity and require government action? (hurricanes, epidemics, war) What risks perceptions are difficult and require information from regulatory agencies? (SEC, FDA) Which investments provide such diffuse benefits that they cannot be financed through individual or corporate actions? (NIH, CDC, NCHS)

Theory of Public Goods (Economics) Thomas E. Getzen, PhD Public goods answers the question of why people must engage in collective action in order to reap the benefits of individual exchange in the marketplace Well established work on the allocation of funding and financial rewards from research has not yet been widely translated and applied to the field of public health

Theories of democracy demonstrate that the public’s health is an important collective [public] good because funds are expended to benefit all or most of the population Walzer, 1983

The Theory of Population Health Action (Public Health) Thomas E. Getzen, PhD Salient linkages to finance and economics include: –the assessment of risk –the evaluation of distributional consequences –the incidence of fee-based and tax financing –vaccine pricing –funding prevention and health promotion –and many others…….

Competencies What should public health mangers know about finance? Very little content is offered in the accredited SPHs that directly address public health finance concepts Only 8 of 32 programs surveyed offered a course with some content relevant to public health finance Public Health respondents to a survey added competencies that should be taught such as knowledge about the appropriations process, public financing, governmental systems Finance typically a sub-set under a broader category (e.g. management) in national public health competency reports Gillespie,Kurz, McBride,Schmitz, JPHMP 2004

What do we know about the finances that fund the public health system?

National Health Expenditures 2003 $1,678.9 = Total NHE $53.8 = Governmental Public Health Activities (3.2% of Total) CMS National Health Expenditures-Table 3, 2003

Local Health Agency NACCHO LPHA INFRASTRUCTURE: A CHARTBOOK 2001 * 1999 Average Annual Expenditures Median All LPHAs$4,505,096 $621,100 Metropolitan$8,930,091$1,185,433 Non-Metropolitan $1,195,632 $509,540 0 to 24,999 Population $437,637 $214, ,000 or more$66,200,000$27,000,000

Local Health Agency Budget by Funding Source * 44% - Local 30% - State 19% - Service reimbursement 3% - Federal 4% - Other NACCHO LPHA INFRASTRUCTUREA CHARTBOOK 2001 * 1999

State Expenditures – FY 2003 Total Population Health Expenditures –$19.2 B –5.4% of State Health Expenditures Prevention of Epidemics/Disease –$1.9 B Protect Against Environmental Hazards –$5.6 B Injury Prevention –$1 B Promotion of Chronic Disease/healthy Behavior –$5.9 B Disaster Preparedness/Response –$2.3 B Health Infrastructure –$2.5 B State Health Expenditure Report, NASBO/Milbank 2005

CDC Per Capita Dollars to States 2004 $ National Average Top 5 $ Alaska $ Vermont $28.63 Wyoming North Dakota $ Rhode Island Bottom 5 $ Indiana $ Ohio $ Pennsylvania $ Florida $ Virginia Shortchanging America’s Health: A State-By-State look at How Federal Public Health Dollars are Spent Trust for America’s Health, 2005

Financial Related Research Findings Higher LHA performance capacity was greater based on agency expenditures per capita… Kennedy, JPHMP, 2003 Effective health departments have larger annual expenditures and derive their budgets from a larger number of funding sources while ineffective agencies tend to have Medicaid as a significant source of their budget... Handler & Turnock, JPHP, 1996 Higher performing public health jurisdictions had higher taxes per capita…. Honoré, Simoes, Jones, Moonsinghe, JPHMP, 2004 Agency spending is a significant predictor of performance… Mays et al, JPHMP, 2004

Topics of Interest Impact of public health funding on health outcomes Taxonomies for systematically measuring and analyzing the national investment in the public health system Costs of optimal agency and system performance Comparisons of flexible and categorical funding sources Analysis of funding gaps in the public health system

Data

Hot Topics in Public Health Systems Research Where’s the Data? AcademyHealth 2005 Public Health Systems Research Interest Group Meeting

Data Collection ASTHO/PHF Data Reporting System established Federal funding for the system eliminated NACCHO LPHA Infrastructure CHARTBOOK NASBO/Milbank State Health Care Expenditure Report HP2010 Objective (23-16) for $ data deleted

Lack of financial data limits the ability to conduct system-wide public health research and analysis… We know little about where the [health] dollars are spent and what they are purchasing Thorpe,HCFR 1999

Recommended Strategies for Obtaining Public Health Infrastructure Data Lewin Group, 1997 Data reporting by state and local public health agencies should be linked to funding streams The feasibility of using the ten essential services as a data collection tool should be carefully [cautiously] considered –not currently structured, organized, or funded in a similar manner

Advancing Forward Funded by: Robert Wood Johnson Foundation Conference - Feb 8, APHA Headquarters D C Emory Meetings Speaker’s Bureau Website ( System-wide representation: APHA, Pfizer, NGA, NCSL, NACCHO, ASTHO, NALBOH, US Senate, DHHS, CDC, Institute of Medicine, Turning Point, AcademyHealth, MS Department of Health, GA Division of Public Health, Metro Nashville Department of Health, The California Endowment, National Health Policy Forum, Emory University, East Carolina University, Medical University of South Carolina, University of Arkansas for Medical Sciences, Temple University, University of Pittsburgh, Johns Hopkins University, University of North Carolina Chapel Hill

Journal of Public Health Management and Practice September/October 2004 Issue Focus: Public Health Finance

Journal of Public Health Management and Practice 2nd Public Health Finance Issue January/February 2007 Analysis of the variation in public health funding Next steps to advancing public health finance and a national investment plan Documentation of public health funding formulas and strategies Methodologies for local health agency financial analysis State Health Department Data Collection Case Study Examination of increased county revenues on local public health funding and community health status Newborn screening program financing issues Examination of different funding mechanisms to improve the prevalence of dental sealants among Medicaid eligible children Case study of changes in methods for classifying public health state appropriations

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