1. Mahoning County District Board of Health Using Financial Ratios to Support a Local Health Department’s Financial Turnaround Matthew Stefanak Health Commissioner (retired) General Health District in Mahoning County

2. Mahoning County District Board of Health Objective: Provide examples of promising financial performance management practices used by local health departments in Ohio Illustrate use of analytical features in PHUND$

3. Mahoning County District Board of Health Ratio and Trend Analysis The health department uses financial ratios from the NACCHO Public Health Uniform Data System (PHUND$) for risk mitigation and budget forecasting.

4. Mahoning County District Board of Health Financial ratio and trend analysis is the calculation and comparison of ratios which are derived from information in an organization’s financial records and relevant demographic data sets Ratio values are calculated using a numerator and denominator Comparisons are made with prior budgetary periods (trend analysis) and with other similar organizations (benchmarking) What is Ratio and Trend Analysis?

5. Mahoning County District Board of Health What is PHUND$? Web-based public health financial data collection and analysis portal hosted by NACCHO Provides LHDs with timely, reliable and uniform data to support assessment and decision-making LHDs enter financial and demographic data, and PHUND$ generates: −Ratio and trend analysis −Dashboard −Benchmarking against peer agencies −Analysis of program financial performance

6. Mahoning County District Board of Health B. “Net Income” Ratios allow us to compare organizations of different sizes. A.Most public health organizations are not “profit” organizations so the “current” Revenue/Expense ratio should be equal to 1 or greater. If it is less than one our current “assets” or programs and services are not covered by funding source. i.LPH agencies may experience delays from State or Federal Sources in funding which effect current and total debt ratios ii.Most LPH agencies must have “carryover” as cash on hand to cover when ratios are less than 1. B.Net Income = Revenue – Expense C.Total Margin = (Revenue-Expense )/ Revenue is a long term measure. D.The PHUND$ Data Dictionary defines how the ratio or measure is to be interpreted. A. “Current Ratio” C. “Total Margin”

7. Mahoning County District Board of Health Analysis of All Programs

8. Mahoning County District Board of Health What Led 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.

9. 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.

10. 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.

11. Mahoning County District Board of Health Leading Financial Ratios (Dashboard Indicators) from PHUND$

12. 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

13. 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.

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%

15. Mahoning County District Board of Health Our Conclusions 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).

16. Mahoning County District Board of Health END