Assessing Variation in Revenue-Generating Strategies of Local Health Departments

1. Assessing Variation in Revenue-Generating Strategies of Local Health Departments Sergey Sotnikov, PhD; Huabin Luo, PhD; Timothy Van Wave, DrPH Office for State, Tribal, Local and Territorial Support Centers for Disease Control and Prevention APHA 142nd Annual Meeting November 15-19, 2014 Centers for Disease Control and Prevention Office for State, Tribal, Local and Territorial Support

2. Background andResearch 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

3. 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 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

4. 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 Herfindahlindex (defined as a sum of squared shares of all revenue sources). • A revenue stream is considered to be well diversified if the Herfindahlindex is below the threshold point of 1,500.

5. Population Studied • A sample of 1,363 LHDs that participated in the NACCHO 2010 Profile study

6. 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.

9. 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.

11. Conclusions • LHDs withwell-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.

12. Implications for Policy, Delivery, or Practice • Diversifying revenue sources might help LHDs maximize available funds for community health improvement.

13. 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.

14. Questions? Comments?We value your input!Sergey Sotnikovann0@cdc.gov Centers for Disease Control and Prevention Office for State, Tribal, Local and Territorial Support