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April 19, 2007

BUDGETING FOR NEW ACCESS POINTS IN HIGH POVERTY COUNTIES Hosted By: National Association of Community Health Centers Gil Bernhard, CPA gil.bernhard@rsmi.com (212) 372-1604. April 19, 2007. TOTAL BUDGET CONCEPT HEALTH CENTER – SINGLE BRHC GRANTEE. Operating Budget (Scope of Project). Other.

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April 19, 2007

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  1. BUDGETING FOR NEW ACCESS POINTS IN HIGH POVERTY COUNTIESHosted By:National Association of Community Health CentersGil Bernhard, CPA gil.bernhard@rsmi.com(212) 372-1604 April 19, 2007

  2. TOTAL BUDGET CONCEPT HEALTH CENTER – SINGLE BRHC GRANTEE Operating Budget (Scope of Project) Other Other State and Local Contracts & Grants State and Local Contracts & Grants Patient Revenue = Program Income Patient Revenue = Program Income Federal Grant Dollars Federal Grant Dollars • Hosted by: National Association of Community Health Centers, Inc.

  3. TOTAL BUDGET CONCEPT HEALTH CENTER – MULTIPLE BPHC GRANTEE Operating Budget (Scope of Project) Single Grant Application Section 330(e) Operations Section 330(h) Operations Other State and Local Contracts & Grants State and Local Contracts & Grants Patient Revenue = Program Income Other Patient Revenue = Program Income Other Federal Grant Dollars Patient Revenue = Program Income State and Local Contracts & Grants Federal Grant Dollars Ryan White Title III b Operations Federal Grant Dollars Hosted by: National Association of Community Health Centers, Inc.

  4. BUDGETING ISSUES • Preparation of Budget(s): • 330 grant applications must submit a balance budget (Revenues = Expenses) • Operational budget = Surplus ? • FQHC look-a-like application (PIN 2005-17) must be able to demonstrate revenues are 90% of expenses • Change in scope (PIN 2002-07) demonstrate financially viable Hosted by: National Association of Community Health Centers, Inc.

  5. 330 GRANT APPLICATIONS • Budget presentation should include the following forms: • BPHC funding request summary (Form 1-B) • PHS 5161-1: Form SF 424A, Sections A-F • Section C – Non Federal Resources and Section D - Forecasted Cash Needs are not applicable • Detailed budget justification (line item budget and narrative) for each 12-month period requested for federal funding • Proposed staff profile for each 12 month period requested (Form 2) • Income analysis format for each 12 month period requested (Form 3) Note: As of 2007 grant applications and could change in the future. Please refer to most recent guidance available. Hosted by: National Association of Community Health Centers, Inc.

  6. 330 GRANT APPLICATIONS • Keys to writing line item budget: • Justification Amounts Should Agree to Budget Forms • Be Specific Regarding Each Line of the Budget (Revenue and Expenses - See example in PIN): • If Variable Costs, Describe Calculation of Cost (e.g., Supplies Cost Per Visit X Visit) • If Fixed Cost, Describe Cost (e.g., Rent – As Per Lease Agreement) Note: As of 2007 grant applications and could change in the future. Please refer to most recent guidance available. Hosted by: National Association of Community Health Centers, Inc.

  7. 330 GRANT APPLICATIONS • Budget Narrative – Additional information and detail may be provided in narrative form, as needed. • Cost effectiveness (Cost/Visit, Cost/User, Grant $ per user) • Users • Visits • If a capital managed care program is included, the applicant should: describe each current capitated managed care arrangement, identifying the services for which the applicant is at risk; provide the current number of enrollees and support for the projected number of enrollees included in the total user count • In addition, if there are budget items for which costs are shared with other programs (e.g. HRSA programs or an independent home health program administered by the applicant organization), the basis for the allocation of costs between federally supported programs and other independent programs must be explained. Note: As of 2007 grant applications and could change in the future. Please refer to most recent guidance available. Hosted by: National Association of Community Health Centers, Inc.

  8. 330 GRANT APPLICATIONS AND BUDGETING Budgets for Multiple Years After Year 1 • Continue to budget conservatively • Consider any contractual agreements (Union Contacts) for impact on salaries and fringe benefits • If organization has a strategic plan – it should be factored into budget • No change in scope can be factored into 330 grant application budgets • Consider new contracts being received in the near future • Consider cost of living adjustments or inflationary factors on expenses • Any variances greater than 5% should be explained Note: As of 2007 grant applications and could change in the future. Please refer to most recent guidance available. Hosted by: National Association of Community Health Centers, Inc.

  9. 330 GRANT APPLICATIONS • Make Certain the Budget Balances!!!!! • Review Patient Revenue Factors • Review Staffing • BE CONSERVATIVE WHEN PROJECTING PATIENT SERVICES REVENUE!!!! (If overly aggressive projection are used, an unobligated balance (UOB - ) of Federal funds instead of Estimated Program Income (EPI - ) could result when the Financial Status Report (FSR) is filed) Hosted by: National Association of Community Health Centers, Inc.

  10. 330 GRANT APPLICATIONS SUPPORT REQUESTED • Applicant demonstrates that the budget presentation (an annualized budget for each 12 month period for which funding is requested of the new project period) is appropriate and reasonable in terms of: • a. The level of requested Federal Section 330 grant funds versus total budget for each year; • b. The total resources required to achieve the goals and objectives of the applicant’s proposed service delivery plan (i.e., total project budget); • c. The maximization of non-grant revenue relative to the proposed plan and other Federal/State/Local/in-kind resources applied to the project; • d. The projected patient income is reasonable based on the patient mix and number of projected users and encounters; • e. The number of proposed users and encounters; • f. The total cost per user and encounter; • g. The total federal section 330 grant dollars per user; and • h. The one-time minor capital costs. • Hosted by: National Association of Community Health Centers, Inc.

  11. 330 GRANT APPLICATIONS SUPPORT REQUESTED (continued) 2. Applicant demonstrates that the Federal grant funds requested are being used to (a) leverage other sources of funding and (b) expand services and capacity to provide services. If the applicant is purchasing/taking over/assuming a clinic(s) operation as part of the proposal, the applicant must demonstrate the level of continued commitment and collaboration of the other organization to assure the viability of the clinic operation. 3. Applicant demonstrates that the Business Plan goals and objectives, appropriate financial planning in the development of the proposal and for the long-term success of the project. 4. Applicant describes how the proposed health center new access point is a cost-effective approach to meeting the primary care needs of the target population given the health care needs of the target population and the level of health care resources currently available in the community. Note: As of 2007 grant applications and could change in the future. Please refer to most recent guidance available. Hosted by: National Association of Community Health Centers, Inc.

  12. 330 GRANT APPLICATIONS • Other Key Points / Coordination Needed With Other Sections of Grant Application: • Run Budget through Uniform Data System (UDS) as a Check of Compliance with Eight Performance Measures • Business and Health Plan • Improvement Proposal (Goals & Objectives) • Address Findings and Issues (Audit & Performance Reviews) Note: As of 2007 grant applications and could change in the future. Please refer to most recent guidance available. Hosted by: National Association of Community Health Centers, Inc.

  13. FSR – EPI vs UOB Budgeted Revenue CHC 1CHC 2CHC 3 Federal grant $1,200,000 $1,200,000 $1,200,000 State, Local & Other 1,800,000 1,800,000 1,800,000 Estimated program income 4,500,0004,500,0004,500,000 Total Budget $7,500,000 $7,500,000 $7,500,000 Actual Revenue Federal grant $1,200,000 $1,200,000 $1,200,000 State, Local & Other 1,800,000 1,700,000 2,000,000 Program income (P.I.) 4,500,000 4,600,000 5,000,000 Total Outlays ($7,400,000) ($7,300,000) ($7,900,000) Excess revenue over outlays $ 100,000 $ 200,000 $ 300,000 Order of Dollars Spent 1) State, Local & Other $1,800,000 $1,700,000 $2,000,000 2) P.I. up to budget $4,500,000 4,500,000 4,500,000 3) Federal grant 1,100,000 1,100,000 1,200,000 4) P.I. --- --- 200,000 Total Expenditures $7,400,000 $7,300,000 $7,900,000 Unspent Dollars Excess Program Income --- $100,000 $300,000 Unobligated Federal Grants $100,000$100,000 ---- Total Unspent Dollars 100,000 $200,000 $300,000 Hosted by: National Association of Community Health Centers, Inc.

  14. NEW ACCESS POINT BUDGET SUMMARY – YEAR ONE TOTAL BUDGET – Year One Estimated Projected Users 3,000 Estimated User Utilization 4.0 Total Expected Projected Visits 12,000 Cost per Visit $ 133.32 Operating Expenses 1,599,840 One-Time Capital Cost 150,000 Total Cost $1,749,840 Hosted by: National Association of Community Health Centers, Inc.

  15. NEW ACCESS POINT GRANT – BUDGETING Sample Staffing Budget – Year One Employee NamePositionFTESalary Dr. Steven Smith Family Practice 1.00 $125,000 Dr. Maria Sanchez Family Practice 1.00 135,000 Dr. John Walsh Family Practice .50 65,000 Bill Jones Nurse Prac. 1.00 80,000 Joan Ross RN 1.00 50,000 Bill Gregg LPN 1.00 40,000 Marie Ryan Medical Assistant 1.00 30,000 John Cooper Front Desk/Reception 1.00 25,000 John Schwartz Biller 1.00 30,000 Raul Hernandez Outreach Coor. 1.00 40,000 Total $620,000 Hosted by: National Association of Community Health Centers, Inc.

  16. NEW ACCESS POINT GRANT – BUDGETING Budgeting of Expenditures – Year One Salaries = $ 620,000 Fringe Benefits (30%) = 186,000 Supplies ($15 per visit) = 180,000 One-Time Capital = 150,000 Other = 613,840 Total Expenses $1,749,840 Hosted by: National Association of Community Health Centers, Inc.

  17. NEW ACCESS POINT GRANT – BUDGETING Calculation of Projected Visits – Year One Budgeted Projected EmployeePositionFTEVisitsVisits Dr. S. Smith Family Practice 1.00 3,950 3,950 Dr. M. Sanchez Family Practice 1.00 3,950 3,950 Dr. J. Walsh Family Practice .50 3,950 1,975 Bill Jones Nurse Prac. 1.00 2,125 2,125 Total Visits 12,000 Hosted by: National Association of Community Health Centers, Inc.

  18. Payor MCD# MCR S/P* OTP ** % 70 10 10 10 100% # Visits 8,400 1,200 1,200 1,200 12,000 Rate $120 $85 Var Var Coll. % 95% 100% 50% 50% Revenues $957,600 102,000 4,800 35,440 $1,099,840 NEW ACCESS POINT GRANT – BUDGETING NEW ACCESS POINT GRANT – BUDGETING #Includes wraparound and Medicaid Managed Care visits at PPS rates. All MCD managed care patients are budgeted at PPS rate. *Average collection $8.00 ** Average collection $59.06 Hosted by: National Association of Community Health Centers, Inc.

  19. NEW ACCESS POINT GRANT – BUDGETING Projected Budget – Year One BPHC Grant (3,000 users @ $150) $450,000 BPHC Grant Capital component 150,000 State, Local, and Other 50,000 Program Income 1,099,840 Total projected revenue $1,749,840 Total Projected Expenses $1,749,840 Excess of Projected Expenses Over Projected Revenue $ 0*** *** CHCs must always submit a balanced budget when submitting a grant application. Hosted by: National Association of Community Health Centers, Inc.

  20. NEW ACCESS POINT GRANT – BUDGETING TOTAL BUDGET – Year Two Estimated Projected Users * 4,000 Estimated User Utilization 3.50 Total Additional Visits 14,000 Cost per Visit $120.00 Total Cost $1,680,000 • (3,000 users from year 1+an additional 1,000 new users for year 2) Hosted by: National Association of Community Health Centers, Inc.

  21. NEW ACCESS POINT GRANT – BUDGETING Sample Staffing Budget – Year Two Employee NamePositionFTESalary ** Dr. Steven Smith Family Practice 1.00 $128,750 Dr. Maria Sanchez Family Practice 1.00 139,050 Dr. John Walsh Family Practice * 1.00 135,000 Bill Jones Nurse Prac. 1.00 82,400 Joan Ross RN 1.00 51,500 Bill Gregg LPN 1.00 41,200 Marie Ryan Medical Assistant 1.00 30,900 John Cooper Front Desk/Reception 1.00 25,750 John Schwartz Biller 1.00 30,900 Raul Hernandez Outreach Coor. 1.00 41,200 Total $706,650 * Additional .5 FTE ** Includes 3% COLA Hosted by: National Association of Community Health Centers, Inc.

  22. NEW ACCESS POINT GRANT – BUDGETING Budgeting of Expenditures – Year Two Salaries = $ 706,650 Fringe Benefits (30%) = 211,995 Supplies ($15 per visit) = 227,475 Other = 533,880 Total Expenses $1,680,000 Hosted by: National Association of Community Health Centers, Inc.

  23. NEW ACCESS POINT GRANT– BUDGETING Calculation of Projected Visits – Year Two Budgeted Projected EmployeePositionFTEVisitsVisits Dr. S. Smith Family Practice 1.00 4,000 4,000 Dr. M. Sanchez Family Practice 1.00 4,000 4,000 Dr. J. Walsh Family Practice 1.00 4,000 4,000 Bill Jones Nurse Prac. 1.00 2,000 2,000 Total Visits 14,000 Hosted by: National Association of Community Health Centers, Inc.

  24. Payor MCD# MCR S/P* OTP** % 51 10 29 10 100% # Visits 7,140 1,400 4,060 1,400 14,000 Rate $124 $87 Var Var Coll. % 95% 95% 50% 65% Revenues $841,092 115,710 18,270 54,928 $1,030,000 NEW ACCESS POINT GRANT– BUDGETING – Year Two • #Includes wraparound and Medicaid Managed Care visits at PPS rates. All MCD managed care patients are budgeted at PPS rate. • *Average collection $9.00 ** Average collection $60.00 • Hosted by: National Association of Community Health Centers, Inc.

  25. NEW ACCESS POINT GRANT– BUDGETING Projected Budget– Year Two BPHC Grant (4,000 users @ $150.00) $600,000 State, local, and Other 50,000 Program Income 1,030,000 Total projected revenue $1,680,000 Total projected expenses $1,680,000 Excess of Projected Expenses Over Projected Revenue $ 0*** *** CHCs must always submit a balanced budget when submitting a grant application. Hosted by: National Association of Community Health Centers, Inc.

  26. NEW ACCESS POINT GRANT – BUDGETING TOTAL BUDGET – Year Three Estimated Projected Users * 5,000 Estimated User Utilization 3.00 Total Additional Visits 15,000 Cost per Visit $120.00 Total Cost $1,800,000 • (3,000 users from year 1+an additional 1,000 users for year 2 + 1,000 new users for year 3) • Hosted by: National Association of Community Health Centers, Inc.

  27. NEW ACCESS POINT GRANT – BUDGETING Sample Staffing Budget – Year Three Employee NamePositionFTESalary * Dr. Steven Smith Family Practice 1.00 $132,615 Dr. Maria Sanchez Family Practice 1.00 143,220 Dr. John Walsh Family Practice 1.00 139,050 Bill Jones Nurse Prac. 1.00 84,870 Joan Ross RN 1.00 53,045 Bill Gregg LPN 1.00 42,435 Marie Ryan Medical Assistant 1.00 31,825 John Cooper Front Desk/Reception 1.00 26,525 John Schwartz Biller 1.00 31,825 Raul Hernandez Outreach Coor. 1.00 42,435 Total $727,845 • Includes 3% COLA • Hosted by: National Association of Community Health Centers, Inc.

  28. NEW ACCESS POINT GRANT – BUDGETING Budgeting of Expenditures – Year Three Salaries = $ 727,845 Fringe Benefits (30%) = 218,354 Supplies ($15 per visit) = 225,000 Other = 628,801 Total Expenses $1,800,000 Hosted by: National Association of Community Health Centers, Inc.

  29. NEW ACCESS POINT GRANT– BUDGETING Calculation of Projected Visits – Year Three Budgeted Projected EmployeePositionFTEVisitsVisits Dr. S. Smith Family Practice 1.00 4,200 4,200 Dr. M. Sanchez Family Practice 1.00 4,200 4,200 Dr. J. Walsh Family Practice 1.00 4,200 4,200 Bill Jones Nurse Prac. 1.00 2,400 2,400 Total Visits 15,000 Hosted by: National Association of Community Health Centers, Inc.

  30. Payor MCD# MCR S/P* OTP** % 48 15 27 10 100% # Visits 7,200 2,250 4,050 1,500 15,000 Rate $128 $89 Var Var Coll. % 97% 95% 50% 50% Revenues $893,952 190,238 20,250 45,560 $1,150,000 NEW ACCESS POINT GRANT– BUDGETING – Year Three #Includes wraparound and Medicaid Managed Care visits at PPS rates. All MCD managed care patients are budgeted at PPS rate. *Average collection $10.00 ** Average collection $60.75 Hosted by: National Association of Community Health Centers, Inc.

  31. NEW ACCESS POINT GRANT– BUDGETING • Projected Budget– Year Three • BPHC Grant (5,000 users @ $120) $600,000** • State, Local and Other 50,000 • Program Income 1,150,000 • Total projected revenue $1,800,000 • Total projected expenses $1,800,000 • Excess of Projected Expenses • Over Projected Revenue $ 0*** • ** Award capped at Dollar amount threshold • *** CHCs must always submit a balanced budget when submitting a grant application. • Note: • PPS Rate $128 • Cost per Visit 120 • Difference $ 8 * 7,500 visits = $60,000 – Additional Medicaid income generated to cover services for the uninsured. • Hosted by: National Association of Community Health Centers, Inc.

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