2003 Model Practice Application (Public)

Financial Management Review Process

Oneida County Health Department

In November 2001, Oneida County’s County Executive directed department leaders to evaluate their programs and find ways to save county dollars. To meet the financial challenges faced by the county and by their health department, the Oneida County Health Department (OCHD) established the OCHD Financial Management Committee (FMC). The purpose of the FMC was to review and improve the financial management process for effective and efficient use of program funds. The FMC would also review and respond to recommendations from the County’s Financial Review and Response Committee (FRRC), as well as forward recommendations to the FRRC for consideration. The overarching goal of OCHD-FMC is to reduce the department’s dependency on county dollars. After reviewing two of the eight divisions, formulated 55 financial recommendations that have the potential net savings to the county of $457,492.

The Oneida County Health Department faces significant financial challenges in 2003 and expects this challenge to continue into 2004. Strong financial management practices must be infused within the department administration and executed throughout the programs and services expected by the county’s residents. Sound financial management:

• Fosters service efficiency and effectiveness.
  
  
• Provides the foundation for effective budgeting, strategic planning and program management.
  
  
• Builds staff self-confidence.
  
  
• Demonstrates creditable County leadership.
  
  
• Enhances community confidence.

The OCHD FMC a comprehensive problem-solving methodology to develop a financial management review process and to use this process to identify, analyze, and implement action items to address financial issues. The FMC planning schedule was developed in the following three phases: 1) to address 2002 budget issues, 2) to plan for 2003, and 3) to continue as an ongoing group to review, evaluate, and analyze the financial aspects of the department.

Historically, the OCHD management practiced reactive budgeting, using past expenditure patterns to dictate future budgetary plans. Also, the traditional financial mindset of management staff was to spend funds with a goal to reach a “$0.00 Balance” by the end of the fiscal year. In doing so, the health department believed that it was better positioned to receive similar, but hopefully more, funding in the following fiscal year. Such financial practices promoted wasteful spending and poor program and financial management. Ultimately, the county residents served by the health department pay the price of inefficiency through lower quality of services, a limited number of services offered, and increased fees and county taxes.

The OCHD is fiscally responsible for the stewardship of county funds appropriated for improving the public’s health in the community. Among the 55 recommendations, several required coordination and cooperation with external stakeholders (e.g., insurance companies, health care service providers, professional associations, state health department, local businesses and organizations, other county departments, and the county legislature).

By working with stakeholders, the health department was able to implement action items such as increasing insurance reimbursement rates for various services (e.g., immunizations), receiving reimbursement for previously non-reimbursable items (e.g., lead investigations), streamlining billing procedures with insurance companies, and consolidating provider services (e.g., therapists) to reduce redundancy and overhead costs associated with managing multiple contracts for the same provider. Internally within OCHD, staff worked with division management to shift their financial thinking and practices from one of “categorical” spending for one’s own program to one of “pooled” funds to meet department-wide needs. This has eliminated a great deal of wasteful spending, especially for items such as office supplies, computers, and office equipment.

The eight-member FMC meets every Friday for two hours. The core committee is comprised of division directors, financial managers, the county attorney, and support staff. The costs are their time at the meetings and, at times, time spent on “homework” assignments. However, a great deal of their work is work that they would normally do and therefore, there are no additional costs. One of the objectives of the FMC was to ensure an ongoing advisory and planning capacity. Upon completion of the master financial management plan (June 1, 2003), the FMC will meet quarterly to monitor and evaluate the effectiveness of the plan and prepare for the next cycle of planning activities.

Also, the recommendations identified the costs of execution, and this information was included in the action plan. Several precursor recommendations were identified, which, when achieved, would provide the funding to carry out the remaining recommendations. Such costs included hiring additional staff, purchasing equipment, training, etc.

Basically, since the overall focus was financial management the impact was determined by net dollars saved and/or revenues earned. Each recommendation was converted to financial impact figures where possible. The financial impacts were also developed for later use as a means to measure the success in achieving the goals. In addition to financial indicators/measurements, outcome measurements were also included for the objectives identified for each recommendation. A financial report card was also developed to keep track of financial impact.

After the individual and collective action plans were developed, the FMC reviewed them to identify common or duplicative activities and sought ways to combine or coordinate the use of limited resources. The FMC is actively engaged in the implementation and monitoring of the action plan. Staff is informed of the process and action plan to ensure that the implementation activities are institutionalized at all levels within the department. Microsoft Project® is installed on key management computers. This software program provides a useful tool to control, document, monitor, and evaluate the action plan activities over time.

• Developing and implementing a financial management process is tremendously valuable in identifying what can be done to save or increase program funds. The traditional, bureaucratic public health structure is not designed to be financially efficient.
  
  
• Simple internal solutions can result in tremendous savings to the department.
  
  
• Fostered teamwork and cooperation carried over into other aspects of the department.
  
  
• Saving money or increasing revenues offers tangible results.
  
  
• Take the time to implement the process correctly.

As a result of the work, the health department obtained approval from the County Executive to fill six vacancies, grant one pay raise, and create a new position in the department. This occurred during a time when the county had recently passed a 16 percent tax increase and instituted an all-county hiring freeze.

As with any process the key elements are getting the right people involved, taking the time to do it right, and sticking to the process.