Authors

  1. Honore, Peggy A. DHA
  2. Leider, Jonathon P. PhD
  3. Singletary, Vivian MBA
  4. Ross, David A. ScD

Abstract

In its 2012 report on the current and future states of public health finance, the Institute of Medicine noted, with concern, the relative lack of capacity for practitioners and researchers alike to make comparisons between health department expenditures across the country. This is due in part to different accounting systems, service portfolios, and state- or agency-specific reporting requirements. The Institute of Medicine called for a uniform chart of accounts, perhaps building on existing efforts such as the Public Health Uniform National Data Systems (PHUND$). Shortly thereafter, a group was convened to work with public health practitioners and researchers to develop a uniform chart of accounts crosswalk. A year-long process was undertaken to create the crosswalk. This commentary discusses that process, challenges encountered along the way and provides a draft crosswalk in line with the Foundational Public Health Services model that, if used by health departments, could allow for meaningful comparisons between agencies.

 

Article Content

In 2012, the Institute of Medicine, now the National Academy of Medicine (NAM), released For the Public's Health: Investing in a Healthier Future.1 The report called for a "minimum package of public health services," with the idea that no matter where someone lived, worked, or travelled within the United States, he or she could expect the same set of public health protections. The "minimum package" has evolved into the Foundational Public Health Services (FPHS) model, which includes a list of Foundational Areas and Capabilities.2 Another major recommendation in the report was for public health to develop methodologies supported by a uniform chart of accounts (COA) and data system that would provide information to compare the cost and benefits of the FPHS. The report noted that the absence of shared uniform expense data limits important rigorous research into the sources, uses, costs, and outcomes accruing from public health system funding. Such research is needed to understand, at a minimum, the trends in the cost of performance of public health agencies.1,3,4 Insights into the costs and benefits of public health activities will aid in making the case for the value of public health services and to identify areas that need improvement.4

 

As a first step to advancing progress toward meeting the NAM recommendations and researching critical performance questions, the Robert Wood Johnson Foundation charged the Public Health Informatics Institute with conducting conceptual analysis to determine the feasibility of a uniform COA for all governmental public health agencies. Specifically, the project explored the feasibility of building a database of expenditures and revenue data compiled from many, if not all, public health agencies constructed by indexing each public health agency's COA to a uniform COA-we refer to this as a "COA crosswalk" or "crosswalk," for short. This project consisted of more than a year of standards development comprising interviews with public health department financial staff, examination of state and local health department COAs, and standards-setting by a technical expert panel. In this commentary, we provide our perspectives on the concept of standards for a uniform COA crosswalk for public health.

 

Why a Crosswalk?

Standards-setting in finance can occur in multiple ways when attempting to allow for apples-to-apples comparisons across multiple agencies. One major route is to create a model COA that every agency then adopts, replacing its previous COA. Our interviewees and technical expert panel dismissed this idea early on-it is not realistic or practical to have the expectation that agencies will replace their current COA, or even that they have the legal authority to do so. Indeed, most do not; they must use their state or local government-mandated accounting structure. Much more feasible is the development of a crosswalk that would allow the connection between an agency's COA and a standard set of areas of expenditures. This approach is widely used in other fields.4-8 We believe this is the best path forward. An added benefit of this approach is the potential ability to expand upon currently used financial data collection and reporting systems (specifically the Public Health Uniform National Data System [PHUND$]).4

 

As the Figure shows, a COA crosswalk can be aligned to an agency's general ledger, allowing for systematic comparison of expenditures under the Foundational Areas and Capabilities specified by the FPHS model. More importantly, such a system could also allow health departments to view the financial health of their agency by major program areas and make comparisons with their peers.

 

One important feature of a crosswalk that also provides data on the financial health of an agency is that it captures all expenditures from the agency, not just those in the FPHS. Practically, this means a financial data collection system should capture both "Foundational" and "non-Foundational" spending in the Foundational Areas and Capabilities. That is, the system should capture both expenditures on "communicable disease" activities that should exist everywhere (Foundational), as well as those that exist due to community need (non-Foundational). In addition, such a system should capture all non-public health expenditures from an agency (Table, "All Other Nonpublic Health Activities"). These include many types of health care (direct clinical care services) that a health department might be providing due to community need that do not necessarily qualify as public health services, as well as other social services that an agency might conduct. Finally, it is our recommendation that a uniform COA crosswalk also capture expenditures in "natural expense categories," also sometimes known as "class codes" or "object codes."9 These would include, for instance, spending within a program on personnel salaries and wages; fringe benefits; consultant costs; equipment; supplies; travel (in-state, out-of-state); contractual; intergovernmental pass-through; other intergovernmental transfers; and all other (Table). This level of coding would allow for robust comparisons across agencies and for examination of cost drivers behind the public health enterprise.

  
FIGURE . Function of... - Click to enlarge in new windowFIGURE *. Function of the Model Chart of Accounts Crosswalk for Classifying Agency Data in the Foundational Areas and Capabilities
 
TABLE -a A Draft of ... - Click to enlarge in new windowTABLE *-a A Draft of the Major Areas and Activities Constituting a Uniform Chart of Accounts Crosswalk for Public Health

Challenges

While a crosswalk is both needed and feasible, we would suggest several challenges exist in attempts to standardize financial reporting. These challenges have been experienced in other fields, perhaps most notably higher education.8 One of the most pressing challenges highlighted by practitioners in our technical advisory panel is the expectation that it would be very difficult to parse types of spending at a high level (eg, for a communicable disease control bureau) into Foundational (an activity that should be available everywhere) versus those activities that are available due to community need. We recommend creating a COA crosswalk that works on a program or activity level (eg, coding "HIV/AIDS" within "communicable disease control") for this reason. However, in our experience, many smaller jurisdictions' COAs may not be granular enough to code at such a level, and further work will be needed to help these agencies parse their spending to the needed granularity.

 

A related concern is that the accounting codes for many of the Foundational Capabilities cut across agency Foundational Areas. This creates problems when categorizing data into either the Foundational Areas or the Foundational Capabilities. Both state and local public health agencies receive money in jurisdiction-specific formats and as such must record and report data back to government fiscal offices (eg, state budget office, county government budget offices) in those same formats. For example, an agency's structure captures "epidemiology and surveillance" activities under Communicable Disease or a similar program area but would otherwise be captured under the Foundational Capabilities in the FPHS model. Our solution is to code a program's categorization by both the Foundational Areas and Capabilities, independently. In this way, one would be able to specify whether Assessment or Communication is program-specific or agency-oriented; it would also conform to the recommendation of the NAM report that agency-wide spending estimates for certain types of spending be generated.1

 

One of the most important conceptual advances of the FPHS model-the Foundational Capabilities-may be the most difficult to implement. Some current public health agency financial systems do not capture staff time or expenditures by many of the Foundational Capabilities. For instance, while systems may capture Assessment or Communications expenditures, we posit few if any capture Community Partnership Development or Policy Development; these are interwoven in the work conducted by the various programs in the agency and are not tagged to their own expenditure codes. Capturing data in this manner would require business process redesigns throughout all public health agencies. In essence, staff daily work that aligns with the Foundational Capability definition would have to be "time coded" to the appropriate capability. It is unclear that any level of coding in COA and related accounting structures will facilitate capturing accurate expenditure data by all of the Foundational Capabilities. Such a business process redesign was discussed as an obstacle for most participants of the advisory committee.

 

A related challenge is that some agencies' COAs do not classify administrative and other indirect expenses in as detailed a manner as required for a COA crosswalk. This is especially true for smaller agencies. The allocation of indirect costs and other organizational competency and administrative expenditures is a major obstacle that may inhibit comparative analysis among health departments due to different allocation methods. This is further complicated by the fact that certain state and local governments have no reported or allocated expenses for services provided by other state or local agencies. Information technology is a common example that may be provided by another agency, and its costs may or may not be allocated to the health department.

 

Next Steps

A draft set of standards for a COA crosswalk have been developed (Table). These standards would benefit from further refinement and piloting in state and local health departments. A system that incorporates fine mapping of COAs would allow for longitudinal use and comparisons over time, which would be valuable to practitioners, policy makers, and researchers alike. This would involve an initial investment of time to map the COAs to the crosswalk, but, given the relatively stable nature of organizational COAs, the map could be reused on a recurring basis with little additional need for remapping, excepting new or modified programs.

 

In our view, 2 necessary conditions would need to be met for widespread uptake of a system that crosswalks health department COAs to a model COA. First, some sort of system of incentives would need to exist, ideally relating the use of the COA crosswalk to Public Health Accreditation Board accreditation and/or additional sources of revenue for participating agencies. Making use of the crosswalk part of mandatory reporting is also a possibility, in line with current requirements driving uptake of the Medicare Cost Reports and Health Resources and Services Administration data system for community health centers.10 Second, the advisory committee emphatically stated that a system that depends on the participation of health departments would need to be directly and immediately useful to those health departments in their day-to-day work. This system cannot be wholly for research purposes (as the 2012 NAM report also makes clear), but should build on PHUND$' approach, which allows health departments to examine their financial health and make comparisons with their peers.

 

As one of the authors has noted,4 public health finance is more than a century behind other public finance standards and sectors and at least 40 years behind the reporting standards for health care. This is partially due to federalism, and each state and home rule local health department setting their own accounting structure. However, this is also due to a lack of a standard crosswalk that would allow for comparisons among disparate systems. Such a crosswalk has been called for by the NAM and others, and standards for such a crosswalk are in development. It will now be up to funders and health departments, together, for how and whether such a crosswalk is implemented.

 

REFERENCES

 

1. Committee on Public Health Strategies to Improve Health, Institute of Medicine. For the Public's Health: Investing in a Healthier Future. Washington, DC: National Academies Press; 2012. [Context Link]

 

2. Public Health Leadership Forum. Defining and Constituting Foundational "Capabilities" and "Areas" Version 1. Washington, DC: RESOLVE; 2014. [Context Link]

 

3. Mays GP; Public Health Cost Estimation Workgroup. Estimating the Costs of Foundational Public Health Capabilities: A Recommended Methodology. Lexington, KY: University of Kentucky; 2014. [Context Link]

 

4. Honore PA. Measuring progress in public health finance. J. Public Health Manag Pract. 2012;18(4):306-308. [Context Link]

 

5. National Association of Community Health Centers. Designing a Chart of Accounts for a Community Health Center. Bethesda, MD: National Association of Community Health Centers; 2003. [Context Link]

 

6. National Center for Education Statistics. Financial Accounting for Local and State School Systems: 2009 Edition. Washington, DC: National Center for Education Statistics; 2009. [Context Link]

 

7. Gans DN, Piland NF, Honore PA. Developing a chart of accounts: historical perspective of the Medical Group Management Association. J. Public Health Manag Pract. 2007;13(2):130-132. [Context Link]

 

8. Honore PA, Clarke RL, Mead DM, Menditto SM. Creating financial transparency in public health: examining best practices of system partners. J. Public Health Manag Pract. 2007;13(2):121-129. [Context Link]

 

9. US Census Bureau. Government Finance and Employment Classification Manual. Washington, DC: US Census Bureau; 2006. [Context Link]

 

10. Health Resources and Services Administration. Clinical and financial performance measures. http://bphc.hrsa.gov/policiesregulations/performancemeasures. Published 2015. Accessed March 25, 2015. [Context Link]

 

foundational areas; foundational capabilities; foundational public health services; governmental public health; public health administration; public health finance