Many focus areas in the Affordable Care Act (ACA) garner considerable attention when discussing the potential for transforming the health care and public health systems. These include areas such as access to care, prevention, quality, workforce, information technology, and payment reforms. There is, however, an opportunity for the ACA to advance the transformation of public health economic and financial analytical practices as well. Language that could generate this is found in [S]4301, titled Research on Optimizing the Delivery of Public Health Services.1

Public health services and systems research to examine evidence-based prevention practices is the focus of ACA [S]4301. Included are mandates for economic and financial analysis to:

* Compare the effectiveness and cost of community-based public health interventions.

* Examine for effective strategies to organize, finance, and deliver public health services.

* Compare governmental public health department structures and systems in terms of effectiveness and cost.

Cost can be viewed as a measurement of the acquisition and utilization of resources to achieve a desired outcome. Analysis of cost and effectiveness would aid the public health system to better understand if it is optimizing the delivery of public health services while also demonstrating how those services advance improvements in the health of the US population.

The Institute of Medicine reinforced this call for increased economic and financial analysis in the 2012 report For the Public's Health: Investing in a Healthier Future.2 In summary, the report identified a minimum package of public health services and called on public health to develop methods to:

* Compare cost and benefits of the minimum package of public health services and population health improvement strategies.

* Improve data systems for the tracking of revenues and expenditures with particular emphasis on development of a model uniform chart of accounts.

The underlying motivation of the ACA mandates and the Institute of Medicine recommendations is simply a desire to understand the financial investments and related returns achieved as a result of public health programs and services.

Analytical Techniques

Under [S]4002 of the ACA, $15 billion over 10 years is dedicated to public health through the Prevention and Public Health Fund.3 Although some of this funding has been redirected to other purposes, funding remains at a high enough level that it should stimulate a sense of urgency for public health to effectively implement analysis to determine the cost and benefits of programs and services. Examining for cost and benefits is critical because it reveals important information on the inputs, outputs, and outcomes achieved with scare resources. Publications over many years mentioned the lack of required data as a barrier to quantifying the investments and value of public health.2,4,5

Several economic evaluation and financial analytical techniques provide methods for the needed analysis. Economic evaluation is a classification of analytical methods that are used to measure, compare, and value the cost of alternative strategies. One example is cost-effectiveness analysis that compares the cost of an intervention with the effectiveness as measured by outcomes such as cases averted, lives saved, or reductions in adverse conditions. For example, a cost-effectiveness analysis of a routine varicella vaccination program for children in the United States found that it would prevent 94% of potential cases of chickenpox and that the program would save $5 for every dollar in vaccination investment.6

Cost analysis is another example that could focus either on cost of illness analysis or on program cost analysis. The Brown et al7 article on the cost of 6 chronic diseases in California included in this special issue is an excellent example of a cost of illness analysis. The authors quantify that $72 billion is spent to treat these chronic conditions. The analysis contributes to understanding the magnitude of financial resources consumed that alternatively could be used to proactively expand prevention services to mitigate the onset of these preventable illnesses. Another method, program cost analysis estimates the cost of operating a program and typically reveals information on the cost per unit of service or cost per client served. Using reports compiled monthly by the Florida Department of Health, a county-level immunization program in a 12-month period during 2009-2010 had a total cost $2.2 million that equaled a cost of $30.01 per unit of services provided.8 Such analysis on program cost provides a valuable tool to conduct routine financial analysis to identify drivers of operational strengths and weakness. Program cost analysis is often used as a component of cost-effectiveness analysis since calculating the cost of implementing different interventions is necessary when comparing the costs and benefits of alternative strategies.

Model Cost Reports and Cost Accounting Systems

Providers of health care services have for years made data available for cost-related analysis by reporting on cost, service utilization, staffing, outcomes, and other relevant data. The Centers for Medicare & Medicaid Services mandates annual reporting of this and other data in the Medicare Cost Reports.9 The reports mandated by the Centers for Medicare & Medicaid Services for institutional providers (eg, hospitals, skilled nursing facilities, community mental health centers) consist of a series of forms to collect financial data (eg, revenues, expenditures, net income), cost and charges data, descriptive (eg, facility size, patient-days, discharges), and other statistical data. The reports provide valuable information for the Centers for Medicare & Medicaid Services purposes and to researchers to conduct cost and other comparative analysis such as determining the financial health of a facility. Data to populate the cost reports are generated through a variety of agency accounting (eg, general ledger, time accounting, financial statements) and other systems.

Community health centers are also mandated to annually report cost and other data into the Health Resources and Services Administration-supported Uniform Data System. Each community health center submits data directly into the Uniform Data System on agency finances, costs, service utilization rates, staffing, and other statistics.10 A sample of statistics published in an annual report includes measures of cost-effectiveness (eg, the average total cost per patient, average medical cost per medical visit), quality and outcomes measures (eg, screenings, controlled diabetes), revenue sources, staffing, and patient demographics.

An example of a comprehensive cost analysis methodology to study cost in local public health agencies was actually conducted in 2000 by the Division of Public Health in the Georgia Department of Human Resources (currently the Georgia Department of Public Health).11 A template to capture both clinical and population-based services data was developed and training was conducted that gave every local public health agency the ability to generate a valid cost report. The creation of cost center accounting that captured all financial activities related to specific service areas and the use of Current Procedural Terminology codes were principal features of the system. Driving this effort was a desire to negotiate Medicaid reimbursements.

As illustrated earlier, the Florida Department of Health does maintain the infrastructure for a uniform statewide cost accounting system for data collection and reporting on program cost. A multilevel account coding structure enables the collection of financial data that is interfaced with systems that collect data on services provided, clients served, full-time equivalents, and other relevant data for more than 70 programs provided by public health agencies throughout the state.8 The Florida Association of County Health Department Business Administrators played a pivotal role in the identification of this and other accounting systems needed to provide timely and concise financial information in order to "increase productivity, reduce costs, and improve accountability."12^(p416) Their efforts align with a Government Finance Officers Association best practice policy, titled The Public Finance Officer's Role in Supporting Fiscal Sustainability.13

Infrastructure for Analysis

In order for public health to advance toward uniform reporting of cost, outcomes, and related comparative analysis, it must first build the necessary data infrastructure in individual agencies. Standardized program definitions in the minimum package of public health services categories are important, but additional standardized categories and definitions are also needed to capture the full range of programs and services provided in public health organizations. This is critical to ensure uniform reporting and analysis of program- and service-level data across all public health agencies. In addition, analysis of financial and operational performance that is conducted in the other systems mentioned earlier requires a review of total agency inflow and outflow of financial resources.

Cost accounting systems must be designed to generate the needed information. This is best accomplished through integrated information systems (eg, financial, time and cost center accounting, production reporting) that can be sorted in multiple configurations to achieve desired levels of cost analysis. It must be noted that a uniform national chart of accounts as described in the Institute of Medicine2 report will not alone produce the infrastructure supports needed for the desired level of cost analysis. Also, it is important enough to note that an integrated information system should not be confused and described as a chart of account.

The Public Health Uniform National Data System (PHUND$)14 hosted at the National Association of County & City Health Officials does currently collect, on a voluntary basis, local health department standardized total revenue and expenditure data as well as data categorized in the minimum package of public health services areas. Data from PHUND$ can also provide financial data needed when estimating total national public health spending in governmental agencies. Reports produced in PHUND$ facilitates analysis of strategies to organize and finance services as directed in the ACA.1 PHUND$ also supports another Government Finance Officers Association best practices for financial analysis15 by providing local health departments with ratio and trend data, benchmarking, and a dashboard to analyze agency financial health against peer organizations. PHUND$ has expansion capacity to capture data from cost accounting systems such as uniform data on production, service utilization, and other elements needed to support comprehensive cost analysis. Data reporting mandates for public health agencies, such as those for providers of health care services and community health centers, would be consistent with calls for a comprehensive national database on public health financial data.

Summary

Mandates in the ACA for cost-effective and comparative effective analysis provide the stimulus to advance the transformation of public health analytical practices. Rigorous economic evaluations and financial analytical practices are needed for that to be accomplished. The main thrust of increased analytical practices is to maximize health benefits at the minimum level of cost. The quality movement actually grew decades ago out of a desire to improve services while lowering cost. Because of the ACA mandates, public health has an opportunity now to demonstrate that it can transform to support quality, cost-efficiencies, and better health for the population.

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