The category receiving the highest percentage of expenditures in the DHSS was essential service 3 (inform, educate, and empower) (17.1%). Performance in this category was measured at 47 percent and ranked fourth. The Division of Community Health accounted for the highest allocation (24%) of its total expenditures to this category. The second highest level of expenditures was in essential service 7, which was divided, as stipulated by the Crosswalk guidelines (Table 2), into two categories: 7(a)—assure the provision of care (15.0%), and 7(b)—link people to needed services (11.8%.) The NPHPSP classified performance of essential service 7 as a single score, and this category was rated as 39 percent, sixth in overall DHSS rankings for performance. The senior services function that was transferred to the agency in 2001 had 99 percent of its payroll expenditures allocated to essential service 7(a)—assure the provision of care. Forty-five percent of that division's contract expenditures were allocated to 7(b)—link people to needed services. Also, the Center for Health Information Management and Evaluation had 26% of its payroll expenditures in essential service 7(b)—link people to needed services, given its responsibility of developing and maintaining data systems to support services as stipulated in the Crosswalk tool.
The third-highest ranking expenditure category was essential service 9 (evaluate health services) with 10.2 percent and had a performance score that ranked seventh at 31 percent. The Division of Senior Services and Regulation had 54 percent of its payroll expenditures in this category.
The administration category ranked sixth, receiving 7.1 percent of agency expenditures, with no score for performance since it is not a category measured under the NPHPSP. This was only slightly above essential service 4—mobilize community partnerships (6.6%).
In contrast, the three highest performance scores were essential service 2 (diagnose and investigate) (72%) but ranked eighth in expenditures (5.1%); essential service 1 (monitor health status) (50%) ranked fourth in expenditures (8.8%); and essential service 6 (enforce laws and regulations) (48%) with expenditures ranked as ninth (5.0%).
Interestingly, the three categories with the highest percentage of expenditures—essential services 3 (inform, educate, and empower), essential service 7 (assure the provision of care and link people to needed services), and essential service 9 (evaluate health services)—had relatively low performance scores, ranging from 47 percent to 31 percent, with the median performance score for all 10 categories being 41.5 percent. Conversely, the three categories receiving the highest performance scores—essential services 2 (diagnose and investigate), essential service 1 (monitor health status), and essential service 6 (enforce laws and regulations)—actually had relatively low percentages of expenditures ranging from 8.8 percent to 5.0 percent as illustrated in Table 2. It was observed that essential service 5 (develop policies and plans) and essential service 10 (research) were ranked low in the percentage of expenditures consumed, 9th and 10th, receptively, and did rank relatively low, 8th and 9th, in performance as well. As with all of the other categories, the remaining two essential service categories, essential service 8 (assure a competent workforce) and essential service 4 (mobilize community partnerships), there were no clear consistent patterns observed between rankings of expenditure percentages and performance scores.
It should be noted that the state of Missouri does not include fringe benefit amounts in the appropriation to state agencies. Accordingly, fringe benefit expenditures were not included in this study. Since the fringe benefit rate is a constant percentage (40.4% for fiscal year 2004), applying that amount to each of the expenditure categories in this study would not have significantly changed the category expenditure percentages when compared to total expenditures nor would the rankings have been different.
The purpose of this study was to measure the amount of financial resources used to achieve levels of performance. Alignments of expenditures and performance levels were not predicted. However, a significant observation provided by this study was that, generally, expenditure levels were not aligned with performance scores. With the exception of relatively low performance and expenditure percentages in essential service categories 5 (develop polices and plans) and essential service 10 (research), there was no clear consistency of funding and performance in any of the other categories. One possible explanation for low performance and expenditures in essential service 10 (research) is that state health departments do not typically have large capacities for research. As such, performance and funding dedicated to this activity would be relatively low.
DHSS management was not entirely surprised by the finding of a lack of clear patterns for alignments of funding and performance. First, it is acknowledged that some programs and services have different levels of funding requirements to meet performance expectations—some programs simply cost more to operate. Also, a reservation from the beginning was that the Performance Assessment Instrument was a measure of system performance and not exclusively of the agency. However, the only expenditures that could be reasonably measured were those of the DHSS. Also, the agency acknowledged concern that utilizing a system performance measurement methodology did not necessarily help DHSS determine what level of agency investments were needed to improve agency performance, a responsibility and function under their direct control. An additional instrument to measure agency-specific performance would have greater management utility for analyzing and comparing funding to performance levels.
A component of the study that was particularly helpful was the measurement of administrative expenditures. Administrative expenses are typically used in healthcare organizations as a measure of productivity.4 This study found that the administration category represented 7.1 percent of total expenditures in the DHSS. While it is acknowledged that there most likely were differences in allocation methodologies between the Maryland study and that of the DHSS, the Maryland state agency category for coordination and administration accounted for 10 percent of total agency expenditures. The range among Maryland state offices that participated in that study was 13 percent to 24 percent. A 1998 study in New Jersey found that administrative services accounted for 20 percent of public health expenditures.10 This was not considered a good measure for comparison since allocation methods were not provided for review in the New Jersey report. The DHSS considered the Maryland study to be a valid comparison. It took an aggressive approach to allocating administrative expenditures in comparison to Maryland guidelines. Legislators in recent years had targeted budget reductions to administration, assuming that a large percentage of agency funding was directed to this function. Since the DHSS financial coding system did not track administrative expenditures, the DHSS was challenged in communicating that the agency did not spend unusually high amounts for administration. This study provided clear evidence that would be useful for informing policymakers. However, the ability to benchmark with other similarly organized state agencies could provide additional opportunities to examine this category more closely.
It should be noted that even though essential service 7-b (assure provision of care) had 15 percent of total expenditures, DHSS funding does not support the direct provision of personal healthcare. In contrast, the Maryland study had 80 percent of agency expenditures to essential service category 7(b) (link people to needed services). Benchmarking in this category is difficult since there can be great variability in services provided in state public health agencies and also in the range of activities for this category as stipulated in the Crosswalk guidelines. This highlights the degree of difficulty encountered when trying to benchmark financial data in public health under existing methodologies. However, it also highlights the potential value of peer analysis as well.
Study Limitations and Challenges
There was a major limitation to this study for comparing expenditure patterns in each of the 10 essential service categories to performance scores. The Performance Assessment Instrument was designed to measure state public health system performance. According to the Performance Assessment Instrument guidelines, organizations required to participate in completing the survey include the state health department as well as others in the state that contribute to the delivery of public health services (eg, hospitals, schools, universities, not-for-profits).8 This proved to be a particularly difficult concept for some to comprehend and many organizations did not participate. As a result of this design, the performance scores in each of the 10 essential service categories represent the combined contributions of the state public health agency and other organizations willing to participate. However, this study categorized only the expenditures for the state public health agency. Gathering financial data from all entities considered as contributing to the performance of public health services in a state was considered highly unrealistic. Some of the organizations considered under the Performance Assessment Instrument to contribute to public health services such as universities do not separately capture and categorize expenditures in their accounting systems for public health services. Also the DHSS preference would have been to undertake an agency-wide performance analysis for purposes of examining organizational patterns under which it has direct control. The Performance Assessment Instrument was not designed for that purpose. On the basis of these issues, it is unlikely that the agency would undertake a similar study in the future using the same system performance instrument.
The organizational structure of the DHSS could prove to be an additional limitation of this study. There is great variability in the types of services performed by state health agencies. Comparing expenditure percentages in each of the categories to other expenditure studies of state public health agencies that do not include senior services functions could be misleading since services performed are so dissimilar.
The DHSS also found the process to be time consuming and incredibly arduous, given information age technologies. The Crosswalk was a complex feature and was prone to be very subjective, ambiguous, and, in some aspects, vague. It is difficult to envision that such an instrument alone could facilitate the collection of valid, reliable, and verifiable data. This was also mentioned as a concern in earlier expenditure pilot studies and a 1997 Lewin Group report.11 As such, these documented concerns should not be summarily dismissed. Also, any serious considerations to the collection of national financial data must include very specific definitions for each category and the categories must clearly meet the needs of stakeholders. The use of the essential services and a tool designed for public health activities was very challenging when applying it to social service–type activities. As was indicated also in the Lewin Group report,11 the essential service categories do describe very well the framework of public health for some purposes, but uniform decision rules would be critical to developing meaningful datasets.
An alternate methodology that could aid public health in quantitative financial analysis is a standard chart of accounts. Charts of accounts are universally accepted financial management tools that provide a framework to organize financial data. This is a generally accepted accounting tool to facilitate the collection and sorting of data by cost centers, product lines, functional categories, or any other classifications deemed necessary for evidence-based decision making. Collection of these data manually would be considered very costly, unreliable, and inefficient by other industries. A uniform chart of accounts could be a solution if this is shown to be plausible for a profession with so many government financial reporting structures. A strategy to classify individual programs (eg, family planning, immunization, surveillance) into standard essential service categories could be a uniform allocation methodology adaptable to a chart of accounts. Without this level of standardization, however, invalid and unreliable datasets with little utility for peer analysis and relevance to stakeholders might be created. If demonstrated to be feasible, a chart of accounts would have benefits even given the variability of state and local budgeting frameworks. It is already a common accounting practice for individual agency account categories to be aggregated into state and local government specific budgeting and reporting frameworks. Including finance professionals in the design of financial data-collection methodologies could help translate some of these practices to public health.
The collection of public health financial and performance information must be feasible, relevant, and purposeful. Public health leaders need this information not only to measure agency financial and operational performance but also to demonstrate outcomes and the value added by the profession. The Institute of Medicine advocated for national plans to collect financial data aligned with the 10 Essential Public Health Services,3 and even though it has been earmarked for deletion, Healthy People 2010 included a goal (#23-16) to collect data by the 10 essential services also. Given this level of national interest, identification of methodologies to effectively measure financial and agency performance is imperative. This study was an initial attempt at this type of analysis. While this study and results did not totally meet the needs of agency leaders, it was an important step in demonstrating the efficacy of the concept.
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Keywords:© 2007 Lippincott Williams & Wilkins, Inc.
public health expenditures; public health essential services; public health finance; public health performance