2011 Executive Proposed Budget

Public Health – Public Health Center Budget Reduction Executive Summary

Summary

Approximately 50% of the Department of Public Health’s (PH) entire General Fund (GF) is budgeted in the Public Health Fund, with the other half in Jail Health Services. Within the PH Fund, about half of the GF is used in the PH Centers, and all of that GF is used to cover fixed infrastructure/building costs and some indirect expenses.

The Executive’s 12% GF target reduction for PH was a cut of $3.24 million in the PH Fund. To help meet this target reduction, PH proposes to cut $1.6 million in GF support for PH Centers infrastructure.  Because infrastructure costs are fixed, to keep Centers operating, this general fund reduction would have to be backfilled by revenue transferred from program funds used for delivering services, specifically from service reductions and model changes to Maternity Support Services, Primary Care, and funding to Community Health Centers, described below. This reduction also includes 11.3 FTEs. The consequence of transferring program revenue to infrastructure costs is that the revenue is no longer available to provide services.  In 2011 this revenue likely would have been used to provide care to increasing numbers of uninsured clients and to partially offset impending state cuts in clinic reimbursement rates. Funding would also be cut from development of an electronic health record system, which is a critical efficiency needed to improve patient care and to generate additional Medicaid payments.

Approach Used

The PH Centers’ (PHC) budget is comprised of two parts: first, infrastructure (e.g., fixed building costs) and indirect costs, where County GF is budgeted; and second, program services, which fund their own direct costs with patient-generated revenue and contract/grant funds. Consequently, reducing GF in the PHCs creates a gap in financing for Center infrastructure, where the GF is budgeted.

The model changes and service reductions in the three PHC programs described below create program revenues that backfill the GF cut, but would otherwise fund care for low income and vulnerable clients, especially in anticipation of probable State cuts to Medicaid reimbursement. The program revenue was also intended for development of the electronic health record, which would assure stability, quality care and efficiency in the PH clinical system.

In choosing where and how to make reductions in the PHC programs, PH used the following criteria:

1. Fewest number of patients affected;
2. Ability to partially compensate for lost clinic visits with alternative staffing models; and
3. Least impact on partner Community Health Centers and other safety net providers.

Primary Care Reduction ($75,608 net)

PH proposes to reduce its primary care program at the Eastgate PHC by 1.2 FTE physicians who primarily see uninsured adults, but then add a 1.0 FTE Pediatric Nurse Practitioner, shifting the client mix to more insured children and fewer uninsured adults, which will generate revenue. This reduces clinic visits by adults by 2,000 (17% of its current visits) and adds about 1,700 visits by children. About 350 adult visits will also be added by an expansion of the physician residency program through a partnership with Virginia Mason Hospital.

Community Health Centers ($115,067)

PH also proposes to proportionally decrease by 12% -- PH’s target reduction -- GF-supported contract funds to Community Health Centers, which are local non-profit organizations providing primary care and dental services to low income and diverse communities. The reduction is $115,067, which will result in a reduction of various services to those centers’ clients.

Maternity Support Service Reduction ($1,486,765)

The largest GF impact in the PHCs results from a business model change in Maternity Support Services (MSS), which was intended to free up program revenue for critical service needs for low income and vulnerable clients. Most of this $1.4 million reduction would be to at-home visits provided out of all PH Centers, which have a higher time and monetary cost than in-clinic visits.  This action eliminates 11.1 FTE (out of 95 FTE), some of which are currently vacant.  PH estimates that there will be about 1,600 fewer visits in 2011 due to the reduction, which represents approximately 10% fewer home visits across all PHCs.  PH hopes to lessen the impact of this reduction by working to have all nurses more consistently meet productivity goals for numbers of visits.  This will help create capacity for additional in-clinic MSS visits.

As background, MSS provides preventive health services that supplement coverage for Medicaid eligible women who are pregnant or within 60 days post-pregnancy. Benefits of MSS services include reduction of premature birth and infant mortality, and promotion of healthy child development through education, screening, early intervention and other care that helps the family make positive health care decisions. Most patients are low income pregnant women and infants.

The model changes and service reductions described above, particularly in MSS, create program revenue that if not used to backfill the GF cut would otherwise be used to preserve capacity for low income and vulnerable clients in the face of highly likely impending State cuts to Medicaid reimbursement rates. For example, a 5-7% cut would be a revenue loss of over $2 million, causing deeper service reductions to uninsured clients as well as to Medicaid covered patients in MSS, Primary Care, Family Planning, Dental and Pharmacy. It is also vital to invest in an electronic health record, which is critical to assure financial stability, care standards and efficiency in the PH clinical system.

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