5.3 Budgeting and financial management

Public health budgeting is crucial for allocating resources to achieve health goals. It involves a four-phase cycle: preparation, approval, execution, and evaluation. Effective budgeting aligns with strategic plans, considers multiple funding sources, and adheres to legal requirements.

Financial management in public health prioritizes evidence-based interventions and leverages partnerships to stretch funds. Strategies include implementing cost-saving measures, diversifying funding sources, and utilizing technology for improved efficiency. These approaches help maximize the impact of limited public health resources.

Budgeting for Public Health

Principles of Public Health Budgeting

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• Budgeting in public health allocates financial resources systematically to achieve health-related goals within a specified timeframe
• Financial management plans, organizes, directs, and controls financial activities for effective use of public health funds
• Budget cycle includes four phases
  • Preparation
  • Approval
  • Execution
  • Audit/evaluation
• Common budgeting approaches
  • Zero-based budgeting resets all budget items to zero each cycle, requiring justification for each expense
  • Performance-based budgeting links funding to specific outcomes or performance metrics
• Public health budgets must
  • Align with strategic plans
  • Consider multiple funding sources (federal, state, local, grants)
  • Adhere to legal and regulatory requirements (accounting standards, reporting regulations)
• Financial transparency and accountability maintain public trust and ensure proper resource use
  • Regular financial reporting
  • External audits
  • Public disclosure of budget information

Financial Management Strategies

• Prioritize interventions based on evidence-based practices and potential population health impact
• Leverage partnerships and collaborations to stretch funds
  • Resource sharing agreements
  • Joint procurement initiatives
• Implement cost-saving measures
  • Bulk purchasing of supplies and equipment
  • Shared services agreements for administrative functions
• Diversify funding sources for enhanced stability
  • Grants (federal, state, private foundations)
  • Private donations
  • Revenue-generating activities (fee-for-service programs)
• Utilize technology and data analytics to improve efficiency
  • Electronic health records for streamlined data collection
  • Predictive modeling for resource allocation
• Implement performance measurement systems
  • Key performance indicators (KPIs) for health outcomes
  • Regular program evaluations
• Explore innovative financing mechanisms
  • Social impact bonds
  • Pay-for-success models
  • Public-private partnerships

Public Health Program Budgeting

Cost Identification and Categorization

• Program budgeting identifies all direct and indirect costs for implementing and maintaining public health initiatives
• Common cost categories in public health budgets
  • Personnel (salaries, benefits, training)
  • Equipment (medical devices, computers)
  • Supplies (office supplies, medical supplies)
  • Travel (site visits, conferences)
  • Contractual services (consultants, laboratory services)
  • Overhead expenses (rent, utilities)
• Budget justification provides detailed explanations for each line item
  • Demonstrates necessity and reasonableness of expenses
  • Links costs to program objectives and outcomes
• Indirect cost rates account for shared organizational expenses
  • Calculated as a percentage of direct costs
  • Negotiated with funding agencies

Budget Management Techniques

• Variance analysis compares actual expenses to budgeted amounts
  • Identifies significant differences
  • Explains reasons for variances (unexpected events, price changes)
• Cash flow management ensures fund availability throughout the budget period
  • Forecasting incoming and outgoing funds
  • Timing expenditures to match revenue streams
• Budget revision processes adapt to changes in funding or program needs
  • Formal procedures for requesting and approving changes
  • Documentation of reasons for revisions
• Grant management tracks multiple funding sources
  • Ensures compliance with specific grant requirements
  • Monitors spending against approved budgets
  • Prepares financial reports for grantors

Financial Analysis of Public Health Programs

Financial Statement Analysis

• Key financial statements in public health
  • Balance sheets show assets, liabilities, and net assets at a specific point in time
  • Income statements display revenues and expenses over a period
  • Cash flow statements track inflows and outflows of cash
• Ratio analysis evaluates financial performance
  • Liquidity ratios (current ratio, quick ratio) assess ability to meet short-term obligations
  • Efficiency ratios (days in accounts receivable) measure resource utilization
  • Profitability ratios (program revenue to expense ratio) evaluate financial sustainability
• Trend analysis examines financial data over time
  • Identifies patterns in revenues, expenses, and program costs
  • Predicts future financial needs or challenges
• Fund accounting principles apply to government and non-profit organizations
  • Separate accounting for restricted and unrestricted funds
  • Tracking of fund balances and transfers between funds

Program Evaluation and Financial Impact

• Cost-benefit analysis compares program costs to monetary value of outcomes
  • Example Calculating return on investment for a vaccination program
• Cost-effectiveness analysis evaluates relative costs of different interventions
  • Example Comparing cost per life saved for different cancer screening methods
• Interpreting financial reports in context of programmatic goals
  • Linking financial metrics to health outcomes
  • Assessing efficiency of resource utilization in achieving objectives
• Performance measurement systems track financial and programmatic metrics
  • Balanced scorecard approach integrating financial and non-financial indicators
  • Regular reporting and review of key performance indicators

Maximizing Public Health Funding Impact

Resource Optimization Strategies

• Implement evidence-based interventions with proven cost-effectiveness
  • Example Investing in tobacco cessation programs with high return on investment
• Leverage technology for operational efficiency
  • Telemedicine to reduce travel costs and increase access
  • Data analytics for targeted resource allocation
• Explore shared service models
  • Regional laboratories for economies of scale
  • Shared administrative functions across health departments
• Implement lean management principles
  • Process mapping to identify and eliminate waste
  • Continuous improvement initiatives to enhance efficiency

Innovative Funding Approaches

• Explore alternative financing mechanisms
  • Social impact bonds link private investment to public health outcomes
  • Pay-for-success models tie funding to achievement of specific health targets
• Develop public-private partnerships
  • Corporate sponsorships for health promotion programs
  • Joint ventures for community health initiatives
• Create revenue-generating activities
  • Fee-for-service programs (immunization clinics)
  • Licensing of public health technologies or educational materials
• Leverage community resources
  • Volunteer programs to supplement workforce
  • In-kind donations of goods and services