Public Health Administration Final

Public Health Financial Management

Public health financial management is the acquisition and management of resources for the effective delivery of health services to the population. Since resources are scarce, effective management is crucial for ensuring that the available resources serve the public’s needs in the best possible way. This text identifies the principles and tools of resource management and how selected tools can be used to address the selected public health issue.

Principles of Budget and Resource Management

Financial resource management is based on several fundamental principles. This text discusses three principles: time value, risk awareness, and budgeting (Gapenski & Reiter, 2016). Time value has to do with valuing cash flows expected to occur at different points in the future to determine if an investment is worth making now (Gapenski & Reiter, 2016). This principle ensures that public health leaders prioritize projects and commit limited resources to projects that would yield greater or positive benefits in the future. On the other hand, risk awareness is about understanding and accurately measuring the risks that face the project (Gapenski & Reiter, 2016). Proper risk awareness enhances accuracy in the estimation of costs and revenues (Gapenski & Reiter, 2016). Finally, budgeting is the process of specifying how resources will be obtained and used over a specified period (Gapenski & Reiter, 2016).

To ensure effective financial resource management, public health leaders have several tools at their disposal. The first tool is variance analysis, which involves comparing actual values (such as revenues and costs) against budgeted values to identify operational problems and put in place control measures. Another crucial tool is financial statement and ratio analysis (Gapenski & Reiter, 2016). Financial statements provide crucial information on an organization’s financial position and operations. For instance, the cash flow statement indicates the cash inflows versus cash outflows of the organization to show whether it generates enough to meet its costs. It also shows the net effect of investment decisions (Gapenski & Reiter, 2016). At the same time, financial ratios use data from financial statements to show the financial condition of an organization or project (Gapenski & Reiter, 2016). Finally, risk analysis tools such as the net present value (NPV) and the internal rate of return (IRR) can also guide resource management decisions by showing what projects would have the greatest benefit in future (Gapenski & Reiter, 2016).

Resource Management Tools Relevant to Selected Public Health Project

The net present value and the operating margin financial ratio would both be relevant tools for the selected public health project. The operating margin is obtained from the financial statements by dividing profits generated from operations by the total project revenue (Gapenski & Reiter, 2016). It measures how much of the project’s revenues are left when all operating costs have been settled. The operating margin would indicate at a glance how well the project’s available revenue streams are able to generate surplus to keep current operations going and also expand service offerings. An operating margin of 15 percent would be the ideal, indicating that the project can comfortably sustain current operations and a possible expansion (Gapenski & Reiter, 2016). On the other hand, an operating margin less than 10 would mean that the project is not sustainable and hence, there is a need to seek out more revenue sources.

The net present value (NPV) provides a means to compare two or more competing investments by discounting the streams of future cash flows (Gapenski & Reiter, 2016). The investment that yields the highest NPV is considered the most beneficial and profitable. The proposed project faces resource limitations. The NPV would provide a means to select the most beneficial activities or programs to prioritize by comparing the net present value after discounting the expected cash outflows and inflows. For instance, due to resource limitations, the project may not be in a position to implement three fundraising activities in the first year, say a kids’ heart festival, a heart walk and a cycling competition. Using the NPV, the project team would obtain and discount the projected cash outflows and inflows for all three events and then prioritize the events with the highest NPV.

Funding Issues Related to Selected Community Health Problem

Several funding challenges face the Lake Troubled Shallows Health Department and may affect the effective implementation of the proposed project. First, the past two decades have seen a declining trend in spending on health promotion, equity, and prevention programs at both federal and state government levels (Farberman & Krawchenko, 2022). According to a 2022 report by Trust for America’s Health, the US spent $4.1 trillion on health programs, with public health and prevention programs only accounting for 5.4 percent of this spending (Farberman & Krawchenko, 2022).

Unfortunately, prevention programs targeting stroke and cardiovascular diseases continue to receive less support than other programs such as mental health prevention (CDC, 2014). The CDC reports that on average, such programs receive less than 3 percent of the total state public health budgets (CDC, 2014). However, reduced support for preventive programs is regarded as a short-term problem occasioned by the fact that public health departments had to divert resources towards the short-term Covid19 response, leaving limited resources for preventive programs. However, the problem is one of high urgency as it could affect the availability of state funding for the proposed project. In case of failed implementation, the most affected stakeholders would be cardiovascular disease and stroke patients who would otherwise benefit from the project.

Besides the limited support for the targeted prevention programs, there has also been budget cuts to local public health departments across states in the US. A 2020 press release by the National Association of County and City Health Officials (NACCHO) reports that two-thirds of local health departments have either experienced cuts to their overall operating budgets or flat funding from state governments since 2010 (Spinner, 2020). In Minnesota, public health spending reduced by 9 percent between 2010 and 2018, with allocations to local public health departments reducing by approximately 18 percent (Stahl et al., 2020). Given this trend, there is a risk of minimal state funding for the project, which may increase the need to seek out more grant opportunities. At the same time, this is considered a long-term problem as the funding model is unlikely to change soon. All the same, the problem may need to be addressed urgently by seeking out open grant opportunities to meet operating costs.

In line with the reduced funding support, there has also been a drop in public health agency staffing. Spinner (2020) notes that at least 38,000 public health jobs at the state and local levels have been lost across the country since 2008. For this reason, most local public health departments are forced to rely on volunteers or to divert the existing staff to attend to response activities, particularly during emergencies (Spinner, 2020). For the project, this is an urgent problem as staff are crucial for the project’s effective implementation. However, it is a short-term problem as the project could choose engage volunteers rather than hiring full-time staff amidst resource constraints. This problem would mostly affect the project staff by altering their contractual terms and benefits.

The health program planner will be the only full-time employee in the project. They will be responsible for overseeing operations, financial management, donor reporting, and representing the project in stakeholder forums and press briefings. Having a single full-time employee will reduce spending on salaries and benefits. The health program planner will be assisted by a project assistant, who will dedicate 40 percent of their time to the project every week. The project assistant will be responsible for coordinating the volunteers and carrying out administrative functions such as organizing fundraising events, updating the project website and social media sites, coordinating procurement processes, and organizing staff meetings.

Potential Funding Sources for the Selected Project

In addition to the $250,000, the project leadership team could consider other grant opportunities from local, state, and federal funding organizations. At the local level, the project could seek a grant of up to $10,000 from the Medica Foundation Rural Health Program, which provides funding for organizations or public agencies supporting health-related programs targeting disadvantaged rural communities in Minnesota. An additional $24,000 in grants could be sought from the Minnesota Public Health Nurse Loan Forgiveness Program to support registered nurses with public health certifications who accept to serve in the project as volunteers. At the federal level, the project could seek out a grant of up to $10, 000 annually from the World Heart Federation, where category 2 of grants supports organizations and public agencies focused on raising awareness on cardiovascular diseases and risk factors among selected at-risk groups. Revenues from donations are projected to decline by 2 percent in subsequent years as state support to the local health department normalizes to pre-covid19 levels.