9th Annual Public Health Finance Roundtable
November 3, 2012
Boston, MA
Peggy Honoré
Accreditation can be described as a process of
ensuring acceptable levels of quality in an
institution that are consistent with industry
criteria.
Standards are an integral component of an
accreditation system and serve as assessment
criteria to evaluate institutional conformity with
industry-wide goals for quality that are influenced
by shared principles and values.
Standards can also be viewed as a reflection on
the accreditation agency’s capabilities to
effectively measure the ability of the organization
under review to meet quality assuring criteria.2
Public health department accreditation is
defined as the development of a set of
standards, a process to measure health
department performance against those
standards, and reward or recognition for those
health departments who meet the standards.
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Must be supported by a sound system of
financial management
Should be supported by appropriate
standards
Availability of timely and reliable data to
self-monitor for financial strengths and risk
continuously
Risk-mitigation strategies to prevent the
disruption of programs and services
Financial management involves the “application
of theory and concepts to help managers make
better decisions”.8(p.5)
It includes the routine blending of accounting,
finance, and management concepts into
organizational practices as a means for
minimizing the risk of financial loss.9
An effective system of financial management
should enhance the decision-making process
by providing the appropriate tools.8 A critically
important tool is financial information.10
OMB states that a key feature of these financial
management systems is to “provide complete,
timely, reliable and consistent information for
decision makers and the public”.12(Sec 6)
Ensuring transparency by providing relevant and
timely financial and operational data that can be
turned into information to inform decision
making is a critical component of financial
management.
Also, it is consistent with the national public
health quality aim of Transparency.13
Another basic objective of financial management involves
the allocation of organizational resources and the tracking
of performance resulting from such allocations.11
In public service organizations, decisions are oriented to
accomplishing a multitude of organizational goals while
assuring a satisfactory financial position.10
A quantitative evaluation mechanism widely used in private
industry and the public sector to measure financial health is
ratio and trend analysis.
Ratio and trend analysis are valid techniques for comparing
data over multiple periods. The utility of these methods
increases exponentially when data are compared industrywide such as in benchmarking of peer institutions.
The assessment for quality in the financial
management systems used by the six Higher
Education Accreditation agencies closely
resembles a “risk-focused surveillance approach”
14, a concept widely used in other accreditation
processes.
Quality is assessed by quantitatively measuring,
through a review of agency financial information,
financial stability, the allocation of financial
resources consistent with institutional mission,
and sound financial planning as a risk-mitigating
strategy to prevent the disruption of programs
and services.
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Standard: Planning, Resource Allocation, and
Institutional Renewal
◦ Review of Resource Allocation procedures and their
relationship to planning, purpose, mission, goals, and
objectives
◦ Sound financial planning
◦ Plans for financial contingencies
◦ Program additions and deletions are consistent with the
availability of resources
◦ Provides sufficient resources to sustain and improve
programs
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Standard: Institutional Resources
◦ Sound financial planning
◦ Corrective action plan to strengthen financial position
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Administration
◦ Provide adequate information to support decision making
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Policy Compliance Review
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Organizational Governance
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Financial Planning
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Financial Management
◦ Annual analysis of institution’s financial health
◦ Board monitoring for fiscal solvency
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Resources to support mission and goals
5 year history of financial stability
Adequacy of financial reserves to meet fluctuations
Report of financial adequacy
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Resources to support mission and goals
Corrective action plan to strengthen financial position
5 year history of financial stability
Adequacy of financial reserves to meet fluctuations
Report of financial adequacy
Diversification of revenue sources
Realistic plan to eliminate deficits
Demonstrates control over financial resources
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Ratio and Trend Analysis
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Total Margin
Operating Surplus/Deficit
Revenue and Expenditure ratios
One-time and dedicated revenues
General Fund Balance trends
Leave liability
Financial competence of staff
Cash Flow
Other measures of financial health/stability
Program Sustainability Module
Benchmarking
Product line analysis
Dashboard
Financial Performance (Risk) Index
Definition of Financial Health
(Exploring)
(Exploring)
Are the PHAB measures and documentation
guidance sufficient enough to make either
quantitative or qualitative assessments of
financial management systems?
Domain 11: Maintain Administrative and
Management Capacity
Domain 11 focuses on health department management
and administration capacity. Organizational
administration and management is the process of
organizing, leading, and controlling the efforts of
organizational human and other resources to make
decisions and achieve organizational goals. Health
departments must have a well-managed human
resources system, be competent in general financial
management, have data management capacity and
capability, and be knowledgeable about public health
authorities and mandates.
Standard 11.1 Develop and maintain an
operational infrastructure to support the
performance of public health functions
A strong operational infrastructure is necessary in order to
administer public health services efficiently and effectively to
meet the needs of the population. By maintaining a strong
organizational infrastructure, the health department can assess
and improve its operations, staffing, and program support
systems.
Standard 11.2: Establish effective financial
management system
Sound financial practices are basic to any
organization. They are required to manage resources
wisely, to analyze present and future needs, to sustain
operations, and demonstrate accountability. This
standard measures the capacity of the health
department to manage the organizations finances
11.2.1 A
Measure
 Manage grants and contracts
Purpose
 Access ability to manage grants and contracts
and compliance with requirements
Documentation
 Audited financial statements
 Program reports
 Full disclosure of adverse auditing findings or
communications related to higher than usual
level of oversight or control from funding agency
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11.2.2 A
Measure
 Written agreements with entities from which
the health department purchases, or
delegates services, programs, interventions
Purpose
 Assess management of agreements with
other organizations
Documentation
 Contracts/MOUs/MOAs
11.2.3 A
Measure
 Financial management system
Purpose
 Assess the LHDs ability to manage finances
Documentation
 Approved health department budget
 Financial reports
11.2.4.A
Measure
 Resources sought to support agency infrastructure
and processes, programs, and interventions
Purpose
 Assess the LHD activities to increase financial
resources and to enhance or develop processes,
programs, interventions
Documentation
 Formal efforts to seek additional financial
resources
 Communications concerning the need for financial
support to maintain and improve infrastructure
and services
Standard 5.3: Develop and implement a health
department organizational strategic plan
Strategic planning is a process for defining and determining an
organization’s roles, priorities, and direction over three to five
years. A strategic plan sets forth what an organization plans to
achieve, how it will achieve it, and how it will know if it has achieved
it. The strategic plan provides a guide for making decisions on
allocating resources and on taking action to pursue strategies and
priorities. A health department’s strategic plan focuses on the entire
health department. Health department programs may have
program-specific strategic plans that complement and support the
health department’s organizational strategic plan.
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Using PHUND$ to Establish Standards for a