Proportion of Budget spent on
Administration – Guidelines for
Health Service Providers
Hamilton Niagara Haldimand Brant Local
Health Integration Network
September 2013
Context
•
A key strategic priority for the HNHB LHIN is to ensure accessible,
client-centered services that also reflect value for money.
•
The 2014-17 M-SAA for all Health Service Providers will reflect a
focus on efficiency and a reasonable balance between
administration and health service provision.
•
The Proportion of Budget Spent on Administration will be an
Accountability Indicator in the 2014-17 M-SAA
Context (continued)
 The Proportion of Budget Spent on Administration indicator
measures how much an organization spends on
administrative services relative to total operating
expenditures.
 A higher value indicates that a greater share of resources is
spent on administration.
 The LHIN’s expectations is that a shifting of resources away
from administration will:
• increase capacity to deliver services directly impacting
client care
• contribute to the sustainability of the local health system.
Calculating Administration Costs
•
How do you determine what goes into your Administration
costs?
•
LHIN Funded agencies are to use Ontario Healthcare
Reporting Standards (OHRS) to prepare their reports
•
OHRS Functional Centre frameworks are intended to separate
and distinguish activity costs associated with administering a
healthcare facility from the activity costs of delivery specific
healthcare or community services
Determining Administrative Costs
Step 1. Read the OHRS chapter for your sector(s)
•
Chapter 5 – Community Care Access Centres (CCAC)
•
Chapter 7 – Community Mental Health & Addictions (CMHA)
•
Chapter 10 – Community Support Services (CSS)
•
Chapter 12 – Community Health Centres (CHC)
Each chapter has details on what should be included in
Administration.
How Do You Determine What You Should
Include in Administration?
•
Review your Trial Balance submission
•
Accounts beginning with “721” are part of the Administrative
and Support Services functional centres
•
These accounts are established to record expenses, revenues
and statistics, if any, of functional centres that support the
overall administration of the agency
Administrative And Support Services Functional
Centres
Administrative and Support Services functional centres include
items such as:
721 10 AS Administrative Services
721 15 AS Finance
721 20 AS Human Resources
721 25 AS Information Systems Support
721 30 AS Communications
721 35 AS Materials Management
721 40 AS Volunteer Services
721 45 AS Housekeeping Services
721 55 AS Plant Operation
Administrative And Support Services
Functional Centres
The following slides will cover some of the more common expenses
within the Community Service Sector
Not all Administrative And Support Services Functional Centres
will apply to each agency
The examples provided on the following slides are not a complete
listing of expenses that may apply to each Administrative And
Support Services Functional Centre
If you have any doubt or concerns about whether an expense
should be considered administrative, please contact your LHIN
Finance Advisor or your OHRS contact.
721 10 Administrative Services
•
Reflects the resources required to manage and monitor the
overall activities of the agency
•
Expenses include:
• expenses related to senior executives, board of trustees, and
medical director
• risk management
• public relations
• quality assurance
• French Language Services
• accreditation expenses
• legal fees and
• insurance fees for the overall organization
72 1 15 Finance
•
Reflects the resources required to manage and monitor the
financial resources of the agency
•
Expenses include:
•
•
•
•
•
•
accounts payable and receivable,
payroll,
budgeting and case costing,
accounting and auditing professional fees,
interest expenses
all bank service expenses
72 1 20 Human Resources
•
Reflects the resources required to manage and monitor the human
resources of the organization
•
Expenses include:
• Human Resources personnel,
• labour relations,
• benefit management,
• Occupational Health & Safety (OH&S),
• Employee Assistance Programs (EAP),
• advertising related to recruitment,
• expenses related to the staff managing the following activities:
• labour relations or benefits,
• general orientation of staff,
• expenses related to OH&S/EAP,
• recruitment and retention,
• legal fees
• labour relation professional fees
72 1 25 Information Systems Support
•
Reflects the resources required to manage, monitor and
maintain the information systems of the agency
•
Expenses Include:
• hardware and software expenses for all non-clinical
information systems and the staff that develop and maintain
these systems,
• maintenance,
• upgrades
• staff supports for networks and infrastructure,
• interface expenses for clinical equipment to networks and
department management systems
72 1 25 Information Systems Support continued
•
The following expenses are not included as Administrative
expenses under Information Systems Support:
• computers, hardware and software required for the
operation clinical equipment
• telecommunications equipment such as voicemail and
paging systems
• business machines such as fax machines and photocopiers
• expenses that can clearly be identified to clinical equipment
such as device upgrades/repairs and equipment specific
software
72 1 30 Communications
•
Reflects the resources required to manage, maintain and
monitor the overall communication systems of the organization
•
In some community agencies, there may be expenses but no
compensation related to these systems
•
Expenses include:
•
•
•
•
•
•
•
telephone services,
internet,
paging systems,
internal mail system,
courier delivery,
visitor information services,
expenses related to the movement of mail between sites
72 1 35 Materials Management
•
Reflects the resources required to manage and monitor the
equipment and supplies of the agency
•
Expenses Includes:
•
•
•
•
•
•
•
•
•
purchasing,
capital asset control,
receiving and shipping,
stores,
inventory management and distribution,
reprocessing and printing,
contract management for services and equipment,
request for proposal processes,
transportation of supplies between sites
72 1 35 Materials Management continued
•
The following expenses are not included as Administrative
expenses for Materials Management:
• information systems expenses for software
• hardware and technical support for purchasing and
inventory systems
• transport of service recipients
• laboratory specimens,
• garbage handling
• materials management functions in pharmacy, food
services, laundry and linen
72 1 40 Volunteer Services
•
Reflects the resources required to manage and monitor
individuals that volunteer their time
•
Expenses include:
• compensation and expenses of a volunteer services
coordinator
• any expenses incurred to recruit and recognize volunteers
•
The expenses related to fundraising or profit generating
activities of volunteers are not included as Administrative
expenses. These expenses should be included under Fund
Type 3.
72 1 45 Housekeeping
•
Reflects the resources required to manage and monitor the
staff providing housekeeping services
•
Includes: all expenses related to housekeeping such as
cleaning floors, walls, furniture and non-clinical equipment and
waste disposal expenses
7* 1 53 Plant Administration
•
Reflects the expenses of administrative staff that manage and
monitor more than one of the following functional centres:
• Plant Operations
• Plant Security
• Plant Maintenance
72 1 55 Plant Operations
•
Expenses include:
• Rental or lease space
• expenses related to distribution and monitoring of water,
light, power, heat, refrigeration, steam, compressed air and
other building service systems throughout the healthcare
organization
• compensation for staff that maintain and monitor plant
systems,
• heat, hydro, water and other utilities
72 1 65 Plant Maintenance
•
Reflect the expenses related to the general servicing, repair
and maintenance of the grounds, buildings and building service
equipment of the agency. Includes all similar services
purchased from an external agency
•
Includes: all renovations
FTE – Service Delivery & Administration
•
Within your organization, you will have employees that provide
direct service and administrative services or a combination of
both.
•
How should FTE be allocated?
• Each employee’s role and duties should be reviewed to see
whether they should be allocated as Administration or
Service Delivery, or as a portion of an FTE under both
Administration and Service Delivery
Example 1:
• a bookkeeper would be allocated to Administration
FTE Allocation (Continued)
Example 2: A program assistant could be split between Service
Activity and Administration
• for example, the program assistant may spend part of their
time booking client appointments (service delivery) and part
of their time filing (administration)
• The FTE allocation between Administration and Service
Delivery is based on the amount of time the program
assistant would normally spend on each activity
• If the program assistant is 1FTE (i.e. 1,950 hours), and
spends 50% of their time on client activities and 50% on
clerical duties, then half the salary and FTE count would be
allocated to Administration and half the salary and FTE
count would allocated to a service delivery functional centre
• Note that the 80/20 rule applies
Using the 80/20
•
If an employee spends less than 20% of their time doing an
activity, then they should be allocated as 100% to the activity
they perform most
•
In Example 2, if the program assistant spent 80% of their time
booking client appointments and dealing with client inquiries
and 20% of their time filing, they could be allocated 100% to
the service delivery functional centre
HSP Administrative Budget Summary Sheet
•
The LHIN has prepared a sample calculator to help you with
calculating Administration amounts
•
It can be found on our website with a copy of this presentation
http://www.hnhblhin.on.ca/Page.aspx?id=3296
•
Note that the calculator is not an exhaustive list and some
specific items you have that are administrative may not be
listed
•
If an expense is not listed, that does not mean it should not be
included. Please add it to the form when doing your calculation
Summary
•
The previous slides are an overview of Administration and
Support Services costs and how to calculate them
•
With last year’s MSAA Refresh, the LHIN indicated a goal of
10% for Proportion of Budget Spent on Administration
•
The LHIN realizes that this target may not be attainable for all
service providers
Summary (continued)
•
With the 2014-17 CAPS, the LHIN’s expectation is that
resources shifted away from Administration and Support
Services will be redirected to service delivery
•
The LHIN will be looking for service providers to set a
reasonable Administration target with a goal to reduce
Administration over the 3 year period of the agreement.
OHRS-further resources
•
OHRS Standards can be found on the Ministry of Health and
Long-Term Care’s Health Data Branch Web Portal at:
https://hsimi.on.ca/hdbportal/
•
Chapters 1-4 of OHRS Version 9.0 covers account structures,
business rules and common primary accounts
•
In particular, Chapter 4 outlines what should be included in the
calculation of Administration and Support Services
•
If you have any doubt or concerns about whether an expense
should be considered administrative, please contact your LHIN
Finance Advisor or your OHRS contact at the Ministry of Health
and Long-Term Care.