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It Pays to Know Your Costs: Why and
How to Conduct an Effective Cost
Analysis
Webinar 1: How to Get Started With a Cost Analysis
June 28, 2013
Intended Audience
Title X grantees and sub-recipient agency staff who are
new to cost analysis or in need of a refresher on how to
conduct and update a cost analysis
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Agenda
1. Communities of Practice (CoP) site
2. Importance of conducting a cost analysis
3. The Focused Cost Analysis (FCA) Methodology
4. Completing the Cost Report or Cost Pool
Calculation using the FCA Workbook
5. Homework
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Objectives
By the end of this training, participants will be
able to:
• Describe why it is essential for clinics to conduct a cost
analysis; and
• List the sources of cost data needed to conduct a cost
analysis.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Communities of Practice (CoP) Site
• Hosted on the JSI E-Learning Site
• Participants set-up account
[http://elearning.jsi.com/login/signup.php]
• Then visit COP site
[http://elearning.jsi.com/course/view.php?id=10]
• Access course materials, checklists, homework activities
• Participate in discussion forums
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
George “Gerry” Christie,
Emily Kinsella, MSPH,
Senior Partner, Health Policy
Analysts
Unit Manager
Women’s Wellness Connection
Colorado Department of Public
Health and Environment
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Importance of
Conducting a Cost
Analysis
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Importance of Conducting a Cost Analysis
It is Good Business!
It is a Title X requirement
Clinics need to know the costs of providing services to
set charges
To assist in negotiating charges with various payers (including
Medicaid)
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Benefits of a Cost Analysis
•
Provides the knowledge needed to develop, implement
and analyze efficiency in the program.
•
Helps control costs.
•
Aids agency in remaining financially viable and
continuing to operate.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
The Focused Cost Analysis (FCA)
Methodology
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Overview of the Workbook
Steps Comprise the FCA
• Collect cost data and allocate costs
• Retrieve Relative Values
• Collect utilization data
• Determine the cost of each service and
establish fees
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Methodology
Determining Family Planning
Costs
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
The Cost Analysis
The cost of services in each program is driven by two
things:
Expenses
and
Utilization
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
The Cost Analysis
To complete the Cost Analysis you need:
•
Total family planning expenses (cash or accrual) for the
Cost Analysis period (calendar year, fiscal year).
•
This will include in-kind and volunteer contributions.
• Utilization data for every procedure and lab service
provided by the program for the same time frame.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Determining Family Planning Costs
• The program must be able to identify what expenses
relate to the provision of family planning services.
• Some programs are 100% family planning, and this is
straightforward.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Determining Family Planning Costs
• Other programs are part of a larger agency, and family
planning is only one of several programs.
• Some of the program expenses are allocated to family
planning while other expenses are connected to other
agency programs.
• You must determine a method for appropriately allocating
expenses.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Allocating Expenses
Allocating expenses includes:
• Salaries, wages and fringe benefits;
• Other direct expenses; and
• Indirect costs including an approved indirect cost rate or
administrative cost pool.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Allocation of Staff
•
Allocate each and every person who has worked in
family planning during the reporting period into one or
more of the agency programs.
• The best way to allocate staff is through a time study.
• Ideally, the time study should be done during two
different points of time during the year.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Allocating Other Expenses
• The program must also allocate “other” expenses to the
family planning program.
• The allocation must be done consistently to capture the
real costs that occur in each cost center.
• The methodology must accurately represent expenses
in each cost center.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Allocation of In-kind and Staff Volunteers
• Remember to allocate those individuals that volunteer
in your program or are donated by some other agency.
• Also allocate any other in-kind contributions such as
administration, facilities, equipment, supplies, etc.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Questions / Discussion
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Completing the Cost
Report or Cost Pool
Calculation
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Determining Family Planning Costs
There are two options to use in determining family
planning costs:
• Cost Report: Used to document allowable costs for
your family planning program. This will be used if the
program does not have reports on hand
documenting costs.
• Cost Pool Calculation: Used if the program has
existing reports documenting family planning costs.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Methodology:
The Cost Report
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
The Cost Report
This was developed to assist agencies in identifying and
distributing costs (expenses) associated with the provision
of the services in the family planning program.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Cost Report
Agency Name:
Time Frame For Report:
Note: Enter data in the yellow areas only, the green areas will calculate automatically.
Assembling FP costs
(A)
Total Agency
Costs
(B)
Direct FP costs
(C)
Indirect FP costs
(D )
In-Kind
contributions for
FP costs
(E)
Total FP Co
(No outside
pharmaceutic
outreach)
(F)
A. ADMINISTRATIVE:
1. Executive Director/CEO
2. Administrator/COO
3. Administrative Support
4. Finance Director/CFO
5. Fiscal Support
6. Medical Director
7. Public Relations/Marketing
8. Legal
9. Data Processing
10. Staff Travel
11. Telephone
12. Postage
13. Operating Interest
$
$
$
$
$
$
$
$
$
$
$
$
$
The Cost Report
•
Rates established for each service should reflect all
expenses.
•
They must include: direct, indirect and in-kind costs.
•
If you have additional cost subcategories, use the blank
rows under the relevant lettered category.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Direct costs are those expended for activities or services
that benefit specific projects; expenses associated with
providing a procedure or service.
Direct Costs
Project Staff
Consultants
Supplies
Publications
Travel
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Indirect costs are those for activities or services that benefit
more than one project. Their precise benefits to a specific
project are often difficult or impossible to trace.
Indirect Costs
Utilities
Rent
Audit and
Legal
Administrative
Staff
Equipment
Rental
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
In-Kind Expenses
•
Be sure to include the value of volunteers, donated
goods, and donated services that are used by the
agency.
•
These may be provided to the agency by some other
entity. These are not paid for by the family planning
program but are used in providing services.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Methodology
The Cost Pool
Calculation
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Cost Pool Calculation
This Tab is used if programs have complete cost
information for their family planning program. Often this
has been collected for other purposes (i.e., reporting
expenses to a grantee or as a departmental report to a
larger entity).
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Focused Cost Analysis
(FCA)
Cost Pool
Agency:
Time Frame for Costs:
Note: Enter data in the yellow areas only, the grey areas will calculate automatically.
Total Expenses
Minus Reductions:
Fund Raising/Lobbying [1]
Restricted Expenses [2]
Unallowable Expenses [3]
Referral Visits and Procedures [4]
Other Expenses Not To Be Charged to Patients/Third Parties [5]
Total Reductions (sum of above)
Gross Expenses for Cost Pool (Total Expenses Less Total Reduction) :
Minus Items Billed to Clients Separately:
Contraceptives
Other Medications
Pap Smears
Other Outside Laboratory Expenses
Total Separate Billing
NET EXPENSES
$
$
-
$
-
$
-
$
-
Questions / Discussion
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Homework
Gather your agency’s family planning fiscal data and
complete either the Cost Report or the Cost Pool
Calculation in the FCA Workbook.
• Be sure to allocate expenses to family planning.
• Develop a methodology for the allocation.
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Communities of Practice Site
Access all supporting documents
Review homework activities
Ask questions and interact with peers
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
It Pays to Know Your Costs: Why and
How to Conduct an Effective Cost
Analysis
Webinar 2: All About Relative Value Units
July 10th, 2013
2:00PM-3:30PM Eastern Time
George “Gerry” Christie, Senior Partner, Health Policy Analysts
Emily Kinsella, MSPH, Family Planning Program
Colorado Department of Public Health and Environment
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Check-In Poll:
Length of Webinar
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Adjourn
Thank you for attending!
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs
Thank You!
National Training Center for Management and
Systems Improvement
www.fpntc.org
Reesa Webb
[email protected]
Ann Loeffler
[email protected]
Tara Melinkovich
[email protected]
Caitlin Hungate
[email protected]
Jen Spezeski
[email protected]
Adrienne Christy
[email protected]
Paul Rohde
[email protected]
303-262-4300
www.jsi.com
Fam ily Plan n in g N ation al Train in g Cen ter for Man agemen t an d Systems Imp rovemen t · Su p p orted b y Office of Pop u lation Affairs