BUDGET STUDIES NEEDED IN THE HEALTH PLANNING PROCESS

As state facilitating teams move the community through the planning process, priorities will be identified. The experiences of the Oklahoma team show the priorities are of two types: behavior type actions and service type actions. The behavior actions include such items as reducing teenage pregnancy or reducing drunk driving. Service type actions include adding or evaluating a specific service such as adding a pediatrician or starting an outpatient rehabilitation service.

The state team needs to be ready to assist in evaluating proposed services. It is crucial that the decision makers know whether the service is economically feasible. If not, decision makers need to know how much they will have to subsidize the service in order for it to break- even. The objective of this paper is to demonstrate the budget process.

More specifically, the paper will:

	1.		Present basic budget analysis methodology;
	2.		Review an outpatient rehabilitation facility study;
	3.		Review adult day care facility study; and
	4.		Summarize the services where budget studies are available.

Basic Budget Analysis Methodology

Before the plan can be written, it is imperative that the issue be analyzed. Some issues identified and ranked extremely high by the process are not economically feasible or will require additional resources. If this is the case, all data and facts must be known before action is initiated. Analyzing the issue may be quite simple or may be very difficult. Some issues will require technical assistance from experts outside the committee and community. Knowledge of where to obtain assistance and willingness to ask is important. The methodology involved in analyzing an issue is quite basic and is outlined in Table 1. To illustrate this methodology, an outpatient rehabilitation facility study and an adult day care facility study will be presented.

Example Outpatient Rehabilitation Facility Study

Estimating Need
The first question to answer is how many visits to an outpatient rehabilitation facility would a given health service area generate? National data indicate that there are 300 office visits per year per thousand population. From this information, a patient consensus can be determined by the size of the service area population.

Estimating Capital and Operating Costs
Capital items include a building and equipment. A building could be rented and remodeled or a new building could be constructed. Since rental options and construction costs

Table 1
Basic Methodology for Analyzing an Issue
	I.		Estimate Needs
	II.		Project Costs
			A. Capital or Start-Up Costs
			B. Annual Operating Costs
	III.		Estimate Revenue
	IV.		If Doesn't Break-Even, Other Source of Funds

Methodology for budget studies illustrated with specific examples.

Adult Day Services	|	Primary Care Physician	|	Emergency Medical Services	|	Outpatient Rehabilitation