# Presentation: 375936

## Measuring Community-Based Healthcare Organization Financial Health

***Tim Clouse ***
**U.S. Department of Agriculture**
***Gil Silva***
***Rob Gilliam***
**Health Resources and Services Administration**

## I Know “It” When I See It

**What is good financial health for a community-based healthcare organization?**
**Is there an easy way to determine it?**
**Is there an understandable way to explain it?**

**Notes:**
Not a substitute for professional judgment
Not designed to be a cookbook—includes an override for a reason

## Half of Them Are Above Average

**Rates community-based healthcare organizations**
**Relative to a sample of similar organizations**
**Simple, objective, and flexible**
**Currently in use**

**Notes:**
Not a substitute for professional judgment
Not designed to be a cookbook—includes an override for a reason

## Death and Taxes: The Only Two Certainties

**Uses available financial data**
**Simple (?) calculations**
**Identifies problem areas**
***General type of problem***
***Suggests remedies***

**Notes:**
Not a substitute for professional judgment
Not designed to be a cookbook—includes an override for a reason

## Financial Risk Assessment Worksheet and Required Data

- Instructions:
- An outpatient safety net provider can use this worksheet to evaluate its financial risk relative to our sample of outpatient safety net providers. Fill in each box with the information requested and do the calculations. If information is missing, either use an informed judgment as to the actual value or assume that the benchmark is met (i.e., the provider gets full points for that measure). If the resulting calculation yields more points than maximum in that category, only the maximum points are given.

**Notes:**
The “1040” (1)

## Slide 6

##   Benchmarks and Points

| LIQUIDITY (measures if a provider can meet obligations over the short run) |  |
| --- | --- |
| CURRENT
RATIO |                                         
                                               = A |
| WORKING CAPITAL | 
                                               = B |

-   Benchmarks and Points

## What’s the Bottom Line?

**Low scores are a Bad Thing**
_***Not***_*** risk of bankruptcy***
**More Research Is Needed**
***What areas are low?***
**Possible fixes**
***Fee structure, billing, and collecting***

**Notes:**
Any part of the tool can be changed depending on the local situation
“All clinics are above average”—Unlikely that any clinic will meet/exceed the 60th percentile on all measures

## All Politics Is Local

**Every situation is unique**
**Changing the benchmarks for each score**
**Changing the weights/emphasis for each score**
**Changing the risk categories**

**Notes:**

Any part of the tool can be changed depending on the local situation
“All clinics are above average”—Unlikely that any clinic will meet/exceed the 60th percentile on all measures

## The Chicken and The Egg

**The Financial Risk Assessment Model also works backwards**
**Using it for a performance benchmark**
**Knowing what to watch for**
**Planning for a new organization**
**Planning to sustain**

**Notes:**
*And because they are all unique, they all share uniqueness

Any part of the tool can be changed depending on the local situation
“All clinics are above average”—Unlikely that any clinic will meet/exceed the 60th percentile on all measures