"Never base your budget requests on realistic assumptions, as this could lead to a decrease in your funding."
This week House Republicans and Senate Democrats released competing budget blueprints for federal spending over the next ten years. President Obama’s FY14 budget will also be released shortly. In the weeks to come, you will certainly be hearing from both sides about the respective short and long-term merits of their proposals. Although the two plans are quite different, they share a common thread—neither effectively addresses the national debt.
Despite how the short-term funding fights are ultimately resolved, even the rosiest long-term plans promise to eliminate the annual budget deficit over ten years. Between now and then, we’ll continue adding to our $16+ Trillion national debt. This reality means the pressure will be on squeeze the federal budget further and further. Although discretionary spending gets the lion’s share of attention, the major entitlements (Social Security, Medicare, and Medicaid) soak up the bulk of federal spending.
For many health centers that rely on Medicaid and Section 330 funding for a majority of their revenues, the outcome of these budget battles (and the ever-shrinking size of the overall federal pie) will force some to rethink their business models. At the same time, the Affordable Care Act and broad demographic trends are creating a surge of new patients and new revenues for health centers. Ultimately, health centers that take action now to strategically grow and plan for the future will be well-positioned—regardless of the federal budget situation. Here are few ideas to get started:
What you can do now:
· Evaluate your finances and balance sheet. Conduct a sensitivity analysis to evaluate the impact of the possible changes to your health center’s funding streams, and develop a capitalization plan to ensure you have a sufficient cash “cushion” to weather the changes on the horizon.
· Examine your market to determine opportunities for growth in light of new health insurance exchanges and/or Medicaid expansion.
· Develop and implement a strategic plan for growth that includes an operational and program and staffing plan.
· Develop an outreach plan for connecting to the newly insured population, as well as a plan to assist your currently uninsured patients in navigating their new insurance options.
· Consider beefing up your development and fundraising efforts for ongoing support as well as capital support.