Practical Tips for Financial Forecasting in Community Health Projects

Welcome to the Community Health Management Podcast. I’m Dr. Tami Moser, your host for this insightful journey into the vital world of designing and implementing successful community health programs. In today’s episode, we're diving deep into a pivotal aspect of program planning: revenue forecasting and financial sustainability. Whether you're part of a retail pharmacy, a health system, or a nonprofit organization, understanding how to project and maintain your program's financial health is critical for long-term success. We’ll explore the importance of accurate financial projections, tackle common challenges like unpredictable patient volumes and changing reimbursement rates, and provide real-world examples to help you navigate this complex process. Plus, we’ll debunk the myth that simply offering a needed service guarantees revenue and emphasize the importance of marketing, community engagement, and continuous improvement. By the end of this episode, you'll be equipped with actionable steps to create a preliminary revenue forecast for your program. Let’s get started!

Tami Moser [00:00:00]: Welcome to the community health management podcast. I'm doctor Tami Moser, and we're gonna explore essential elements of designing and implementing successful community health programs. Today, we're diving into a crucial aspect of program planning, revenue forecasting, and financial sustainability. Whether you're working in a retail pharmacy, a health system, or a nonprofit organization, understanding how to project, how to project and sustain your program's financial health is vital for long term success. So let's start by breaking down why revenue forecasting is so important. Accurate financial projections allow you to, first, plan resources effectively, 2, make informed decisions about program expansion or contraction, 3, demonstrate viability to stakeholders and potential funders. And 4, ensure long term sustainability of your community health initiative. Your budgets are often and financial projections are often looked at very closely because it allows some funding agencies or people that are involved in funding to get an idea if you understand the costs associated with the program and whether you've really thought through everything that needs to be done from a financial perspective so that you can sustain the program and that it can be successful.

Tami Moser [00:01:18]: So it's important to really put some time and attention in into this. But here's the catch. Forecasting isn't always straightforward, especially in the complex world of health care. Let's explore some of the common challenges and how you might overcome them. So let's look at challenge nber 1, unpredictable patient voles. In community health, patient nbers can fluctuate due to various factors like seasonal illnesses, economic changes, or shifts in local demographics. Your work around here is to use historical data from your community, if available, or look at similar programs in comparable areas in the United States. Factor in a range rather than a single nber and always include best case, worst case, and most likely scenarios in your projections.

Tami Moser [00:02:02]: Challenge nber 2, changing reimbursement rates. With healthcare policies constantly evolving, reimbursement rates from insurance companies and government programs can be a moving target. Your workaround is to stay informed about policy changes, maintain open communication with major player payers, and build flexibility into your financial models. Consider creating multiple projections based on different reimbursement scenarios. Now let's look at how revenue forecasting might offer or differ depending on your setting. In a retail pharmacy, for instance, you might focus on prescription vole and average revenue per prescription, over the counter sales, potential income from additional services like vaccinations or health screenings. On the other hand, in health system setting, your revenue streams might include inpatient and outpatient services, diagnostic procedures, specialized treatment, government grants, or research funding. Let's take a real world example.

Tami Moser [00:03:01]: Let's imagine you're planning a diabetes management program in a community with a high prevalence of type 2 diabetes. Your revenue streams might include insurance reimbursements for patient visits and education sessions, grants from local or national diabetes organizations, partnerships with local gyms or nutrition centers for referral fees, potential future revenue from a diabetes management app or telehealth service. To forecast accurately, you'd need to, 1st, estimate the nber of potential patients based on local diabetes statistics, research average reimbursement rates for diabetes management services, or even better if you're in a system that already has charges like this on the book. You could see what the average reimbursement rate actually is for diabetes management services of some type. So maybe it's not let's see. If you're at the state health department, you would have opportunities to look in a different regional area and see what those kind of reimbursements rates are if you're wanting to look at engaging in a similar program in your area. Investigate available grants and their typical award amounts and look at to project adoption rates for additional services like an app or telehealth. So if you have 100 patients as a part of your program, what kind of adoption rates for additional services might you see? And, again, you can you use what others have done and published surrounding similar programs across the United States as a starting point for your nbers.

Tami Moser [00:04:36]: Remember, it's crucial to be conservative in your estimates. It's better to underestimate revenue and be pleasantly surprised than to overestimate and fall short. And as you can tell, this is a common theme with me. Now let's address a common misconception. If we build it, they will come. Many program planners asse that simply offering a needed service will automatically generate revenue. However, successful programs require not just a good idea, but also effective marketing, community engagement, and continuous quality improvement. Somebody needs to be minding the store.

Tami Moser [00:05:07]: To ensure your revenue forecasts are realistic, consider the time it might take to build awareness and trust in your community, potential competition from existing programs or services, the need for ongoing marketing and outreach efforts, and the cost associated with maintaining and improving your program over time. In fact, I am a big proponent of adding in to your budget, your ongoing budget, the cost that you would associate with doing some maintenance and improvement. So for instance, if we have educational materials as a part of this, then at a minim, every year, those materials should be reviewed and updated based on best knowledge that we have or updated knowledge that we've gained about the issues we're dealing with patients. So whatever we're trying to educate them about, we're updating that material to make it the most relevant and timely. Well, that's got a cost associated with it. You have to have a subject matter matter expert actually look over the materials, and then if they need to be updated, time and money is spent on that update. So build this in from the very beginning that this is gonna happen. And education materials aren't the only type of updates that may need to be done, but that's a starting point.

Tami Moser [00:06:32]: Before we wrap up this particular podcast, here's your action item for this material. Create a preliminary revenue forecast for your proposed community health program. Include at least 3 different revenue streams and project your finances for the 1st 2 years of operation. Remember to include best case, worst case, and most likely scenarios. The next podcast will discuss how to identify and engage key stakeholders in your community health program. Now we've already covered stakeholder analysis and for you to actually kinda map out who your stakeholders are, how you wanna communicate with them, what that might look like, how important they are. And that really plays into this this part of building partnerships and understanding your financial landscape. Thank you for tuning in to this episode.

Tami Moser [00:07:22]: Remember, accurate financial forecasting is the foundation of a sustainable program. Keep refining your projections as you gather more information, and don't hesitate to seek advice from financial experts in health care and in your facilities. Until next time, this is doctor Tami Moser wishing you success in your community health endeavors.