From Survival to Strategy

Tim Dunbar

May 19, 2011
Community Health

The Colorado Health Institute has been around for almost eight years now.  We are constantly thinking – as I’m sure you are - about our long-term financial sustainability.  We plan on continuing to inform the dialogue around health and healthcare in Colorado for years to come.  Here are five things we see as essential to our fiscal health:

  • Cash, cash, cash.  It all comes down to cash flow.  How does yours look for the next year?  Three years?  Make a simple spreadsheet that maps it out.  It need not be perfect, and the act of making it visual will highlight areas of danger and opportunity.
  • Plan for the downside.  Believe it or not, some organizations do not have a reserve policy.  How much cash is needed to survive an emergency?  Ninety days worth is a good goal, but your Board should establish what is appropriate.   Once you have your number, begin a savings plan that will get you there.
  • Plan for the upside.  Remember, non-profit is a tax designation, not a mandate.  It’s ok to make money, especially if it is used to establish needed programs.  What kind of profitability do you need to plan for in order to build for the future?  Make it visual and then work the plan.
  • Develop trigger points.  Trigger points = advance decision making based on financial results.  For example, you’re four months into the year and funding is 20% below budget – do you lay off, cut hours, or tap into the reserve?    Consider the opposite - funding is 20% over budget.  Do you expand pre-existing programs or save for a rainy day?  Establishing trigger points makes tough decisions easier.
  • Collect internal data.  Data isn’t sexy, but losing money because of a lack of information isn’t exactly desirable either.  Are your employees spending too much time on your least profitable program?  Is that a problem?  Maybe, maybe not.  It could be a “loss leader” or an employee favorite that is in need of an overhaul.  Without good cost and time data, you’ll never know.

These are a few of the topics around which CHI’s sustainability conversations have been gravitating.  We want to plan well so that we’ll be able to provide our trusty “perspectives informed by data” long into the future.

How is your organization thinking about financial sustainability?