Purpose This study defines, documents, and analyzes the administrative and management costs (overhead) of the Indian Health Service (IHS) that are incurred in providing services to American Indians and Alaska Natives (AI/ANs). The main objectives of the study are: 1) to determine the dollar amount of the IHS overhead costs; 2) to determine the functions that create these expenditures; 3) to define how these expenditures link to the provision of direct health care; and 4) to provide a preliminary report and briefing useful to Congressional committees. Methods The authors conducted a quantitative and analytical evaluation using informal interviews and financial data research and analysis. A functional analysis of the IHS organization identified administrative and management functions that are traceable to direct health care programs. Cost Center analysis interview data was collected pertaining to the budgeting process, accounting policies and procedures, and the financial reporting system. Cost centers were classified by expenditure type. After the classification process was completed for both functional areas and cost centers, adjustments were made to ensure completeness and to eliminate duplication. The data collected from the interview process was compared with financial data to define the distinction of the IHS' cost between overhead and direct health care. Results The study defined and estimated IHS Administrative and Management costs for fiscal year 1992. The study also proposed a refined Cost Center Design, aligning expenditures between overhead and direct health care operations. Conclusion The recommendations of this study are as follows: 1) private industry hospitals, health maintenance organizations, and Veterans Administration hospitals should not be used by the IHS as models for determining its administrative and management costs; 2) IHS should standardize its cost accounting procedures and ensure consistent implementation system-wide; 3) timely reviews of cost center expenditures should be performed to ensure accurate classification of costs between overhead and direct; 4) proposed refined cost center design should be implemented to adequately describe cost center functions; 5) Utilizing the refined cost center design, the IHS should perform a comprehensive and accurate study of the IHS overhead and direct care costs; and 6) IHS should develop the criteria to determine Solemn Obligations.
Indian Health Service, Staff Office of Planning, Evaluation and Research, Rockville, MD 20857 (SSI-19).
IHS indirect costs study - final report. Indian Health Service, Staff Office of Planning, Evaluation and Research, Rockville, MD 20857 (SSI-19). 1993