The Impact of Local Health Department Consolidation on Non-Local Public Health Revenues: Evidence from Ohio

Abstract

This study examines the effects of Local Health Department (LHD) consolidations, occurring in Ohio, on the level of revenues generated from non-local sources.  Twenty LHD consolidations were identified as being completed during the years between 2001 and 2011. We obtained data on both total and non-local revenues from annual financial fillings required by the State of Ohio and through original data collected in interviews conducted with senior local health officials. Our findings indicate that consolidating health departments experienced a reduction in the percentage of total revenue generated from non-local sources of approximately 41 percent (p = .002) in the immediate post-consolidation period, but that this decrease appears to be transitory.

Given that previous literature suggests that higher levels of non-local revenue may be associated with organizations of larger size and scale, the findings from our initial model specification differ from the hypothesized relationship. Sensitivity analyses, conducted on the regression model, appear to indicate that the decrease in these non-locally generated revenues, observed in the first year post consolidation, is no longer statistically significant after year two. While data limitations prevent us from being able to establish the reason for this transitory effect our interviews with Local Health Officials (LHOs) and previous worksuggests that this may be due to disruption effect that occurs during the process of implementing LHD consolidations. Conceivably, disruption effects may inhibit, at least in the short-term, LHD staffs from effectively pursuing non-local revenues such as state and federal grants. This pattern is also consistent with disruptions in revenue observed in the nonprofit healthcare sector when introducing significant organizational changes.

Our results raise questions on the conception that consolidations may yield immediate growth in non-local revenues. However, they also suggest that the inhibiting effects of consolidation on external revenue growth may be short lived.  Further research is needed to examine the extent to which our findings apply to LHD consolidations in other states and to better understand the longer term effects of LHD consolidation on non-local revenue sources.