DPH projects $20.5M surplus; commission reviews major contracts and EHR funding implications

Greg Wagner, the Department of Public Health’s chief financial officer, presented the department’s second-quarter financial report (07/01/2015–12/31/2015), telling the Health Commission the department is projected to end the fiscal year with a $20.5 million general-fund surplus.

Wagner explained that some line-item revenue variances result from the timing and structure of intergovernmental transfers (IGTs) tied to Medi‑Cal waiver programs and not from underlying operational declines. He said the department expects a waiver-related revenue shortfall of about $22 million in the current period, but that roughly $7 million of that is a net loss after offsetting transfer savings. Wagner also described a provision in the budget that would allow the department to transfer up to $18 million of surplus into the electronic-health-record (EHR) project if those surplus revenues materialize.

The finance and planning committee reviewed a set of contracts that the commission expects to consider on the consent calendar. Commissioner Charles summarized those items: a Stericycle contract for $1,190,000 to dispose of medical and biohazardous waste; Glide Foundation funding of $1,086,000 and SFA's Foundation funding of $750,000 for HIV-informed hepatitis C linkage-to-care services (HealthRight360 was deferred for further review); a Public Health Foundation Enterprises contract to serve as fiscal intermediary for the PRIDE program; and a $3,700,000 Gartner contract for consulting on acquisition and implementation of the integrated EHR.

Commissioners questioned how the department is preparing for payment-system changes (value-based purchasing and capitation). Wagner said capitated Medi‑Cal is already a large and growing portion of the department’s revenue base and emphasized retention and enrollment as key drivers. Commissioner Singer and others asked for more underlying enrollment and retention data to understand whether capitation trends reflect operational strength or external rate changes.

The consent calendar, with the HealthRight360 item removed per committee recommendation, was adopted by voice vote at the meeting; commissioners did not take a separate recorded roll call on each contract in this session. The department said it will continue to work with the mayor’s and controller’s offices to finalize appropriation sources for EHR and other projects over the coming months.