Sustainability for Community Quality Collaboratives: An Overview (continued)
Community Quality Collaborative Business Model Insights
To help Community Quality Collaboratives identify their strengths and weaknesses by comparing data and processes with successful organizations, this section provides an overview of the business model for each of the studied organizations. Details, including the sources of funds, uses of funds, and products and services, are shared in the case studies.
Key observations are summarized below, including similarities and differences among the studied organizations that may offer benchmarks, contrasts, or ideas for Community Quality Collaboratives. These insights are provided as examples to stimulate ideas and discussion, but they should not be construed as representative of all collaboratives or as a recipe for success in any given market.
Key Themes in Financial Models
The Community Quality Collaboratives highlighted in the case studies that are part of this toolbox demonstrated the following central themes:
- Anchored: Each case study reflects a different "anchor" or core of funding. The mission and funding are linked and together influence the approach and priorities of the organization.
- Diverse: Each organization relies on a diverse portfolio of funding sources.
- Mission-focused: The "Use of Funds" charts (provided in the case studies) illustrate how each organization applies funding among programs. Each organization has a clearly articulated mission supported by measurable objectives that are linked to the funding portfolio.
Common Types of Funding
As illustrated by the case studies, successful, sustainable organizations plan for and secure reliable funding, typically from a mix of the following categories. Each type is discussed in detail below.
- Member Fees.
- Grant Funding.
- Contract Payments.
- Revenue from Transactions or Products.
- Revenue from Services or Consultation.
- Investment Returns.
- Other Funding Sources.
Among the Community Quality Collaboratives in the Learning Network, all of these categories are represented to some degree. However, all categories may not apply to an individual organization.
Funding Source No. 1: Member Fees
This category reflects dues paid by stakeholders on a recurring basis, typically for a specified period of time, such as one year, for the opportunity to participate in specified activities.
Member fee structures vary and are often adjusted over time as the organization grows and changes. Examples include fees based on:
- Size of an organization.
- Level of participation.
- Percentages, such as a percentage of cost savings.
In one example, the Puget Sound Health Alliance applies the following fee structure. Every participant pays a fee to participate, ranging from $25 per year for individual consumers to six-figure contributions for large corporations. The resulting fee structure is based on the type of organization as well as its size, and specifies minimum and maximum contributions for each type of participant. Puget Sound Health Alliance fee categories include:
- Purchasers - fees based on covered lives.
- Health Plans - fees based on statewide enrollment.
- Providers - fees based on full-time equivalent staff.
- Other Organizations - based on a fee schedule.
- Individuals - flat fee.
In another example that illustrates savings-based fees, the Pacific Business Group on Health (PBGH) coordinates a portion of its funding through a Quality Improvement Fund (QIF), which began when PBGH purchaser members joined together to negotiate with health plans. At that time, the members agreed to contribute to the fund on a per-member basis. These contributions are leveraged with additional financial and in-kind contributions from other stakeholders. The funds are used to support quality programs, including the California Quality Collaborative and the California Cooperative Healthcare Reporting Initiative. While QIF funding is not guaranteed, it has continued for more than 10 years.
Funding Source No. 2: Grant Funding
This type of funding is provided by an organization, such as a foundation, corporation, or government entity, to encourage the development of desired benefits. The use of grant funds may be restricted by the grantor, based on specific objectives, or by the grantee, based on organizational guidelines that ensure integrity. In some cases, unrestricted grant funds are provided to support the daily operations of a nonprofit organization.
Funding Source No. 3: Contract Payments
This category includes government and other similar contracts that provide funding for an organization to achieve specific objectives.
For example, the Louisiana Health Care Quality Forum has been funded for three years under a contract with the Louisiana Department of Health and Hospitals. This contract specifies objectives and deliverables that the Forum is expected to achieve. Within those objectives, the Forum has considerable flexibility to design a model and approach that will be effective in Louisiana.
Funding Source No. 4: Revenue from Transactions or Products
This category reflects fees paid for specific items or activities, such as publications or access to specific data sets. The fee structures vary depending on the structure of the Community Quality Collaborative, its funding mechanisms, and the level of participation. For example, in some cases, Community Quality Collaborative members or program participants receive end products while non-participants pay a fee. In other cases, all recipients pay a fee for specific products or increased access, although members or participants' fees may be discounted.
Health Information Technology is a promising area for generating this type of income. For example, OneHealthPort.com based in Seattle began as a secure portal for providers to use a single sign-on to access multiple plans' eligibility information. The Puget Sound Health Alliance is working with OneHealthPort to provide access to provider-level quality data. At this time, the portal is financially supported by the health plans, but the technology enables broader and more creative business models that may generate additional funds from other sources.
Funding Source No. 5: Revenue from Services or Consultation
This category includes fees paid for specific services by an individual or group, such as speaking fees or advisory services.
For example, The California Cooperative Healthcare Reporting Initiative organizes and manages an integrated chart-pulling activity to support its annual Report on Quality, thereby linking the initiative's funding, services, and mission. The Pittsburgh Regional Health Initiative (PRHI) has successfully applied manufacturing models and experience to improve safety and quality in health care. "Over the last five years, the PRHI has helped many hospital units and community health centers to streamline their work and eliminate waste and error using its own Perfecting Patient Caresm system, a quality engineering methodology adapted from the Toyota Production System."12 PRHI charges modest fees for the program.
Funding Source No. 6: Investment Returns
This category reflects returns on invested funds. This typically is not a substantial source of income for Community Quality Collaboratives. Organizations that have funds to invest generally choose very conservative investment options to minimize risk.
Funding Source No. 7: Other Funding Sources
Collaboratives may also consider out-of-the-box strategies to achieve organizational goals, including developing alternative sources of funding. When seeking creative strategies, consider the following questions:
- How can we partner with business ventures?
- What innovations have nonprofit organizations in other sectors developed?
- What can we learn from for-profit collaborative ventures?
- How can we inject fresh ideas from individuals in industries, sectors, or disciplines who might not be at the table?
In summary, a variety of opportunities exists for Community Quality Collaboratives to establish a niche that delivers significant value while diversifying funding sources that will lead to sustainability.
Key Questions in Building Your Sustainability Plan
Tools to Help Build Staying Power in Your Community Quality Collaborative
This Overview was created to provide insight and motivation to assist Community Quality Collaboratives in applying both art and science to building sustainable strategies. The needs of each Community Quality Collaborative will vary, depending on its market and stage of development. However, much can be learned and applied from successful collaboratives, as well as from related ventures and disciplines.
As you build strategic plans with a focus on sustainability, this Community Quality Collaborative Sustainability Program provides tools to help you:
- Understand and validate the starting point for your Community Quality Collaborative today.
- Survey stakeholders to confirm expectations.
- Apply and share leading practices.
- Identify gaps and opportunities in your current approach.
- Define a clear plan of action to integrate themes of sustainability into strategic planning as well as daily activities.
- Measure and evaluate progress.
- Share your successes and challenges with the Learning Network.
The author would like to thank the following people for contributing to this document: Case Study No. 1: Cathie Markow, Senior Manager, Pacific Business Group on Health & (California Community Quality Collaborative); David Hopkins, PhD, Administrator, California Cooperative Healthcare Reporting Initiative; Diane Stewart, Director of Performance Improvement, Pacific Business Group on Health/CQC; Michael-Ann Browne, MD, Regional Medical Director, BlueShield of California; Peter Lee, JD, Executive Director for National Health Policy of the Pacific Business Group on Health; Tammy Fisher, BA, MPH, Senior Manager, Pacific Business Group on Health; and Wells Shoemaker, MD, Medical Director, California Association of Physician Groups. Case Study No. 2: Diane Giese, Director, Communication & Development, Puget Sound Health Alliance; Diane Zahn, UFCW/Teamsters/Multi-employer Trust; Hugh Straley, MD, Medical Director, Group Health Cooperative; Jerry Henry, Senior Advisor, Puget Sound Energy; Margaret Stanley, MHA, Former Executive Director, Puget Sound Health Alliance, Mary McWilliams, Executive Director, Puget Sound Health Alliance; Sean McCliment, Performance Report Analyst, Puget Sound Health Alliance; Susie Dade, Director, Quality Improvement & Administration, Puget Sound Health Alliance. Case Study No. 2: Christine Whipple, Executive Director, Pittsburgh Business Group on Health; Jack Krah, MD, Allegheny County Medical Society; Jason Kunzman, CPA, MBA, Chief Financial Officer, Pittsburgh Regional Health Initiative; Karen Wolk Feinstein, PhD, President and Chief Executive Officer, Pittsburgh Regional Health Initiative; Naida Grunden, author, The Pittsburgh Way and Communications Consultant, Pittsburgh Regional Health Initiative; Nancy Zionts, MBA, Vice President of Program and Planning, Jewish Healthcare Foundation.
The author wishes to thank the following people for reviewing this report: Christine Chen, MPP, Center for Health Improvement; Jan De La Mare, MPA, Agency for Healthcare Research and Quality; Karen Shore, PhD, Center for Health Improvement; Katherine Crosson, MPH, Agency for Healthcare Research and Quality; Michael Harrison, PhD, Agency for Healthcare Research and Quality; Nancy Brands Ward, Center for Health Improvement; Patricia E. Powers, MPPA, Center for Health Improvement; and Peggy McNamara, MSPH, Agency for Healthcare Research and Quality.
AHRQ appreciates citation as to source. Suggested format follows: Lejnieks, L. Sustainability for Community Quality Collaboratives: An Overview of the Art & Science of Building Staying Power. Rockville, MD: Agency for Healthcare Research and Quality, January 2009.
We consider our Learning Network tools to be works in progress and always welcome your comments. Please forward suggestions to AHRQ's Peggy McNamara at firstname.lastname@example.org.
5 David Shute, MD, "Community Quality Collaborative Sustainability Workgroup Seeks Feedback: Preliminary Thoughts on Sustainability Options." Presentation given at the National Meeting of AHRQ's Learning Network for Community Quality Collaboratives, October 2, 2008.