Budget Cut Survival Skills

Maureen Fitzgerald, NIATx editor, gave me a copy of the last issue of Alcoholism and Drug Abuse Weekly with a note saying “Why don’t you blog about this?”. It was attached to an article on Washington state’s budget proposal to eliminate adult substance abuse treatment funding. My first thought was, “Why would I want to write about more depressing state budget news? Everyone knows about that already.” But as I gave it more thought over the weekend, I decided maybe she was right.

First, Washington is not the first state to propose drastic cuts. Almost every state is facing similar problems and proposing similarly draconian solutions. Providers in Illinois, Maine, and other states have fought off huge cuts in addiction treatment budgets through advocacy and finding other places in state government administrative costs that made more sense to cut. So the first thing to do is know your state budget and get to know your legislative representatives and make sure they know and appreciate you. Good advocacy is your first line of defense.

An equally important second line of defense is preparing for reduced government funding by diversifying revenue streams. Any business that is reliant on a single customer is vulnerable, whether that customer is government or General Motors. Over 70% of people who need treatment have insurance. They either are not seeking treatment or not seeking treatment from you. Many businesses are self-insured. If you can demonstrate positive outcomes and get their employees back to productive employment, they will use you over and over again. These are the obvious sources of new revenue. What are some less obvious sources that you have found?

Another important thing to do is to streamline and automate to reduce costs. This is what NIATx teaches. Maybe you have done a few changes to reduce wait times or increase retention. If you have only partially adopted process improvement or only done a few projects, it’s time to dig in and look at every process at your organization and ask “How can we simplify? Is it possible to automate this and how cheaply can we do that?”

It's hard to think about the second line of defense when you are freaking out about the first. But you can't neglect potential revenue streams or cost reduction if you are going to ride this wave of change in the funding environment. NIATx has developed some resources to help you in these tough budget times, including the NIATx Third-party Billing Guide and new Promising Practices related to increasing reimbursement.

Let us know the creative ways that you have managed funding transitions. I know there is a lot we are missing sitting here in our ivory tower and it would be great if those of you who have been managing budget cuts since 2007 had some words of wisdom for the folks in Washington and other states who may be experiencing their first year of panic.