Local Health Departments' Costs of Providing Environmental Health Services

Abstract

Background: A detailed understanding of the costs that local health departments (LHDs) incur in the provision of public health services plays an important role in their efforts to provide services in an effective and efficient manner. However, surprisingly little evidence exists about the key cost components that LHDs incur in the provision of services. Purpose: The purpose of this report was to provide empirical estimates of LHDs’ cost structure. Methods: Using cost information for 2012 from 15 LHDs in North Carolina for two public health services—food and lodging and onsite water—this report first presents estimates of the total costs per service provided. In a second step, total costs are decomposed into key components, including direct and indirect costs. Both data collection and analysis were conducted in 2014. Results: For the LHDs examined in this report, median cost per service amounted to $145 for food and lodging and $82 for onsite water. Service costs, however, varied widely across agencies. Decomposition showed that direct labor costs represented more than 80% of total costs. Other direct costs accounted for 10% to 15% of total costs, while indirect costs represented 5% to 6% of total costs. Implications: The finding that labor costs represent a majority of the total costs of service provision has important implications for public health practitioners. Perhaps most importantly, for the purpose of costing public health services, estimation procedures may be simplified by focusing primarily on the cost of labor required to provide any given service.