Recipe: Monetizing care days
Length or stay is a key indicator of permanency for children in foster care. For the sake of child well-being, we strive to minimize length of stay—to get children out of foster care and into permanent homes as quickly as possible. But length of stay also as a fiscal implication. Foster care is expensive to provide. Many states are exploring ways to reduce foster care expenditures and reinvest savings into preventive and in-home services that decrease the need for out-of-home care.
In the previous Recipe, I used the web tool’s Baseline Care Days and Exits Summary to answer the question of whether interventions designed to improve permanency outcomes have their intended effects. In this Recipe, I’ll show you how to use the information produced by that template to set baselines and targets for expenditures as well as outcomes.
This Recipe takes about 10 minutes to complete. In addition to the web tool, you’ll need a calculator or a spreadsheet program like Microsoft Excel.
Question: How many foster care days will children use in the next two years and how much will providing that service cost?
- On the left-hand sidebar menu, click Benchmarks. Note that Benchmark reports are only available on the Multistate portion of the website.
- On the next screen, select Baseline Exits and Care Day Summary.
- On the next screen, select the geographic area you want to analyze.
Recall from the previous Recipe, that the Baseline Exits and Care Day Summary (BECDS) report generates baseline outcomes for two groups of children in care during a reform period: children already in-care on the first day of that period, and children who enter care during that period. Below is the segment of the BECDS report that deals with the in-care population:
Based on historical performance, the BECDS estimates that, in this jurisdiction, 5,031 children will be in foster care on 1/1/2012. It also estimates those children will use a total of 1,799,697 foster care days during the performance window (between 1/1/2012 and 12/31/2013). If we know the cost per day of foster care in this jurisdiction, we can calculate how much money will be spent on foster care for those children during the window.
In practice, cost per day can vary greatly based on care type. As such, calculating the total cost of care days used really involves discovering how many of the total care days are used on various types of foster care, congregate care, and kinship care, and then multiplying those care day totals by their respective costs per day.
For simplicity’s sake, say that in this sample jurisdiction, there are three care types, each with its own daily cost: foster care = $100/day, kinship care = $75/day, and congregate care = $250/day. The BECDS excerpt above shows us that the in-care population is expected to use 1,799,697 care days between 1/1/2012 and 12/31/2013. Figure 1 breaks up that total by care type (hypothetically) and multiplies each by its respective cost per day:
Figure 1: Calculating the cost of care days
The ability to set baseline expenditures is essential for an agency that is trying to generate foster care savings for reinvestment. Subtracting baseline expenditures from actual expenditures reveals the money saved over the course of a given performance period, i.e., the sum available for reallocation.
A prime example of the application of this procedure is the Data Center’s work on performance-based contracting in Tennessee. In the mid-2000s, we worked with Tennessee’s state child welfare agency to develop a contract for its private service providers that incentivized providers to expedite permanency for children in care. According to the contract, if a provider decreased its care day use compared to its baseline, the state would return a portion of the care day savings to the provider. The provider could then invest those funds in programs that supported in-home services and other programs designed to decrease the use of foster care, furthering their ability to meet the permanency goals set by the state. With these new incentives established and analytic protocols in place for calculating baseline, target, and actual expenditures, the state was able to save $20 million over a period of five years.
To learn more about the Data Center’s work in performance-based contracting, contact me at email@example.com.