My company is a NFP, 420-FTE, $29M, 10-county, publicly funded community behavioral health provider system. We provide many programs to ensure a complete continuum of care for the mentally ill and those in addiction. We have been very willing to create new programs for state and federal agencies. Over the last 5 years, we have opened 18 programs that generate reimbursable monthly expense of $933,000. Not one of these programs was funded upfront; we start the program and issue an invoice to the state/feds for expenses in the past month. It typically takes one month for the agencies to pay after we submit the invoice on the 15th. That means payment for a month's expenses comes at least 45 days after month's end, and 2 1/4 months after the month's spending starts. My theory is that each time our company starts a reimbursement-based program, and does not receive start-up operating capital, and that program is not more than break-even, that program’s start-up costs drain cash that is not made up until the program ends and the state makes the last payment. In other words, we have invested equity in these programs that we wont get back unless the program is defunded or we quit providing the service. Am I correct in believing that this monthly expense, multiplied by some factor (depending on length of time it takes to get paid), has a measurable effect on total cash? If I were to ask the state to "make us whole", how would I compute that amount? Thanks so much!
