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Read this if you are involved in budgeting, performance, or oversight of FQHC operations.

This article is the third in a three-part series to help Federally Qualified Health Centers understand how site- and program-specific accounting is essential to sustainability.

Site- and program-specific accounting is a powerful tool that gives Federally Qualified Health Centers (FQHCs) the visibility they need to optimize operations for long-term sustainability. Article one explores why that visibility matters—because an organization-wide view can't reveal what's happening at individual locations and within programs. Article two then breaks down how to lay the groundwork for reliable reporting by restructuring the general ledger, modifying payroll data, and aligning the accounting structure with the EHR so results can be reported consistently. 

That leads to the practical question at the core of this article: How do you use months of accumulated site- and program-specific financial data to plan and budget? This article explains how FQHCs can translate location- and service line-level reporting into budgets that reflect real operating conditions, engage site and program leaders, and create accountability by regularly comparing results to budget and monitoring performance trends over time. 

Driving change with site- and program-specific financials 

With systems modified to report on sites and programs, an FQHC can begin tracking monthly financials and using the data to fine-tune planning and budgeting. If reporting shows that a program or site is not performing well, questions arise. Has there been significant turnover at that location? What's the reason behind it? What are other sites doing differently that might lead to better results? 

Without the level of detail provided by site- and program-specific accounting, an underperforming site can adversely impact the financial performance of the entire organization without ever being identified as the problem. However, when systems are modified to report on location or service-line performance, organizations can analyze the data to determine why a site or program is underperforming and take corrective action. Conversely, if the financials indicate a high-performing location with strong provider productivity, key metrics can be reviewed to identify the differentiators. Once identified, those practices can be replicated across locations to achieve similar results. 

Site- and program-specific reporting also creates valuable benchmarking opportunities. Comparing locations and programs allows leadership to identify operational differences, understand why performance varies, and replicate successful practices across the organization. 

If the data points to a patient mix issue at one health center, leadership may determine that the site faces structural challenges that differ from those at other locations. Understanding those factors allows the organization to establish realistic expectations and make informed strategic decisions regarding resource allocation and support.  

However, if the financial reporting shows that a lack of centralized scheduling gives providers too much control and results in fewer appointments than at other sites, the cause is clear. Modifying schedule templates may lead to a substantial increase in provider productivity and potentially additional revenue. Likewise, when the data indicates provider productivity is low and that seeing one additional patient per day will improve financial performance, there's an obvious path to improvement. 

Without reporting by site and by program, results for the entire organization are lumped together without any insight into the root cause. Moving to a more granular level of financial reporting ultimately supports financial stability and sustainability by helping leadership identify issues and address them more effectively. It's no longer a guessing game. 

Budgeting, buy-in, and accountability 

After implementation, budgets can be built by location and program. To create meaningful accountability and organizational alignment, it’s essential that key stakeholders—program and site directors—participate in the budget process. Their involvement helps ensure budget assumptions are realistic, operational priorities are understood, and goals are aligned across the organization. Then, through monthly financial reports and reviews of results, directors are accountable for the performance of their respective site or program. Results could even be tied to their compensation, reinforcing accountability for achieving budget goals. 

Director involvement gives them ownership and a clearer path to achieving goals. If they aren't invited to collaborate, and decisions are instead made at the C-suite level and given as mandates, the likelihood of stakeholder buy-in decreases.  

Not only does accounting by program and location support improved financial results and sustainability, but it also enhances communication at the management and board levels by improving transparency. It facilitates clearer reporting and provides an in-depth understanding of performance. This, in turn, gives leadership the ability to make more strategic decisions around correcting underperformance and replicating successes while strengthening the organization’s long-term financial sustainability through a more accurate understanding of operational performance.

BerryDunn can help  

Faced with rapid changes in an increasingly competitive environment, community health centers rely on our seasoned professionals to refine business strategies, streamline operations, and introduce proven best practices to enhance performance while managing costs. Our team works with a comprehensive range of community health providers, including FQHCs, FQHC Look-Alikes (LALs), and Rural Health Clinics (RHCs). Learn more about our team and the services we provide. 

The Rural Health Transformation Program (RHTP) presents a meaningful opportunity for organizations working to expand access and improve outcomes in rural communities. But with federal funding comes a heightened level of scrutiny. Accounting professionals play a critical role in ensuring grant management activities are set up properly, funds are managed appropriately, compliance requirements are met, and risks are minimized. 

A strong foundation starts with understanding and applying the requirements in 2 CFR 200. Below are five essential areas every RHTP recipient should address to set up the grant management activities properly to support compliance and long-term success. 

1. Build an accounting system that meets federal standards 

Your accounting system should be designed to support clear, accurate grant tracking. At a minimum, it must allow you to: 

• Track RHTP funds separately using unique fund identifiers 
• Monitor budget-to-actual performance by approved cost categories 
• Maintain transaction-level detail with supporting documentation 
• Provide a complete audit trail from financial reports to source documents 
• Align with federal or state reporting requirements for RHTP activities 
• Adequately track grant activities for subrecipients 

Cost classification is a key component of this structure. Direct costs are tied specifically to the grant, such as program staff salaries, supplies, travel, and contracted services. Indirect costs support shared operations like administration, facilities, and IT. 

Organizations must either use a federally negotiated indirect cost rate agreement (NICRA) or elect the 15% de minimis rate if the organization does not have a negotiated rate. 

Personnel expenses require particular attention. Time and effort reporting must reflect actual work performed, include total compensated activity, and be reviewed and approved. For employees working across multiple cost centers or activities, certifications should occur at least twice per year. 

2. Establish internal controls that support compliance with Section 200.303

This starts with a strong control environment. Organizations should have documented financial policies aligned with federal requirements, clearly defined roles and responsibilities, and ongoing staff training. Leadership should actively reinforce the importance of compliance. 

Day-to-day control activities are just as critical. These include: 

• Segregating duties across authorization, custody, and recordkeeping (ARC) 
• Defining clear mitigating controls in instances where the ARC activities cannot be separated  
• Defining approval thresholds and workflows 
• Performing regular reconciliations and management reviews 
• Maintaining organized and complete documentation 
• Retaining records for at least three years from the date of submission of the final financial report, in accordance with 2 CFR 200.334 (longer if required for audit, litigation, or other federal requirements)

If your program includes equipment purchases, you will also need property records and procedures for conducting physical inventories. 

3. Follow procurement standards to ensure fair and open competition 

Federal procurement rules are designed to promote competition and responsible spending. Your policies should align with the thresholds outlined in 2 CFR 200. 

• Micro-purchases up to $10,000 do not require quotes but must be reasonably priced 
• Small purchases up to $250,000 require quotes from multiple qualified sources 
• Larger purchases may require sealed bids or competitive proposals, depending on the situation 
• Sole-source procurement is allowed only in limited circumstances and must be fully justified and documented

Before entering into any covered transaction over $25,000, you must verify that the vendor is not suspended or debarred using SAM.gov. Many organizations extend this practice to all purchases as a risk mitigation step. These checks performed against SAM.gov are also required for any employees being paid under the grant in excess of $25,000. Organizations should have procedures in place to perform these checks on a monthly basis. 

Conflict of interest policies should also be clearly defined. These should address financial interests, family relationships, gifts, and outside employment, along with disclosure requirements and enforcement measures. 

4. Strengthen subrecipient oversight 

If your organization passes funding through to subrecipients, you are responsible for ensuring those subrecipients comply with federal requirements. 

Start by determining whether an entity is a subrecipient or a contractor. Subrecipients carry out program activities and make programmatic decisions. Contractors provide goods or services as part of normal business operations. This distinction affects how you monitor and manage the relationship, so it should be clearly documented. 

• The prime recipient should develop clear grant agreements, terms and conditions, and other grant reporting templates that are in compliance with 2 CFR Part 200 and the specific requirements of the RHT program. These documents should be developed in order to provide the subrecipients with clear guidance and responsibilities under the grant.  
• Before issuing an award, assess subrecipient risk based on factors like prior audit results, experience with federal funding, and internal systems. You will also need to confirm eligibility through SAM.gov and communicate all required award details. 
• Ongoing monitoring should include reviewing financial and performance reports, conducting site visits when appropriate, and obtaining single audits for entities that meet the federal threshold. Any audit findings must be addressed with a formal management decision within six months. 

5. Apply the rules for allowable costs 

Every cost charged to RHTP funding must meet the five tests for allowability. Costs must be reasonable, allocable, consistent, conform to the award terms, and fully documented. 

Some expenses require prior written approval before they can be charged to the grant. These may include pre-award costs beyond 90 days, equipment purchases over $5,000, certain participant support costs, foreign travel, and significant budget changes. 

There are also costs that are always unallowable. These include alcohol, entertainment, fundraising expenses, personal-use items, lobbying, fines, and losses from other awards. Charging these costs can lead to audit findings or repayment requirements. 

Set the foundation early 

Managing RHTP funding successfully requires more than basic accounting. It demands a proactive approach to compliance across systems, processes, and people. 

By strengthening your accounting infrastructure, reinforcing internal controls, aligning procurement practices, developing clear guidance for your subrecipients, actively monitoring subrecipients, and applying allowability rules, you can reduce risk and position your organization for clean audits and successful program outcomes. 

A solid compliance framework does more than protect funding. It allows your organization to stay focused on its mission to improve rural health where it is needed most. 

How BerryDunn can help 

Our experienced consultants have decades of expertise advising rural healthcare providers. We partner with clients to deliver rural healthcare transformation services that are practical, compliant, and sustainable—grounded in firsthand experience with rural delivery models, workforce constraints, and community needs, and aligned with CMS requirements. Learn more about our services and team.  

State Medicaid agencies and Managed Care Organizations (MCOs) are facing growing pressure to better coordinate care across providers, vendors, and different state and federal agencies while reducing administrative complexity for members. Federal and state priorities—including greater focus on behavioral health integration, mental health parity, continuity of coverage, and proactive oversight—are also increasing expectations around coordination, accountability, and operational performance. 

These shifts were reflected in recent industry discussions, including conversations at the 2026 Medicaid Managed Care Conference in San Diego, which reinforced broader trends emerging across Medicaid managed care: stronger coordination across complex care systems, reducing barriers that make it harder for members to access and navigate care, and earlier identification of member needs, service gaps, and challenges. 

While Medicaid managed care programs vary across states, several common operational challenges continue to surface across programs. 

Reducing fragmentation across care delivery systems 

One recurring challenge involves fragmentation across the organizations, vendors, providers, and systems involved in managing member care. 

As Medicaid programs adapt to new federal requirements and continue expanding focus on behavioral health integration, Long-Term services and Supports (LTSS), social determinants of health, and complex care management, states are strengthening coordination across overlapping care delivery systems. Care transitions often require coordination across multiple entities, including state agencies, MCOs, providers, and case workers—each responsible for different aspects of the member experience. 

Without clear expectations around information sharing, accountability, and follow-through across multiple handoffs, coordination breakdowns may occur. As a result, organizations are focused on building more standardized and coordinated operational models through: 

• Clear accountability structures and standardized escalation pathways 
• Shared visibility into care transitions and barriers 
• More integrated care planning approaches 

Together, these approaches reflect growing recognition that fragmentation is as much an operational challenge as a clinical one. For states, this trend is likely to drive greater emphasis on coordination requirements within procurements, contracts, and oversight of health plan activities. 

Addressing administrative complexity, member navigation challenges, and continuity of care 

Members often must navigate multiple administrative care coordination challenges simultaneously in order to maintain coverage and receive care, including: 

• Managing eligibility and coverage renewal requirements 
• Delays and requirements related to service and medication approvals 
• Resolving coverage denials and grievance issues 
• Managing prescription coverage and pharmacy requirements 
• Language and communication barriers 
• Navigating multiple organizations involved in coverage and care 

Recent Medicaid public health emergency unwinding activities and prior state experiences implementing community engagement requirements highlighted how procedural barriers and communication challenges impact continuity of coverage and access to care, particularly for vulnerable populations and individuals with complex needs. Recent KFF analyses of Medicaid unwinding data found that a significant share of Medicaid disenrollments nationally were tied to procedural reasons rather than confirmed ineligibility. 

As states implement new federal Medicaid eligibility and redetermination requirements, many managed care programs may face renewed pressure to strengthen member outreach, communication, and navigation support in order to reduce avoidable coverage disruptions. 

Moving from reactive intervention to proactive, data-driven oversight 

Historically, managed care oversight has focused heavily on retrospective reporting and compliance monitoring. Today, organizations are seeking to identify risks earlier—before they result in avoidable utilization, member dissatisfaction, or coverage disruptions. 

This shift is driving greater focus on: 

• Real-time operational dashboards and integrated reporting across vendors and functions 
• Utilization management and care transition monitoring 
• Predictive analytics and risk stratification 
• Proactive member outreach models 
• Greater visibility into operational “friction points” across the member experience 

This growing emphasis underscores that challenges for members, such as delayed authorizations, communication breakdowns, fragmented transitions, or barriers navigating eligibility, authorization, or care coordination processes, can directly impact program quality, equity, and continuity of care. In response, State Medicaid managed care programs are looking for ways to better connect areas such as member services, utilization management, pharmacy, grievances, and care management to identify barriers and risks earlier in the member journey. 

Creating seamless member experiences 

Medicaid managed care programs continue evolving alongside changing regulatory requirements, member needs, and growing expectations around coordination and accountability. More focus on coordination, greater insight into how systems perform in practice, and earlier identification of risk (not solely whether minimum compliance requirements are being met) can create a better member experience. Streamlining managed care operations requires stronger coordination across systems, vendors, and care coordination activities to support more seamless and member-centered experiences. 

How BerryDunn can help 

We provide key insights to Medicaid agencies seeking opportunities to improve their delivery of services, expand and manage provider networks, and mature provider payment models. We can help you oversee benefits and services through contracted arrangements with MCOs. Learn more about our services and team.  

Read this if you are a controller, accountant, or grant manager, or a CEO or CFO involved in HRSA grant management at a health center or nonprofit. 

Time and effort reporting is more than a routine administrative task—it’s a key control to ensure that payrolls charged to federally funded grants are allowable and properly supported. Because it is a high-risk area for HRSA grantees—and a frequent audit finding—strong documentation is critical to reducing compliance exposure and administrative burden. This article breaks down what time and effort reporting is, why the urgency has increased, and what health centers can do to strengthen practices and lower risks.

What is time and effort reporting? 

Time and effort reporting is the process by which federal grant recipients track time worked under their various grant programs. Any employee working on a federally funded project is required to document the time they spend on work related to the project. The tracking performed by the organization provides assurance that an employee's work allocated to the specified grants aligns with the terms and conditions of the award. Estimates are not allowed—only hours worked—and the work must comply with the allowable cost principles required for the grant recipient and in-scope services.

How tracking time and effort typically works 

There are two common approaches to tracking time and effort: 

1. Charging 100% of an employee’s time to a grant with periodic attestation 

This is the easiest and most common method for tracking. On a regular basis (typically monthly), the employee signs an attestation form that they have spent this time on allowable activities under the scope of a grant.

This approach comes with an important caveat: tracking earnings up to the Federal Executive Level II wage cap. This wage cap is the maximum annual salary a federally paid employee can earn, currently set at $220,700 for calendar year 2026. If an employee’s gross wages exceed the executive-level compensation threshold and they charge 100% of their time to a federally funded grant, the organization must implement additional safeguards. These safeguards are to ensure the portion of compensation above the threshold is covered by operations. This process should be performed by pay period, which ensures that if an employee charged to the grant is terminated, their wages charged are within the allowable threshold. Some payroll and time entry systems can accommodate this process. However, it is more widely adopted via Excel spreadsheets.

2. Specific identification of time across grants through detailed time-entry coding that must be reviewed and approved 

This more complex mechanism for tracking is commonly used by health centers with multiple federal grants and requires the employee to code their time by federally funded project. The executive-level threshold still applies under this methodology and becomes more cumbersome as the threshold must be reduced by the employee allocation to each grant. For example, if the employee's time for a period is 50% charged to a grant, the threshold is also reduced to 50%. 

Why time and effort reporting is critical now 

Documenting time and effort for work tied to a federal grant is a core compliance control linked to federal allowable cost requirements. To mitigate compliance risk, federal agencies are applying heightened oversight of grant funding in efforts to detect fraud and misuse. With this increased government scrutiny of federally funded projects, it’s imperative that health centers and nonprofits remain audit ready—and that means implementing stronger internal controls and verification of work performed. 

In the event of an audit, an organization will be required to provide underlying details relating to the purpose of drawdowns initiated within payment management systems (PMS). If a federal grantee is found not to be in compliance with time and effort, it could lead to penalties requiring repayment of federal funds. Audit findings lead to operational disruption and administrative effort that increase the pressure on already overextended and understaffed health centers. 

Best practices for time and effort reporting 

Create audit-ready habits to reduce risks of monetary penalties and avoid last-minute administrative scrambles to compile documentation.

1) Use 100% charging and monthly attestation when possible.  

When roles are clearly within the scope of the grant and allowable, a 100% allocation with monthly attestation can be the simplest, strongest approach.

2) If time is split, detailed time tracking is imperative. 

Partial work time allocations must be supported by detailed time entry and routine supervisor approval to validate accuracy. 

3) Build controls around the executive compensation threshold. 

Organizations should actively monitor the cap (and its annual changes) and ensure charges are reduced or allocated correctly to remain under the threshold—especially for higher-paid providers and any staff not 100% on the grant. 

4) Make audit readiness a priority. 

Retain and keep attestations forms, time records, approvals, and reconciliations readily available upon request. 

5) Plan for turnover and continuity in funded positions. 

When a funded provider leaves, controls should ensure the grant-charged role continues to be documented correctly as a position (not just tied to one individual). 

BerryDunn can help 

BerryDunn’s team partners with a diverse range of healthcare and nonprofit organizations, including Federally Qualified Health Centers (FQHCs) and FQHC Look-Alikes (LALs), to enhance efficiency, improve patient outcomes, and strengthen community health systems. In a rapidly evolving regulatory environment, our healthcare compliance consultants help community health centers navigate complex compliance requirements, from grant and 340B program adherence to healthcare credentialing. With expert guidance, we help you mitigate risk, gain regulatory confidence, and enhance operational integrity. Learn more about our services and team.    

Every organization experiences pain points from time to time: your costs may be too high, your cycle times too slow, your error rates are unacceptable, complaints are mounting. When things go wrong, it’s often the underlying processes and systems—not the people—that are at fault. To find a solution, organizations may turn to a consulting partner, like BerryDunn, for Business Process Improvement (BPI) services.

In this article, we discuss the types of BPI and related services like business process reengineering (BPR) you might consider, and how to decide which approach is right for your organization.

What is Business Process Improvement (BPI)?

BPI involves making changes to your existing processes. The core system remains intact; the goal is to make it work better—faster, cheaper, more accurately, or with less waste.

A BPI project begins with an assessment to measure how well your technology needs, business processes, and staff competencies align with your strategic goals and objectives. BPI projects typically:

• Build on what already exists
• Draw on philosophies and tools from Six Sigma and Lean
• Involve incremental changes that may be easier for your employees to absorb

Following the assessment, your consulting partner will provide recommendations and action plans to help you establish priorities, adopt and implement action plans, and make informed decisions. The recommendations are designed to improve efficiency, effectiveness, streamlining, and accuracy, while prioritizing your business goals and objectives.

Central to our approach at BerryDunn is collaboration with stakeholders to gain a solid understanding of your current environment.

When do you need more than process improvement?

BPI can be a standalone service to improve your existing organizational structures, processes, procedures, operational practices, and technology. It can also be the starting point for business process reengineering (BPR), which takes the actions from BPI analysis a step further.

BPR involves a fundamental rethinking of how work gets done. Rather than asking “How do we do this better?” it asks “Should we be doing this at all?” Whereas BPI builds on what already exists, BPR starts with a clean mindset and the willingness to redesign your business process from scratch.

Before you decide on an approach, it pays to fully understand where the pain is coming from within your business process.

Diagnose before deciding

Your consultant can be an invaluable, objective partner in diagnosing your business process pain points. Consider this four-question framework for analyzing your problem:

1. What is the nature of the problem? Is it contained within one process or is it systemic?
2. Is the current problem fundamentally sound? Is it poorly executed or is it the wrong process entirely?
3. What has already been tried? Have previous fixes resulted in long-term solutions?
4. What is our organization's capacity for change? Not just appetite, but bandwidth, leadership alignment, and change management infrastructure

Understanding the problem before deciding on a solution can save your organization significant time, money, and disruption later.

Starting on the business process improvement path

If your process is structurally sound but has accumulated inefficiencies over time—if it’s localized rather than enterprise-wide—BPI is the place to start. Time and budget constraints favor the focused, lower-risk BPI approach, which involves incremental change rather than wholesale disruption.

Key questions your BPI consultant will want to explore at the start of your project include:

• Who will be the internal champions who can own this work?
• What project phases should they be involved in?
• How will we engage them in outreach and information gathering?
• How will we measure success, and over what timeframe?

Process improvement activities are focused on understanding the challenges in existing processes and their underlying causes, then developing solutions to eliminate or mitigate those causes. If staff performance issues are identified, they are handled through coaching, training, and escalation to supervisors as needed and appropriate.

If the root cause of your problem turns out to be structural rather than operational, an approach to more fundamental changes may be warranted; We call this Business Process Reengineering (BPR). BPR is the next step to the meaningful and sustainable business process improvements you are looking for.

When process reengineering makes sense

BPR takes the actions from BPI a step further by developing new solutions to current organizational challenges. Because it may require more transformational change, BPR can be a higher risk-higher reward undertaking. Important considerations for your team include:

• Is leadership committed to disruptive change?
• How will we manage resistance to change?
• Do we have the governance structures to make cross-functional decisions?
• What is our risk tolerance, and how do we manage it?
• How do we maintain operational continuity while the redesign is underway?

An effective approach for conducting BPR initiatives will integrate best practices and industry standards from three key disciplines: process improvement, project management, and organizational change management (OCM).

In our experience at BerryDunn, a focus on process improvement/redesign alone does not lead to meaningful and sustainable improvements: in addition to redesigning processes, the organizational culture must reinforce—and stakeholders must fully support—the changes.

Key takeaways

• Assess your pain points first to determine whether incremental improvement (BPI) or full redesign (BPR) is the right approach.
• Differentiate between BPI and BPR—improve existing processes for efficiency or redesign them when they no longer meet organizational needs.
• Align change efforts with business goals to ensure process improvements deliver measurable, sustainable outcomes.
• Engage stakeholders across the organization to uncover root causes, build buy‑in, and support successful implementation.
• Partner with experienced advisors to guide assessment, prioritization and execution for long‑term organizational change.

Leveraging your Business Process Improvement investment

Organizational capability building (OCB) is one of BerryDunn’s core services, designed to help organizations optimize their business operations and sustain the gains they made through the BPI/BPR initiative. We work with organizations of all kinds to solve business process problems, build a culture of continuous improvement, and provide the support and guidance necessary to successfully execute their project goals and objectives. Learn more about our services and team.