Keeping the Community Health Center’s Doors Open – Case forChapters 10 and 5
Lea Nolan
Sally Moneyfretter, the executive director of Quality CareCommunity Health Center (CHC), reads the latest financial reportfrom her chief financial officer and sighs. It seems the CHC isconstantly teetering on the edge of financial insolvency. There’snever revenue to meet their underserved and vulnerable patients’myriad needs, or to make needed investments. Sometimes Sallywonders how she’ll keep the health center’s doors open—and whatwill happen to their patients if she can’t.
Quality Care CHC is a federally-qualified health center (FQHC)operating in a medically underserved area (MUA) in an inner city onthe eastern seaboard. The MUA is characterized by high poverty,high infant mortality rates, and a shortage of primary careproviders. As an FQHC, Quality Care is dedicated to its mission ofproviding affordable, quality primary care services to medicallyunderserved populations, regardless of their insurance status orability to pay. Two-thirds of Quality Care’s 33,000 patients livebelow the federal poverty line, and 87% have incomes below 200% ofpoverty (about $20,780 for a family of three). Quality Care CHCserves a diverse patient population. Fifty-five percent of patientsare African-American, 20% are Hispanic/Latino, 5% are Asian, andthe rest identify as White non-Hispanic. As is common amonglow-income, majority-minority populations, Quality Care CHC’spatients experience a disproportionate share of chronic conditions,especially obesity, diabetes, hypertension, high cholesterol, heartdisease, cancer, asthma, HIV, mental illness, and substance abuse.To meet its patients’ needs, the health center providescomprehensive primary care, lab, and pharmacy services, and hasrecently expanded its dental, mental health, and substance abusecare.
Thanks to the Affordable Care Act, and the state’s decision toexpand Medicaid eligibility to those with incomes up to 138% of thefederal poverty level, Quality Care CHC has seen a significantincrease in its insured population. Forty percent of its patientsare enrolled in Medicaid or CHIP, 23% have third-party insurance,and 7% have Medicare. However, these coverage increases do not comeclose to meeting the cost of delivering services. (Note: Sincecommunity health centers are non-profit, their charges are a proxyfor costs.) Quality Care’s Medicaid reimbursements cover only 80%of the health center’s costs. Collections for Medicare, privateinsurance, and other public insurance are even lower, rangingbetween 55% and 56% of costs.
Unfortunately, a significant portion of these newly insuredpatients are underinsured. Given their low incomes, many patientspurchased less costly bronze level plans through the federal andstate marketplaces. These plans have deductibles of up to $5,000per person per year, as well as coinsurance and copayments andprovide no federal subsidies. When patients who have not yet mettheir deductible seek services at Quality Care, they often cannotafford the out-of-pocket cost. Some forego needed care or end up inthe emergency department when their conditions worsen. For thosewho do seek services from the health center, Quality Care providesa discount by charging on a sliding fee scale, which is based onincome and in effect subsidizes the cost of their care.
Due to Quality Care’s reputation as a safety net provider thatserves all comers regardless of their ability to pay, the healthcenter has seen an increase in the number of uninsured patientsseeking care. Despite increased coverage options and the CHC’srobust enrollment efforts, 30% of its patients remain uninsured.These patients are charged via a sliding fee scale, and theirpayments account for a fraction of the cost of services delivered.Sometimes patients leave the health center without paying theirfee. Occasionally, sympathetic front-line staff don’t charge thefee.
Quality Care’s lifeline is its annual federal Section 330 grantwhich helps defray the cost of providing care to its uninsured andunderinsured patients. The grant also funds enabling services thatsupport and assist the delivery of primary care and facilitatepatients’ access to care. These services include case management,eligibility and enrollment services, transportation,interpretation, community health worker programs, and patienteducation. Without this grant, the center would cease to operate.However, this funding does not cover the full cost of treatinguninsured patients. Nationally, the annual total cost of a CHCpatient is $890, yet the annual health center funding per uninsuredpatient is only $713 (National Association of Community HealthCenter, 2018). Quality Care CHC has experienced a similarshortfall. Small local and state grants help to fill fundinggaps.
Given the tight funding landscape, Quality Care strives toprovide cost-effective care. Rough calculations estimate that thehealth center’s annual cost per patient is about $2,550. Since thisis less than the average per patient cost for all health centerusers ($4,043) and non-health center users ($5,306) (NACHC, 2018),Ms. Moneyfretter believes her health center is performing optimallyand hasn’t sought potential cost-cutting and quality improvementinitiatives.
The health center’s financial situation has far reachingimplications. Quality Care CHC has experienced difficultiesrecruiting and retaining clinicians and other staff. Currently thehealth center has vacancies for a family practitioner, a nursepractitioner, two mental health providers, a dental healthprovider, and a social worker. The health center cannot offersalaries and benefits that compete with nearby private andfor-profit organizations. In addition, prospective applicants oftencite community amenities (or the lack thereof) and other healthcenter location factors as the reason they decline offers ofemployment. The health center’s tight budget also impacts itsability to initiate capital projects and needed upgrades. QualityCare has plans to expand and improve on its facility, enabling itto accommodate more providers and serve more patients, as well asto update its information technology and electronic medicalrecords, but perennial funding gaps preclude theirimplementation.
Discussion Questions
What are the facts in this case?
What are three factors contributing to the community healthcenter’s problems?
What are the consequences of a community health center closurefor both patients and the community?
Are there sources of revenue that the CHC hasn’t focused on,such as fund raising in the community and with foundations andcorporations?
What alternative sources of care are available for communityhealth center patients?
How important is the provision of enabling services forcommunity health center patients?
What are the consequences of patients foregoing care?
What strategies could the executive director employ to addressthe health center’s financial challenges?
What steps can the executive director take to improve the healthcenter’s recruitment and retention rates?
