Sabrina Matson Graduate Thesis

Understanding the Socioeconomic Impact of Utilizing Federally Qualified Health Centers as a Strategy to Generate Donor Interest

Understanding the Socioeconomic Impact of Utilizing Federally Qualified Health Centers as a Strategy to Generate

Donor Interest

Thesis by:

Sabrina L. Matson

MPA StudentSeattle University

Institute of Public Service


Executive Summary:

When Congress passed health reform through the Affordable Care Act (ACA), they

recognized the need for enhanced access to primary care. In particular, 32 million currently

uninsured individuals will gain coverage through Medicaid and private insurance expansions

starting in 2014. Yet today’s 50 million uninsured, as well as millions currently uninsured, need

access to primary care today.

Community, migrant, and homeless health centers are already the largest network of

safety net primary care services in the nation, currently serving 20 million patients. Health

centers go above and beyond the traditional role of primary care by providing dental, mental

health and substance abuse, pharmacy, health education, and other services, such as

translation, transportation, and case management. They target communities where care is

needed but scarce, and improve access to care for millions of individuals regardless of their

insurance status or ability to pay. Nearly all patients are low-income, and most are uninsured or

publicly insured. Patients also tend to be members of racial and ethnic minority groups.

Healthcare Reform such as the ACA and Obama Care has changed the way Community

Health Centers (CHCs) do business today. Although these changes have been positive in nature,

there is still a need for additional programs, services, new and upgraded facilities to sustain the

anticipated growth of Medicaid which is expected to double by 2014. In 2011, 1,128 federally

funded health centers, operating in more than 8,500 communities, furnished comprehensive

primary health care to more than 20 million patients (Bureau of Primary Health Care/ Health

Resources and Services Administration/U.S. Department of Health and Human Services, 2012)


(UDS, 2012). Under the ACA, both Medicaid and private coverage will expand to cover millions

more Americans in 2014. To help meet the expected increased demand for care, the ACA

provided a new $11 billion dedicated trust fund for expansion of the health center program.

The law envisions that current health center capacity will double to 40 million patients by 2019.

Because there is only so much federal and state funding to go around, the need to look at

creative ways to offset the funding gap is essential to maintaining the socioeconomic benefits

CHCs currently have in the communities they serve. One creative way is to examine how CHCs

can utilize their Board of Directors to seek increased private funding from donors who have an

ability to give at the 100k level or higher. A functional tool would be to provide a case

statement that illustrates the socioeconomic impact CHCs have on the communities they serve

as a strategy that sparks donor interests.

There are several areas where increased funding is needed. However, the primary focus is

to examine those areas which involve “specialty care services” including operations,

administrative, equipment, and capital development.

Origin:

Community Health Centers were founded in the mid 1960’s by the Office of Economic

Opportunity (OEO) as part of President Lyndon B. Johnson’s War on Poverty. They are based on

the model of community-oriented primary care developed by Sidney and Emily Kark. (Kark &

Kark, 1983) Health Resources and Services Administration (HRSA) reintegrated the tradition of

intersecting public health and personal health services by defining health broadly as providing

preventative, environmental, and outreach services and medical treatment at one facility.

(Sardell, 1988) CHCs can receive the designation of “Federally Qualified Health Center (FQHC)”


from Health Resources and Services Administration (HRSA), a division of the Department of

Health and Human Services (DHHS).

Today:

Health centers can receive the designation “federally qualified health center” from the

Health Resources and Services Administration. Federally Qualified Health Centers are supported

by federal grants to help cover the costs. Sequentially, FQHCs (aka., Community Health Centers)

are a key source of comprehensive primary care for medically underserved communities,

serving more than 20 million patients in 2011. The ACA expanded the health center program

significantly to help meet the increased demand for health care that is expected as millions of

the uninsured gain health coverage, beginning in 2014. Today, health centers treat nearly1 out

3 people living in poverty. By 2015, the rate will swell to 2 out 3 people living in poverty.

(NACHC, Capital Link, 2010) Evidence of the quality of care they provide is of keen interest.

Issue at Hand:

As a result of Sequestration cuts for fiscal year 2013, Medicaid will take a $51 billion cut in

addition to cuts already made under the ACA. Low Medicaid payment rates typically are the

main barrier facing patients today that seek specialty care with specialty physicians where

treatment is done in a timely manner. Lack of timely care can result in adverse medical

outcomes and potentially higher costs from avoidable emergency department visits,

hospitalizations and FQHC funding. This cut significantly reduced the number of federal grants

for new sites, curtailed new expansion grants and could be an indication for further cuts as the

administration and Congress focus on federal-deficit reduction. (Rosenbaum, Sara, and Peter


Shin, 2011).

The lack of Medicaid new payment strategies for specialty services could limit the models’

expansion and replication. Notwithstanding the funding arrangements among models,

Medicaid programs generally are less likely to pay for strategies involving HIT (e.g.,telehealth,

eConsults), staff training, access coordination, and other types of interactions beyond in-person

visits. While many as 40 state Medicaid programs report covering telehealth services, many

limit coverage to real-time encounters with patient, inpatient or emergency services, or certain

populations, such as children. (Waters, 2011).

Medicaid programs generally do not pay for providers’ ongoing education training to

provide specialty care or care coordination, although some of these activities are covered by

Medicaid primary care case management programs and disease management programs. In

addition, state Medicaid programs typically consider care coordination activities and

administrative expense. Thus, money spent on such activities could jeopardize a health plan’s

ability to meet that state’s medical loss ratio requirement. That is, the percentage premiums

spent on medical care as compared with administrative costs.

Furthermore, federal and state policies limit the types of specialty services that FQHCs can

add and receive payment for. This is known as the “scope of project.’ HRSA allows FQHCs only

to add specialty services that are in sufficient demand by patients. Such services commonly

include consultations and examinations for pulmonology, cardiology, podiatry, and oncology, as

well as colonoscopies. After HRSA approval, a state Medicaid program must approve a scope-

of-service change for FQHC to receive enhanced payment rates for the added services.


FQHC leaders face significant challenges, including operating costs that rose faster than

revenues, difficulties meeting demand and arranging for all services their patients need –

particularly specialty care – and complex and changing payer requirements.

Currently, stress is circled around the Health Center Funding Fiscal Cliff (HCFF) as a result

of cutting the discretionary budget funding for health centers under the Budget Control Act

(BCA). This was back-filled with ACA money that was initially allocated for health center

expansion.

There simply are not enough federal and state dollars to support the change that is ahead.

The need to seek private funds to offset the costs of improving our health center community

programs and services is essential to sustain socioeconomic stability of which these CHCs serve.

Health centers also need initial financing resources and capacity to meet federal requirements.

Exhibit 1: SNAPSHOT - State Funding Cuts to Health Centers, FY12

$60 million, or 15% less than reported in FY11.

State funding for health centers has been steadily declining for the fourth year in a row and

FY12 represents a seven year low at a time of significantly rising needs. FY12 Funding:

• Decreased in 20 states (AK,CO,DE,FL,HI,IN,IA,KS,MI,MN,MO,NE,NH,NY,OK,PA,UT,WA,WV,WI) • No funding in 14 states and the District of Colombia (AL, AZ,CA,D.C.,ID,KY,LA,ME,MT,NV,ND,OR,PR,SC,SD) (Pending: CT and TX) Source: NACHC, Calculating the Cost: State Budgets and Community Health Centers Policy Report 39, November 2011, www.nachc.com

The Health Center Model:

Health centers operate under the direction of patient-majority governing boards, which

http://www.nachc.com/


ensures accountability to the surrounding community and payers. Their unique delivery model

utilizes multiple health professionals with varied skills to increase capacity, reduce barriers, and

amplify access to essential, comprehensive primary care in their communities. They offer

services not typically furnished in other primary care settings, such as dental, behavioral health

and pharmacy services that remove persistent barriers to care. For instance, case management,

interpretation, and home visits. Compared to other providers, health centers disproportionately

serve more chronically ill, uninsured, publicly insured, and minority patients (Hing, Hooker, &

Ashman, 2011) as well as those in poor health. (Shi, Stevens, & Politzer, 2007). Health centers

are increasingly using Nurse Practitioners (NPs), Physician Assistance (PAs), and Certified

Nursing Midwives (CNMs) in the provision of primary and preventative care. As a result, they

employ on average more NP/PA/CNMs than any other primary care practices.

A new and logical model in progression, not yet represented in public policy, is the

community-centered health home, which extends the patient-centered medical home concept

to the community level. The patient-centered medical home is birthed out of the Wagner

Chronic Care Model, which is designed to improve the quality and monitor the care of people

with chronic diseases. (Wagner, Autism, Davis, Hindmarsh, Schaefer & Bonomi, 2001)

The Affordable Care Act and Health Centers:

Today, approximately 1,200 health centers operate nearly 9,000 service delivery sites that

provide care to more than 21 million patients in every U.S State, the District of Columbia,

Puerto Rico, the U.S. Virgin Islands, and the Pacific Basin.


Overall, since the beginning of 2009, health centers have increased the total number of

patients served on an annual basis by 4 million people, increasing the number of patients

served from 17.1 million to 21.1 million annually. During this time, health centers have also

added more than 35,000 new full-time positions, increasing their employment from 113,000 to

more than 148,000 staff nationwide.

This network of health Centers has created one of the largest safety net systems of primary and preventive care in the country with true national impact.

> CHCs supported by the Health Resources and Services Administration (HRSA) treated more than 21 million people in 2012, 62% of whom are members of ethnic and minority groups. 36% have no health insurance; 32% are children

> One out of every 15 people living in the U.S. now relies on a HRSA-funded clinic for primary care.

> CHCs are an integral source of local employment and economic growth, employing more than 148,000 individuals nationwide, of which 35,000 jobs have been added over the last 4 yrs.

> CHCs employ more than 10,000 physicians and more than 7,500 NPs, PAs, and CNM in a multi-disciplinary workforce.

Cost Savings:

Several research studies demonstrate that health centers yield substantial cost savings to

the health care system by reducing emergency department visits, hospitalizations, and other

avoidable, costly care. A new study from the George Washington University finds that the

expansion of health centers will contribute to even higher savings. (Ku, 2010).

> Up to $122 billion in total health costs would be saved between 2010 and 2015.

> Health Centers would save as much as $55 billion for Medicaid over the five-year period. Of that, the federal government would save $32 billion, with states benefiting from the rest.


Despite providing a broader array of services and serving more at-risk patients, health

centers’ average cost runs a dollar less per patient per day compared to all physician settings

($1.67 vs. $2.64). (AHRQ Tables, 2008) (BPHC, HRSA & DHHS Uniform Data System, 2009)

Health centers save the health care system over $24 billion annually. This includes $ 6 billion in

savings to the Medicaid program (Ku, Richard & Dor, 2010).

Exhibit 2:

Quality Care:

Research shows that, despite serving patients with a higher prevalence of chronic disease

and socioeconomic disadvantages, health centers perform as well as or better than other

settings (including private primary care physician practices) on diverse measures of access and

quality. This includes rates of screening services, preventive care, hospital admissions,

emergency room visits for ambulatory care-sensitive conditions, and adherence to evidence-

based clinical management of chronic conditions (Dor, Pylypchuck, Shin, & Rosenbaum, 2008)

(Falik, Neddleman, Wells, & Korb, 2001) (Goldman, Chu, Tran, Romano, & Stafford, 2012). But

more important is the socioeconomic impact Federally Qualified Health Centers have on the

underserved communities of which they operate.

Average Cost Per Patient Per Day:

Hospital Inpatient $41.36Hospital Outpatient $7.59Emergency Room $3.64All Physician Settings $2.64Health Center $1.67


FQHCs have built reputations as high-quality, efficient providers. This is consistent with

research showing, for example, that health center patients’ conditions are better managed and

that they incur lower total medical expenditures than patients using other providers. (Falik &

Marilyn, 2006) (Ku & Leighton, 2009).

Exhibit 3:

ACA Funding for FQHCs→ Health Center Controlled Networks, awarded $21 million to 43 network organizations to support the adoption of electronic health records and the use of information technology to improve quality in health centers. They served 10 Health Center Program grantees, supporting 700 HCs nationwide.

→ Health Center Outreach and Enrollment Assistance: awarded $150 million in July 2013 to 1,159 HCs to support outreach and enrollment activities nationwide.

→Health Center New Access Points: awarded $19 million to establish 32 new health center access points.

→Health Center Base Adjustments: awarded $48 million to 1,193 existing HCs nationwide to support ongoing operations and quality improvement activities.

→School Based Health Center Capital Program (SBHCC), awarded $200 million to 470 school-based HC programs to address significant capital needs to improve delivery and support expansion of services to school-based health centers.

Grant Awards under ACA for FQHCs

→In 2012, the percent of low birth weight babies, at 7.1%, continues to be lower than national estimates of 8.16%.→ The rate of entry for prenatal care in the first trimester increased from 65% in 2008 to 70% in 2012.→70% of health center patients demonstrated control over their diabetes with a hemoglobin A1c (HbA1c) level less than or equal to 9.→64% of hypertensive health center patients have their blood pressure under control.→ Health center model of care reduces the use of costlier providers of care, such as emergency departments (EDs) and hospitals.


→Health Center New Access Points awarded $129 million to establish 219 HC new access points across the country.→ Health Center Capital Development – Building Capacity Program awarded $629 million to 171 organizations for new large renovation, expansion or construction projects.→ Health Center Capital Development – Immediate Facility Improvement Program awarded $99 million to 227 organizations for new construction and renovation projects.

Economic Catalyst:

Investments in health centers have produced an economic “ripple effect” in their

communities, creating jobs and fueling additional economic activity through the purchase of

goods and services from local businesses. In 2009, a federal investment of $2.2 billion

generated $20 billion in total economic benefits in resource-poor rural and urban communities.

(The importance of Community Health Centers: Engines of Economic Activity and Job Creation,

2010).

→CHCs generated $20 billion in economic activity in low income communities during 2009 and are expected to generate $53.9 billion by year 2015.

→They produced more than 189,000 jobs in some of the country’s most economically deprived neighborhoods. By 2015, HCs will have created 284,323 additional full-time jobs.

→CHCs are an integral source of local employment and economic growth, employing more than 148,000 individuals nationwide, of which 35,000 jobs have been added over the last 4 yrs.

→CHCs employ more than 10,000 physicians and more than 7,500 NPs, PAs, and CNM in a multi-disciplinary workforce.

Moreover, there are other economic avenues being pursued in varying regions such as

Seattle, Cleveland and Miami that set aside a local tax revenue to support health centers. This

revenue is generated from a “Provider tax” or “Fee assessment”. Each state law authorizes

collecting revenue from specified categories of providers (a mechanism to generate new in-

state funds) and then matches them with federal funds so that state can get additional federal


Medicaid dollars. Places like Orange County, Indianapolis and Lansing have set up community

programs to manage care for uninsured people to reimburse health centers (and other

providers) for treating enrollees.

Unfortunately in some cases, these additional funds have been cut due to budget

constraints. For example, Arizona, California and Ohio eliminated tobacco-tax-based funding to

health centers. (http://www.chnwa.org/PolicyAdvocacy/ResearchAndReports/Impact%20of%20WA%20CHC%20System

%2012-03-08.pdf.)

Exhibit 4:

State

Number of Federally

Qualified Health Center

Organizations

Total Patients Total Economic Impact

Total Employment Produced in

Health Centers and Their

CommunitiesCalifornia 118 2,786,350 $3,434,654,244 29,642

Illinois 36 1,060,723 $1,082,732,035 9,445New York 52 1,389,385 $1,269,493,264 14,218

Washington 25 721,245 $934,705,298 8,507***National Association of Community Health Centers, Inc.

Exhibit 5:

State of Washington:

Community Health Network of Washington and Washington Association of Community

and Migrant Health Centers conducted a report in 2008 that utilized data from 24 health

centers as well as Community Health Plan to identify a $1.2 billion total impact on Washington’s

In 2015, Health Centers Will:

> Reach 40 million patients> Save $122 billion in total health care costs over 5 years

> Generate $54 billion in total economic activity> Create 284,000 new full-time jobs in their local communities

http://www.chnwa.org/PolicyAdvocacy/ResearchAndReports/Impact%20of%20WA%20CHC%20System%2012-03-08.pdf



economy by the community health center system within Washington State. A strong economic

force, Washington’s Community health center system combined direct and downstream effect

creates approximately 8,500 jobs and generates a tax contribution of $176 million. This includes

revenues, jobs and services that could not be easily replaced if funding was reduced or

eliminated. The report details the impact on both a state and county level. Additionally, the

report analyzes how the Washington Community Health Center System is a critical safety net

for Washington residents – treating 10% of the state population, including one in three

uninsured Washington residents. (Dobson, 2008).

Expanded FQHC Role in Reform:

Estimated to expand coverage to 32 million people by 2019, Patient Protection and The

Affordable Care Act (PPACA) seeks to make health care more available and affordable. There

are three areas where FQHCs appear poised to assume a significant role under health reform:

coverage expansions, primary care workforce development, and new models of health care

delivery and payment.

Coverage expansion, under the law, will expand Medicaid eligibility in 2014 to include all

people with incomes up to 138 percent of federal poverty level ($30,843 for a family of four in

2011) and subsidized private coverage will become available to people with incomes up to 400

percent of poverty ($89,400 for a family of four in 2011). To help meet increased demand,

PPACA also permanently reauthorized the FQHC program and appropriated an extra $11 billion

in grant funding to double FQHC capacity to treat approximately 20 million more insured and

uninsured people by 2015.


Primary care workforce of FQHCs face periodic difficulties in hiring clinical staff because

clinicians can earn more in other settings. However, National Health Service Corps (NHSC) has

been a good source for recruitment as the organization helps to repay student loans and

provides scholarships for clinicians who commit to work in underserved areas. The health

reform law provides additional $1.5 billion to expand the NHSC by an estimated 15,000

providers by 2015.

New care payment models current law establishes medical-home pilots designed to

coordinate patient care across providers and settings. Final federal rules on Medicare

accountable care organizations (ACOs) authorize FQHCs to participate in or form their own

ACOs. Although FQHCs typically treat a relatively small percentage of Medicare patients, this

may change if other primary care capacity tightens, as FQHCs’ baby-boomer patients “age into”

Medicare as Medicare payment rates to FQHCs are expected to increase in 2014 under a new

methodology. (Report to the Congress, 2001)

Government health reform legislation has significantly impacted the culture of patient

care, specifically as it pertains to FQHCs. The health care reform package is comprised of the

Patient Protection and Affordable Care Act (PPACA) and the Reconciliation Act of 2010. Now

under reform, health centers are the nucleus for many of the nation’s efforts to expand access

to high-value primary care. Many of the ACA’s goals will be carried out directly through health

centers, allowing them to serve millions of new patients in new communities and craft a more

efficient health care system. As health centers expand to serve more communities, there will be

more primary care options for consumers and thus lower health care costs that will generate

savings to consumers, taxpayers, and governments. By 2015, health centers stand to become a


provider of choice in the emerging health care marketplace.

Current Strategies to Improving Specialty Care Services:

Safety-net hospitals, community health centers, specialists, state Medicaid programs and

Medicaid health plans are partnering to improve access to specialty care. Several program

models were thought of that deploy staff members and technology in innovative ways such as:

Models:→ the availability of specialty care through telehealth, bringing specialists to primary care sites, and using physician assistants (Pas) to deliver specialty care services;

→Expanding the role of primary care providers-physicians and nurse practitioners (NPs)-to handle more specialized health issues through training and electronic consultations; and

→Enhancing communication and coordination among patients, primary care providers, and specialists through broad medical home models and staff – known as access coordinators – dedicated to arranging specialty care.

→FQHCs in Seattle joined the Washington Patient-Centered Medical Home Collaborative, and FQHCs are a key part of the “managed system of care” model underway in Orange County, which aims to transition uninsured people into new coverage options.

While these models have developed under existing state Medicaid policies, long-term

sustainability, expansion, and replication may require updates to Medicaid payment policies

that recognize and support new types of interactions with patients. Such changes might

include: paying providers to consult with other clinicians or treat patients remotely; expanding

the scope of FQHCs to provide more specialty care services; funding the training of primary care

clinicians in certain types of specialty care; and changing the way nonclinical activities, like

coordinating patient care, are paid and accounted for in managed care contracts. Although ACA

expanded Medicaid coverage to millions, it does not explicitly address the likely increased

demand for specialty care stemming from coverage expansion. Although the law’s temporary


increase in Medicaid payments for primary care may help support components of these models

that rely on a larger role by primary care clinicians, many expect the demand for these

providers to exceed supply.

The lack of Medicaid payment for specialty services provided in new ways could limit the

models’ expansion and replication.

Recap of FQHCs Contributions:

Community health centers play three important roles in their communities: they are

clinical care providers, business development engines, and community development agents.

As clinical care providers, CHCs provide access to primary and preventative care which is

pivotal to the educational and economic success of low-income families.

Being business development drivers, CHCs generated more than $11 billion dollars in total

revenue and $20 billion in direct and indirect economic activity in their local communities

during 2009. They also produced more than189,000 jobs in some of the country’s most

economically deprived neighborhoods. Moreover, centers create good jobs, with career

ladders, at all levels of capability and educational attainment, which in itself promotes the

health of the community.

The National Association of Community Health Centers estimates that every $1 million in

federal funding for centers’ operations yields $1.73 million in return. (NACHC, 2011)

Furthermore, each $1 million of federal funding leveraged an additional $270,000 of state and

local grant funding and an additional $70,000 of foundation and private grant funding. These

efforts create vital, viable, and sustainable public-private partnerships that contribute to the


environment, economy, and health of communities, reaching beyond those who use centers for

their health care (NACHC, 2011). In our communities, health centers have addressed the

upstream causes of poor health through a variety of community programs, sponsored directly

with others, that connect patients to resources and assistance. These programs allow

community health centers to work beyond the sphere of health care delivery to address the

social detriments of health, by promoting individual and community health more

comprehensively through broader lifestyle, education, and environmental interventions.

Recommendations:

Examine how CHCs can utilize their Board of Directors to seek increased private funding from

donors who have an ability to give at the 100k level or higher. Then recommend to the CHC staff to write

a case statement that illustrates the socioeconomic impact their CHC has on the community it serves as

a marketing piece that can encourage donor interests as well as be used for publication, Capital

Campaigns, Major Gifts Campaigns, for Development Staff, etc. Additionally, encouraging CHCs to

develop both an endowment as well as a Foundation as a way to secure additional, tax free funds should

they be needed when unanticipated growth is prevalent.

Conclusion:

Health centers will remain an important investment in caring for millions of Americans

who remain uninsured in the wake of health reform, either because they do not qualify for

assistance or do not have access to affordable coverage. It is important to recognize that each

and every health center in the United States today was founded by its local community to meet

unique local health problems. Because of their success in delivering high-quality, cost-effective

care, the Health Centers Program was rated one of the most effective federal programs by the


Office of Management and Budget (OMB, Program Assessment Rating Tool, 2007). The

expansion of health centers will magnify their contributions to improved access and community

health, all the while generating significant local, state, and national economic returns. Research

demonstrates that health centers deliver a significant return on investment in terms of system

wide savings, economic benefits, and health improvements. As health centers expand to each

new patients with unmet health care needs, the value they bring to communities and payers

will grow.

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Center for American Progress. The importance of Community Health Centers: Engines of Economic Activity and Job Creation. August 2010. http://www.americanprogress.org/issues/2010/08/pdf/chc.pdf

http://www.americanprogress.org/issues/2010/08/pdf/chc.pdf

http://www.whitehouse.gov/omb/expectmore/summary/10000274.2007.html

Documents

Sabrina Matson Graduate Thesis