FQHCs Can Build Net Revenues: Strategies for Financial Sustainability

Many FQHCs are struggling with ongoing budget cuts, and are stretched to meet often increasing levels of need. The recent close call with what CMS itself called the “Funding Cliff” is the most recent example of challenges that many CHCs face with ongoing sustainable funding when core federal funding is threatened. There is a new “sweet spot” for services to older adults that (1) meet needs, (2) are very well funded, and (3) significantly build your net revenues.

What Federal Bureau for Primary Health Care (BPHC) 330 Cuts Could Mean

Federal lawmakers have focused on cutting BPHC 330 funding for Community Health Centers, which represents a big block of funding for FQHCs. Many providers have expressed deep concerns about this trend. Experts at the federal Department of Health & Human Services (DHHS) not only call this the “Funding Cliff,” but created a Funding Cliff Calculator to assist health centers to project  potential revenue shortfalls. The bottom line: without new revenue sources, many FQHCs will not be able to continue operations at current levels, causing deep cuts; and some will need to close. The recent federal funding approvals for two-year funding for CHCs provides many community health centers with an important window in which to create greater financial sustainability and net revenues.

There seem to be multiple trends at work.

  • CHCs have a long history of support and funding at federal and state levels.
  • Many state and federal legislators believe that Medicaid Expansion and the Affordable Care Act significanty reduce CHC funding needs, and although these provide new payment sources, the reduction in need for federal and state funding is much less and issues more complex than many legislators may believe.
  • The trend at the federal level seems to be a reduction in national level support for many health and social services, benefits and entitlement programs.
  • Many states are facing budget challenges, and may pare their levels of support for CHCs over time.
  • A large number of thought leaders realize that CHCs represent the backbone of primary care in our states and communities, and will work to support the maintenance of that important network.

What are Some Options to Create the Best Net Revenues for FQHCs?

States and communities can analyze the options for revenue enhancement that best fit their areas. In general, CHCs may be able to benefit from the following types of revenue generation, to create greater financial sustainability:

  • Medicare high reimbursement rates for prevention, early intervention, and chronic disease management (screenings, annual wellness visit, and other services);
  • CMS and HRSA funding for initiatives targeted to their priorities for moving services “upstream,” and into the community;
  • National, federal, and state funding for cross-sector initiatives that address health disparities, access to care, and other root causes for health challenges and risks;
  • Program related investment (PRI);
  • Funding or PRI for cross-sector initiatives that result in workforce development, job creation in health care, and economic development for the region.

I’ll tackle each of these areas with an article focused on that issue.

Anne Hays Egan, New Ventures Consulting, February, 2018