Community Health Centers Face Funding Crisis

Lamprey Health Care (Photo Courtesy of Lamprey Health Care)

Between 2009 and 2024 the number of patients served at Amoskeag Health in Manchester nearly tripled from 6,000 to 16,000 and staff numbers have increased from 55 to 225 at five locations. The challenge, says CEO Kris McCracken, is funding.

Funding for the federally qualified health center (FQHC) is “largely either decreasing or stable, but it doesn’t keep up with inflation,” says McCracken. Because of that, Amoskeag Health will likely fall $3 million short in its $22 million operating budget this year.

Amoskeag Health is not Alone
New Hampshire has 12 community health centers, 11 of which are FQHCs funded primarily through federal grants and Medicaid reimbursements. (Only Planned Parenthood is not an FQHC). In 2022, there were nearly 400,000 patient visits at community health centers, according to the Kaiser Family Foundation, for everything from obstetric care to diabetes management and medication-assisted treatment for substance use disorder. While most patients served by these centers are low income, in some areas like Newport, community health centers are one of the only local primary care options, so they serve the whole community. Research by the National Association of Community Health Centers shows that FQHCs provide more cost-effective health care than other settings, especially for people on Medicaid, and the centers contribute roughly $335 million to the Granite State economy each year.

Although they’re serving an ever-expanding number of patients, the main source of funding  is a federal grant commonly known as the 330 grant— and it has remained largely stagnant since 2018, according to the National Association of Community Health Centers. In addition, the unwinding of state Medicaid coverage after the pandemic increased costs for the centers, resulting in more people unable to pay for the care they receive.

Because of that, an alliance of FQHCs in NH appealed to the governor’s office for $11 million in emergency funding, but received only $6 million in relief, which was announced in mid-August.

That’s left them fighting for more systemic changes to support their organizations—which they say are critical to the already taxed healthcare system in the Granite State.

“If we shrink, or God forbid close, it will cost the state a lot more money and it will impact the hospitals,” McCracken says. “This is the most cost-effective way to [provide health care], and a
wise investment.”

Jillan Peabody of Amoskeag Health with a patient (Courtesy of Amoskeag Health)

Stagnant Funding Leads to Cuts
FQHCs are unique in that they provide a variety of health care services, including primary care, behavioral health, substance use disorder treatment and even dental care, all under one roof.

“We treat as much in a single visit as we can,” says Ted Bolognani, president and CEO of HealthFirst Family Care, which has locations in Franklin, Laconia, and Canaan. If a patient comes in for high blood pressure but brings up their depression, for example, they can get treatment for both conditions rather than returning for a separate appointment. This removes a barrier to care.

In part because of this, FQHCs are one of the lowest-cost ways to deliver health care, especially to high-needs individuals. They reduce the cost of care for Medicare patients by between 8.4% to 24%, according to the National Association of Community Health Centers. People who visit FQHCs are less likely to need expensive emergency room care and hospital stays.

Because of that, supporting FQHCs is “not only the right thing to do, but it makes good economic sense,” says Patricia Tilley, associate commissioner of the NH Department of Health and Human Services.

“They’re a critically important part of our safety net,” Tilley says.

And yet, investment in FQHCs has not reflected their importance. The 330 grant typically provides about 12% of the $12 million annual budget at HealthFirst. However, “the buying power and purchasing power of that core funding has been reduced over the years because of inflation,” says Bolognani.

The health center bills Medicare, Medicaid, private insurers, and individuals to generate about 60% of its annual operating budget, but with the 330 funding covering less and less, “we’re getting squeezed and there’s just not a lot of funding out there,” Bolognani says.

This year, HealthFirst Family Care is anticipating a loss of about $1.2 million.

Lamprey Health Care has centers in Nashua, Newmarket, and Raymond. It has an operating budget of about $24 million and last year the organization had a “pretty significant loss” of about $1.4 million, according to CEO Gregory White. This year, Lamprey Health Care has lost that much in just nine months, although finances seem to be stabilizing, White says.

Without an increase in 330 grant funding, FQHCs in NH are scrambling to make ends meet. That often means cutting employees, since personnel costs make up about 75% of operating expenses. Last year, Amoskeag Health eliminated 32 full-time equivalent positions, McCracken says, resulting in longer wait times for patients for everything from phone calls being answered to getting prescription refills.

Lamprey Health Care is trying to increase provider efficiency to bill for more services. But there’s a limit to how many patients a doctor can see without compromising care and making patients feel “shortchanged,” White says. “You hate to treat it as a manufacturing process because we’re dealing with people,” he says.

Lamprey Health Care is also exploring insurance programs that “incentivize us for outcomes, instead of volume,” White says. Medicare’s Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) and similar programs, including one from Anthem, provide compensation for helping patients avoid the emergency room or get preventative screenings.

“That benefits the patient, the system and us,” White says. “If you keep people healthy, it’s better than treating them when they’re sick.”

Unwinding of Medicaid Hits FQHCs Hard
Many of the patients who use FQHCs have Medicaid. Part of the 330 grant allows FQHCs to be paid more than other health providers for treating Medicaid or Medicare patients. FQHCs make more revenue off these patients than they do from people who have private insurance or who pay out of pocket.

“It’s a fairly favorable rate compared to a private insurer,” says Bolognani of HealthFirst.

Last year, NH increased Medicaid reimbursement rates, and FQHCs hoped to see a resulting uptick in revenue. However, at the same time the state began unwinding Medicaid enrollment. Once the COVID public health emergency ended, people were again required to re-qualify for Medicaid, or risk losing their insurance.

Statewide, many people retained their Medicaid coverage—in fact, there are 2.8% more people on Medicaid today than before the pandemic, according to the NH Department of Health and Human Services. And yet, many existing patients at FQHCs lost their coverage.

“We got the bump in the rates, which we thought was going to fill some gaps, but we see a continually declining number of Medicaid patients,” Bolognani says.

The same has been true at Amoskeag Health. At the end of 2022, 52% of patients at the center were on Medicaid; one year later, that had dropped to 45%. “It’s pretty clear what happened to those people: they lost coverage,” McCracken says.

She has a theory for why that might be. “The patients we serve—who have limited English proficiency, limited access to a computer and printer, limited transportation—may be more at risk for not successfully completing that process,” she says.

For health centers, that means less revenue. Between 2022 and 2023, the number of patients paying out-of-pocket rose 7% at Amoskeag Health.

The center uses a sliding-scale payment system, where people living at 175% of the poverty line or less pay between $20 to $50 per visit, well below the amounts Medicaid reimburses, which varies depending on the patient’s treatment needs. In reality, most patients don’t pay at all.

“We’re going to write off [about 80%] of their balance to charitable care,” McCracken says.    

Proposals for Short-Term and Long-Term Solutions
To make up for that loss, FQHC leaders would like NH to adopt a solution that 11 states including Maine and Massachusetts have implemented: an uncompensated care fund.

That would be a long-term solution to mitigate the unreimbursed costs for providing care for uninsured people, says Colleen Dowling, program manager for NH public policy at Bi-State Primary Care Association, a nonprofit that supports FQHCs in NH and Vermont.

Bi-State is hoping to push the legislature to include an uncompensated care fund in the next state budget. The allocation would likely exist under Medicaid funding, although it’s structured differently in various states. Ultimately, that money would allow FQHCs to be paid for the care they provide to uninsured people, rather than having to write off 80% of those bills.

In the meantime, FQHCs are hoping for short-term relief. Nine FQHCs and Bi-State submitted an $11 million request to the Governor’s Office for Emergency Relief and Recovery to help cover their losses so far in fiscal year 2024.

The funding for that request would come from COVID-related federal grants, and would be a one-time infusion of cash. On Aug. 14, the governor’s office approved $6 million in relief, “a fraction” of what’s needed, according to Bi-State Primary Care Association.

Like many health care organizations, FQHCs are plagued by workforce shortages, so efforts to bolster the workforce in NH and increase available housing will also benefit community health centers, Dowling says.

Ultimately, FQHCs need increased funding for the federal 330 grant.  “There are some things we need to happen at the federal level,” says Bolognani. “Even if they just caught us up to current inflation [rate].” He recently met with Sen. Jeanne Shaheen at HealthFirst’s Canaan location to talk about just that, but with the upcoming election Bolognani knows it will likely be at least a year before federal lawmakers even consider the funding.

When he arrived at HealthFirst 13 years ago as chief financial officer, the organization was struggling to make payroll. While the center is not yet at that point, Bolognani is reminded of those tumultuous days. “Because I know the finances and know what we dug this company out of, I’m confident we can do it, but it’s not pretty and it won’t be fun,” he says.

If losses continue, health centers say they’ll have to cut down on patient services. “I don’t think anyone wants to be in a situation of shrinking the operation, but realistically, you have to live within your means,” says White.

That reality is looming at Amoskeag Health. “We’re down to less than 10 days cash on hand,” says McCracken. “How do we find a way to survive in the current financial reality that we’re in?”