Financial Capacity and Charity Services: The Case of Community US Health Centers

• In Event: Non-profit finances 1

Abstract

Community health centers (CHCs) in the US provide vital health and human services to underserved and vulnerable communities. Stemming from the civil rights movement in the 1960s, CHCs have mandates to locate in and serve marginalized communities, provide accessibility services such as transportation or translation services, and establish governance structures that reflect their client population (Lam & Grasse, 2019; Collins et al., 2014). Thus, in addition to providing direct health services, CHCs are often engaged in community empowerment and issues of equity and access. This community focus has naturally led CHCs’ to take a more holistic view of its “model of care” to address social and environmental factors and preventative services or what researchers call social determinants or “upstream” determinants of health (Collins et al., 2014).
Providing such a broad array of services (i.e., direct health and preventative services) presents a challenging and interesting financing dilemma for CHCs. While, on average, the majority of CHC revenue comes in the form of private and government insurance reimbursements for providing traditional direct health services (i.e., medical procedures, tests, etc.), these revenue sources often don’t cover the full cost of services and do not fund preventative or “upstream” forms of care.
Alternatively, to fund services focused on social determinants and upstream causes of poor health, CHCs have a limited number of financing strategies. CHCs can earn a profit and use these profits to build a reserve fund to finance preventive services. However, given the slim and often negative profit margins due to high costs of services and low reimbursement rates, this strategy often takes a long time and may only be available to larger CHCs. Alternatively, CHCs may operate a social enterprise or provide non-medically necessary market-rate health services (i.e., plastic surgery) to fund preventive services. However, this often requires an upfront investment in resources and capacity (also not available to many CHCs). Finally, CHCs can rely on traditional fundraising for income sources, such as grants or donations. Studying CHCs in the province of Ontario, Collins et al. (2014) note that CHCs are often reluctant to relinquish “Community Initiatives” that focus on upstream health determinants despite their lack of funding and often rely on creative resource tactics such as partnerships and building strong community networks.
This study seeks to examine CHC finances and service provision. To date, relatively few studies focus on the relationship between CHC finances and outputs or outcomes, primarily due to a lack of data availability. Building from prior work from Lam & Grasse (2019), this study will draw from a unique dataset of CHCs in the US and proposes to fill this gap in knowledge by answering the following questions:

What is the association between financial capacity and service provision for CHCs in the US?
How do CHC revenue portfolios influence patients served and service provision?

Preliminary analyses indicate that while Medicaid and Medicare service provision drive revenue and expense growth, their effects are unequal; also, program service revenue is important to increasing the patients served in both programs.

References

Collins, P. A., Resendes, S. J., & Dunn, J. R. (2014). The untold story: examining Ontario’s community health centres’ initiatives to address upstream determinants of health. Healthcare policy = Politiques de sante, 10(1), 14–29.

Marcus Lam & Nathan J. Grasse (2019). Community Health Centers (CHCs) Under Environmental Uncertainty: An Examination of the Affordable Care Act of 2010 and Early Medicaid Expansion on CHC Margins. Nonprofit Policy Forum (2019), 10(2), 1-15.

Authors

• Nathan Grasse, Carleton University

• Marcus Lam, University of San Diego