New Report Reveals Financial Weakness In New York's Primary Care Safety Net

August 26, 2010 (New York) – The New York State Health Foundation (NYSHealth) today released a report showing broad financial distress in New York’s primary care safety net, but also identified opportunities to build stronger, more sustainable health centers that will better serve a rapidly growing patient population. NYSHealth also announced an initiative to help health centers strengthen and expand services through federal health reform funding.

“New York’s nonprofit health centers are the backbone of the State’s primary care system, said James R. Knickman, President and CEO of NYSHealth. “With 1.2 million more New Yorkers poised to gain coverage through the Federal health reform law, but with many still uninsured and in need of high-quality care and services, the role of health centers will become even more critical.”

The report titled, “Health Center Financial Check-Up: Prescriptions for Strengthening New York’s Diagnostic and Treatment Centers,” prepared by the Primary Care Development Corporation (PCDC), analyzed seven years of financial data from 95 nonprofit diagnostic and treatment centers (DTCs), which serve some 1.5 million mostly low-income residents. Among the findings:

• 43% of the State’s DTCs lost money in all or most years, and margins fell from 2.28% in 2001 to 0.56% in 2007. On average, DTCs were only one payroll away from full-scale financial distress.
• Inadequate and delayed payments, as well as administrative and bureaucratic burdens, affected the entire sector.
• Federally qualified health centers (FQHCs) were financially healthier than non-FQHCs, and larger FQHCs were among the healthiest. FQHCs have certain benefits, including higher Medicaid rates, Federal coverage of malpractice insurance, and Federal grants for uninsured patients.
• Strong governance and management, provider productivity, robust billing and collections, and modern facilities were key factors among financially healthy DTCs.

“New York’s primary care safety net is in a perpetual struggle against inadequate payments and bureaucratic barriers, yet there are leaders in the sector who defy the odds and operate financially strong health centers that effectively serve their communities,” said Ronda Kotelchuck, PCDC’s Executive Director. “This report identifies the leading indicators of success. Now we must bring the stability of a few to the primary care safety net as a whole.”

The report makes several key recommendations to strengthen New York’s primary care safety net:

1. Promote FQHC expansion with Federal health care reform funding. Federal health care reform provides $11 billion nationwide over five years to double FQHC capacity. Policymakers and foundations should help New York’s FQHCs secure funding to build new sites, expand existing sites, and encourage mergers and acquisitions that will help to strengthen and restructure the primary care safety net sector.

In response to this recommendation, NYSHealth awarded a nearly $400,000 grant to the Community Health Care Association of New York (CHCANYS) to provide technical assistance to health centers across the State to develop strong, competitive applications in response to the Federal request for funding proposals.

“This is a pivotal time for New York’s health center sector,” said Elizabeth Swain, CEO of CHCANYS. “We have an unprecedented opportunity to strengthen our existing centers and to create new access points so that the promise of health care reform is fulfilled for all New Yorkers.”

2. Strengthen health center business and financial management. Redesign of business operations offers the prospect of meeting many needs across a diverse range of health centers. Foundations in particular could support financial assessments and technical assistance.

3. Pay providers adequately and on time. Payment of state Medicaid rate add-ons, grants, and indigent care payments are subject to long and unpredictable delays, sometimes as long as two years. These delays hinder financial planning and efficient management of resources. Payers should also standardize and streamline the payment processes to reduce payment delays and wasteful administrative costs and pay health centers adequately for the services they provide.

4. Establish a singular primary care focus within the New York State Department of Health. Responsibility for primary care issues are spread across different departments and staff. A State Office of Primary Care could provide a single point of contact and coordination.

Copies of the report are available at www.nyshealthfoundation.org and upon request.

The New York State Health Foundation is a private Foundation dedicated to improving the health of all New Yorkers. NYSHealth has a three-part mission: expanding health insurance coverage, increasing access to high-quality health care services, and improving public and community health by educating New Yorkers about health issues and empowering communities to address them. It was established with charitable funds from the privatization of Empire Blue Cross/Blue Shield. www.nyshealthfoundation.org

The Primary Care Development Corporation is a nonprofit organization that transforms health care in underserved communities through high-impact financing, innovative services, and policy leadership that helps providers expand access to high-quality, patient-centered primary care. www.pcdcny.org

The Community Health Care Association of New York State represents more than 60 community, migrant, and homeless federally qualified health centers and Look Alikes that provide primary medical and dental care, as well as mental health, substance abuse, and other community-based services to anyone in need regardless of their insurance status or ability to pay. In New York State, federally qualified health centers provide high-quality health care to more than 1.4 million residents at 457 sites across the State. www.chcanys.org