Financial performance of community health centers

Background Community Health Centers (CHCs) are important medical access points for the nation's vulnerable populations. However, the increased number of uninsured, the proliferation of Medicaid managed care, and decreased governmental subsidies have challenged the financial viability of these centers.

Objective The objective of this study was to identify trends and predictors of financial performance (costs, productivity, and overall financial health) for CHCs.

Methods Data was analyzed from the 1998-2004 Uniform Data System, which collects patient demographics, selected diagnoses and services, staffing and utilization, financing, and managed care enrollment and utilization. Measures of financial performance/stability and health center characteristic were selected. Multivariate, longitudinal analyses were used to identify center attributes significantly associated with center financial performance, while bi-variate analyses comparatively examined differences in financial performance between urban/rural and managed care/non-managed care centers.

Results Grant revenue typically accounted for approximately 40% of all revenues, but declined during the study period. While Medicaid revenue decreased, Medicaid collections, encounter costs, medical personnel costs, and third-party payments all increased. Overall, physician productivity decreased while mid-level provider productivity remained relatively stable. Net revenue increased in each year, and several predictors of financial performance were found to be statistically significant.

Conclusions Increasing grant revenues were associated with increased costs and a decline in net revenues. Financial health was also jeopardized by several other characteristics. Urban centers with larger numbers of clients, centers that treated high numbers of patients with chronic diseases, and centers with large numbers of prenatal care users were the most fiscally sound.