Community health centers can be an 'economic engine'
Community health centers can be an 'economic engine'
A $250 million appropriations increase for community health centers would yield health care for an additional 1.8 million patients and a nationwide 4:1 return-on-investment, according to a study by George Washington University's Geiger Gibson/RCHN Community Health Foundation Research Collaborative. Lead researcher Peter Shin tells State Health Watch that level of return-on-investment would be expected to hold no matter how much of an increased appropriation comes to community health centers.
Mr. Shin's study"How Does Investment in Community Health Centers Affect the Economy?"concludes that such an appropriation increase would provide substantial economic gains, including nearly $1 billion in direct benefits measured in new revenues and more than $1.1 billion in indirect benefits including 24,000 new jobs and other community investments.
On a state-by-state basis, each $1 million in federal appropriations ensures care for an additional 8,400 patients and brings a 6:1 rate of return, for more than $6 million in direct and indirect economic benefits.
As a result of the nation's economic slowdown, Mr. Shin says, policy-makers are looking for investments that can produce rapid economic gains in communities. Although the economic stimulus package signed by President Bush in February was intended to provide a short-term infusion of funds into the economy, experts have said the economic downturn could be lengthy and thus Congress was expected to continue looking for additional investment strategies.
"Of particular importance are investments that not only offer urgently needed services but that also are able to rapidly transform themselves into productive employment and services in hard-hit communities," Mr. Shin says.
He says looking at increasing investment in community health centers makes sense because of their location in rural and urban areas and their ability to rapidly translate additional funding into health care, community services, and employment.
Areas affected by downturn
Community health centers, the report says, are located in rural and urban communities that tend to be particularly affected during economic downturns because of their vulnerability to eroding financial conditions. In 2006, the nation's 1,002 federally funded community health centers operated in more than 6,300 rural and urban medically underserved communities characterized by high levels of poverty, high uninsurance rates, and elevated health risks. Those centers employed more than 97,000 health care professionals and administrative staff and furnished comprehensive primary medical and dental care to more than 15 million community residents, 90% of whom are low-income, 40% of whom have no health insurance, and 66% of whom are members of racial and ethnic minority groups. In 2006, 44% of community health centers were in rural locations and 56% in urban areas.
One of the advantages in directing economic stimulus spending to community health centers, Mr. Shin says, is that they have demonstrated capacity to grow rapidly to meet patient needs. And, in fact, rapid expenditure of funds often is a specific condition attached to federal grants to community health centers, meaning they must be able to implement proposed service expansions within 90 days of receiving a grant.
In 2006, health centers reported earning approximately $3 in third-party revenue for every $1 they received in health center grant funding. Mr. Shin uses that record to suggest that a $250 million investment would translate into nearly $750 million in additional third-party revenues, bringing the total new revenue for health centers to approximately $1 billion.
With the per-capita cost of serving a health center patient estimated at $538, Mr. Shin calculates that centers would be able to serve an additional 740,000 uninsured patients nationwide and 1.1 million more publicly- or privately insured patients.
Serve 1.8 million more people
Thus, he says, an investment of $250 million would allow health centers to serve an additional 1.8 million patients. More than 92% of these new patients would be low-income, 63% would be members of racial and ethnic minority groups, and 40% would be uninsured.
In addition, communities would see some $2.1 billion in economic benefits from a $250 million investment, including 24,000 new community jobs and significant investment in community services and supplies.
Mr. Shin and his colleagues estimate that, of the total economic activity produced by an additional $250 million health center investment, 23% or $480 million would be generated in rural service areas, while 77% or $1.6 billion would be generated in urban communities.
Estimates of the state-by-state impact of a $250 million investment are for an additional 8,400 patients served, 40% of whom would be uninsured, and an average $6.6 million in economic benefits.
Asked about the availability of trained people to fill the 24,000 new work force positions he estimates would be created, Mr. Shin says some of the workers would be in health care positions, while others would be in companies that provide goods and services to health centers, including new small businesses that could open to serve new or expanded health centers.
"There will be a shortage of trained health care staff," he says, "but we're looking at the situation overall."
Mr. Shin says he did not analyze whether investing in community health centers would be more of an economic stimulus than a temporary increase in the federal Medicaid matching percentage. He did note, however, that health centers need strong Medicaid funding to continue their growth and "you can't do one without the other."
While the study had received little attention shortly after its release, Mr. Shin believes lawmakers will find its conclusions interesting as they look for additional ways to stimulate the economy.
More funding may come
National Association of Com-munity Health Centers vice president for federal relations Daniel Hawkins tells State Health Watch that members of Congress are becoming more aware of the broader economic impacts that come with investment in community health centers.
"Lawmakers have always understood there is a return-on-investment in community health centers that leads to reduced use of emergency rooms, fewer hospital admissions, etc.," Mr. Hawkins says. "But they haven't always understood the economic benefits health centers bring to the communities they serve through jobs, purchasing goods and services, etc. We've been trying to make the point that community health centers are an 'economic engine' as well as a way to improve health care for many people who need it."
Mr. Hawkins says that studies over the last 10 to 15 years have consistently shown that health centers save significantly more money than is spent on them.
He says he believes centers will receive an increased appropriation, although it's hard to say whether it will be the $250 million the paper envisions because of the budget difficulties and economic problems the country currently is facing. Mr. Hawkins notes support for health centers is bipartisan, pointing out that when President George Bush was governor of Texas, he visited health centers in that state and became convinced of the good they can do.
Asked whether community health centers really could make effective use of a significant increase in funds, Mr. Hawkins is adamant in his conviction that they are ready to expand as soon as the funds are available. "Over the last six years, health centers have grown by more than 70%," he says. "They've always been able to serve even more people than they projected and they receive a lot of local philanthropic support."
Mr. Hawkins acknowledges that staffing always is a problem, but says statistics over the last few years have shown that health centers are successful in finding and retaining professional staff.
Many federal grants, he says, require that health centers be ready to implement new services funded by the grants within 90 days and he says more than 80% of grant applicants meet that readiness test. In addition, he says there always are many more applicants for grants than there is funding available.
"There is a great need, interest, and desire to establish new health centers and begin to provide care at a level that far surpasses what Congress is able to fund," Mr. Hawkins says.
Download the report at http://www.gwumc.edu/sphhs/departments/healthpolicy/chsrp/downloads/DHP_RCHN_HealthCenterInvestmentReport.pdf. Contact Mr. Shin at (202) 530-2313. Contact Mr. Hawkins at (202) 296-3800.
A $250 million appropriations increase for community health centers would yield health care for an additional 1.8 million patients and a nationwide 4:1 return-on-investment, according to a study by George Washington University's Geiger Gibson/RCHN Community Health Foundation Research Collaborative.Subscribe Now for Access
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