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Trends in Health Care and the Role of CHCs in Low-Income Communities
This training module provides an overview of the American health care delivery system and the role that community health center (“CHCs”) play within it. The session highlights the major shifts occurring in the health care industry, including affordability and cost, and the importance of CHCs providing access to affordable health care. The module concludes with an understanding of how the social determinants of health are directly correlated with broader community development objectives.
- Author: Tom Manning, Primary Care Development Corporation
- Summary: This presentation provides an overview of how federally qualified health centers (“FQHCs”) fit within the overall American health care system, the broad market forces driving health care reform, the role of FQHCs within these changes, and their importance in providing access to affordable health care in the United States.
Defining the CHC Landscape
This training module offers a historical perspective of the CHC movement and the essential elements to be a federally qualified health center. The presentation helps CDFIs understand the types of patients that health centers serve, the services provided, and the types of revenue and funds generated by CHCs. The module concludes with a discussion of the major drivers of growth for health centers and opportunities for CDFIs to support this growth.
- Author: Allison Coleman, Capital Link
- Summary: This presentation highlights the history of the CHC movement, and the five basics characteristics of FQHCs including the various enabling services that CHCs provide to medically underserved areas. The presentation offers a snapshot of the accomplishments and economic impacts of CHCs in low-income communities. CDFIs will understand how the changing operating environment is shifting to primary care and how CHCs are positioned to benefit.
Additional Tools
- America’s Health Centers (August 2013)
- Author: National Association of Community Health Centers
- Summary: This fact sheet defines health centers, the various types of people that benefit from their services, how CHCs overcome barriers to care and how they make a difference in medically underserved areas, and why investing in CHCs is important.
- Community Health Centers at a Glance Infographic (March 2013)
- Author: National Association of Community Health Center
- Summary: A snapshot of the number of CHCs, annual patients served, and the demographics of persons that receive primary care from CHCs.
- Community Health Centers in an Era of Health Reform: An Overview and Key Challenges to Health Center Growth
- Author: Kaiser Commission on Medicaid and the Uninsured
- Summary: This research provides a current snapshot of health centers and discusses recent developments that can be expected to have a significant impact on health center growth in the coming years.
Primary Credit Needs of CHCs and Sources of Credit
This module’s objective is to identify the major capital project needs for community health centers over the next five years. To help meet those needs, the module highlights the primary types and uses of loan products that are requested by CHCs, and summarizes the major sources of capital for CHCs, including those provided by public, private, and philanthropic entities.
- Author: Scott Sporte, Capital Impact Partners
- Summary: Based on Capital Link’s 2012 survey, “Capital Plans and Needs of Health Centers”, there is an estimated $3.8 billion gap in financing for CHCs to complete planned projects over the next five years. The presentation delves into the primary financing needs of CHCs, which includes, but isn’t limited to, financing for equipment, working capital, construction, and acquisition. CDFIs will have a better understanding of the various sources of grants, equity, and debt that are available to CHCs.
Additional Tools
- Capital Plans and Needs of Health Centers – A National Perspective (2012)
- Author: Capital Link
- Summary: In the fall of 2011, Capital Link conducted a national capital needs study of health centers across the country. The purpose of the study was to determine the current capital plans of health centers nationally—and to determine whether these plans, if funded and implemented, would be sufficient to provide the facilities necessary to serve 40 million patients.
CHC Financial and Operational Metrics and Trends
This module provides an overview of CHCs’ operating structures, composition of revenue streams, and typical expenses (including staffing structures and how they impact revenues and productivity). The data presented in the module is of the “median CHC” to assist CDFIs with understanding what a “typical health center looks like” from an operational and financial perspective. The module highlights the changing CHC payor environment and how it may affect health centers.
- Author: Allison Coleman, Capital Link
- Summary: This presentation provides financial and operational benchmarking data to assist CDFIs with underwriting and investment consideration for CHCs. The module will provide CDFIs key metrics for understanding CHC operating margins, liquidity, leverage, and capitalization ratios.
Additional Tools
- Financial and Operational Ratios and Trends of Community Health Centers, 2008-2011 (August 2013)
- Authors: Capital Link and Community Health Center Capital Fund; published by the Federal Reserve Bank of San Francisco, Community Development Investment Center, March, 2014.
- Summary: This report provides an operational and financial overview of the community health center industry from 2008 to 2011. It was prepared with the goal of increasing the information available to community health center lenders and investors.
Underwriting CHCs
This module provides CDFIs with the essential tools to understand the key elements of CHC credit analysis and underwriting considerations. The module highlights common risks and mitigations in lending to CHCs and how the financial ratios discussed in the “CHC Financial and Operational Metrics and Trends” module should be incorporated in the credit analysis process. In addition to the financial analysis, the module will highlight other underwriting considerations such as collateral, management and governance, competition, and social and community development impacts.
- Author: Scott Sporte (Capital Impact Partners) and Tom Manning (Primary Care Development Corporation
- Summary: This presentation provides an overview for CDFIs on how to underwrite and define impact measurement for CHCs. CDFIs are given the fundamental credit analysis considerations, and the key underwriting challenges for CHCs. Training participants completed three case studies of CHCs requesting financing from CDFIs. The case studies incorporated how various forms of capital, including using tax credit finance, are used as subsidies to make CHC projects economically feasible.
Case Studies
- Working Capital: Due to cash flow concerns resulting from the implementation of a new patient management system, a CHC is requesting a working capital loan to manage its increase in accounts receivable.
- Capital Project: A CHC is seeking financing for the proposed relocation and expansion of its main clinical facility. The total project budget includes acquisition, construction, and permanent financing.
- Acquisition of a Failing CHC: A CHC is requesting financing to expand by acquiring a failing community health center. In order to raise sufficient capital for the transaction, the CHC will use tax-exempt bond financing and a loan from a CDFI.
Development Services and Partnerships
This module summarizes the major technical assistance resources and organizations that support the CHC industry. In addition to highlighting the major government, nonprofit, and philanthropic stakeholders, CDFIs will learn how to interface with these organizations in order to better serve CHCs.
- Author: Allison Coleman, Capital Link
- Summary: The presentation is an overview of the various national and state organizations that provide technical assistance, advocacy, and capital support to CHCs. The presentation also highlights the direct services that CDFIs offer to CHCs to build their capacity.