With a record budget deficit threatening operation of some of the state's community health centers, the California HealthCare Foundation (CHCF) will again make $10 million available to the Emergency Working Capital Loan Fund, a low-interest loan pool designed to ensure California's safety-net clinics provide uninterrupted care.
The $24 billion budget shortfall has ignited a financial emergency, threatening the flow of reimbursement dollars from Medi-Cal, California's insurance program for low-income families. During previous budget delays, the state was able to draw upon a small reserve fund to continue making Medi-Cal payments to community health centers and other institutional providers. Given current circumstances, there is uncertainty about whether those payments will continue after June 30.
"The situation in Sacramento is as uncertain as I've ever seen, while at the same time some community health centers are experiencing a 10 to 50% increase in the number of uninsured patients they see because of these hard times," said CHCF president and CEO Mark D. Smith, M.D., M.B.A. "The emergency loan pool is vital to ensuring that these important providers are able to continue to provide care."
A recent survey by the California Primary Care Association (CPCA), the statewide association of over 700 community clinics and health centers, found that nearly eight in ten clinics surveyed would require an emergency loan if Medi-Cal payments were delayed by eight weeks. With Medi-Cal reimbursement accounting for up to 50% of community health center revenue -- or approximately $10 million each week statewide -- further delay in reaching a budget agreement will make it very difficult for many clinics to meet payroll and overhead expenses. As a result, some will be forced to reduce patient services, reduce hours of operation, or shut down altogether.
As was the case last year, the Foundation has joined others in contributing to the loan fund, through which eligible clinics can receive a maximum of $1.5 million. CHCF's participation in the fund brings down the effective interest rate for clinics seeking loans to 3.6%.
Loan underwriting, approval, documentation, and servicing will be handled by NCB Capital Impact, a national nonprofit organization with a proven track record of lending and managing loans to community health centers in California. To qualify, a clinic must be a nonprofit primary care, family planning center, or tribal clinic and have been in existence for three years prior to loan application.
Other contributors to the Emergency Working Capital Loan Fund include Catholic Healthcare West, Sutter Health, the Nonprofit Finance Fund, NCB Capital Impact, Mercy Partnership, and the CPCA Loan Fund. The $10 million contribution by CHCF brings the fund's total to $26 million.
Visit the NCB Capital Impact Web site at www.ncbcapitalimpact.org for more information.
CHCF participation in the loan fund is part of its broader effort to support the state's crucial health care safety-net institutions, which includes increasing efficiency through the widespread implementation of electronic health records, quality improvement activities, and care process redesign.