Publication

Financial Health of Community Clinics

Capital Link

Community clinics are a vital part of California's health care safety net — especially for the state's growing populations of uninsured and low-income consumers. These nonprofit primary care centers, which serve the state's neediest people, include: Federally Qualified Health Centers* (FQHCs); nonprofit Rural Health Clinics (RHCs); free clinics; and other licensed safety-net centers such as family planning and school-based clinics. In a period of economic distress for many Californians, the financial viability of community clinics is particularly important.

This snapshot captures key measures of clinics' financial health from 2003 to 2006. It is based on a 2009 report prepared by Capital Link in collaboration with the California HealthCare Foundation.

Key findings include:

• Spurred in part by federal grants for FQHCs, California's community clinics have grown significantly in terms of the number of clinics, patient visits, revenues, and expenses. By 2006 there were 762 clinic sites, up from 596 in 2003.
• A growing proportion of California’s uninsured and low-income populations are using community clinics. By 2006, over half of Californians with income below the federal poverty level were served at clinics.
• About two-thirds of clinic revenues come from patient services, which increased 43% from 2003 to 2006 — faster than other revenue streams.
• Clinics are heavily dependent on Medi-Cal programs, which provide almost 70% of revenues from patient services, and the proportion is growing; any change in Medi-Cal reimbursement or eligibility would have a major impact on clinics and patients.
• Larger clinics, in general, perform better financially than smaller ones, although some small clinics also perform well.
• Although one-fourth of clinics have a strong bottom line, most operate at or under breakeven, and these figures are worsening.
• California's fiscal crisis is a threat to clinics due to possible state-funded health program cutbacks as well as to a decrease in the availability of loan capital for nonprofit enterprises with low margins.

The snapshot and the complete report are available under Document Downloads.

* FQHCs include Section 330 health centers, which receive federal grants to help cover the costs of providing care to those who cannot afford to pay, as well as "look-alikes," which do not receive these grants but are eligible for cost-based Medicare and Medi-Cal reimbursement.