California FQHCs: Financial and Operational Performance Analysis
April 2, 2019
Capital Link, with the support of the California Health Care Foundation, provides an aggregate financial and operational profile of California Federally Qualified Health Centers (FQHCs) for 2013–17. By presenting multiyear statewide median results, this report offers a framework for identifying the financial strengths, challenges, and benchmarks that support opportunities for performance improvement.
Key finding include:
Growth and expansion: California health centers experienced rapid growth from 2013 to 2017, although the pace of expansion slowed in 2017.
Payer mix: The patient payer mix of California FQHCs stabilized in 2017 after significant shifts from 2013 to 2016. Medi-Cal remained an important payer, providing 65% of patients with coverage and generating 85% of patient revenues by 2017 for the median health center.
Financial performance: Between 2013 and 2017, California health centers increased revenues and generated modest but healthy operating margins. However, 25% of clinics had an operating margin of 1% or less (with many operating at a loss), offering a reminder that additional improvement is needed to safeguard the sustainability of these critical safety-net organizations.
Financial condition: Health centers in California strengthened their liquidity in 2017, supported by strong operating surpluses and improved patient revenue collections processes. Healthy cash reserves are essential to support continued growth in patient care capacity.
Utilization: Annual patient utilization showed incremental growth. It is likely that utilization growth was driven by insurance expansion and the addition of comprehensive services. Given the current volume-based FQHC reimbursement model, this increase in utilization was financially beneficial for health centers.
Productivity: Although overall productivity levels, as measured by number of visits per provider, were generally below those seen in 2013, California health centers were able to reverse recent productivity declines in 2017. Nationally, health centers continued to experience decreases. Provider productivity challenges coincided with an extended period of transformation at health centers, which includes the continued implementation of electronic health records and the transition to team-based care models. These activities required time, reducing the amount of time available for providers to see patients.
Quality of care: California FQHCs continued to perform well compared to their national counterparts based on key quality-of-care metrics as reported to HRSA, including child immunization rates, asthma treatment, and colorectal cancer screenings, although compared less favorably on measures such as depression screenings.