California’s Federally Qualified Health Centers (FQHCs) are a critical provider of heath care, particularly for communities of color. It is vital that health centers are financially and operationally stable so they can continue to effectively provide patients with primary care, behavioral health, and dental services.

At the start the COVID-19 pandemic, California’s health centers were already facing financial challenges that had put them on uncertain ground, with significant reductions in operating margins between 2016 and 2019. Once the pandemic hit, face-to-face primary care visits and corresponding reimbursements dropped precipitously. California health centers employed a range of immediate loss-mitigation strategies, which varied in level of effort, but taken together, sustained health centers through 2020 as the pandemic continued. Strategies included:

• Embracing and investing in telehealth
• Reassigning and furloughing staff
• Spending down reserves
• Closing sites temporarily
• Generating quick cash
• Tapping into COVID-19-related federal support
• Leveraging partnerships

With the ongoing pressure the pandemic is placing on the state’s health care delivery systems and the corresponding financial challenges faced by FQHCs, health centers will need to continue to be creative. In addition, policy actions can speed health centers’ recovery from the financial shocks of the pandemic and ensure that they can continue to provide essential access to care. A deeper exploration of these operational changes and policy considerations will be provided in a final report to be published in spring 2021.

About the Authors

Carol Backstrom, MHA, is the vice president for Medicaid Policy & Programs at Aurrera Health Group, a mission-driven national health policy and communications firm based in Sacramento. Allison Coleman, MBA, is the chief executive officer of Capital Link, a national nonprofit organization focused on strengthening FQHCs — financially and operationally — in a rapidly changing marketplace. Capital Link helps health centers plan for sustainability and growth, access capital, improve and optimize operations and financial management, and articulate their value.