Federal Funding Deadlock Costs Safety Net Clinics

Hollywood, California, and rural North Carolina have more than just distance separating them. But despite the cultural, economic, and weather differences, safety net health centers in each location report a shared challenge, one which is being exacerbated by Congress and political wrangling.

“It’s already hard to recruit people to work in rural areas, and it doesn’t instill confidence to have to ask Congress to remember us every few years,” said Leslie Wolcott, director of communications at Roanoke Chowan Community Health Center in North Carolina.

“Big picture, between cost-of-living increases, inflation, and the cost of doing business, retention is a huge issue, just being able to pay competitive wages. How do you sustain that?” said Adam Friedman, chief marketing officer at the Saban Clinic.

Federally Qualified Health Centers, which care for tens of millions of people in the U.S. annually at a fraction of the cost of hospitals, are set to lose their main source of federal grant funding after September 30 unless Congress manages to break its deadlock on the issue. This healthcare network, started during the Lyndon B. Johnson administration, has enjoyed bi-partisan support through the years, including a notable expansion during George W. Bush’s time in office, when funding for FQHCs doubled, leading to patient number increases of 60%. Currently, there are more than 14,000 FQHC sites, also called community health centers, across the U.S.

While health center leaders do not expect the funding to be withheld, ambiguity regarding the final amount of funding is already leading to negative impacts in terms of recruiting and weakening trust among community members, according to Wolcott and Friedman.

“The uncertainty about funding just adds another layer of challenge, an additional headwind,” said Joe Dunn, vice president of the public policy and research division at NACHC.

Data from NACHC showed that in 2022, Medicaid provided 43% of revenue to FQHCs, Section 330 Federal Grants provided 12%, private third-party payers provided 12%, Medicare provided 9%, and the rest was paid by a combination of other grants, federal and not, as well as directly from patients and other sources. NACHC states the average cost of an FQHC visit is $322 compared to an average emergency room visit, which is $2,600 according to data from health insurance company UnitedHealthcare.

So far this year, more than 5.5 million Americans have been disenrolled from Medicaid. This could also impact health centers, as some people might not know they can still seek care at community health centers. However, these centers will likely face challenges with reimbursements for such uninsured visits, particularly if federal grants are not expanded and approved. Medicaid is the largest revenue source for FQHCs nationally, according to the National Association of Community Health Centers, an advocacy organization for community health centers.

“The role that health centers play in the health of the whole country is critical, so when you hear these kinds of things happening [funding cliffs], it’s concerning,” Friedman said. “It’s certainly concerning when you’re in the trenches of the health care system that we have and when you’ve been providing equal access to care for over 55 years, and you know the need is strong,” he said.

Friedman noted that the federal grant uncertainty comes at a particularly inopportune time, as behavioral health visitors increased by 50% in 2022, which will rise this year, and some of the local safety net programs, including at the county-level, do not cover behavioral health, forcing Saban to seek private donors to fill in the funding gaps.

Lenna Poulatian, Saban’s director of development, said that while past funding helped pay for a pediatric behavioral health specialist – pediatric visits have tripled since 2020 – future donations are at-risk due to the ongoing Hollywood strikes and broader economic uncertainty. Saban’s supporters include major Hollywood studios and networks as well as non-entertainment foundations and private donors.

In North Carolina, Wolcott said the timing comes RCCHC just broke ground on a new dental clinic. A hospital in their area, Martin General Hospital, recently closed, which will have ripple effects when it comes to primary health care access in the area, Wolcott said.

“Rural healthcare is really precarious,” she said. “When hospitals close, it messes up the primary healthcare system, and then it falls on FQHCs,” Wolcott said.

Further adding to the strain, many critical programs offered by RCCHC are not fully reimbursed, forcing the clinic to shore them up with additional funding from additional grants. These programs include mobile clinics for farmworkers, eye exams for diabetics, and colorectal screenings.

“We are providing care with not enough resources. And with every potential finding cliff, we have to lay out our core services to see what we would have to cut. Staffers hear this, and word gets around town,” Wolcott said, adding that, although no services have been curtailed, it reduces trust among the community.

“News spreads fast in a small town,” she said.

In LA, Friedman said Saban Clinic remains resilient and plans to continue to provide all services they currently offer, even with the uncertainty.

“We want to keep doing the work that we do, and we hope they (Congress) would see the value we provide,” he said.