Kresge awards $1.2 million to Indiana and Wisconsin primary health care associations to strengthen community health centers
Technical assistance program will help health centers improve financial operations and adapt to change.
The recent U.S. Supreme Court decision to uphold the Affordable Care Act will mean huge changes, including increased demand, for health centers serving the nation’s most vulnerable populations.
To help federally funded community health centers adapt to a rapidly changing environment, The Kresge Foundation is investing more than $1.2 million in a comprehensive technical assistance program in Indiana and Wisconsin that could be replicated in other states. More than 20 million Americans receive primary care through community health centers.
The foundation awarded $652,000 to the Indiana Primary Health Care Associationand $583,000 to the Wisconsin Primary Health Care Association. The associations advocate for access to primary care services and provide technical assistance to federally qualified health centers in their respective states. Wisconsin’s 18 health centers care for more than 280,000 patients. Indiana’s 19 federally funded centers serve almost 260,000.
The grants will fund the STAR initiative, created by the health care associations, IFF, Fiscal Management Associates and Kresge. STAR stands for strengthen and transform community health centers, help them adapt to change, and provide a model that can be replicated.
As part of STAR, eight health centers in Wisconsin and nine in Indiana will receive intensive coaching and technical assistance to help them establish goals and develop and implement individualized improvement plans. Another five in Wisconsin and six in Indiana will participate in training activities but will not receive technical assistance.
STAR will help participants:
- Create teams to make strategic decisions based on data.
- Optimize revenues by understanding revenue cycles and per-patient service delivery costs.
- Use process improvement tools such as Lean Six Sigma.
- Update business plans for future growth and capitalization.
“STAR was created in response to the need for high-performance federally qualified health centers, given the number of newly insured people expected to enter the health care rolls,” says Kresge Social Investment Practice Director Kimberlee Cornett.
Stephanie Harrison, executive director of the Wisconsin Primary Health Care Association, and Philip Morphew, chief executive officer of the Indiana Primary Health Care Association, agree community health centers face enormous challenges.
In addition to serving more patients, health centers are dealing with many new variables, including pay for performance and regulatory reform, Harrison says.
“We want to help stabilize health centers and increase their capacity in the financial area,” she says. “Typically each center has a chief financial officer who works on day-to-day operations and strategy. Unlike hospitals, most health centers don’t have a lot of bench strength to handle finances. A team approach will provide more breadth and depth to financial operations so centers won’t depend only on one person.”
Health care centers need to be more flexible and plan for various business scenarios. “In the past, if one thing changed, it could threaten a center’s financial stability,” she adds.
“In Indiana,” Morphew says, “we have large swaths of the state with no federally qualified health centers and urban areas without enough capacity to meet current need.” The Affordable Care Act will increase the state’s Medicaid enrollment — 1.24 million in Indiana in 2010 — by at least 200,000 people, he estimates. Wisconsin has 1.17 million enrolled in Medicaid. Unlike Indiana, Wisconsin anticipates a flattening or even reduction in Medicaid rolls because the state exceeds coverage thresholds mandated by the Affordable Care Act.
“The challenge is to build capacity and maintain the high quality we have,” Morphew says. “We’re working with health centers to identify points of leverage for improvement. One center might need help with electronic medical records. Another may not be coding bills accurately and effectively. Others have problems collecting overdue payments.”
STAR will bring together health center staff members from Indiana and Wisconsin to learn from external consultants and from each other, Morphew says. “There is great wisdom at the front line. Each center has practices that work. These health centers can raise the collective bar.”
Measures of STAR’s success include:
- Health center leaders are confident in their ability to adapt to a rapidly changing environment.
- Teams use data to make good business decisions.
- The financial team introduces efficiencies.
- The health center creates a sophisticated business plan that demonstrates it can repay a loan.
“The associations have set an aggressive goal to have 80 percent of the health centers ‘loan ready’ within three years, meaning that they will be financially stable enough to secure a loan to build or renovate their facilities and raise their levels of service,” Cornett says. “Many federally qualified health centers currently are unable to borrow money because of debt or are not considered good credit risks.”
The grants complement a loan partnership Kresge established with IFF, a community development financial institution, in 2011 to make $5 million in loans and technical assistance available to health center borrowers over a 10-year period. If the associations are successful and 80 percent of STAR participants become loan ready within the three years, Cornett anticipates other primary health care associations will look for opportunities to partner with community development financial institutions like IFF.
The partnership between IFF and the Indiana and Wisconsin associations will be featured at the National Summit on Community Health Care Lending and Innovation, being sponsored by Kresge and the Robert Wood Johnson Foundation Sept. 18-19 in Bloomfield Hills, Mich. (See related story.)