Health center financial performance: National trends and state variation, 1998-2004

For four decades, health centers have provided quality, cost-effective primary healthcare to underserved populations. Using the Uniform Data System, this study analyzes national trends in health center patients, providers, and financial performance for 1998-2004, and state-specific data for 2004. Between 1998 and 2004, health centers served increasing numbers of underserved patients, which included patients who were uninsured or on Medicaid, minorities, and patients at or below poverty level. Even though the number of health center providers and patients increased, patient-to-provider ratios did not change significantly. Medicaid remained the single largest source of health center revenue, accounting for 36.4 percent of total revenue in 2004. Compared with Medicare, private insurance, and self-pay, Medicaid consistently reimbursed health centers at the highest rate per patient. Federal and nonfederal grants to support care for the uninsured as well as enabling services such as transportation, translation, and other support systems is one of many important sources of revenue. Financial challenges for health centers included increasing costs and varied or declining rates of reimbursement for services rendered. However, health centers became more self-sufficient over time, average net revenues increased, and operating margins were predominantly positive. Data on individual states, with different numbers and types of health centers, varied widely in all of these categories. In conclusion, health centers rely on federal and nonfederal grant support in concert with the Medicaid program as major funding sources and continued financial stability will be contingent upon health centers' ability to balance revenues with the cost of managing the vulnerable populations that they serve.