Jeffrey Leonard has a thoughtful article in the November/December 2011 issue of Washington Monthly about expanding Community Health Centers in the future. Leonard takes a look at the bigger picture of the growing number of medically disenfranchised Americans, the need for job creation in this lagging economy, and the real obstacles that Community Health Centers face as they look to expand ahead of the full enactment of the Affordable Care Act.
The other problem with the funding set aside by the ACA is that the vast bulk of it can only go toward paying the operating expenses of a center, not its construction costs. That means a new center may use that federal money to pay rent on a new facility, but not to build or buy one. Thus the new centers will wind up operating as many do now, in make-do spaces like defunct big-box stores, rickety trailers, and even—in at least one case—a retrofitted gas station.
This is a very inefficient and, over the long run, expensive way for centers to expand. Needless to say, a converted gas station is hardly the ideal physical plant for a medical facility. But more importantly, rents only go up with time. If centers could build, own, or sign long-term leases for their own space, they would level out their occupancy costs, rather than watch those costs threaten to eclipse revenues year in and year out. Better yet, if health centers did so now, they would buy into a depressed real estate market with rock-bottom prices.
He explores why there are so many obstacles for health centers to secure private equity to expand, even though, as he points out: “Out of the 1,200 community health centers in America today, only one or two have ever defaulted on a loan.”
Be sure to read the whole article here. It’s an interesting perspective on what needs to happen to allow Community Health Centers to expand to serve more patients, keep costs predictable, create needed jobs, and have more modern facilities that better meet the needs of their patients.