Factors associated with federally qualified health center financial performance. (21st March 2022)

• Record Type: Journal Article
• Authors: Jung, Daniel; Huang, Elbert S.; Mayeda, Eric; Tobey, Rachel; Turer, Eric; Maxwell, James; Coleman, Allison; Saber, Jennifer; Petrie, Susan; Bolton, Joshua; Duplantier, Daniel; Hoang, Hank; Sripipatana, Alek; Nocon, Robert
• Is Part Of: Health services research. Volume 57:Number 5(2022)
• Page Start: 1058
• Page End: 1069
• Publication Date: 2022-03-21
• Subjects: access to health care -- federally qualified health center -- financial management -- Medicaid -- Medicaid expansion; Medical care -- Periodicals; Medical care -- Evaluation -- Periodicals; Hospital care -- Periodicals; Health services administration -- Periodicals; 362
• DOI: 10.1111/1475-6773.13967
• Languages: English
• ISSNs: 0017-9124

Abstract

Abstract: Objectives: To understand factors associated with federally qualified health center (FQHC) financial performance. Study Design: We used multivariate linear regression to identify correlates of health center financial performance. We examined six measures of health center financial performance across four domains: margin (operating margin), liquidity (days cash on hand [DCOH], current ratio), solvency (debt‐to‐equity ratio), and others (net patient accounts receivable days, personnel‐related expenses). We examined potential correlates of financial performance, including characteristics of the patient population, health center organization, and location/geography. Data Sources: We use 2012–2017 Uniform Data System (UDS) files, financial audit data from Capital link, and publicly available data. Data Collection/Extraction Methods: We focused on health centers in the 50 US states and District of Columbia, which reported information to UDS for at least 1 year between 2012 and 2017 and had Capital link financial audit data. Principal Findings: FQHC financial performance generally improved over the study period, especially from 2015 to 2017. In multivariate regression models, a higher percentage of Medicaid patients was associated with better margins (operating margin: 0.06, p < 0.001), liquidity (DCOH: 0.67, p < 0.001; current ratio: 0.28, p = 0.001), and solvency (debt‐to equity ratio: −0.08, p = 0.004). Moreover, a staffing mix comprised of more nonphysician providers was associated with better margin (operating margin: 0.21, p = 0.001) and liquidity (current ratio: 1.12, p < 0.001) measures. Patient‐centered medical home (PCMH) recognition was also associated with better liquidity (DCOH: 19.01, p < 0.001; current ratio: 4.68, p = 0.014) and solvency (debt‐to‐equity ratio: −2.03, p < 0.001). Conclusions: The financial health of FQHCs improved with provisions of the Affordable Care Act, which included significant Medicaid expansion and direct funding support for health centers. FQHC financial health was also associated with key staffing and operating characteristics of health centers. Maintaining the financial health of FQHCs is critical to their ability to continuously provide affordable and high‐quality care in medically underserved areas.