Community Health Centers Save Medicaid 24%

An analysis of claims data finds that health centers save, on average, $2,371 in total spending per Medicaid patient when compared to other providers.

A sweeping multistate study led by University of Chicago researchers validates what many public health advocates have known for years: Community Health Centers are a tremendous value.

The study, which will appear in the November issue of American Journal of Public Health, analyzed Medicaid claims data from 13 states for health center and non-health center patients, and found that health centers save, on average, $2,371 (or 24%) in total spending per Medicaid patient when compared to other providers.

The savings came primarily from lower utilization and spending across key drivers of healthcare costs, including:;

• 22% fewer hospital visits
• 33% lower spending on specialty care
• 25% fewer hospital admissions
• 27% lower spending on inpatient care
• 24% lower total spending

Dan Hawkins, senior vice president for Policy and Research at the National Association of Community Health Centers, calls the study "absolute validation of not only our own sentiment and belief in the value and effectiveness of health centers, but also a validation of studies done earlier using older Medicaid data, and studies going all the way back to the 1970s."

"This is the most recent, and it's the most comprehensive study; [comprising from] 13 states more than one million Medicaid beneficiaries' data claims," Hawkins says.

"It's not our data. It's Medicaid data from the states and (the Centers for Medicare & Medicaid Services) and it affirms the fact that health center care leads to lower use and lower spending in all the important factors: inpatient hospital, emergency room, and specialty care that drive total spending in areas generally for both public and private payers."

3 Influencing Factors

Hawkins credits much of the savings generated by the 1,300 community health centers across the nation to three factors:

1. Nonprofit Status

"No. 1, they are nonprofit organizations, all of them," he says. "They are not out to make a fast buck. That is not to say that every other provider is out to make a fast buck, but there are some out there and that is part of what drives spending, for sure."

2. An Extremely Low-Income Population

"No. 2, the people they serve are low-income in the extreme; 93% have incomes below twice the federal poverty level," he says. "Even for those among them who have coverage, the coverage is typically Medicaid. It is exceedingly difficult to get a low-income patient an appointment with a specialist, and it requires that it be done by the health centers only when they desperately need that care."

"Then, the health center physicians will go into beast mode and do what they have to do to get the care for these folks. But they don't just willy-nilly send the patients out for an MRI or a consult when the patient needs it. They are not into overuse because they can't afford it."

3. A History of Quality Improvement

"Finally, there is a long history of health centers being focused on quality improvement," he says. "A significant number of health centers today are primary care medical homes. Many have been certified as quality of care leaders. This is something that health centers aspire to."

"They understand that simply because they see low-income and difficult-to-serve people they might be considered less-than-stellar providers in their own right. The 12,000 physicians and thousands of other clinicians who work at health centers do not want to be considered second class so they strive to do the best they can."

With a growing body of evidence showing that health centers work, Hawkins says the next push will be to double, from 25 million to 50 million, the number of people served each year over the next decade by community health centers.

"There are still more than 50 million Americans today, this according to the National Center for Health Statistics, who don't have a source for primary care, other than the emergency room, where they go sporadically," he says.

"Health centers want to be that source of care for those individuals because they are the patients who drive up spending by delaying care until it's costly."