HOSPITAL CASE STUDY IN FQHC DEVELOPMENT
As indicated at the recent HFMA 2006 Annual Institute in Atlantic City, along with the recommended strategy from the NJDHSS relative to hospitals converting their outpatient departments/clinics in collaboration with Federally Qualified Health Centers (FQHCs), we feel it appropriate to reintroduce our Hospital Case Study in FQHC Development. Our firm, Executive Resources, LLC, which is comprised of hospital executives (Harry Wright, formerly of Network, Inc. and Concord and Bill Cusick and Larry Sargent of Contemporary Health Care, Inc.), works with hospitals that are interested in exploring outpatient alternatives and are willing to consider “conversions” and other unique relationships with existing FQHCs / FQHC “Look-Alikes” to enhance financial viability.
Why hospitals should consider outpatient/clinic conversion include, but are not limited to the following:
- Reduce ongoing outpatient subsidies/losses
- Enhanced payment rates
- Provide more primary care access
- Limit primary care incidence in the ER
- Potential for primary care provider malpractice coverage/340B Drug Pricing Program
We are not saying FQHC development is “right” for everyone, but structured properly, it can be positive for both parties and for hospitals, it can further bottom-line financial viability of the system. We are nationally known in multiple states (NJ, LA, MS, MD, KY) in working with hospitals and other providers in outpatient conversions and FQHC development. Consider the following questions as they may apply to your organization:
- Is your hospital encountering significant and ongoing outpatient department cost subsidies/losses?
- Is the primary medical care incidence in your emergency room draining your financial resources due to primary care availability and accessibility?
- Do you feel that current payments to outpatient departments are inadequate and outdated relative to the mission of providing health care to your community?
- Do you think your hospital should remain in the business of direct provision of primary medical care or should share it with a community-based organization?
- Does it seem better for your hospital to develop ancillary, subspecialty, admission, and other relationships with a community-based primary medical care organization?
These are questions that we regularly inquire of hospital CEOs and CFOs. While the hospital bottom-line position continues to be eroded, something can actually be done about it relative to primary care provision. Executive Resources, LLC can assist your hospital in this arena, since this is what we have done for years, not as just today’s “hot topic” as provided by other consulting firms.
A hospital case study follows of which Executive Resources, LLC provided expert technical assistance (as Contemporary Health Care, Inc.) to our client and which may be adapted (whole or in part) to your own hospital:
- An existing health care system’s hospital member’s outpatient department/clinic was being subsidized to the tune of multi-million dollars.
- It was agreed that other alternatives needed to be considered to maintain and increase access for a program that was becoming increasingly Medicaid, uninsured, and underinsured – with limited payments. Consideration included the hospital member’s own community-driven mission as well as maintaining tax-exempt status.
- A task force evolved and commissioned a detailed feasibility study, which entailed financial scenarios of existing systems and alternative systems, including revenues, expenses, and staffing. The recommendation of the was to proceed with FQHC development and in this specific marketplace, there was no existing FQHC.
- A separate 501 (c)(3) non-profit was formed with a 51% user majority (actual patient users of the clinic) and 49% non-users.
- By converting the clinic to an FQHC, the new organization filed with DHHS applications to 1) achieve FQHC “Look-Alike” designation to receive “enhanced” Medicare and Medicaid payments and other benefits, and to 2) receive U.S. Public Health Service section 330 grant funding to increase access. FQHC Look-Alike status was achieved first and then section 330 status was achieved, providing the organization with $650K annually to expanded primary care access, along with other benefits including Federal Tort Claims Act malpractice coverage.
- The conversion was successful for the health care system regarding utilization and financial viability and a second member hospital, not in the same marketplace, was considered for conversion to this new FQHC.
- A reorganization of the Board of Directors took place to better represent both marketplaces of each site and then the FQHC submitted a Scope of Project Policy change to DHHS to “fold-in” the second member hospital’s outpatient department.
- The “scope change” process was successful and now both sites have all the benefits of an FQHC and the end result is a comprehensive preventive and primary care FQHC Network provider in the county and of which, has further developed ancillary, subspecialty, and other relationships with hospitals and community providers.
The timing is “right” for you to consider and evaluate the options available to your hospital and FQHC may be a viable alternative. Besides creating a new FQHC, becoming part of an existing FQHC Network and its resources through a formal Scope of Project Policy change is another alternative. Executive Resources, LLC can assist your hospital including concept development, feasibility study and model development, due diligence, and application processes, along with Board of Director development and medical staff education/buy-in. Don’t forget, we are hospital executives, who just happen to bridge the gap between hospitals and FQHCs. For further information, please call us at 732-974-7200.
Contact us, and we'll be happy to tell you exactly how we can address your particular institutional situation.