Policy Recommendations for the Secretary-Designate of the U.S. Department of Health and Human Services

I. Situation Analysis

A. The U.S. faces a primary care crisis.

Millions of Americans with health insurance and without currently lack access to primary care. Massachusetts is quickly discovering that enrolling hundreds of thousands of new residents places enormous demand on primary care system. Many primary care providers have closed their panels, and patients can wait up to four months for an appointment. A recent JAMA study found that the insured were proportionately more likely than the uninsured to seek non-emergency care in emergency rooms (a key indicator of insufficient primary care access). A recent Health Affairs study estimated a primary care physician shortage of 35,000 to 44,000 by the year 2025 which will likely worsen with expanded health coverage.

B. Primary care is core to health reform.

Health care reform is often equated only with expanded or universal health coverage. However, if expanded coverage is to be affordable and effective, a consistent and substantial investment in primary care services is necessary. While expanding health insurance increases demand for health care, it does little to address supply. With chronic illness reaching epidemic proportions, access to primary care is key to improving health outcomes; eliminating health care disparities; and dramatically reducing health care costsparticularly those that result from avoidable emergency room and inpatient use.

C. A robust primary care sector spurs economic development in low-income communities.

New, expanded and renovated facilities are crucial to recruiting and supporting physicians to practice in low income communities. These facilities catalyze economic development in low income communities, producing quality construction and permanent jobs for community residents at all levels of skill and education. The overall economic impact of community health centers reaches $12.6 billion annually, producing 143,000 jobs in some of the country's most economically deprived neighborhoods. Moreover, access to quality primary care supports worker productivity, acquisition of skills and education, and sustainable communities. Conversely, the absence of primary care causes illnesses that could be otherwise prevented or managed to become life threatening, leading to lost time and productivity, family financial devastation, dependence, disability, and even premature death. The impact is even more striking in low income neighborhoods where prevalence of chronic illness runs two to three times higher than in upper-income communities.

D. Severe lack of capital impedes the development of needed primary care.

Complexity of the health care market, shifts in payment policy, and the low margins for most primary care providers, combine to make primary care investment an unacceptable risk for most lenders. The problem is further exacerbated by the current credit crisis. Lack of capital hampers the development and modernization of health centers; the rapid redesign of primary care models into Patient-Centered Medical Homes; the adoption of health information technology, including Electronic Medical Records; and the hiring and retention of a qualified primary care workforce.

II. Policy and Financing Recommendations

Given the interconnected nature of the economic and health care crisis, and the importance of primary care to both, we urge that these recommendations be enacted as rapidly as possible, and that they be considered a component of both an economic stimulus package, as well as the Obama Administration's comprehensive health care reform agenda.

A. Establish a leveraged grant fund to build and expand primary care facilities.

Modeled after New York's Community Health Center Capital Grant Program, this fund would require a match, leverage private resources, and reduce the overall cost of capital, making expansion affordable to many providers unable to build reserves or equity because of the low-income payment populations they serve. Not only will this leverage the U.S. Government's dollars, it will stimulate the credit market for worthy investments in communities with little access to credit.

B. Consider establishing the PCDC model throughout the U.S.

PCDC has developed a highly effective and replicable model for primary care development that has dramatically expanded primary care capacity in New York State. PCDC is the only Community Development Financial Institution in NYS, and the largest and one of the only in the U.S., focusing solely on primary care. A public-private partnership, PCDC marshals support and capital resources from City, State, federal and private sources, offering this capital in the form of favorable-term loans, and providing technical assistance necessary to ensure profitable, sustainable primary care business models that expand access to primary care in underserved communities. Since its founding in 1993, PCDC has provided or leveraged a total of $240 million for 77 health center projects throughout New York State; generated more than 2,100 permanent jobs; built or renovated 620,000 SF of space and created the capacity to provide 1.6 million medical visits serving some 525,000 patients annually. The PCDC model is gaining interest around the country, but must be scaled up rapidly to effectively mobilize the capital necessary to expand primary care throughout the United States.

C. Reform the primary care payment system and care model.

Payment must be sufficient to pay the costs of delivering an effective model of care, consistent across payers and settings, transparent in the content and quality of what is purchased, and aligned to support improved health outcomes. A sufficient revenue stream will attract lenders that have to date considered financing primary care an unacceptable risk. The Patient-Centered Medical Home (PCMH) offers a promising model that is gaining widespread support. The PCMH model requires radical redesign of service delivery, clinical care, and business processes. Adequate pay, and a care model that places value on patient care instead of paperwork, are crucial to attracting physicians to primary care.
About the Primary Care Development Corporation

Since 1993, the Primary Care Development Corporation (PCDC) has been transforming health care in underserved communities in New York and beyond through high-impact financing, innovative services, and policy leadership that helps providers expand access to quality, patient-centered primary care. With years of experience financing successful primary care enterprises, PCDC has invested over $200 million in more than 70 capital projects that deliver care to more than 500,000 people in low-income communities.

PCDC has also helped over 400 care teams at dozens of health centers increase productivity, effectively implement EMR, and prepare for emergencies. PCDC earned a AAA Impact Performance Rating from the Community Development Financial Institution Assessment and Rating System, (highest rating possible).