Healthcare Expansion Funding Options: Weighing Pros/Cons
The financial struggles underserved communities face may seem abstract, but the ways in which a lack of funding affects public health are strikingly vivid. Alongside higher infant mortality and lower life expectancy, a lack of access to primary care is a result of income inequality that creates a domino effect of poorer health and steep emergency room bills for the people with the fewest resources. Health centers can support financial support through a variety of supporters, each offering its own benefits. When it comes to the overall success and longevity of a health center, however, CDFIs such as PCDC are the best resource available.
Federal grants play no small part in supporting our nation’s medical system. The government steers billions of subsidy dollars into poor neighborhoods each year, and the impact these funds make is even greater. The National Association of Community Health Centers estimates that every $1 million in federal funding for centers’ operations yields $1.73 million in return by leveraging an additional $270,000 of state and local grant funding and an additional $70,000 of foundation and private grant funding. This relationship between the government and local health centers helps to nurture public-private partnerships, therefore contributing to the environment, economy, and health of underserved communities.
While the billions that subsidize healthcare are by no means insignificant, the breadth of the healthcare landscape makes for a lot of ground for that money to cover. For every federal healthcare dollar, only seven cents goes toward primary care nationwide. This isn’t enough to meet the needs of low-income communities, much less expand their current health centers.
Additionally, federal funds don’t come with a guarantee of consistency from year to year. Congressional efforts to reduce the deficit means budget cuts are often on the table. Studies show that improved primary care can decrease healthcare costs overall, but the price of primary care will have to increase before we can see reductions elsewhere. This makes calling for increased funding to primary care facilities a particularly hard sell.
Banks, Community Lenders, Advocates, and Foundations
Where federal funds fall short, independent lenders and donors can provide supplementary income. Lenders, whether they are bankers, policy makers, or entrepreneurs, often bring their expertise to the cause alongside financial support. Since underserved clinics often receive funding from multiple sources, this allows clinics to make connections that may prove useful in the future.
Independent loans and one-off donations don’t come with lifetime guarantees. Therefore, health centers can’t count on this income from year to year. Supporters of this kind usually don’t provide advisory services to help improve a healthcare center through operational improvements alongside the added funds. Lenders that aren’t socially motivated may not be as incentivized or as well-equipped to assist underserved communities in managing capital and building credit. And in the worst cases, they may exploit communities and organizations in need.
The community development sector has an excellent track record of finding ways to attract all types of capital, including loans and government subsidies, to projects with good business fundamentals. CDFIs help their clients build credit and join the economic mainstream. Alliances between community health centers and CDFIs have powerful potential for community-level planning and implementation of state and federal initiatives. With a shared mission to improve a community’s wellbeing, CDFIs and community health centers make for a strong partnership.
At PCDC, we raise impact-focused capital from the government, banks, and other foundations to fund our loans. We also partner with community lenders and advocates who are dedicated to catalyzing excellence in primary care to ensure we can meet all borrowers’ needs, regardless of project size. We assist providers in considering various funding options, including grant funding, debt financing, and tax-advantage financing. PCDC guides providers to manage debt and to meet their lenders’ financing requirements. Over the years, we have invested over $1.1 billion in more than 130 primary care health center projects nationwide, leveraging more than $5 of private investment for each $1 of public investment. These projects have provided primary care access to millions of patients, created more than 10,500 jobs in low‐income communities, trained more than 9,000 health workers, and transformed more than 1.8 million square feet of space.
Thanks to a personalized, holistic approach, CDFIs are well guarded against developing weak spots. From short-term needs to long-term sustainability, from paying the bills to training providers, we’re here to help. With decades of success stories under our belt, we can confidently say that a PCDC partnership is transformative. The impact of these transformations extends throughout communities and beyond.