Health care lenders are deeply concerned about the continued uncertainty around federal funding for Federally Qualified Health Centers (FQHCs), and how that uncertainty destabilizes future investments in the sector.
The Lenders Coalition for Community Health Centers — a national coalition of 25 U.S. Treasury-certified Community Development Financial Institutions (CDFIs) dedicated to financing FQHCs — recently wrote to congressional leadership urging action and outlining how inaction threatens investment and the health of Americans alike.
Following is the letter by Anne Dyjak, PCDC’s managing director and the newly elected chair of the Lenders Coalition for Community Health Centers:
November 1, 2017
The Honorable Mitch McConnell, Majority Leader, U.S. Senate
The Honorable Paul Ryan, Speaker of the House, U.S. House of Representatives
The Honorable Charles Schumer, Minority Leader, U.S. Senate
The Honorable Nancy Pelosi, Minority Leader, U.S. House of Representatives
Dear Speaker Ryan, Leader Pelosi, Leader McConnell, and Leader Schumer:
We write to you as a coalition of 25 Community Development Financial Institutions (CDFIs) dedicated to financing the construction and renovation of federally qualified health centers (FQHCs). We are deeply concerned about how the increasing uncertainty of federal funding for health programs will affect future investment in this sector and health care overall. That is why we urge Congress to pass a multi-year extension of the Community Health Centers Fund and Children’s Health Insurance Program (CHIP).
CDFIs, mission-driven lenders with strong ties and commitment to low-income and underserved communities, have played a critical role in the development and expansion of FQHCs. Collectively since 1996, the members of our coalition have provided $2 billion in investments to FQHCs in approximately 40 states through nearly 1,000 loans and New Markets Tax Credit financing. Using tools including flexible capital to address the unique needs of these critical safety net providers, filling gaps in the capital stack, and leveraging public funds, we are working to build healthy communities and increase access to high quality health care.
In turn, FQHCs provide comprehensive, high-quality primary care to 26 million low-income Americans in distressed urban and rural communities. FQHCs address medical, dental, behavioral, pharmacy, and other needs regardless of a patient’s ability to pay, and they do so in a cost-effective manner that saves an estimated $28.6 billion taxpayer dollars annually.
The benefits transcend health. New and expanded health centers drive economic momentum by creating significant new jobs — construction jobs as well as permanent employment — for community residents. In 2016, health centers employed more than 207,000 people, many of whom come from the low-income communities served by these centers.
To provide care to both the newly insured and those who are still without coverage over the next several years, it is estimated that FQHCs will require at least $8.5 billion to build or expand facilities and critical infrastructure. Achieving this investment objective will require FQHCs’ access to low-cost, patient capital provided by CDFIs as well as additional investments by traditional lenders, whose support and resources are essential for these projects.
Despite the success of FQHCs, public funding to support facilities financing is limited, and loans available from traditional lenders are often out of reach for most health centers or lack the flexibility to meet the complex needs of health care projects.
Specializing in health center financing means that we are frequently required to “predict” the future of federal funding streams which provide critical sources of revenue to these safety net providers. In the past, knowing that Section 330 operating grant funding for health centers was secure for five years allowed us to confidently make loans for as long as seven to ten years. Health centers see high proportions of patients insured through Medicaid and CHIP, which provide stable sources of funding for these institutions.
The confidence among CDFIs in the stability of federal reimbursement has allowed us to offer affordable interest rates and terms, attracting the partnership of larger traditional mainstream financial institutions. Though often more risk-averse, these institutions value CDFIs’ knowledge and expertise in the sector and enable limited public funds to be leveraged multiple times over with private investment.
With both the Community Health Centers Fund and CHIP program having expired on September 30, health centers, patients, lenders, and providers have been left to question what comes next. In this uncertainty, more than half of health centers recently surveyed will cancel or delay a facility renovation or expansion, 72 percent plan to institute a hiring freeze, 41 percent will lay off staff, 47 percent will reduce staff hours and/or hours of operation, and 42 percent will begin tapping into and spending down reserves. These actions risk stunting economic growth and sacrificing quality care in all communities.
For all of these reasons, it is critical that Congress pass a bipartisan, multi-year extension of the Community Health Centers Fund and CHIP program. We are heartened to see proposals in both chambers including a five-year CHIP extension and two-year funding for community health centers. But while swift action is necessary to ensure these programs are adequately resourced as states and centers face budget shortfalls, it must be done without eroding our safety net or retrenching our investments in prevention.
Short-term extensions and patches are problematic when it comes to investment in health centers. Constant debate and unpredictability will prove corrosive, undermining the stability of the sector, provoking partners and investors to reduce capital investment, and eroding the health center landscape when it is needed most. While uncertainty is always bad for investment, it is especially harmful to the health of Americans.
Chair, Lenders Coalition for Community Health Centers
Members of the Lenders Coalition for Community Health Centers:
Boston Community Capital
Capital Impact Partners
Community Reinvestment Fund, USA
CSH (Corporation for Supportive Housing)
Enterprise Community Loan Fund, Inc.
Florida Community Loan Fund
Forward Community Investment
Hope Enterprise Corporation
Local Initiatives Support Corporation
Low Income Investment Fund
Mercy Loan Fund
Nonprofit Finance Fund
National Development Council
Northern California Community Loan Fund
Opportunity Finance Network
Partners for the Common Good
Primary Care Development Corporation (PCDC)
Rural Community Assistance Corporation
South Carolina Community Loan Fund
The Reinvestment Fund
Vital Healthcare Capital
About the Lenders Coalition for Community Health Centers
Launched in 2013, the Lenders Coalition for Community Health Centers (LCCHC) is a coalition of 25 community development financial institutions (CDFIs) involved in community health center lending whose main goal is to advocate for resources and policies that will strengthen health centers’ access to capital and CDFIs’ ability to finance community health center growth. Since 1996, the members of our coalition have provided $2 billion in investments to FQHCs in approximately 40 states through nearly 1,000 loans and New Markets Tax Credit financing. LCCHC member-financed projects serve more than 3.3 million patients annually. Using tools including flexible capital to address the unique needs of these critical safety net providers, filling gaps in the capital stack, and leveraging public funds, we are working to build healthy communities and increase access to high quality health care.