"Why Some Boston Health Centers Aren't Doing Well Under Health Reform" by Bill Walczak

When community health centers were first introduced to the United States (the first in the U.S. was in Dorchester in 1965), they were created to deal with a health care system that didn’t meet the needs of the millions of low income people who increasingly made up American cities as the suburbs drew the middle and working classes out of them. To use my own health center community as an example, by the 1970s, there were still private physicians practicing in Codman Square, but the new residents, who were mainly African Americans largely uninsured or covered by Medicaid, were not welcome in most of those offices. Most of the doctors had closed their practices to new patients or refused to take new customers on Medicaid (and nearly all left the community by 1980). So the new residents had no place to go for services except the emergency rooms of local hospitals, which was considered very inefficient and costly, and bad care.

The Boston Department of Health and Hospitals, under enlightened leadership from people like Lewis Pollock, encouraged communities to start their own health centers. In addition, a number of urban hospitals, through the encouragement of the Sackett Plan (named for previous Health and Hospitals Commissioner Andrew Sackett), worked with community groups to help them start health centers. Availability of federal funding also encouraged the formation of health centers. Eventually 28 health centers were created in Boston (26 remain). Because of these different methods of formation, three different types of health centers emerged, all providing similar medical services but with different funding models.

These were: hospital owned/licensed health centers, which operate as departments of the hospitals that own them, but have community boards that help direct their missions; independently licensed health centers with community boards that direct them, and which typically receive substantial federal grants; and a hybrid model which can be called the Boston Medical Center (BMC) licensed but community owned health centers. The BMC centers are part of the original intent of the Sackett plan, and developed similarly to the other health centers, but with funding sources that filtered through BMC (and before BMC, through Boston City Hospital and the Department of Health and Hospitals).

Despite the differences in the origin and the funding sources of the various types of health centers, health centers developed similar systems for providing services and have similar cost structures. This means that most health centers, regardless of how funded, generally pay staff around the same amount of money, have similar management and medical care staffing, and productivity. The package for funding the health centers might differ, but most cost about the same (per visit) to operate. On the revenue side of the equation, reimbursement for services is generally lower than the cost of providing services and so health centers need a source of subsidy to balance their bottom lines. The three types of health centers receive their subsidy for operations from various places, and most have been able to break even over the years.

Health reform has had a big impact on health centers, but a huge impact on the BMC centers. Over the years, the uncompensated (free) care pool became the largest single source of subsidy for the BMC centers. So when Chapter 58 eliminated the system for free care pool reimbursement to BMC, it eliminated it for the BMC health centers too. This has created the current crisis for BMC and the BMC health centers. (Cambridge Health Alliance and its health centers have been harmed by the same dynamic.)

Why? Because the reimbursement for services in the new system brought about by Chapter 58 doesn’t cover the cost of service. While other hospitals can shift the cost to private payers, and other health centers have larger federal grants or hospital resources to sustain them, BMC (and Cambridge) don’t have sufficient private payers to shift cost to, and there is no permanent replacement planned for the free care subsidy (or it’s successor Section 122 funding) for BMC and the BMC centers.

The State EOHHS has acknowledged that the BMC centers’ problem is the unintended consequence of Chapter 58. And the Boston Globe has editorialized on the need to reverse the decisions which have resulted in such harm to safety net institutions such as BMC. The FMAP money available from the stimulus package has been a partial solution to the BMC and Cambridge problem, but the problem is still very real and looming – the walls come crashing down on October 1 if a solution isn’t found. And the stimulus money is time limited, so even if the gap is bridged, there still needs to be a solution to the long term problem.

So the question comes as to the state’s commitment to institutions that care for the residents who were given insurance through health reform. The people who led health reform knew that the dollars available for health reform were insufficient to pay for the plan. That’s why they claimed that cost control (remember the Health Care Quality and Cost Council?) was equally important for the success of health reform. I hope that “cost control” doesn’t mean slashing reimbursement below the reasonable cost of care and what is needed to sustain safety net providers, as this would cause many of those who were the beneficiaries of health reform to lose their access to care, surely not the intent of health reform.

Bill Walczak is CEO of the Codman Square Health Center, which is BMC licensed but community owned.