The Definitive Blog

Community Health Centers Show Billions in Medicare Savings

Every year, the Department of Health and Human Services (HHS) celebrates Community Health Centers Week. From August 12-19, the HHS acknowledged the impact that community health centers have on vulnerable and underserved populations by providing quality care regardless of patient ability to pay.

Community health centers (CHCs) are community-based, patient-directed safety net facilities that deliver comprehensive and culturally competent care to the most underserved communities across the United States. CHCs incorporate necessary primary and preventative care with community health education, mental health support, substance abuse treatment, and access to essential pharmaceuticals—and primarily rely on Medicaid and Medicare to do so.

Since CHCs were first opened by the federal government in 1965, they have expanded to provide care for more than 25 million underserved Americans in more than 1,400 locations. CHCs are the primary care providers for more than 1 in 6 Medicaid beneficiaries nationally. The Medicaid patient population at CHCs is more than double that of the general population.

Top 10 Hospitals with Lowest Medicare Spending per Patient

Hospital Medicare Spending per Beneficiary Net Medicare Revenue (M) Net Patient Revenue (M) # Medicare Discharges
Morton County Hospital 0.61 $2.0 $5.1 158
Acomo Canoncito Laguna PHS Hospital 0.64 $1.9 76
Brighton Center for Recovery 0.64 $0.2 $16.1 42
Crownpoint Health Care Facility 0.65 $2.7 103
Baptist Emergency Hospital – Thousand Oaks 0.66 $2.8 $72.4 135
Phoenix Indian Medical Center 0.66 $6.8 137
Sells Indian Health Service Hospital 0.67 $2.5 36
Lawton Indian Hospital 0.69 $4.0 46
Turtle Mountain Service Unit 0.69 $2.7 142
Bob Wilson Memorial Grant County Hospital 0.71 $2.2 $11.8 166

Fig 1 Data from Definitive Healthcare using most recent CMS data available. Only active hospitals with more than 25 beds were included to decrease variables.

Due to the patient-centric care CHCs provide, every one is different in terms of how it is organized and what specific programs it provides. Many CHCs provide transportation assistance for their patients to further improve access to necessary healthcare.

In addition to unique services like transport and community education, CHCs have been found to provide unmatched savings for CMS. In a study of 13 states, CHCs save 24 percent per Medicaid patient on average compared to other providers—more than $2,300 per patient, and $6 billion annually. CHCs were also found to have lower total spending per Medicaid patient compared to non-health centers.

Average Financial Metrics for Top 10 Hospitals with Lowest Medicare Spending per Patient

Avg Medicare Spending per Beneficiary 0.66
Avg Net Medicare Revenue (M) $2.8
Avg # Medicare Discharges 104.1

Fig 2 Data from Definitive Healthcare using most recent CMS data available.

However, despite the savings and quality care CHCs provide, they still face funding shortages. Though CHCs provide healthcare to approximately 16 percent of all Medicaid beneficiaries, CMS payments to CHCs account for only 1.7 percent of total Medicaid spending. This poses an issue to many CHCs, as Medicaid payments account for 44 percent of CHCs total revenue. In 2015, Medicaid payments to CHCs only covered 82 percent of the costs associated with treating patients, leading to a recurring uncompensated care gap.

To try and recover some of the lost revenue, some CHCs are turning to alternate ways to save money and receive funding. Lynn Community Health Center in Massachusetts utilized the Lean Performance Improvement Model to reduce urgent care wait times by nearly 30 percent. Other CHCs, including 62 in New York state, have been awarded federal funds by the HHS. Umpqua Community Health Center in Oregon requires 51 percent of its board members to receive health care from the clinic to ensure that patient’s needs are always a top priority.

As CMS continues to emphasize care quality over patient volume, CHCs could become critical benchmarks for learning how to maximize care value without spending precious funds.

Community Health Center Statistics

Visit the Definitive Blog to read more about CMS programs like bundled payments and CJR coverage at ASCs.

Definitive Healthcare has the most up-to-date, comprehensive and integrated data on over 7,700 hospitals, 1.4 million physicians, and numerous other healthcare providers. Our database features detailed clinical information on hospitals and health systems, including procedure analytics, payments, and participation in CMS programs.

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