Thursday, June 28, 2012

As Affordable Care Act Advances, Health Centers Challenged to Meet Capital Needs

By Allison Coleman, Chief Executive Officer

Capital Link announces the release of Capital Plans and Needs of Health Centers: A National Perspective, a study conducted to determine the current capital plans of community health centers across the United States and whether those plans, if funded and implemented, would be sufficient to provide the facilities necessary to serve 40 million patients, the Affordable Care Act goal for access to care. This study was supported by a Cooperative Agreement with the Health Resources and Services Administration, Bureau of Primary Health Care.

Capital Link requested information from 1,200 health centers, resulting in a 30% response rate. 76% indicated that they had specific plans to initiate capital projects within the next five years, which Capital Link estimates will total approximately $5.7 billion. These planned projects should accommodate an additional 6,629 providers and 6.9 million patients, tremendous progress but still some distance from the needed capacity.

To serve 40 million patients annually and provide space for an additional 15,303 providers, Capital Link estimates that health centers will need to take on additional capital projects costing about $7.4 billion. Combined with planned projects of $5.7 billion, this additional capacity brings the total capital need to $13.1 billion.

Health centers have secured about 33% of the cost of planned projects, with federal grants accounting for a third of that figure. Extrapolating from that data, Capital Link estimates that health centers nationally have likely secured at maximum of $1.9 billion for planned capital development, but a funding gap of at least $3.8 billion for planned capital projects likely remains. Given that projects totaling at least $7.4 billion have not yet been planned nor funding secured, health centers still have an enormous gap of $11.2 billion to bridge with additional equity and/or debt financing and through securing leased space.

For detailed results, access the complete report online at http://www.caplink.org/resources/reports

Tuesday, June 5, 2012

So You Didn’t Get a HRSA Capital Development Grant: Take a Moment to Reflect

By Terry Glasscock, Senior Project Consultant

Federal funding over the past few years has helped many health centers increase their capacity, but there is still a need to complete hundreds of projects to meet patient demand. Given that no additional federal grants are expected for the foreseeable future, how can health centers that did not receive grants advance their capital projects? There are many paths to success, but take a moment to reflect if your health center is well-positioned to proceed with a financing/funding plan.

Health centers that have been successful in stimulating investment from granters and lenders have some common elements, so the first step is to assess if improvements or changes need to be made to move you forward.

 Does your health center have the following qualities?
·         Management and Board strength
·         Demonstrated internal planning capabilities
·         A compelling business case
·         The ability to leverage community partnerships or resources
·         A financing strategy with a variety of sources identified

If you feel that you health center doesn’t demonstrate the qualities referenced above as well as it could, you may need to step back and complete a strategic capital planning process to ensure you are ready to proceed with your project.  The overall process, which is diagramed below, results in specific action steps to improve operational efficiencies, maintain a good financial condition, and plan long-range facility requirements given patient population needs. Once these key planning activities are complete, your health center has the data to put together a written business plan.

Market Analysis
Program & Staff Planning
Facility Planning
Financial Planning
Describe Market & Current Patient Base
Identify Program Priorities
Calculate Required Spaces
Consider Funding Sources & Financial Profile
Identify Key Competitors
Consider Capacity & Efficiencies
Consider Adjacency & Flow
Develop Financing Plan
Analyze Demand for Future Services
Create Staffing & Recruitment Plan
Facility Layout & Design
Project Financials Based on Trends & Demonstrate Financial Feasibility


For more information on capital project readiness, health centers and Primary Care Associations can access Capital Link’s manual “Preparing for a Capital Project: Are You Ready?” in the Resources section of our website at http://www.caplink.org/.

How Much has the Federal Government Invested in Community Health Center Construction?

by Joe McKelvey, Project Consultant
According to a report released on May 1st by the White House[1] , the Affordable Care Act has already supported the construction and renovation of 190 health center sites and the creation of 67 new health center sites across the country, and will support the construction and renovation of more than 485 health center sites and the creation of 245 new health center sites over the next two years.

Since the beginning of 2009, primarily due to the Affordable Care Act and the Recovery Act, Community Health Centers are serving nearly 3 million additional patients today and will serve an additional 1.3 million additional new patients in the next two years. Employment at Community Health Centers nationwide has increased by 15 percent. A summary of direct federal investment in health center capital projects since 2009 is included in the table below.


Unfortunately, the last round of major capital funding from the Affordable Care Act has passed.  To keep moving forward with growth, health centers will need to rely on more deliberate planning and extensive development of alternative fundraising strategies—including capital campaigns.   Visit Capital Link’s website at www.caplink.org for more information.