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The Influence of Environmental Factors and Organizational Characteristics on Federally-Funded Health Centers’ Financial and Non-Financial Performance Open Access

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Like any non-profit organizations, health centers must sustain their financial well-being in order to maintain the quantity and quality of health care services provided to vulnerable populations. This study sought to identify the environmental factors and organizational characteristics influencing performance (e.g., operating margin, net revenue per visit, grant reliance and cost per patient). The study employs a combination an analytical techniques – time series cross sectional and logistic regressions – on the Uniform Data System (UDS) and Area Health Resource File (ARF) data to study the relationship between performance and health center characteristics and environmental factors for 897 HRSA-funded health centers from 2005 to 2009. This study demonstrates that health centers are no different than other non-profit organizations as they have small margins and experience fluctuations over the years. These fluctuations can occur as a health center tries to build up reserves for hiring more staff or making capital improvements. Alarmingly, a quarter of health centers have a margin equal to or lesser than -5% (a red flag for credit agencies) and two-thirds of the health centers have become more reliant on grant funding.Findings demonstrate the importance of reimbursement, especially from Medicaid. While Medicaid is more generous than private insurance and Medicare, it does not cover the cost of care. Threats to trim reimbursement or grant funding could have harmful effects. An unexpected finding was the role of non-physician clinician productivity in reducing total cost per patient as well as grant reliance. Health centers will need tools such as technical assistance, supplemental grants and legislative changes to weather the changing health care landscape.

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