Financial impacts of COVID-19 may force over half of community health centers in WA to close

Sixteen of Washington’s 27 community health centers (CHCs) may be forced to close by mid-September due to the financial impacts of COVID-19, according to a recent analysis commissioned by the Washington Association for Community Health. The report, conducted my CliftonLarsonAllen (CLA), evaluates the impacts of the pandemic in terms of revenue lost, layoffs, and potential closures of CHCs.

Washington’s 27 community health centers operate 350 clinics and service sites across the state, providing medical, dental, and behavioral health services to 1.2 million patients. These centers provide access to care for a population that is primarily Medicaid-enrolled or uninsured.

 

 

Faced with a potential surge in hospitalizations in Washington and a shortage of personal protective equipment, CHCs have had to suspend non-emergency primary care and dental visits during the pandemic. Behavioral health appointments have also either been cancelled or have moved to telehealth.

“This transition, combined with decreased demand for services due to the pandemic and the state’s shelter in place order, has dramatically reduced CHC revenues, leading to staff furloughs, layoffs, and rapidly declining cash reserves,” reads the report.

The report identifies a “best case” scenario based strictly on reported data from CHCs; it also includes a “realistic” scenario which includes market insights on the real-time impacts of COVID-19 on revenues.

In the “best case” scenario, CLA assumes overall CHC revenues will decrease by 44%, which represents the “average experience of a health center based on reported data.” In this scenario, Washington CHCs would lose $353 million in revenue between March 15 and September 15. They estimate 12 CHCs and 141 clinical sites will close resulting in 6,602 lost FTEs and 503,095 Washington patients losing their primary service provider. Under this scenario there are 17 CHCs with Days Cash on Hand less than 30 days.

In the “realistic” scenario, CLA assumes an overall revenue loss of 59%, which they determined based on reported data and from their work with other health care organizations during the pandemic. This percentage equates to $473 million in lost revenue, 16 CHC closures, and 167 clinical sites lost. Under this scenarios 8,008 FTEs would be lost and 611,178 patients would lose their primary service provider.

These projections don’t account for possible future emergency funding or for possible CHC actions such as eliminating individual programs and services.

“Losing these incredible safety net clinics for low-income patients is unthinkable,” said Bob Marsalli, CEO of The Washington Association for Community Health. “With more unemployed Washingtonians, demand for their services will only increase in the foreseeable future. Community health centers provide care to patients regardless of their ability to pay, but cannot survive to protect patients and communities without additional emergency funding from both the state and federal government.”

A press release announcing the results of the analysis notes that the impacts on community health centers in rural Washington will be particularly difficult. NEW Health, which operates seven clinics in Ferry, Pend Oreille, and Stevens counties, has had to lay off most of its dental staff due to significant losses in revenue. If NEW Health were to close, it would eliminate care options for a region of the state with one of the highest Medicaid populations.

“Health centers play an essential role in keeping patients from overcrowding hospitals. If a financial crisis forces them to close in the coming months, our state will lack a crucial buffer as we try to re-open our economy,” said Leanne Berge, CEO of the Community Health Network of Washington.