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CHC Financial and Operational Metrics and

Trends

Allison Coleman, Capital Link

Tuesday, July 7, 2015

The CDFI Fund is an equal opportunity provider.

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CDFI Fund’s Capacity Building Initiative:Financing Community Health Centers

• Goal: Build the capacity of CDFIs to successfully finance and provide services to community health centers in underserved communities.

• Focus: Health care sector trends, underwriting, program designs for lending to CHCs, and other relevant subjects.

• Approach: Advanced forum, six trainings, five affinity groups, one-to-one technical assistance, webinars, virtual resource bank.

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Presenter

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Allison Coleman, CEO

Capital Link

[email protected]

mailto:[email protected]

Health Center Financial & Operational Trends

• With the support of Citi Foundation, Capital Link launched a series of field-building resources entitled: “Community Health Center Financial Perspectives”

– Financial and Operational Ratios and Trends of Community Health Centers, 2008 – 2011

• Issue 2: A Guide for Lenders (March 2014)

– Infographic: http://www.caplink.org/images/stories/Resources/reports/infographic-national-health-center-financial-and-operational-trends-issue2.pdf

– Full Report: http://www.caplink.org/images/stories/Resources/reports/report-national-health-center-financial-and-operational-trends-issue%202.pdf

– Also available as publication of the San Francisco Federal Reserve Bank: http://www.frbsf.org/community-development/publications/special/financial-operational-ratios-trends-community-health-centers/

• Today’s presentation updates key portions of this report, showing health center ratios and trends from 2010 - 2013

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The “Typical” Health Center

• In 2013, the median health center had:*– $10.4 million in annual revenues

– Assets of $7.8 million

– Long-term debt of $1,330,000 (average = $9.6 million) (of those with debt; 19% had no L-T Debt at all)

– Net assets of $4.7 million

• In 2013, the average health center:**– Saw ~18,000 patients annually through 71,000 visits

– Had 23 provider FTEs and 130 total FTEs

* Data from Capital Link’s audited financial database

** Data from HRSA’s Uniform Data System (UDS)6

http://www.caplink.org/images/stories/Resources/reports/infographic-national-health-center-financial-and-operational-trends-issue2.pdf

http://www.caplink.org/images/stories/Resources/reports/report-national-health-center-financial-and-operational-trends-issue 2.pdf

http://www.frbsf.org/community-development/publications/special/financial-operational-ratios-trends-community-health-centers/

Health Center Four-Year Growth Trends

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18.8 19.5 20.2 21.1 21.7

73.877.1

80.083.8 85.6

1,131 1,124 1,128 1,1981,202

7,8928,156

8,5018,912

9,170

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

0

10

20

30

40

50

60

70

80

90

2009 2010 2011 2012 2013

Health Center Four-Year Growth Trends

Patients(millions)

Visits(millions)

Grantees

ServiceSites

Source: Uniform Data System, Bureau of Primary Health Care, HRSA, DHHS, 2010-2013

Health Center Total Revenues

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$7.5$8.2

$9.0$9.8

$0.5 $0.7 $0.8 $0.5

$1.9 $2.2 $2.3 $2.5$2.7 $2.8 $2.9 $3.1

$0

$2

$4

$6

$8

$10

$12

2010 2011 2012 2013

Bill

ion

s

Total Revenues

NPSR (Collections)

Capital Grants

Operating Grants

Other


Health Center Patients Compared to U.S. Population

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35%41%

72%

93%

15%20%

16%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Uninsured Medicaid At or Below 100% ofPoverty

At or Below 200% ofPoverty

Income and Insurance Status

Patients

US Population

Source: Uniform Data System, Bureau of Primary Health Care, HRSA, DHHS, 2013 & U.S. Census Reports

Health Center Employment

10

131,660138,403

148,245156,817

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2010 2011 2012 2013

Total Full Time Equivalent Employees


Wide Range of Size

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$18.2$19.3

$21.0$21.8

$8.8 $9.1$10.1 $10.4

$4.7 $4.8 $5.2 $5.5

$0

$5

$10

$15

$20

$25

2010 2011 2012 2013

Mill

ion

sTotal Operating Revenue

75th Percentile

50th Percentile

25th Percentile

Source: Capital Link Database of Health Center Audited Financial Statements, FY10-FY13

Revenue Composition

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58% 59% 59% 60%

35% 33% 31% 30%

3% 4% 5% 6%

0%

100%

2010 2011 2012 2013

Revenue Mix

Other OperatingRevenue

Grant and ContractRevenue

Net Patient ServiceRevenue


Net Patient Service Revenue: Shifting Patients Affect Payer Mix

13

38% 36% 36% 35%

39% 39% 40% 41%

8% 8% 8% 8%3% 2% 2% 2%

14% 14% 14% 14%

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013

Payer Mix

PrivateInsuranceOther Public

Medicare

Medicaid

Uninsured


The Importance of Medicaid as a Payer

14

14%

2%

8%

41%

35%

12%

4%

10%

64%

10%

0%

10%

20%

30%

40%

50%

60%

70%

Private Insurance Other Public Medicare Medicaid Uninsured

% of Patients vs. % of Collections by Payer

Patients

Collections

Source: Uniform Data System, Bureau of Primary Health Care, HRSA, DHHS, 2013

Grants & Contracts

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61% 63% 62% 60%

30% 28% 28% 29%

9% 9% 10% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013

Grant Sources Mix

Foundations/PrivateGrants and Contracts

State & Local Grants

Federal Grants


Expense Structure

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77%78% 78%

79%

71%72% 72%

73%

64% 65% 64%65%

60%

62%

64%

66%

68%

70%

72%

74%

76%

78%

80%

2010 2011 2012 2013

Employment Related Expense as a Percentage of Revenue

75th Percentile

50th Percentile

25th Percentile


Growth in Billable Providers

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9,592 9,936 10,445 10,734

2,882 3,096 3,326 3,4791,144 1,2851,436 1,5391,265

1,3941,573 1,760

6,3626,933

7,5558,156

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013

Full Time Equivalent Employees by Provider Type

Mid-Level

Licensed Clinical SocialWorkersLicensed ClinicalPsychologistsPsychiatrists

Hygienists

Dentists

Physicians


In a Fee-for-Service Environment, Provider Productivity Drives

Revenue

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1,205 1,174 1,128 1,090

3,593 3,506 3,394 3,316

2,880 2,845 2,810 2,739

3,055 3,681 3,735 3,577

1,006 1,042 1,010

984

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2010 2011 2012 2013

Provider Productivity

Behavioral Visits/Behavioral FTE

Dental Visits/Dental FTE

Mid-Level Visits/Mid-Level FTE

Physician Visits/Physician FTE

Medical Visits/Medical FTE


Adequate Support Staff Levels Affect Productivity

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1.83 1.85 1.84 1.88

1.21 1.20 1.17 1.21

0.43 0.42 0.390.46

0.23 0.23 0.24 0.210.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2010 2011 2012 2013

Median Staffing Support Ratios

Medical

Dental

Enabling

Mental Health


Payment Methodologies Are Changing!

• FQHCs currently benefit from Prospective Payment System (PPS) reimbursement

– Fee-for-Service

– Managed Care

• Movement toward outcome-based reimbursement methodologies rather than output-based methodologies

– Patient Centered Medical Home

– Accountable Care Organizations (increasingly risk-based reimbursement)

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Industry Financial Trends

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Profitability

22

8.0%

11.0%

6.0% 5.9%

3.0%4.0%

2.0%1.2%

-1.0%-2.0% -2.0%

-2.9%-4%

-2%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013

Operating Margin

75th Percentile

50th Percentile

25th Percentile


Profitability

23

10.0%

11.0%

10.0%

8.0%

5.0%

4.0% 4.0%

2.9%

1.0%0.1% 0.1%

-0.8%-2%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013

Bottom Line Margin

75th Percentile

50th Percentile

25th Percentile


Liquidity

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8185 88

92

37 38 3945

16 1618 18

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013

Days Cash on Hand

75th Percentile

50th Percentile

25th Percentile


Liquidity

25

70 69 68 67

48 4745 45

33 33 3330

0

10

20

30

40

50

60

70

80

2010 2011 2012 2013

Days in Net Patient Service Receivables

75th Percentile

50th Percentile

25th Percentile


Liquidity

26

6163 64

62

43 44 45 45

31 31 30 31

0

10

20

30

40

50

60

70

2010 2011 2012 2013

Days in All Receivables

75th Percentile

50th Percentile

25th Percentile


Liquidity

27

3.94.1 4.2 4.2

2.3 2.4 2.42.6

1.4 1.4 1.4 1.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2010 2011 2012 2013

Current Ratio

75th Percentile

50th Percentile

25th Percentile


Capital Structure and Debt Load

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75% 75%78%

81%

25% 25% 22% 19%

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013

Health Centers With and Without Debt

Without Debt

With Debt



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$6.5

$7.2

$9.0$9.6

$0

$2

$4

$6

$8

$10

$12

2010 2011 2012 2013

Mill

ion

sAverage Debt Amount for Organizations with Some Debt



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$1.1

$1.3$1.2

$1.3

2010 2011 2012 2013

Median Debt Amount for Organizations with Some Debt (in Millions)



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118%

107%

96% 94%

57%52%

46% 48%

23% 21% 21% 22%

0%

50%

100%

150%

2010 2011 2012 2013

Equity Ratio (Liabilities/Net Assets)

75th Percentile

50th Percentile

25th Percentile



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15.3

17.3

13.512.5

5.6 5.7 5.3 4.9

2.1 1.7 1.8 1.5

0

2

4

6

8

10

12

14

16

18

20

2010 2011 2012 2013

Debt Service Coverage Ratio

75th Percentile

50th Percentile

25th Percentile


Financial & Operational Trends: Summary

• The health center industry remains fairly stable

– The median health center is:

• Growing (patients, visits, FTEs, Revenues)

• Has positive operating margins (although narrowing)

• Balance sheet stability, with consistent cash balances, reasonably efficient cash cycles and low (but increasing) levels of debt

• Medicaid continues to be the dominant and most important payer

• Health centers continue to diversify services with highest growth in behavioral health and dental

• Medical provider productivity continues to decline

• Tremendous variance between the “top” and “bottom” financial performers.

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Questions?

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CDFI Fund’s Virtual Resource Bank

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OFN Contact Information

• Pam Porter

Executive Vice President, Strategic Consulting

Opportunity Finance Network

[email protected]

215-320-4303

• Alexandra Jaskula

Senior Associate, Strategic Consulting

Opportunity Finance Network

[email protected]

215-320-4325

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