WASHINGTON (September 17, 2024) – A new analysis projects that a substantial majority of the nation’s nearly 1,400 community health centers, which served 31.3 million people in 2023, are likely to experience significant losses in 2024 as the cost of operations and service delivery continues to outpace revenue. This report is the first to look at the current and potential shortfalls for health centers as COVID-era protections come to an end.
The authors, from the Geiger Gibson Program in Community Health at the George Washington University Milken Institute School of Public Health, analyzed the recently released 2023 data about community health centers. They compared the period beginning with 2019, just before the COVID-19 pandemic, through 2023, which marked the end of public health emergency protections including continuous Medicaid eligibility and supplemental COVID-related funding.
“While community health centers continue to care for almost one in ten Americans, their financial burdens have grown heavier and the great majority of these non-profit centers are likely to be in the red in 2024,” said Leighton Ku, Professor of Health Policy and Management at the GW Milken Institute School of Public Health and one of the study’s authors. “This will limit their capacity for patient care as the number of uninsured Americans begins to climb.”
The researchers examined changes in the number and characteristics of patients from 2019 to 2023, as well as trends in services, staffing, and financial metrics, and found that:
In 2023, community health centers operated more than 15,500 service sites that together employed 300,000 staff, allowing them to serve 31.3 million people, 1.5 million more (5%) than in 2019.
The number of health center visits continued to rebound from pandemic declines, reaching 132.5 million in 2023. Consistent with their role as core providers of primary and preventive care to medically underserved populations, key services encompassed medical visits including for the management of chronic conditions and reproductive health care needs, behavioral health services, and dental care.
The growth in patient volume was driven primarily by an increase of nearly 11% in the number of Medicaid/CHIP patients served, related to continuous Medicaid eligibility policies, which expired last year.
Health centers cared for 5.6 million uninsured patients in 2023, about one-fifth of the nation’s uninsured. Nonetheless, as more patients have gained insurance coverage, the share of health center patients who are uninsured has declined over the years.
From 2019 to 2023, total costs and revenue each rose at a rate of approximately 48% to 49% (or 24% to 25%, after adjusting for inflation.)
COVID-era support including continuous Medicaid enrollment bolstered health center finances, and in 2021 health centers nationally had a net margin – that is, the difference between revenues and costs – of 5.3%. But as these supports ended, the analysis shows that costs continued to grow while grant revenue declined, causing margins to plummet to 1.6% by 2023.
The proportion of health centers with negative margins began to climb in 2022 and reached a high point of 652 centers, or 48%, in 2023. Data for 2024 will not be available until summer of 2025, but early warning signs indicate that health centers overall can be expected to have negative margins – or “go into the red” – with an estimated loss of $1 billion and negative margins exceeding 2% as the number of uninsured Americans increases, supplemental funding ends, and other programs such as the discount 340B Drug Pricing Program are challenged.
“Given the essential role of health centers as the backbone of the healthcare safety net, this analysis underscores the urgency of both bolstering and stabilizing health center funding in the near future,” said Feygele Jacobs, Director of the Geiger Gibson Program in Community Health and Professor of Health Policy and Management at the GW Milken Institute School of Public Health.
Read the report: “Community Health Centers Grew Through 2023, But Serious Hazards Are on the Horizon.”
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