Community Developments Investments (June 2016)
Federal Government Support: Guaranteed Loan Funds
Source: Health Resources and Services Administration
The Whittier Street Health Center, in Roxbury, Mass., was financed with a federal loan guarantee program.
Letty Shapiro, Community Development Expert, OCC
The U.S. Department of Health and Human Services (HHS) and the U.S. Department of Agriculture actively support the growth and stability of health centers by offering funds, usually grants, and programs that guarantee bank loans to health care projects. These federal programs, when appropriated funds are available, can help banks interested in lending to creditworthy health centers. This article explains both programs.
The Health Resources and Services Administration (HRSA) is an agency within HHS. HRSA works in a number of ways as the primary federal agency “to improve health and achieve health equity through access to quality services, a skilled health workforce, and innovative programs.” HRSA programs target people who are geographically isolated or economically or medically vulnerable.
HRSA manages a loan guarantee program administered by HHS’s Bureau of Primary Health Care. Eligible applicants for the loan guarantee program fall into one of two categories: managed care plans or networks and facilities. For decades, health centers have had difficulty accessing capital funding at affordable lending rates and have experienced delays in obtaining available financing. The purpose of this loan guarantee program is to significantly lower the lending barriers to reduce unnecessary costs and increase access to capital for health centers funded through section 330 of the Public Health Service Act (42 USC 254[b]). The guarantee covers up to 90 percent of the loan principal. While this program has been very successful, limited funds and great demand have exhausted the program funding, and the program is presently not open for applications. Future funding is uncertain.
HRSA also funds national organizations that help health centers meet HRSA program requirements and improve performance for special populations, vulnerable populations, and underserved communities and populations.
Affordable Care Act Funding
Health centers play a critical role in the nation’s health system. These centers provide a vital source of primary care for uninsured, underinsured, and medically underserved patients seeking a quality source of care. To support this role, the Affordable Care Act established the Community Health Center Fund, which initially provided $11 billion over a five-year period, from 2010 to 2015, for the operation, expansion, and construction of health centers throughout the nation. The first $9.5 billion was targeted to support ongoing health center operations; creating new health center sites in medically undeserved areas; and expanding preventive and primary health care services, including oral health, behavioral health, pharmacy services, and enabling services, at existing health center sites. The remaining $1.5 billion supported major construction and renovation projects at community health centers nationwide. New funding for 2016, an additional $100 million, will support improving and expanding the delivery of substance abuse services provided by existing Health Center Program award recipients, and a projected $150 million will support construction and renovation of health center service delivery sites. Together, these funds have strengthened the existing network for health care providers and patients.
The Medicare Access and CHIP (Children's Health Insurance Program) Reauthorization Act of 2015 authorized and appropriated an additional $3.6 billion annually in fiscal years 2016 and 2017 to extend the Community Health Center Fund. This money, administered by HRSA, have helped health centers prepare for the new health care landscape by building modern facilities, adding providers and services, providing care in new communities, increasing use of technology, and getting people into affordable insurance options.
Indian Health Service Funding
According to HRSA’s Health Center Program description, “outpatient health programs or facilities operated by a tribe or tribal organization under the Indian Self-Determination Act or by an Indian organization receiving funds under title V of the Indian Health Care Improvement Act can become health centers by meeting program requirements and applying to HRSA for funding or look-alike status.”
Public entities, such as tribes, and private non-profit organizations, such as tribal corporations that have a medically underserved area or population within their service areas, are eligible to apply for health center status provided they meet certain requirements, including the following:
HRSA is working with federal agency partners and tribal communities to improve access to health professionals, health centers, and affordable health care in hopes of reducing tribal health disparities.
HRSA and the Indian Health Service and tribal organizations work together to bring better, affordable, comprehensive, and culturally acceptable health care to American Indians and Alaska natives. The two agencies are natural partners in providing comprehensive, culturally acceptable, accessible, and affordable health care to improve the lives of tribal populations.
For the past 50 years, health centers have delivered comprehensive, high‐quality preventive and primary health care to patients regardless of their ability to pay. During that time, health centers have become the essential primary care medical home for millions of Americans, including some of the nation’s most vulnerable populations. Health centers also continue to be an integral source of local employment and economic growth.
For more information about HRSA, e-mail Matt Kozar.