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FQHC and Community Hospital?

Posted Aug 26 2008 4:09pm

I had an interesting conversation with a colleague at a suburban community hospital not far from here. While explaining what federally qualified health centers (FQHC) are and how they fit into the healthcare system, we wondered why hospitals did not partner more often with FQHC’s.

Here is the logic:

  1. FQHC’s receive more money per patient from Medicaid and Medicare than other ambulatory centers, enough to subsidize care of the uninsured.
  2. Community Hospitals struggle with high levels of unremunerated care especially in emergency rooms. This is exacerbated by a standard of care in an emergency room usually requires more intense investigation of common problems because of the context of of care in a “casualty” department.
  3. FQHC’s providing appropriate primary care has been amply demonstrated to reduce the amount of “inappropriate” ER visits. I say “inappropriate” because it is only inappropriate from the perspective of a hospital that didn’t get paid for something that could have been taken care of at the office. The patient doesn’t often know what’s appropriate or not; it’s just the path of least resistance. But that’s another column.



It would take a discussion with a couple of lawyers to show that Stark concerns are fairly limited and partnership between an FQHC and hospital could reduce overall costs and improve operating margins for the hospital. The FQHC would benefit [disclaimers should be obvious here, being the medical director of one] and the patient would experience a better outcome.

But the devil is in the details, specifically the payer mix. The FQHC would probably require a quid pro quo , like helping with referrals and diagnostics for uninsured patients. The hospital would also lose Medicaid visits as a consequence of the ER docs finding a helpful referral resource. ER docs can refer “inappropriate” visits heavily – to the point of dumping – when a resource is in the position of making their life easier.

The sad part is that ER visits are a cash cow for most community hospitals. Efficient and cost-effective care delivered by a partner does not feed to the hospital’s bottom line. In fact, it may conceivably hurt the bottom line. I have found very little literature on the topic, which leads me to believe that this does not represent big bucks for the hospitals or nobody has thought it through.

For a hospital to participate it would have to look into how much unremunerated care is delivered out of the ER and to some extent in-patient versus the obligation for referrals and diagnostics and the loss of Medicaid ER income.

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