Chapters

Chapter 3. Finances

Financial Feasibility

What does it mean for our clinic to "achieve balance"?

People who operate safety net clinics have their hearts in the right place. They care about low-income populations who have poor access to health care and they want to make a difference. At the same time, a clinic is of no use to anyone if it can't keep its doors open. Many times, the more inclusive a clinic seeks to be in providing access, the greater its risk of operating in the red because of uncompensated care. By the same token, the more a clinic limits uncompensated care, the greater its risk of limiting access to dental care for people with low-incomes. Just remember, because of resource limitations, the decision to provide care to one person of group is a decision not to provide care to another person of group.

Start with clear mission and goal statements for your clinic, and then develop policies that support them. But you also have to keep in mind the business of operating and sustaining a clinic that strives to fulfill its mission and achieve its goals.

The examples in the table below illustrate the impact of different missions/goals, policies on access, and financial sustainability on three hypothetical safety net dental clinics.

  City Health Dept. "Bring Me Your Tired, Your Poor" Dental Clinic "Pay to Play Health Center Dental Clinic" High Wire Center (Balance)
Mission Provide dental care to all those who seek it, regardless of ability to pay. Operate a self-sustaining dental clinic that serves Medicaid patients and makes care more affordable for other low-income individuals who can pay for a reasonable portion of their care. Increase access to dental care by serving Medicaid patients and other lower-income people in a clinic with limited subsidy (grants/ fundraising).
Clinic Policies
  • Full fees based on Medicaid fee schedule
  • Sliding fee schedule discounts = 80%, 60%, 40%, 20%
  • Minimum fee = $5/visit (will provide care even if the fee is not paid)
  • Payer mix = 60% self-pay/minimum fee, 13% self-pay/sliding fee scale, 25% Medicaid/CHIP, 2% commercial.
  • Full fees based on 75th percentile of UCR
  • Sliding fee scale discounts of 50% and 25%
  • Minimum fee = $50 (will provide emergent care if the fee is not paid)
  • Payer mix = 75% Medicaid/CHIP, 10% self-pay/minimum fee, 10% self-pay/sliding fee scale, 5% commercial.
  • Full fees based on 75th percentile of UCR
  • Sliding fee schedule discounts of 75%, 50%, and 25%
  • Minimum fee = $30/visit (will provide emergent care if the fee is not paid)
  • Payer mix = 50% Medicaid/CHIP, 25% self-pay/minimum fee, 20% self-pay/sliding fee scale, 5% commercial.
Patients Treated 5070 5070 5070
Medicaid/CHIP
$126,800
$412,00
$253,500
Self-Pay
Sliding Fee Schedule
$32,950
$60,800
$50,700
Minimum Pay
$15,210
$38,000
$38,040
Commercial Insurance
$10,100
$31,750
$31,750
Revenue      
Patient Care Revenue (Net)
$185,060
$542,550
$373,990
Non-Patient Care Revenue (Grants, Fundraising)
$0
$0
$126,010
(FQHC grant
and other grants)
Total Revenue
$185,060
$542,550
$500,000
Expenses
$500,000
$500,000
$500,000
Bottom Line
($314,940)
$42,550
0
Other Subsidy
$314,940
City subsidy via recurring line item
$0
$55,500
from other cost centers at Health Center
Long Term This program relies on a line item in the city budget to subsidize the cost of uncompensated care that results from maximizing access through a sliding fee schedule that offers significant discounts. There is an extensive waiting list. As long as the city's priority for this activity holds, the clinic continues providing services. This dental clinic is a standalone or part of a non-subsidized health center and therefore must generate enough revenue to cover the cost of operations. A subset of patients will be unable to afford the minimum fee and need to find care elsewhere in the community. There is no waiting list for the clinic, and the clinic operates in the black.

This clinic relies on grants to offset the cost of uncompensated care due to providing a sliding fee schedule and low minimum fee. There is a greater demand for care than the clinic can meet since it presents a more affordable option for low-income patients.

 

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