Investment in community-based health centers could save states millions of dollars a year, according to a new study “Community Health Centers in Indiana: State Investments and Returns” conducted by faculty and staff at The George Washington University (GW) School of Public Health and Health Services.
“Health centers in Indiana play a crucial role in providing cost effective care to a high need population, resulting in overall savings to the State’s health care system,” said Mr. Julio Bellber, president and CEO of the RCHN Community Health Foundation. “The experience in Indiana highlights the importance of health centers to health reform.”
Added Ms. Sara Rosenbaum, Hirsh Professor and chair of the department of health policy at GW, “Applied nationally, these findings suggest an ability on the part of health centers to ‘bend the curve,’ in an appropriate way, particularly for vulnerable populations.”
Though the report focused on community health centers in Indiana, the results have implications for all states. Like many other states, Indiana is currently struggling with exponentially growing health care costs and a shrinking state budget. From 1984-2004, the state consistently spent a larger share of its gross state product on personal health care than the average U.S. state, and it is predicted that over the next 35 years, health care spending will absorb half of the state’s budget, endangering spending on education and public safety. Rising health care costs have also contributed to a nine percent reduction of employer-based coverage in Indiana between 2001 and 2005, which has resulted in growing rolls of publicly insured and uninsured residents.
Key findings include:
For every dollar spent on patient care at an Indiana community health center, (I-CHC) $1.90 is saved in overall health care spending when compared with other primary care settings.
Indiana CHCs effectively target a population that is economically stressed and financially and medically at risk. Approximately nine in 10 CHC patients have incomes below 200 percent of the federal poverty level (FPL).
Health care services provided at Indiana CHCs are less costly than those provided at other outpatient provider settings, with an annual per-patient cost of $1,529 at CHCs versus $2,924 in other settings — resulting in a savings of $1,395 per patient.
Lower medical costs resulted in savings of $473 million for Indiana’s health care system realized through the lower cost of health care in ambulatory health center settings as well as reduced spending on hospital emergency room utilization and a lower rate of inpatient hospital admission.
In addition to direct savings to the health care system, each dollar spent by the state on I-CHCs is associated with between $6 and $17 of value, in terms of revenues generated from all sources for the delivery of services at I-CHCs.
The study findings underscore the importance of investments in health centers and the need to develop sustainable revenue mechanisms at the federal, state and local levels to enhance the ability of health centers to meet these growing needs.