WASHINGTON and NEW YORK – Chronic underfunding and exposure to significant levels of financial risk is jeopardizing the health care safety net in Puerto Rico, particularly the fiscal viability of community health centers, according to a new report conducted by GW faculty at the Geiger Gibson/RCHN Community Health Foundation Research Collaborative.

In 1994, the Commonwealth of Puerto Rico implemented a comprehensive health reform known as the Government Health Insurance Plan (GHIP) or Reforma. To fund the program, which was aimed at extending health insurance coverage, the Commonwealth substantially curtailed its direct involvement in the provision of health care in favor of privatization of care and the purchase of health insurance coverage. Fifteen years later, the consequences of these early decisions have become evident. Although the Reforma has reduced the proportion of uninsured residents in Puerto Rico, the number of uninsured is again increasing, and serious under-financing of primary care has led to a 51,000-person decline in the number of health center patients served.
Specifically, the report’s authors found that:

• Primary care, particularly that offered by health centers, has been severely and chronically under-financed under the Reforma, with Medicaid revenues now covering less than 12 percent of associated health center expenditures, even as Medicaid patients comprise 63 percent of all patients served
• Medicaid under-financing has severely restricted operating revenues, threatening health center capacity and leaving centers unable to fund necessary capital and health information technology projects, even as need has increased
• Health centers are exposed to excessive financial risk. While federal Medicaid regulations restrict provider risk to 25 percent of the cost of providing services, under the Reforma, health centers and other primary care providers are required to accept full financial risk for a wide range of services that extend well beyond the types of primary health care furnished in a health center practice

Puerto Rico’s 19 health centers play an especially vital role in the delivery of care, serving over 350,000 patients or 10 percent of the Commonwealth’s population, and 15 percent of Medicaid beneficiaries. The Commonwealth’s residents are less likely than their mainland counterparts to have a high school diploma or to be employed, and more likely to live in poverty, have a disability, and have diabetes or other chronic diseases. Health centers have proactively implemented various strategies to address their considerable financial and operational challenges, but many have been forced to offset declining Medicaid revenues by shifting costs to federal 330 grants intended to cover care for the uninsured. This has jeopardized both their ability to care for the uninsured and their overall capacity.

“This report shows the pivotal importance of a strong primary care system as foundational to true reform and the implications that flow from the loss of the safety net during a period of deep economic downturn” noted Dr. Seiji Hayashi, M.D., M.P.H, lead author and assistant research professor in the Department of Health Policy at the School of Public Health and Health Services at The George Washington University Medical Center. Added Professor Sara Rosenbaum, Chair of the Department of Health Policy and study co-author, “During a time of national health reform, it is important to identify ways to help Puerto Rico in its important attempt to address the need for health insurance reform while simultaneously bolstering health centers, who are key to the Reforma’s success.

To help revive the primary health care system, the authors recommend supplemental financing and a restructuring of the Reforma contracts to avert the down-streaming of financial risk to primary health care providers. The authors also recommend direct investment in the island’s health centers to strengthen primary care. The study finds that an investment of $75 million would increase health center capacity to care for an additional 176,000 new patients and result in system wide savings of up to $234 million, while generating more than 1,300 new jobs and over $86 million in new economic activity.

“This study describes a ‘perfect storm,’ with disincentives for primary health care just when it is needed most,” said Julio Bellber, president and CEO of the RCHN Community Health Foundation. “An investment in health centers would not only support essential primary care, but achieve substantial cost savings while generating new economic activity.”

“Examining the Experiences of Puerto Rico’s Community Health Centers Under the Government Health Insurance Plan (GHIP)” can be viewed online here.

The research was conducted by GW faculty at the Geiger Gibson/RCHN Community Health Foundation Research Collaborative, located in the Department of Health Policy at The George Washington University School of Public Health and Health Services. The Collaborative is a multi-faceted academic training and research initiative created in 2007 through a gift from the RCHN Community Health Foundation.

About the RCHN Community Health Foundation
The RCHN Community Health Foundation (RCHN CHF) is a New York-based not-for-profit operating foundation dedicated to supporting and benefiting community health centers (CHCs) in New York state and nationally. The Foundation develops and supports programmatic and business initiatives related to community health center access, pharmacy and health information technology through strategic investment, research, outreach, education, and coalition building. For more information about RCHN CHF, contact Chief Operating Officer / EVP Feygele Jacobs at (212) 246-1122, ext. 712, or fjacobs@rchnfoundation.org or visit www.rchnfoundation.org.

About The George Washington University Medical Center
The George Washington University Medical Center is an internationally recognized interdisciplinary academic health center that has consistently provided high-quality medical care in the Washington, DC metropolitan area, since 1824. The Medical Center comprises the School of Medicine and Health Sciences, the 11th oldest medical school in the country; the School of Public Health and Health Services, the only such school in the nation’s capital; GW Hospital, jointly owned and operated by a partnership between The George Washington University and a subsidiary of Universal Health Services, Inc.; and the GW Medical Faculty Associates, an independent faculty practice plan. For more information on GWUMC, visit www.gwumc.edu.