So You Want to Start a Health Center…? A Practical Guide for Starting a Federally Qualified Health Center Revised July 2011 If you have any questions, feel free to contact: Pamela Byrnes [email protected] Or Jaime Hirschfeld 7200 Wisconsin Avenue, Suite 210 [email protected] Bethesda, MD 20814 Phone 301.347.0400 Fax 301.347.0459 This publication was supported by Grant/Cooperative Agreement No. U30CS00209 from the Health Resources and Services Administration, Bureau of Primary Health Care (HRSA/BPHC). www.nachc.com Its contents are solely the responsibility of the authors and do not necessarily represent the of- ficial views of HRSA/BPHC. The National Association of Community Health Centers wishes to acknowledge the following for their contributions to this guide: Authors of the original 1996 edition Tom Trompeter and Jennifer Bright Bob Peoples and Suzanne Rossel of Community Health Associates, Inc. for updates Pamela Byrnes and Freda Mitchem of the National Association of Community Health Centers for input and edits in the 2005 revision Judith Shea, Pamela Byrnes and Jaime Hirschfeld for the 2011 revisions And to all of the people of the Health Center Movement whose daily experiences contributed immeasurably to the information herein A Practical Guide for Starting a Federally Qualified Health Center Table of Contents Helpful Acronyms . iii Foreword .....................................................................................iv Chapter I Health Center Basics A. Federally Qualified Health Centers . 2 B. Medically Underserved Areas and Populations ........................................ 3 C. Other Relevant Terminology....................................................... 3 D. Other Programs that Support Health Centers . 4 E. Strategic Considerations: Before Deciding to Proceed.................................. 6 Chapter II Ensuring Broad Community Support and Investment A. Defining Community............................................................. 9 B. Community Analysis............................................................ 10 C. Community Participation . 13 D. Involving the Provider Community . 14 Chapter III Needs Assessment and Planning A. Participating in Statewide Planning Activities. ........................................ 16 B. Identifying The Target Population(s). 17 C. Access to Care................................................................ 20 Estimating Need . 20 Assessing Available Resources . 21 D. Setting Priorities and Planning.................................................... 23 E. Securing the Appropriate Federal Designations . 24 Chapter IV Looking for a Home (Organizationally and Physically) A. Organizational Consideration..................................................... 28 Non-Profit Models .......................................................... 28 Public Entity Models . 29 B. Location . 30 C. Space Considerations . 30 Chapter V Developing Community Governance A. Governance Requirements . 32 Roles and Responsibilities . 33 Board Committees.......................................................... 34 Board Development......................................................... 35 Legal Issues . 36 National Association of Community Health Centers i A Practical Guide for Starting a Federally Qualified Health Center Chapter VI Human Resources A. Staffing Needs . 37 B. Hiring, Employing and Terminating Staff . 38 C. Recruiting and Retaining Clinicians ................................................ 38 Chapter VII Business Planning A. Why Develop a Business Plan .................................................... 41 B. Business Plan Components ...................................................... 41 The Purpose . 41 The Market and Research.................................................... 41 The Business Strategy . 43 Management and Organization................................................ 43 Financial Projections ........................................................ 43 Documented Assumptions . 44 Implementation Plan . 62 Contingency Plan . 62 Chapter VIII Before You Open Your Doors: Insurance . 63 Chapter IX Information Technology/Data Systems . 65 Chapter X Conclusions and Final Recommendations A. Planning with Standards in Mind . 67 B. Where to Go for Help ........................................................... 67 Chapter XI Resources and Websites . 71 List of Tables: Table 1 Sample Community Analysis Outline . .11 Table 2 Sources of Demographic and Health Status Information . 19 Table 3 Sources of Information on Access to Health Care . 20 Table 4 Select National Averages: Health Resources Utilization.................................... 21 Table 5 Physician FTE Conversions . 23 Table 6 Population Distribution Market Share Example........................................... 42 Table 7 Total Market Share Example ......................................................... 42 Table 8 Encounters per Year (1999).......................................................... 45 Table 9 Market Share of Visits Example . 45 Table 10 Staff/Volume/Cost Detail ............................................................ 47 Table 11 Other Expense and Total Expense . 50 Table 12 FFS and Cost-based Revenue Detail Worksheet . 54 Table 13 Capitation Revenue Detail Worksheet.................................................. 58 Table 14 Checklist . 69 National Association of Community Health Centers ii A Practical Guide for Starting a Federally Qualified Health Center National Association of Community Health Centers Commonly Used Acronyms in The Health Center Industry ADA Americans with Disabilities Act AHRQ Agency for Healthcare Research and Quality BBA Balanced Budget Act BHPr Bureau of Health Professions BPHC Bureau of Primary Health Care CDC Centers for Disease Control CHIP Children’s Health Insurance Program CMS Centers for Medicare & Medicaid Services (Formerly Health Care Financing Administration) DHHS Department of Health and Human Services FQHC Federally Qualified Health Center FLSA Fair Labor Standards Act FTCA Federal Tort Claims Act GME Graduate Medical Education HCPC Code Health Care Financing Administration Common Procedure Coding System HIPAA Health Insurance Portability and Accountability Act HMO Health Maintenance Organization HPSA Health Professions Shortage Area HRSA Health Resources Services Administration ISDI Integrated Service Delivery Initiative ISDN Integrated Services Delivery Network JCAHO Joint Commission Formerly Joint Commission on Accreditation of Healthcare Organizations MCH Maternal and Child Health MCO Managed Care Organization MSO Management Service Organization MUA Medically Underserved Area MUP Medically Underserved Population NHSC National Health Service Corps OIG Office of Inspector General OPA Office of Pharmacy Affairs ORO Office of Regional Operations PACE Program of All-Inclusive Care for the Elderly PCA Primary Care Association PCMH Patient-Centered Medical Home PCO Primary Care Office PDPA Prescription Drug Purchase Assistance Program PHS Public Health Service PSO Provider Sponsored Organization RHC Rural Health Clinic ROR Reach Out and Read SCHIP State Child Health Insurance Program UDS Uniform Data System USAID United States Agency for International Development WIC Women, Infants, and Children Program National Association of Community Health Centers iii Chapter I ▪ Health Center Basics Foreword here is no “one true path” to establishing a successful health center1. Some health centers function without ever obtaining federal funds or choose to pursue federal funding only after several years of Toperations. Sometimes existing organizations such as family planning clinics or health departments begin gradually offering more comprehensive primary care services and develop into health centers over a period of time. There are also communities that create new nonprofit organizations and apply for “new start’ federal Section 330 community health center grant funding. This Guide is intended to be applicable under any of these circumstances. Whether to pursue a health center and which option is right for a particular community will depend on many practical considerations. These include: • The needs in the community (i.e. health status, barriers and access issues); • The level of support (or resistance) likely to be found in the community and the approaches that will garner the most community support; • The ability to develop and nurture the community governance that will be necessary for success; • Whether there are existing resources (organizations and people) in the community that will help and with whom a service delivery coalition might be formed; • Whether the community has or could qualify for federal shortage designations; • The mix of financing options that make the most sense for the health center; • The amount of effort that will have to be expended to accomplish the necessary tasks for starting a health center. Since undertaking an effort such as starting a health center may seem a daunting task it will be important for planners to break things down into more manageable parts. This Guide is intended to provide stepbystep directions for planning and implementing a new health center, including instructions on applying for federal designations and funding. Organizations that are currently providing some primary care services and are interested in developing a more comprehensive program that meets the Public Health Service Act, Section 330 requirements will also find the Guide very useful. First, a brief introduction to some of the key aspects