During a visit last month to Community Health Centers’ Riverside location, in Burlington’s Old North End, CEO Jeffrey McKee encouraged a reporter to look around the crowded waiting room. That lobby, McKee said, “was probably the most culturally diverse place you will visit this year in Vermont.”
The nonprofit, which has nine locations in Chittenden and Grand Isle Counties, also runs Vermont’s only federally certified Health Care for the Homeless program. Roughly 10% of the clinic’s patients don’t speak English, and the organization works with interpreters of around 50 different languages, McKee said.
It’s a sign of what distinguishes federally qualified health centers, aka FQHCs, from other clinics. Under federal regulations, the centers are open to all, regardless of their ability to pay.
“It’s those people who are afraid to come into our doors, who don’t know how, who don’t speak the language, who’ve been not treated well in the past, who don’t believe they can afford it, who are otherwise disenfranchised, who have not been welcomed, who have been kicked out of every other primary care in the area,” McKee said. “There’s no cherry-picking of patients here.”
But that patient population, as well as a host of other financial challenges, makes for an increasingly tenuous business model. Vermont’s FQHCs are losing money at an alarming rate.
Community Health Centers expects to end the fiscal year, which runs until the end of April, with a $2 million operating deficit — the roughly $40 million organization’s most sizable loss in at least a decade, according to publicly available tax records. Overall, Vermont’s 11 FQHCs are running a combined operating deficit of $8.5 million, Mary Kate Mohlman, Bi-State Primary Care Association’s public policy director in Vermont, told the Senate Health and Welfare Committee last month. The organizations’ combined budgets total about $264 million, according to Bi-State.
“Our members are very, very financially fragile,” Mohlman, whose organization represents FQHCs in Vermont and New Hampshire, told the committee.
The financial distress, she said, is happening “across the board.”
‘Trouble without them’
Federally qualified health centers, which offer primary care, dental care and mental health and substance use disorder treatment, are a crucial part of Vermont’s health care safety net.
The clinics, first established in the 1960s under President Lyndon Johnson, receive federal grant funding and in return, must fulfill a lengthy list of requirements. FQHCs must accept patients on Medicaid and cannot turn away patients for lack of funds. The clinics are required to accept payment on sliding scales depending on their patients’ income, and they must have a board of directors made up of over 50% patients at the center.
Because of those regulations, the centers see thousands of patients who may not be able to get medical care elsewhere. In 2023, according to data compiled by Bi-State, Vermont’s FQHCs served 198,334 patients — roughly a third of the state’s population — and many, if not the majority, of its most vulnerable residents.
That year, roughly 40% of Vermonters on Medicare and Medicaid got care at FQHCs, according to Bi-State’s data. The clinics served 82% percent of Vermonters without health insurance and 78% of the state’s homeless individuals, the data showed.
“They’re a very, very imperative part of our healthcare ecosystem, and we’ll be in trouble without them,” Owen Foster, the chair of the Green Mountain Care Board, a key health care regulator, said in an interview.
But compared to other areas of the state’s health care system, FQHCs have drawn little attention, some of their leaders say — even as Vermont embarks on a multi-year effort to transform its hospitals, many of which are also operating in the red.
“So many people in Vermont — and we know, here in the Bristol area — use (federally qualified) health centers,” Heidi Melbostad, the CEO of Mountain Community Health, a Bristol-based FQHC, said in an interview. “And yet, politically, people don’t really know what they are.”
An exam table and a patch of damaged ceiling at Little Rivers Health Care’s Wells River office. Photos courtesy of John Vose
‘The cliff that we’re at’
FQHCs are facing many of the same challenges that many providers across the state are grappling with: rising costs and inadequate revenue. Reimbursements from Medicaid and Medicare patients do not cover the actual cost of appointments, FQHC leaders say. According to Bi-State, Vermont FQHCs lose an estimated $65 per visit with people insured by Medicaid, who make up about a quarter of their patient population.
And federal grant money to the health centers, known as Section 330 grants, has been “flat funded,” according to Georgia Maheras, a senior vice president at Bi-State, while also not keeping pace with rising costs. Nationally, federal funding has dwindled as a percentage of FQHCs’ revenue in the past years, from 16% in 2019 to 11% in 2023, according to health policy nonprofit KFF.
Operating costs are also rising quickly, and Vermont’s housing shortage has exacerbated a tight labor market, forcing FQHCs to compete with better-funded health care providers for staff. And all of those increases fuel a vicious cycle, one in which the rising price of health care is, in turn, driving up the cost of insurance for the people who provide that care.
“Health care costs, in the cruelest of ironies, (are) hurting the solvency of our health care providers,” Foster, the Green Mountain Care Board chair, told the Health Reform Oversight Committee last year.
Another irony is that FQHCs are on shaky ground in a state that is home to one of their biggest champions in Congress: U.S. Sen. Bernie Sanders, I-Vt.
Sanders, a longtime supporter of FQHCs, has spent years pushing for increased funding for the facilities. Perhaps most significantly, he managed to get language included in the 2010 Affordable Care Act that set aside $11 billion to create a Community Health Center Fund. That pot of money has become a crucial source of support for FQHCs across the country — and has helped bolster the network of health centers across Vermont.
According to Bi-State, Vermont’s FQHCs serve a higher percentage of state residents than nearly any other state.
“It is unacceptable that community health centers in Vermont and across the country are facing severe financial challenges,” Sanders said in a statement to VTDigger. “As the Ranking Member of the Health, Education, Labor, and Pensions Committee, I will continue to do everything that I can to substantially increase funding for community health centers and to make certain that Vermonters get the quality primary care they need.”
Federal Covid-19 pandemic aid buoyed FQHCs’ finances, but only temporarily, FQHC leaders said. The turmoil in the federal government under the new Trump administration has also stoked uncertainty.
Last month, the federal Office of Management and Budget issued a now-rescinded memo freezing billions of dollars in federal grants. At least some of that money has begun flowing again, but the exact future of the funds is not yet clear.
“We’re in this really uncomfortable holding pattern,” said Melbostad, of Mountain Community Health. “We essentially have to develop a crisis plan. If X, then Y, right? If the freeze comes back and we lose money, then what?”
Scraping by
In trying to make ends meet, health centers have cut expenses — or taken more drastic measures.
At Community Health Centers clinics around Chittenden and Grand Isle Counties, administrators cannot afford to make repairs, such as fixing sidewalks and parking lots, or upgrade equipment and software — like buying a new medical records system that staff are “desperate” for, McKee said.
Elsewhere in the state, FQHCs have had to make harder decisions. North Star Health, an FQHC with locations in southeastern Vermont and New Hampshire, closed its Rockingham location in January, citing a decline in patients, rising costs and inadequate reimbursement rates.
In its 2023 fiscal year — the most recent for which data is available — North Star had lost nearly $1.5 million on a roughly $30 million budget, according to tax filings.
Lamoille Health Partners, an FQHC in Lamoille County, closed its Stowe primary care practice on Feb. 24 and is exploring a merger with Morrisville’s Copley Hospital. In the nonprofit’s 2023 fiscal year, it also lost about $1.4 million out of a budget of about $21 million, according to tax filings.
“As healthcare organizations across Vermont and the nation face financial challenges, we must adapt to ensure the sustainability and affordability of our services,” Susan Bartlett, the health center’s interim CEO, said in a statement last month.
According to The Stowe Reporter, the landlord of Lamoille Health Partners’ Stowe practice has filed a lawsuit alleging that the FQHC has $240,000 in unpaid rent.
In the Newbury office of Little Rivers Health Center, an Orange County FQHC, a bucket sits on the floor of the finance office to catch rainwater, Executive Director Andrew Barter said in an interview.
Examination tables at the Wells River location are “40-plus years old” and lead to constant requests for maintenance that he can’t afford to fill, Barter said. The FQHC has shed staff — it’s no longer able to afford a full-time chief financial officer, for example — and has implemented a hiring freeze.
And since 2022, the organization has managed to scrape by with between zero and five days’ worth of cash on hand, Barter said.
Based on the financial figures, “We shouldn’t be open anymore,” he said. But, “we have really dedicated staff.”
Read the story on VTDigger here: ‘Very, very financially fragile’: Vermont’s federally qualified health centers are struggling .