The U.S. Department of the Treasury’s Community Development Financial Institutions Fund announced the awardees for the 2017 round of New Markets Tax Credit (NMTC) allocations. The $3.5 billion in awards are aimed at revitalizing low-income communities and increasing economic opportunity nationwide. Community Health Center Capital Fund (Capital Fund), Capital Link’s lending affiliate, was awarded a $40 million NMTC allocation.

 

While NMTC financing is a critical source of low-cost capital and equity for health center facility projects—often securing approximately 20-22% of total project costs—obtaining tax credits is a competitive and complex process. Interested health centers must demonstrate a high level of project readiness and be able to communicate the merits of their projects to Community Development Entities (CDEs) with allocation. Furthermore, the process of structuring and closing an NMTC transaction is complicated and the terms, benefits, and fees offered to borrowers vary widely.


Capital Link has extensive knowledge of the NMTC financing process and has strong connections with Capital Fund and other CDEs interested in working with health centers. Of the nearly $1 billion in financing obtained by health centers through the NMTC program, approximately 60% was raised with Capital Link and/or Capital Fund assistance. We’ve also assisted many health centers with combining NMTC financing with HRSA capital grants—an excellent option, especially for projects of $5 million or more.

For help in determining whether NMTC financing could be a good fit for your health center, please contact us here.

To learn more about the NMTC program and how it works, click here.

Federally Qualified Health Centers needing to build new facilities, renovate existing space, or purchase new equipment quickly discover that capital development is a complex endeavor. The capital development process requires careful planning and clear objectives, as it can take years from project conception to completion. Without proper planning, health centers can experience unexpected pitfalls, financial destabilization, or lack of interest to get the project off the ground. Capital projects become more manageable when a methodical process is followed.

Capital Link’s newly released publication, Steps to Success: A Toolkit for Community Health Centers Navigating a Capital Development Venture, provides community health centers with a broad overview of the capital development process. This resource highlights eight fundamental planning activities that create a foundation for smoother completion, eliminating most of the guesswork, and allowing health centers to understand opportunities and risks. Each action step provides guidance and related resources to help successfully direct a health center capital project and keep it on track. Steps include: developing a strategic plan, analyzing financial strength, achieving operational and clinical excellence, defining market opportunity, developing a comprehensive business plan, creating strong leadership team with project planning expertise, identifying capital sources, and benchmarking objectives for continuous improvement. 

The four-year period of 2012-2015 was a time of high growth for community health centers across the United States. The implementation of the Affordable Care Act resulted in the expansion of Medicaid and increased patient demand, but also a need for health centers to effectively manage their operations by better understanding their financial and operational performance.

Capital Link’s newly released report, Federally Qualified Health Centers Financial and Operational Performance Analysis, 2012-2015, highlights multi-year financial and operational trends of community health centers on a national basis. The analysis provides a framework for identifying the financial strengths, challenges, and opportunities for performance improvement.  

The report uncovered interesting findings across several financial and operational functions, including statistics related to growth and expansion, productivity and utilization, and financial measures. Most notably:

  • There was significant growth in both patients and visits over the four-year review period. Health centers were busy in 2015, providing services to over 24 million patients and conducting nearly 97 million visits. This was a major increase from 21 million patients and 84 million visits in 2012.

  • There was a substantial shift in insurance coverage over the review period. Uninsured patient rates dropped from 36% of patients in 2012 to 24% in 2015, while Medicaid coverage increased, from 39% of patients in 2012 to nearly 49% in 2015.

  • Patient growth and an improved payer mix were partially responsible for a 40% increase in revenue from 2012-2015, with health centers bringing in $21 billion nationwide in 2015.

  • Productivity declined across several functions over the four-year period, including medical visits, which decreased 12% by 2015. This decline was largely associated with health reform initiatives, including the implementation of medical records.

  • Health centers experienced a 17% increase in cost of care for both patients and visits, exceeding the U.S. medical care inflation rate.

  • An overall look at health center financial stability from 2012-2015 found that 75% of health centers operated in a steady environment, while 25% operate under fragile financial conditions.

The analysis also looked at health center quartiles to examine strategies of high performers for replication, and areas of improvements for low-performers. The report was developed with support from the Health Resources and Services Administration.   

To access this new resource, please click here.

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