An Efficient Model for Providing Health Care to an Underserved Area
by the Rev. Dr. Michael Gemignani

The 77541 zip code has a population of some 18,000, some 12,000 of whom live in the city of Freeport. There had been no practicing medical doctor in that area since the early 90's. Demographically, the area is well below the national average both economically and educationally with the most disadvantaged population concentrated in Freeport. The nearest hospital and medical practices are some ten miles away in Lake Jackson, but many residents of Freeport do not have transportation to Lake Jackson and, even if they could get there, they would find few, if any, physicians willing to treat them because they have no private medical insurance and cannot afford to pay cash.

The Salvation Army Commander for Brazoria County and I started discussions in the late 90's to explore how medical care might be provided in Freeport. Our initial planning centered on bringing in a part-time nurse practitioner. We soon recognized that even this simple model with a fixed site for the clinic would require raising as much as $200,000 a year once the clinic was established.

Serendipitously, a group of providers based in Houston expressed interest in opening a part-time practice in Freeport. They took medicaid and other government-funded health insurance for the needy and thought that Freeport, having no practicing physicians, would be a fertile area in which to expand their practices. These providers formed the nucleus of what is now the Brazosport Medical Center. Episcopal Health Charities, recognizing the need for expanded health care in Freeport, gave us funds to buy and renovate the building in which the Center is located. Our plan called for the Center to be self-sustaining with a minimal need to raise operating funds from outside sources.

The Center makes space available to the providers for their practices; assists in promoting those services in the community; monitors the providers' compliance with their contracts; and provides various administrative services, including maintenance of the physical plant, paying for utilities and screening indigents. The providers, in turn, help defray the costs of the Center through payments to the Board. They also agree to treat all patients who come to the Center, including those on medicaid and other entitlement programs. Uninsured patients who cannot afford to pay for treatment are subsidized by the Board at a reduced rate after being screened for need. Thus, the Center can provide care for all comers while needing to raise funds only to cover indigent care and the expense of furnishing space and other services to the providers at a subsidized rate.

As it turned out, the original match of Center with providers was only partially successful. The initial primary care provider was overextended elsewhere, and when large numbers of patients did not immediately materialize, he lost interest and failed to keep office hours. The primary care area is the engine that drives a center such as ours. Without a reliable primary care provider, the other providers suffer for lack of traffic and referrals. Moreover, the center itself develops a reputation as being undependable. Potential patients are never sure when or if someone will be there to take care of them.

We then found a medical doctor who had an established practice in a nearby town who was willing to practice at the center two and half days a week. He was not a good match either because his rates for office visits were beyond the reach of most of our cash clients. We then came to agreement with a nurse practitioner who had a for-profit clinic in Lake Jackson to provide a nurse practitioner at our location. This arrangement, too, lasted less than a year. The Lake Jackson group experienced a rapid turnover of nurse practitioners assigned to our site punctuated by a month or more of our having no primary care provider at all. After losing their third nurse practitioner and failing to find another for almost two months, they terminated their relationship with us. Thus, we were more than two years into this project and still had not found a good fit between a primary care provider and the Center.

Providentially, a family nurse practitioner who was interested in setting up a clinic to serve the needy knew about the Center and wanted to practice there. We had at last found someone whose philosophy and willingness to serve in Freeport gave us stable, full-time primary care coverage.

Again, the Center does not employ the providers - they are independent contractors -- and the Board supervises them only to make certain they are fulfilling their contractual obligations to the Board. In effect, the Board provides subsidized space for the providers to practice, provides general oversight of the building and seeks outside funding to enable the Center to carry out its programs. The providers contribute to the support of the Center, but at a lesser rate than they would if they had to pay commercial rates for the space and services that the Board provides.

This arrangement has a number of advantages:

• The Center itself is not involved with billing, direct provision of health care or the supervision of health care professionals in their capacity as practitioners. The burden of billing and compliance with appropriate state and federal regulations in their practice falls on the providers. Neither does the Board have to buy malpractice insurance because it is insulated from the practices of the providers acting in their professional capacity.
  
• Our model enables anyone to use the services at the Center, whether indigent or not. It gives the providers greater freedom in their work and in attracting a broader range of patients. The providers are free to see as many patients as they wish, basically set their own hours, and advertise their services to the general community. Although some 90% of those seen at the Center are on medicaid, we do have some patients with private insurance or who pay cash. Indeed, even if a patient pays the full cash rate to see the nurse practitioner, that is still about half the charges at many medical offices in Lake Jackson. The ability is serve all patients who wish to use the services at the Center is particularly important because the Center is one of the only providers of any form of health care in Freeport.
  
• The model means that the Board must raise substantially less outside funding than if we had to pay all the expenses at the Center, and we can minimize the number of persons employed by the Board. If the Board was responsible for hiring all of the personnel now working at the Center and paying for all of their support services, it would have to raise between $500,000 and $1 million annually. As it is, the Board needs to raise some $50,000 to make ends meet.
  

The model clearly has some powerful advantages. It also has some drawbacks.

• We are able to provide affordable rates to our providers because we acquired and renovated our building with a generous grant from Episcopal Health Charities. If we had had to amortize the cost of the facility in the payments required from our providers, it is unlikely many would have chosen to practice at the Center.
  
• It requires a special provider to be willing to work within this model and to be successful at it. Note how long it took us to obtain a primary care provider who was a good match. The providers need to be able to cooperate with one another. We have staff meetings monthly to exchange information and work out problems. A provider who is a lone ranger can lower morale for everyone at the Center and may cause problems by non-compliance with its contract. Nurse practitioners, for example, were a better match than were physicians.
  
• The providers must meet their financial obligations to the Center if the model is to be viable. We had providers who were slow or no pays. Our first provider left the Center owing us a good deal of money which we had to write off. Although all providers are now meeting their obligations faithfully and on time, delinquent payments can cause a cash crunch. Similarly, the loss of a provider and its contribution to the Center can reduce the income needed to run the Center. On the hand, adding more providers can produce additional revenue streams that can be used to expand services provided by the Board.
  
• Providers must sometimes be given special subsidization to become established, that is, to build a sufficient patient base to generate the income they need to become financially viable. We gave all of our providers a several months, usually six, with significantly lower, or even no, payments to the Center. We had to front a loan to one of the providers to enable him to meet his payroll in this first three months with us. This implies that you need sufficient resources up front to bring in providers and help them get on their feet.
  
• Obviously, since the providers are independent contractors, the Board has less control over them than if they were employed by the Board. Our model implies a “federation” of providers who are willing to work with the Board and one another to provide a good working environment for both the providers and the patients. Since the providers relationship to the Board is determined by a contract, the Board must follow the contractual provisions to resolve disputes or if a provider is breaching the contract.
  
• If a provider decides, or is asked, to leave, the Board needs to find a replacement who is willing to work under our model. Some providers like the independence of having their own practice. Others do not want the administrative hassles that come with a private practice, especially a practice that involves medicaid and other entitlement programs. Our providers are now doing rather well, but we also believe we have a special group of providers that have a heart from our particular clientele.
  
• Because this model is a mix of for-profit and not-for-profit components, it required some interpretation to the IRS and other agencies we deal with. The Board is a 501(c)(3) corporation. The primary care provider, as it turns out, has his own 501(c)(3) corporation. The eye doctor and dentist are for-profit providers. The portion of our building which is used by the Board and the NFP corporations does not pay property taxes, but the portion used by for-profits does. Technically, it is the Board that is the United Way agency, but the providers are the ones involved in health care.
  

We started with a building that had 8200 square feet. We renovated 7000 square feet to accommodate five providers. We just renovated our expansion space to bring in two more providers. In the last quarter of 2002, we were running at about 20,000 patient visits a year(this is before we added our new providers) and saw some 1300 brand new patients. We are now seeking ways to buy additional space both to expand our existing services and add new much needed components such as mental health.

The model we are employing is working well now, but it took some two years to tune it, during which time it was touch and go whether we would succeed. Some areas will have a greater challenge implementing this model than others. One of the reasons for our success in Freeport was the lack of competition in a high need area which enabled our providers to develop a large patient base, thus enabling them to succeed financially when subsidized. But if say there are already a number of low-cost or charity clinics in a community, this model will probably not work.

If you wish more information about this model, or would like a copy of the contract we use with our providers, please contact me at mgmign@hal-pc.org or 979-233-8687.