Association for Public Policy Analysis & Management

This paper proposes a novel means of assessing health care delivery to local communities and examines why some health centers perform better than others. We collect data from all 1,375 Federally Qualified Health Centers (FQHCs) in the U.S., which are primary care safety net organizations operating in indigent and medically underserved areas. FQHCs’ activities have grown significantly over the last decade owing to an influx of funding under the 2002 Health Center Expansion Initiative and the 2010 Affordable Care Act (ACA). Although FQHCs heavily rely on federal money, they also receive funding from state and local governments and private sources.

We introduce a new measure of health care delivery consisting of three dimensions—effectiveness, efficiency, and equity. The health outcomes are measured as a composite index of adequacy of management of five chronic diseases: asthma, coronary artery disease, ischemic vascular disease, hypertension, and diabetes. The efficiency dimension is operationalized by cost per patient. The access to care is operationalized by the percent of low-income population and minorities served by the center.

The analysis conceptualizes performance as a function of two critical factors—funding source and organizational structure. We hypothesize that FQHCs with predominantly federal funding will have better health outcomes and improved care access at relatively lower cost compared to FQHCs with moderate, low or no federal funding. We employ a one-year lag to estimate the impact of funding type on performance. In terms of organizational structure, we expect that FQHCs which are run as nonprofits perform better than those operating under governmental auspices. The data for the analysis come from the Bureau of Primary Health Care and U.S. Department of Health and Human Services and cover the period from 2012 to 2015.

The uncertain status of the ACA amidst federal changes in executive power and the talk about repealing the policy make this study especially timely. The results reveal some unexpected insights about the link between federal funding and performance of health centers and have important implications about the allocation of resources to FQHCs. The broader contribution of this study is related to the larger aspects of enhancing social welfare by improving access to quality care for low-income and minority populations in medically underserved communities.