FQHC Look-alikes: A Solution to Hospital Outpatient Services' Losses?

There has been a recent trend of hospitals outsourcing often-unprofitable outpatient services for their poorest patients. This is done by establishing independent, nonprofit organizations to provide primary care. These clinics are known as federally qualified health center look-alikes and are becoming increasingly popular. One of the main reasons is that Medicare and Medicaid pay these clinics significantly more than they would if hospitals owned the sites. Additionally, these clinics allow hospitals to obtain prescription drugs at deep discounts.

ER diversion strategy

Look-alikes do not benefit from a federal government grant to cover operational costs, and they are not eligible for a financial incentive in which the federal government pays for their malpractice insurance premiums.

Many hospital-formed look-alikes have clinics either on hospital campuses or very close by, which helps take some pressure off emergency rooms by providing care for patients with less urgent needs.

Growth

According to the federal Health Resources and Services Administration, the number of look-alike health centers nationally has increased from 87 in 2020 to 108 today.

Look-alike health centers, like real community health centers, are run by a board of directors. Like real community health centers, look-alike health centers need at least 51 percent of the board's members to be patients. Look-alike health facilities provide sliding payment options to customers based on their income.

This is one strategy as health systems explore ways to divert non-emergency care out of the ER while exploring ways to serve more patients in the community.