Despite help, Frances Nelson faces tough financial road

CHAMPAIGN – Three years after Frances Nelson Health Center moved and expanded with the help of a community fund drive, this Champaign clinic for those in need is facing some serious financial challenges.

And they're being fueled by more than the recession.

For three years after its move to a larger building in November 2006, Frances Nelson has been operating with some financial help pledged by Carle Clinic, Christie Clinic and both Urbana hospitals. But most of that help, including free rent, came to an end this month, and the rent going forward will be $75,000 a year.

On top of that, Frances Nelson is already struggling to serve a mix of patients that's unhealthy for its bottom line – more uninsured patients who can't pay for their care and fewer of the Medicaid patients who help cover expenses.

The number of uninsured patients coming to the health center this year has been up 6 percent over last year, while the number of Medicaid patients has been down 6 percent, according to site Director Andrea Goldberg.

"We've always had a large uninsured population in this community, and it seems as if it's growing," Goldberg said. Those two numbers are a concern to Frances Nelson, because the state pays for the care of low-income patients in the Medicaid system. Not only that, it pays federally qualified health centers like Frances Nelson – which serve as medical safety nets in their communities – substantially more than it pays private physicians, and Frances Nelson relies on those enhanced payments to help cover the cost of caring for the uninsured.

With some 27,000 Champaign County residents enrolled in state medical programs, Frances Nelson never intended to serve them all. But bumping up the number of Medicaid patients was a key part of the health center's plans to support itself in a larger building.

So what happened?

Two actions taken by the state to drive more Medicaid patients to Carle and Christie clinics may be having an unintended effect on Frances Nelson, the health center's leaders say.

One was an anti-trust lawsuit filed in 2007 by Illinois Attorney General Lisa Madigan that accused both clinics of conspiring to fix state Medicaid payments by turning away some of Champaign County's Medicaid enrollees.

The lawsuit was settled out of court when the two clinics agreed to serve thousands of new Medicaid patients. Carle Clinic agreed in December 2008 to take on 11,850 new Medicaid patients, and Christie Clinic agreed this past spring to accept 1,900 new Medicaid patients. Both clinics also agreed to make lump-sum payments to Frances Nelson on top of the financial assistance they had already provided voluntarily.

But even before those settlements, both clinics had begun taking in new Medicaid patients after they agreed to become participating providers under the state's new Health Connect program. Under that program, the state set out to find a steady source of care for each Medicaid patient.

Neither clinic would say how many Medicaid patients they have added in the last couple of years – though Christie Clinic says it has met its obligation under the lawsuit settlement, and Carle Clinic says its Medicaid patient numbers have grown in both 2007 and 2008.

"We recognize that in the current climate, Frances Nelson Health Center may have been impacted by the state's request for Carle Clinic to add appointments for patients covered by Medicaid," Carle Clinic spokeswoman Jennifer Hendricks said. "While we are proud of our record serving the community and pleased to see more patients, it is also important to support Frances Nelson."

Without more information, Frances Nelson officials say, they can't accurately assess just how much the lawsuit settlement and Health Connect enrollments at the clinics have affected the patient mix at Frances Nelson.

But Barbara Dunn, executive director of Frances Nelson's Decatur-based parent organization, Community Health Improvement Center, does say there's been an effect.

"The effect on Frances Nelson has been the loss of Medicaid and a corresponding increase in uninsured," she said.

More care for the poor

Madigan spokeswoman Robyn Ziegler says the lawsuit settlement is doing exactly what was intended – ensuring that 20,000 Medicaid-eligible children and adults in Champaign County have health care choices and access to primary care.

"Prior to the settlement, there was a long waiting list at Frances Nelson Health Center and even patients who could not get on the waiting list, leaving them with no options. That is no longer the case. Carle and Christie, under the settlement, agreed to accept Medicaid patients that come to them in the first place," she said.

Even with the settlement in place, Ziegler said, many Medicaid patients are still choosing to go to Frances Nelson.

"We understand Frances Nelson Health Center's agreed maximum Medicaid level to be 5,000 patients," she said, adding Frances Nelson reported 4,848 Medicaid patients in the first quarter of 2009 and 4,901 in the third quarter.

Years before Frances Nelson began planning to move and expand from its longtime location on Champaign's Carver Drive, it was feeling the early impact of a rising number of people without health insurance.

Many of the new uninsured converged on the small health center where charges were based on income, and it was soon stressed trying to keep up with the demand.

Carle Foundation Hospital provided some temporary help with a mobile clinic that provided extra exam room space and began meeting with Frances Nelson to find a more permanent solution.

Those meetings grew into a community fundraising campaign to build a bigger Frances Nelson, and Carle hospital wound up buying the old Leath Furniture store building at 819 Bloomington Road, C, remodeling it and leasing it to the health center for a dollar a year. The hospital also agreed to pick up the cost of the health center's utilities.

The virtually free rent agreement was good for three years, and started when Frances Nelson moved into the new space in November 2006.

Carle and Christie clinics along with Provena Covenant Medical Center also agreed to subsidize Frances Nelson's annual operating costs for three years. Those obligations were met as of last year, Goldberg said.

Three years was thought to be enough time for Frances Nelson to prepare to stand alone, but nobody predicted back then that the three years would end in the middle of a recession, she said.

Yet another complication: Frances Nelson had planned to increase its number of available appointment slots by hiring more doctors, and while one new doctor was recruited after the move, another doctor has since resigned and the position remains unfilled.

Goldberg would like to hire two more doctors, she said, and more Medicaid patients would help cover their salaries.

Without those additional doctors, Frances Nelson has continued to limit appointments to adults with chronic medical conditions and all children but has still seen about a 3 percent increase in patient visits this year over last year, she said.

"There are people who are having to wait for appointments, and there are people having difficulty getting in," Dunn said. "We know that the phone system, at times of the day, is very overloaded with phone calls."

Uncertain future

Goldberg and Dunn say they're keeping an eye on Frances Nelson's expenses and patient mix, and the number of Medicaid patients is a major concern these days.

So is the state's poor financial health and just-as-poor track record for paying Medicaid providers.

Dunn said the state remained fairly current on Frances Nelson's Medicaid claims through October, but there was a slow-down in November and who knows what will happen in the second half of the state's fiscal year.

"I think the community support in Champaign-Urbana has been wonderful, and yes, things are a little tough now with the economy, but we're not the only health center now that is seeing this," Dunn said.

Some of that support from Carle hospital will continue for now.

While Frances Nelson will have to pay rent to Carle, an amount Dunn contends is more than fair for 15,000 square feet, the hospital has offered to continue paying the utility costs, which ran $84,000 this year.

Stephanie Beever, Carle vice president of business development, said Carle and Frances Nelson also continue to meet on a monthly basis to monitor how the local health care network is working in terms of referring uninsured patients from emergency rooms to Frances Nelson and from Frances Nelson to Carle and Christie clinics when patients need specialty care.

"There is interaction going on, on a weekly basis, making sure that patients get the right kind of care," Beever said.

Meanwhile, Dunn said Frances Nelson will need to keep an eye on the mix of patients, because they can't all be self-pay who can't pay.

One option may be trying to collect the charges on the same day of service instead of billing, she said, but even very small charges are difficult for some patients in the current economy, she said.

Another option, once a more thorough look at the state of the health center's finances can be done, may be to do some additional fundraising next year, she said.

"We're hoping to successfully meet these challenges, but it does remain to be seen," Goldberg said.

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