Deborah Costin and John Schlitt

JUNE 2002

How are school-based health centers across the country being financed?  What are major sources of financial support: local, state, and federal government grants?  Sponsoring health and education agencies?  Private foundations?  What portion comes from in-kind support of local partners?  Is patient care revenue a significant part of the financial portfolio?

Through a cooperative agreement from the federal Maternal & Child Health Bureau’s Office of Adolescent Health, and with support from the W.K. Kellogg Foundation, the National Assembly in spring of 2001 launched a national study of school-based health care financing to give the field a better understanding of funding trends.  Guided by a national advisory committee of school-based health care administrators and finance experts, the National Assembly surveyed every school-based health center in the country. 

View survey instrument

View research questions

View one-pager fact sheet with SBHC revenue charts

View criteria for exemplary financing strategies

The Process

To assist in developing the national finance survey tool, NASBHC appointed a work group of individuals with expertise in SBHC administration and broad geographic representation (View work group).  The first task of this group was to develop a set of research questions that were to be answered through the survey (View research questions).  Determining the current sources of revenue for health centers and their perceived degree of vulnerability (risk of closing) were top priorities.

Armed with these research questions, the work group developed the National School-Based Health Center Finance Survey.  This was mailed in March 2001 to every school-based health center in the NASBHC database.  In addition, a survey announcement was published in NASBHC’s Joining Hands newsletter and the listserv maintained by the Center for Health and Health Care in Schools.  State health department and NASBHC state chapter leaders were asked to publicize the survey effort and to encourage response.

The Respondents

The National School-Based Health Center Finance Survey was mailed to 1277 school-based health centers.  A total of 412 surveys with revenue data were returned, yielding a response rate of 32%.  View distribution of respondents by state.

The distribution of respondents by sponsor type, population served, and community characteristic (urban, rural or suburban) closely mirrors the results obtained for the field as a whole in a previous NASBHC “census” project.  Of the 412 respondents, 27% are sponsored by a local health department, 21% by a hospital, 21% by a community health center, 13% by another non-profit agency, 10% by a school system and 8% by some other type of entity.  The respondents represent SBHCs that serve every level of the school-aged population: high school (203), middle school (147), and elementary school (142).  Many of the respondents serve more than one level.  In addition, 57 respondents serve pre-school age children 0 to 5 years, and 22 serve adults as well as children and adolescents.  A total of 54 respondents function within alternative schools.  The majority of respondents (62%) are located in urban areas, 23% are located in rural areas, and 15% in suburbs.

The Findings

A. Sources of Revenue

The survey asked respondents to provide their cash and in-kind revenue by source for their last completed fiscal year.  Sources of funding were broken down into six major categories: federal, state, and local government, private, patient revenue and in-kind.  Each major category had several sub-categories as well.  Respondents were told that government funding should be categorized based upon the agency they applied to for the funding.  For example, if a health center applied to the state health department for money that originated as a federal block grant such as Maternal and Child Health, this was to be included under state government revenue.

The survey revealed that SBHCs collect an average of $169,000 in revenue annually.  This breaks down to an average of $49,000 (29%) collected from state governments, $33,000 (20%) from local governments, $28,000 (17%) from local in-kind sources, $24,000 (14%) from private sources, $21,000 (12%) from patient revenue and $14,000 (8%) from the federal government.  Of the 412 respondents, 20% are currently operating with only one source of revenue.  Another 21% depend upon two sources of revenue.  The largest number (27%) have three sources, while 20% have four, 10% have five and 2% operate with all six possible revenue sources.  Based upon an in-depth review of responses, it is believed that in-kind sources are understated, due to the fact that many programs do not place a monetary value on “hidden” in-kind contributions such as rent-free space, utilities or janitorial services provided by the schools in which they are located.  In addition, in some cases where the SBHC is a collaborative effort among several organizations, some staff members are “loaned” but are not included as in-kind support in the SBHC budget.

Sources of revenue were also analyzed by frequency of mention.  Of the 412 respondents, 60% reported receiving revenue from their state government, 33% from their local government and 21% from the federal government.  Among private sources of funding, state or local foundations were reported by 21% of respondents; 20% received cash from the sponsor agency.  In addition, 11% received funding from United Way or other community campaign, 9% from special events or other fundraising, 7% from corporate donations, 4% from earned income and 3% from national foundations.  The most frequently mentioned contributor of in-kind support was the school district (51%), followed by the medical sponsor (33%), and a non-sponsoring organization (11%).  As for patient revenue, 56% of all responders reported revenue from billing Medicaid including Medicaid managed care, 33% from billing private insurance including commercial managed care, 21% from collecting directly from patients and their families, 13% from State Child Health Insurance Programs (SCHIP), and 3% from CHAMPUS.  An additional 13% reported patient revenue from other sources, including state-funded programs for the medically indigent.

Figure 1: Most Frequently Mentioned Sources of Revenue (n=412)

Because many policy makers feel that improving collections from patients and third parties is the key to SBHC sustainability, the study looked closely at patient revenue.  Approximately two-thirds of respondents reported collecting patient revenue from at least one payer type.  Of the approximately $21,000 collected per year on average, 67% came from Medicaid, 15% from private insurance, 11% from other sources such as state programs for the medically indigent, 4% directly from patients, 2% from SCHIP and 1% from CHAMPUS.  The low amount reported from SCHIP may be partially explained by the fact that, in many states, SCHIP is indistinguishable from Medicaid.

On closer inspection, it was determined that most of the revenue in the “other” category was reported by SBHCs in California.  Most of this revenue comes from three programs unique to that state: Expanded Access to Primary Care (a state-funded program that pays a per visit rate to Federally Qualified Health Centers and FQHC look-alikes that provide care to uninsured individuals under 200% of poverty), Child Health and Disability Program (California’s version of EPSDT, which is administered separately from Medicaid) and Title X family planning funds, which are distributed by the state on a fee-for-service basis.

Figure 2: Average Annual Patient Revenue by Source compared to SBHC Users by Insurance Status

When sources of revenue are analyzed by state, New York, California and Massachusetts appear to be role models (See table one).  Based on the responses to this survey, SBHCs in these states appear to be well funded with several sources of revenue including large amounts of patient revenue.  In fact, out of the 412 survey respondents, 22 had patient revenue greater than $100,000 in the year reported.  Of these 22, eight were in New York, six in California, and five in Massachusetts.  The policy and practices leading to this survey finding merit further study.

SBHC revenue was analyzed by several variables to assess how certain characteristics might influence the ability to attract particular kinds of funding.  These variables include type of sponsoring agency, age of the program, perceived risk of vulnerability, the state in which it operates, and type of community.

Sponsor Type.  As shown in table two, SBHCs sponsored by a local department of health reported higher average total revenue than SBHCs with other types of sponsorship, and also reported significantly higher local revenue sources than other sponsor types.  SBHCs operated by a community health center, however, collected the highest amounts of patient revenue and federal grants.  The ability of federally qualified health centers to bill at full cost of service may account for more successful revenue collection by the community health center-sponsored SBHCs.  Because school districts are least likely to have the infrastructure that is required for billing and collecting, SBHCs sponsored by school systems collected the least amount of patient revenue on average.  SBHCs sponsored by hospitals and non-profit organizations had a significantly larger portion of their revenue funded by the private sector.

Risk of Closing.  Respondents were asked to rate, on a scale of 1 (low) to 5 (high), the likelihood that their site will close in the next three years due to unstable financing.  Over half (53%) of the respondents reported virtually no risk of closing (score=1), and another one-third (36%) reported medium risk (score=2 or 3).  However, 11% felt they were at significant risk of shutting their doors (score = 4 or 5).  Not surprisingly, these centers report the lowest amount of annual revenue on average.  Perhaps most noteworthy is that these sites reported the greatest amount of federal dollars and the least amount of local and state support.  Neither the age nor size of the center appears to be predictive.

Community Type.  When looking at revenue distribution by community type, rural centers operated on less total revenue and were significantly less likely to rely on local government support than their urban and suburban counterparts.

Age of Center.  The age of the center may also reflect the strength of its financing strategy.  The National Finance Survey revealed that, on average, the older the center is, the larger its revenue stream. 

B. Top Priorities for Using Additional Funding

The National School-Based Health Center Finance Study asked responders to identify their top priority for expanded services if additional funding became available.  By an overwhelming margin, the most pressing need identified was mental health services.  Figure 3 illustrates the ranking and number of responses for each possible priority.

Figure 3: Service Priorities for Additional Funding

In addition, responders were asked how they would expand capacity if their SBHC had more resources. Enhancing space and expanding the population served were the most often mentioned, as shown in Figure 4.

Figure 4: Capacity Priorities for Additional Funding

CASE STUDIES

Because one of the objectives of the survey was to identify successful financing models that can be used as case studies for delivering technical assistance, the work group developed criteria for selecting  “exemplary” financing strategies.  The four case studies presented here satisfy the five criteria developed by the work group.  However, each has a different source of core support.  In addition, they represent a cross-section of the field in that they are distributed geographically from west to east, are located in urban, rural and suburban areas, and serve elementary, middle and high schools.

Multnomah County Health Department's Lincoln Park Elementary School, Portland, OR

Intermediate School (IS) 52 School-Based Health Center, Manhattan, New York City, NY

Sonoma County People for Economic Opportunity's Roseland Elementary, Santa Rosa, CA

Wilmington Health Access for Adolescents Lakeside High School Wellness Center, Wilmington, NC

Conclusions

The school-based health center finance study provides a first-ever national analysis of school-based health center revenue.  Our findings substantiate what has previously been documented through anecdote: that school-based health centers are financed through varied approaches, each reflecting the unique opportunities of community, state, and federal public and private programs and policies.  Unlike other safety net providers such as community and migrant health centers and family planning clinics whose mission and appropriations are authorized through Congressional action, school-based health centers have a grassroots genesis that is reflected in the patchwork of blended public and private financial support from multiple collaborators and investors.

The survey revealed that SBHCs collect an average of $169,000 in revenue annually.  State level decision-makers grant almost one-third of this total.  However, the range of total revenue reported is very broad, and the funding sources are many.  Some of the factors that create the wide variations in the amount of revenue may be:

1)  

     Type of population served.  School-based health centers serving adolescents, and especially those located in alternative high schools, tend to require higher revenue.  This is because these populations exhibit multiple risk factors that require multiple visits to resolve.

2)  

     Services offered.  The more comprehensive programs, especially those offering mental health evaluation and treatment and/or dental services require higher revenue to support additional staff.

3)  

     In-kind support.  The case studies illustrate that the reporting of in-kind support is extremely variable.  For example, while Lincoln Park Elementary SBHC in Portland, Oregon receives in-kind donations from the school district in the form of rent-free space, utilities and janitorial services, the center’s budget does not reflect the value of this support.  Other SBHCs report the value of space, utilities and janitorial services, but do not report the value of billing and collection services or administrative oversight which are donated by a parent organization, or the value of volunteer staff or staff-in-training.  Furthermore, many SBHCs are in fact collaborative efforts among several organizations.  That is, medical services may be offered by the medical sponsor while mental health services are offered by a community mental health agency, drug and alcohol counseling by a drug treatment center, and prescription medication on a pre-packaged basis by a local pharmacy.  Under this scenario, comprehensive services are offered, but the school-based health center’s budget reflects only the cost of the medical services provided by the medical sponsor.

4)  

     Billing and Collection Infrastructure. In general, SBHCs that bill and collect patient revenue generate higher total revenue but also require higher revenue to support the hardware, software, knowledgeable staff and ongoing training that is necessary to perform billing and collecting successfully.

It can be debated whether having multiple sources of funding is, in fact, more desirable or “exemplary” than having one long-term source.  If, in fact, the single source is truly “stable” then perhaps not.  Certainly, complying with the requirements of one or two sources is administratively more efficient and therefore less costly.  The reality is, however, that there are inherent risks in all sources of funding based upon federal, state and local political and economic realities.  The more sources of funding a center has, the more this inherent risk is reduced.  Patient revenue, generated through third-party billing, has been singled out as especially desirable because it is the only source of funds that is self-sustaining over time.

The issue of billing and collecting patient revenue remains a challenge for most school-based health center administrators.  The need to generate a reliable and ongoing revenue stream is confounded by the costs associated with building the systems and hiring the staff necessary to successfully perform the function, as well as a transient population with ever-changing insurance coverage.

There are some variables that seem to contribute to greater success in collecting patient revenue.  First, patient volume appears to be significant.  Of the SBHCs that reported patient revenue greater than or equal to 25% of total revenue, users averaged over 1100 compared to 600 in the group that reported less patient revenue.  This could lead one to hypothesize that there is a threshold below which the volume of billable services does not warrant the required investment in billing infrastructure.  The insurance status of patients also has an impact.  Of the SBHCs whose patient revenue equaled or exceeded 25% of total revenue, the proportion of Medicaid enrollees was 47%, compared to 24% among centers with patient revenue less than 25%.  This leads to the conclusion that billing and collecting activities need to be accompanied by effective enrollment assistance efforts.  Finally, being located in a specific state seems to have advantages.  Centers in New York, California and Massachusetts reported a much higher amount of patient revenue – two to three times the national average.  The case studies revealed that state-level policies have created opportunities for SBHCs in these states such as New York’s Medicaid managed care carve-out which allows SBHCs to be reimbursed directly by Medicaid for primary care services, and California’s methodology for distributing Title X funds through Family Pact.

Whether directed by federal, state or county government, whether their source is targeted to primary care, maternal and child health, or Medicaid, public resources are the mainstay for school-based health centers.  Private sources, in all their diversity, account for no more than an average of 14 percent.  Even patient revenue is mostly public in origin.  With state and locally-directed public allocations totaling nearly half of SBHC revenue, sustaining and growing school-based health centers will no doubt require their continued, if not, expanded role.  Equally important to the equation for SBHC sustainability is an expanded federal role for school-based health center support.  A national public health policy is needed that recognizes the unique characteristics and services delivered in school-based health centers, establishes public health resources for their core support, and defines school-based health care services under Medicaid to ensure adequate compensation. 

View survey instrument

View research questions

View one-pager fact sheet with SBHC revenue charts

View criteria for exemplary financing strategies

Finance Study Work Group Members

The National Assembly extends its thanks and appreciation to the work group members who volunteered their time and expertise to the development and oversight of this study.

Donna Behrens, MPH, RN

Maryland Governor’s Office on Children Youth & Families

Baltimore, MD

Jo Ann Derbonne, RN

St.  Francis Cabrini Hospital

Alexandria, Louisiana

Constance Parker

Wilmington Access to Health for Teens

Wilmington, North Carolina

Betty Pepin

Commerce City Community Health Services

Commerce City, Colorado

Carolyn Sexton,

North Carolina Division of Public Health/Women's and Children's Health

Raleigh, North Carolina

Kimberly Uyeda, MD,

Los Angeles Unified School District

Los Angeles, California

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