California HealthCare Foundation Commits $10 Million for Loans to Safety-Net Clinics

July 7, 2009 — The California HealthCare Foundation has announced it will make $10 million available to the Emergency Working Capital Loan Fund, a low-interest loan pool designed to help ensure California's safety-net clinics provide uninterrupted care.

A record $24 billion budget shortfall threatens the flow of government reimbursement dollars to the state's community health centers from Medi-Cal, California's insurance program for low-income families. During previous budget delays, the state was able to draw on a small reserve fund to continue making Medi-Cal payments to community health centers and other institutional providers. But in the current environment, those payments are in jeopardy.

Indeed, a recent survey by the California Primary Care Association found that nearly eight in ten clinics surveyed would require an emergency loan if Medi-Cal payments were delayed by eight weeks. Medi-Cal reimbursement accounts for up to 50 percent of community health center revenue, and without it, many clinics will not be able to meet payroll and overhead expenses. As a result, some will be forced to reduce patient services, reduce hours of operation, or shut down altogether.

As was the case last year, CHCF has joined other organizations in contributing to the loan fund, which now totals $26 million for 2009. Loans are underwritten, approved, and managed by the nonprofit NCB Capital Impact, and eligible clinics may receive a maximum loan of $1.5 million, at an interest rate of 3.6 percent. Other contributors to the fund include Catholic Healthcare West, Sutter Health, NCB Capital Impact, and the Nonprofit Finance, CPCA Loan, and Mercy Partnership funds.

"The situation in Sacramento is as uncertain as I've ever seen, while at the same time some community health centers are experiencing a 10 percent to 50 percent increase in the number of uninsured patients they see because of these hard times," said CHCF president and CEO Mark D. Smith. "The emergency loan pool is vital to ensuring that these important providers are able to continue to provide care."