Underfunded and Overburdened: The Toll of the COVID-19 Pandemic on Community Health Centers

Community health centers are often the first line of defense during health crises in America, including the opioid and HIV epidemics. More than 13,000 service sites operate as a safety net for 30 million patients who would otherwise struggle to access primary care, including 13 million patients living in poverty, 6 million uninsured patients, and 1 million patients experiencing homelessness.

Despite their vital role, health centers are in a precarious financial position. They rely heavily on Medicaid reimbursements, which are lower than Medicare and commercial health insurance reimbursements, and federal grant funds. Operating within tight financial margins leaves them with little room for investments in technology, staffing, and other resources; when financial uncertainty grows, health centers often impose hiring freezes or reduce services.

The COVID-19 pandemic exacerbated these challenges while creating new ones. Centers provide COVID tests and treatments while continuing access to their standard services, all in a safe environment. Further, patients are disproportionately from racial or ethnic minority groups, who are more likely to get seriously ill and die from COVID-19. In response, some health centers expanded outreach to ensure everyone could receive lifesaving care.

Federal and state policymakers supported centers through targeted funding and policy changes that promoted building capacity, improving technology, and maintaining revenues. To understand how these supports affected health centers, we analyzed responses from the 183 U.S. primary care physicians who reported working in a community health center in our Commonwealth Fund 2022 International Health Policy Survey of Primary Care Physicians.

With Surge in Telehealth Use, Reimbursements and Expenses Were Challenging

Before the pandemic, telehealth use among community health centers was limited, owing to insufficient reimbursements and limited capital to purchase and maintain equipment. In an effort to maintain care, centers rapidly implemented telehealth, with the assistance of health center–specific funding and reimbursement policy changes. In the first year of the pandemic, the number of centers providing clinical services via telehealth more than doubled, increasing from 43 percent of centers providing these services in 2019 to 99 percent in 2020.

While most physicians working in community health centers reported they were satisfied with telehealth and found it easy to use, the majority said that reimbursements for the services and related expenses, either to implement or maintain telehealth platforms, were challenges.

One-Third of CHC Physicians Reported Their Practices Lost Revenue During the Pandemic

In recent years, community health centers have relied more on Medicaid, Medicare, and other reimbursements and less on federal grant funds. This placed them in a vulnerable position during the pandemic, when in-person patient visits and associated reimbursements plummeted. Beyond decreasing revenues, they also had new costs related to COVID care. The federal government awarded centers billions in funding to help cover these costs, increase staff capacity, and improve infrastructure.

While not targeted toward centers, the continuous enrollment policy, which allowed Medicaid beneficiaries to maintain their coverage throughout the public health emergency, created financial benefits for centers. The policy led to an increase in Medicaid enrollment, allowing centers to be reimbursed for treating additional patients.

While these policies and funds offset financial losses to some extent, our survey reveals they were insufficient for a significant portion of health centers. One-third (33%) of health center physicians reported their practice lost revenue during the pandemic, while only 13 percent reported their revenue increased.

Despite Support, Health Centers Face an Uncertain Future

While federal support seems to have eased the transition to telehealth and offset some losses, our survey reveals that community health centers still face financial challenges.

CHCs may struggle to continue providing telehealth, which patients have become accustomed to, because these systems can be costly to maintain. As pandemic-related federal funds are spent down, and Medicaid’s continuous enrollment policy ends, health centers are likely to face renewed financial strains. This financial uncertainty is particularly concerning because the Community Health Center Fund — the largest federal funding source for CHCs — is set to expire this year. While many expect Congress to reauthorize it, the generosity of the funding and timeliness of the reauthorization are uncertain.

As policymakers debate the role of community health centers and future funding, health centers’ invaluable role in providing their communities with equitable care should be kept at the forefront of discussions.