5 Ways Hospitals Can Partner With Free Clinics

"I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as well."— Alan Greenspan

Are you prepared for the impending changes in reimbursement? Under the Patient Protection and Affordable Care Act, providers will see a shift from traditional fee for service to a value-based payment model that takes into account costs as well as quality of care. The new system will reward hospitals that provide care most efficiently, while reducing unnecessary services. As hospital finances become more closely tied to cost-effective health management of the population, some hospitals are forging partnerships with local free clinics in an effort to strengthen the medical safety net, and control their costs.

A 2010 Nationwide Survey of Free Clinics in the United States "suggests that free clinics are a much more important component of the ambulatory care safety net than generally recognized … in a context where more than 1,000 free clinics are estimated to serve 1.8 million mostly uninsured patients … annually." The study concludes that as states expand their Medicaid programs, free clinics will adapt and continue to serve as "gap fillers … providing services such as medications … and health education" to help keep patients out of hospitals.1

In the new healthcare landscape, hospitals and free clinics can both reap benefits by working together in partnership. Here are five examples:

1. Referral programs. Free clinics generally provide ambulatory and chronic care for underinsured patients with non-emergent conditions. Hospital emergency departments, on the other hand, will provide acute care to stabilize any individual, regardless of their acuity or ability to pay. As hospital executives face decreasing reimbursements, some are finding referral programs with local free clinics can help them control costs. In these programs, ED staff members are prompted to refer underinsured, non-emergent patients who meet certain criteria to free clinics. Case managers determine when a free clinic would be better suited than a hospital ED to manage a patient's care, then make the referral after the patient is discharged. While there are some upfront costs to set up these referral programs, they can ultimately save hospitals money and improve the quality of care for patients.

2. Sharing data. Hospitals usually have information systems that are more sophisticated than what free clinics have. Many hospitals could benefit from data sharing partnerships with free clinics. Despite some upfront costs, hospital executives are finding that clinical data sharing partnerships can help them more efficiently coordinate care and keep patients out of the hospital when their needs could be better met in a free clinic setting. Under the PPACA, such efficiencies will be crucial, as CMS will begin value-based reimbursements based on cost and quality. In preparation, more providers than ever are investing in electronic health record systems. These systems could be shared with free clinics in the community as they work in partnership with local hospitals.

In addition to clinical data, hospitals may also decide to share financial data with their free clinic partners, to determine return on investment. For example, in the case of a referral program, a hospital could run cost reports for a free clinic, including coding information related to patient acuity upon ED triage. The free clinic could use these reports to compare ED utilization figures before and after the referral program, to determine if their interventions were successful in keeping low-acuity patients out of the hospital.

3. Patient-centered medical home initiatives.
The PPACA created the Center for Medicare and Medicaid Innovation, which is currently testing care delivery models seeking to improve healthcare quality, promote well-being and lower costs. The CMS Innovation Center is funding a number of demonstration projects, including one to the test the effectiveness of the patient-centered medical home. While the PCMH model is only one option to accomplish the CMS Innovation Center's goals, preliminary evidence from published research is encouraging.2 In one case, Group Health, a fully integrated delivery system in the northwest, converted one of its multiple primary care practices into a PCMH. A 12-month controlled study3 indicated that the pilot clinic's transformation resulted in a statistically significant 11 percent reduction in hospitalizations, 29 percent reduction in ED visits and $71 in cost savings per patient for medical home members.

There is not much published research that focuses on the PCMH model in free clinics, but healthcare administrators hypothesize that the model would be effective across all primary, ambulatory and chronic care settings. Gaining PCMH recognition from the National Committee for Quality Assurance can be costly, however. As free clinics across the country strive to meet quality standards, they are beginning to search for resources to support their PCMH transformation initiatives. Hospitals have access to human and capital resources that most free clinics do not have. Some hospital executives are forming partnerships with free clinics by donating human and capital resources to support patient-centered medical home transformation initiatives. These leaders recognize that efficient free clinics can help hospitals control costs by properly managing care for the community's underinsured patients. With an effective safety net in place for the underinsured, providers' overall costs can be cut.

4. Clinical or administrative support. Hospitals can benefit from encouraging their employees and medical staff members to volunteer at a free clinic. For example:

  • It is a hospital's mission to promote health and well being in the community. Hospital clinicians help their communities when they volunteer to care for underinsured, non-emergent patients outside of the ED.
  • Hospital leaders who volunteer on a free clinic's board of directors build valuable connections and strengthen partnerships between their hospitals and the local free clinics.  

Further, the Internal Revenue Service requires not-for-profit hospitals to demonstrate a certain level of community benefit to maintain tax-exempt status. Hospitals can work toward satisfying regulatory requirements by including free clinics on medical resident  rotations or by subsidizing free clinics for medical staff salaries.

5. Donating clinical resources and services. In addition to volunteer hours, there are other ways hospitals can provide clinical support to free clinics. According to a report by the Virginia Association of Free Clinics,5 "hospitals and laboratories contributed nearly $58.6 million of in-kind services to free clinic patients in 2010," in the state of Virginia alone.

Some hospitals support free clinics by discounting specialty referrals. Bellevue Hospital Center in New York City supports the New York City Free Clinic this way. In return, "the NYCFC pays [the] remaining cost such that all specialty referrals to Bellevue Hospital Center are free of charge to NYCFC patients."6

A more common arrangement is a partnership in which a hospital donates laboratory, radiology or other services to a free clinic. Stephanie Garris, executive administrator of Grace Medical Home, a large free clinic in Orlando, Fla., noted how thankful she was that the two large health systems in her market donate laboratory services to her organization. Orlando Health and Florida Hospital alternate weeks to provide laboratory services to Grace Medical Home. The free clinic is also engaged in a financial data sharing arrangement with each local health system, so that it can demonstrate the value that it returns to hospitals in the form of ROI.7

In 2007, the Actuarial Research Corporation and the Kaiser Family Foundation collaborated to conduct a study, which determined that "84 percent of High ED Users (defined as four or more visits over two years) live with chronic conditions, and that 31 percent of of High ED Users' ED visits are related to chronic conditions compared to 16 percent for Low ED Users."8

Julie Bilodeau, director of operations of CrossOver Ministry, the largest free clinic in Richmond, Va., told how her clinic partners with local health systems to manage chronic patients to keep them out of hospitals. She told of a patient who came to CrossOver in January 2011. He complained of dry mouth, frequent urination, persistent thirst, and poor sleep. He had also lost 20 pounds in two months and was growing worried. Dr. Dageforde, one of CrossOver Ministry's volunteer physicians, ran some tests that were funded by a partner hospital's laboratories and discovered that his patient's blood sugar was 333, and his A1C was off the charts. The patient was diagnosed by the free clinic with Type 2 diabetes. CrossOver provided him with insulin, a glucose monitor, strips, needles and other supplies necessary to manage his condition. CrossOver nurses and physicians also took the time to educate the patient about lifestyle changes that would help him live a healthy life. The patient began eating healthy and exercising regularly. Today, the patient is in excellent control of his diabetes, is living a healthy and productive life and holds a steady job at a local restaurant. Upon the patient's most recent visit to CrossOver, in November 2012, the patient recorded an A1C of 6.6, nearly within the healthy range for an adult without diabetes. This particular patient is a constant reminder of the challenges that free clinic patients face without access to healthcare (in this case hospital laboratory services), and how better health education can make a dramatic impact on lives. Ms. Bilodeau's practical example supports the findings of the Actuarial Research Corporation and the Kaiser Family Foundation that well-managed free clinics can reduce hospital costs.

Clearly, there are many ways hospitals can partner with free clinics to better serve patients while controlling costs. Some types of partnerships require an upfront investment from the hospital, but in the long run, these partnerships can be mutually beneficial and represent true win-wins.


1“Free Clinics in the United States: A Nationwide Survey,” Julie S. Darnell (2010), Archives of Internal Medicine 170(11): 946–953

2“What We’re Doing,” Center for Medicare & Medicaid Services, Center for Medicare & Medicaid Innovation (Dec.4, 2012) http://innovations.cms.gov/initiatives

3“Driving Quality Gains and Cost Savings through Adoption of Medical Homes,” Daniel Fields, Elizabeth Leshen and Kavita Patel (2010), Health Affairs 29.5: 819-26

4“Summary of Charity Care Requirements for Certificate of Need Applicants Establishing Ambulatory Surgery Facilities in Other States.” Baltimore, Md., Healthcare Commission (2011)

5 “How We Help,” Virginia Association of Free Clinics (Nov. 7, 2012) http://www.vafreeclinics.org/how-we-help.asp

6“Partnering to Provide Free Care for the Uninsured,” NYC Free Clinic, NYU School of Medicine and Institute of Family Health (Nov. 15, 2012) http://nycfreeclinic.med.nyu.edu/about-new-york-city-free-clinic/partners

7Grace Medical Home telephone interview (Nov. 2, 2012)

8“Characteristics of Frequent Emergency Department Users,” Elizabeth M. Peppe, Jim W. Mays, Holen C. Chang, Eric Becker and Bianca DiJulio, Menlo Park, CA: Kaiser Family Foundation (2007) http://www.kff.org/insurance/7696.cfm

J. Stephen Lindsey, FACHE, was CEO at HCA Henrico Doctors' Hospital for 16 years. He has served as an affiliate professor in the MHA program at Virginia Commonwealth University. Mr. Lindsey is a principal of Ivy Ventures, LLC, a consulting firm that helps hospitals grow outpatient service lines. He is a fellow of the American College of Healthcare Executives. He can be reached at slindsey@ivyventures.com.

John "Trey" Rawles III is enrolled in Virginia Commonwealth University’s Master of Health Administration Program. He has a background in healthcare and Internet marketing, and has also provided strategic and analytical services in the clinical setting as part of a large cardiology practice. He currently works with Piedmont Healthcare, assisting the Director of Community Benefit in researching strategic ways to achieve cost savings by transforming free clinics in Atlanta, Ga., into patient-centered medical homes. He can be reached at treyrawles@gmail.com.

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