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Healthcare
Initiative 25-0008A1
Community Health Clinics: 90% Revenue to Patient Services
Initiative Statute
What This Does in Plain English
Federally Qualified Health Centers (FQHCs) are community clinics that serve low-income and uninsured patients — they receive significant federal and state funding. This measure requires that at least 90% of every dollar those clinics receive goes directly to patient care. No more than 10% can go to management, overhead, or administrative costs.
The Problem It's Solving
- Some nonprofit health clinics that receive public funding spend a disproportionate share on administration, executive pay, and overhead.
- Patients and taxpayers expect that money intended for healthcare actually goes to healthcare.
- Without clear spending rules, clinics can drift from their mission of serving underserved communities.
What Changes
- 90% floor: At least 90 cents of every dollar of revenue must be spent on direct patient services.
- 10% cap on overhead: Management, administrative costs, and non-clinical spending limited to 10%.
- Who it applies to: Nonprofit Federally Qualified Health Centers that serve medically underserved communities.
- Enforcement: State oversight with financial penalties for non-compliant clinics.
Who Is Behind It
The measure's primary funder has not been publicly identified, but it aligns with accountability-focused healthcare reform efforts targeting nonprofit clinic spending practices.
Who It Affects
- Federally Qualified Health Centers and their leadership teams
- Low-income patients who depend on community clinics for primary care
- Clinical and administrative staff at affected clinics
- State regulators who would oversee compliance
Arguments For
- Ensures public funds reach patients, not bureaucracy.
- Creates a clear, enforceable accountability standard for publicly subsidized clinics.
- Protects the integrity of community health programs that serve vulnerable populations.
Arguments Against
- A rigid 90% rule may not account for the real costs of running a complex medical organization safely and effectively.
- Could force cuts to important administrative functions like compliance, IT, or training.
- Small clinics may struggle to meet the threshold without reducing services.
Fiscal Impact
State enforcement costs estimated in the low tens of millions annually, largely offset by penalties collected from non-compliant health centers. Net cost to the state is expected to be minimal.