Proceedings of the 1st National Conference on Community Health Center – Primary Care Residency Program Linkages "Family Practice and the Future of Community Health Centers" (Leong)

Last Updated on April 16, 2022 by Lee Burnett, DO, FAAFP

In preparation for the 25th National Conference on Primary Health Care Access, to be held April 14-16, 2014 at the Hyatt Regency San Francisco, we will be publishing a series of archival works of relating to educational linkages between community health centers and primary care physician residency programs, which will be one of the topics discussed at the 25th National  Conference. The following presentation, which took place during the National Conference’s joint session with the Western Regional Meeting of the Society of Teachers of Family Medicine, from October 17, 1993, is by Darryl Leong, MD, then of the National Association of Community Health Centers.

We gratefully acknowledge the sponsorship of the Valley Consortium for Medical Education (Modesto. California) for funding the transcription and editing of this section of the Proceedings of the First National Conference on Community Health Center-Primary Care Residency Linkages (Lake Tahoe, Nevada, October 17, 1993):


Norman B. Kahn, MD, moderator: [Dr Kahn is a Fellow of the Coastal Research Group]  Darryl Leong is currently vice president for Primary Care Systems Inc, a non-profit corporation that focuses on increasing outcomes for underserved populations, particularly through CHC linkages.

You may know Darryl better in his previous career as Director of Clinical Affairs for the National Association of Community Health Centers, a position in which he served for three years. Prior to that he was Director of Maternal and Child Health for the state health departments in Hawai’i, Vermont and Iowa.

Darryl is a board certified pediatrician who received his MPH from the University of Hawai’i. He will talk on “Family Practice and the Future of Community Health Centers.

Darryl Leong, MD (National Association of CHCs, Washington, DC): I have just a few words about the Primary Care Systems and what we are trying to do. Its mission is to ensure primary care to everyo ne in the country. In support of its mission, it is available to provide assistance to CHCs as well as assistance to academic training programs in developing programs to achieve that mission.

Before I get started, I just wanted to mention the context of what we’re here to talk about in terms of primary care teaching and CHCs.


I would like to begin with a bit of history of the neighborhood health center program, out of which CHCs developed. The neighborhood health centers were started in 1965, by the Office of Economic Opportunity (OEO), as part of the “War on Poverty”.

Some of the sister programs in the War on Poverty, which are still here today, were Family Planning, Head Start, the Job Corps and VISTA. The principal characteristic of all of these programs is that they include direct federal funding to community agencies. All of these programs provide funds that by-pass health departments, hospitals and medical schools.

The CHC program was established to make an impact on health. There were dismal health outcomes in 1965 when the program started. For example, many of the 600,000 children to enter Head Start had never seen a physician in 1965. One-third had never seen a dentist. These children averaged ten pounds underweight. May of these indicators have not improved. The system has not made much of an impact on some of these populations.

So, what OEO decided, rather than purchase traditional medical services, was, instead to fund a model of care they called a Neighborhood Health Center. These centers would provide health care services, regardless of ability to pay.

They would be a “one-door” facility, readily accessible as to time and place for all services. They would include preventive care and social and outreach services, along with treatment services.

They would use high quality staff. They would create employment opportunities (consistent with their War on Poverty mission). They established their sites right in the middle of target communities.

Count Gibson, MD, Founder of Columbia Point (Massachusetts) Community Health Center

A key feature was that consumers were to be participants in the governing of the centers. Coordination with existing services was promoted. There were several responses by a wide variety of public and private sources. Neighborhood health centers were not there to be operated independently. They were to emphasize community-based and community-oriented health care.

The original OEO grants were made to Doctors Count Gibson and Jack Geiger, then respectively of Tufts University and Harvard University, for two neighbhood health centers – Columbia Point in Boston and Mound Bayou in Mississippi.

An excerpt from that first grant is illuminating. The reason why you had a neighborhood health center, it stated, was to intervene in the cycle of extreme poverty, ill health, unemployment and illiteracy. It was not simply to provide health services. One had to break the poverty cycle.

How does one do that? Provide comprehensive health care based in multi-disciplihary CHCs oriented to maximum participation of each community in meeting its own health needs, as well as the social and economic changes related to health.

Jack Geiger, MD, Founder of Mound Bayou (Mississippi) Community Health Center

Again, this is not just a medical care organization, but is a broad health organization. Its goal was not simply to distribute services to passive recipients. It really wanted the community to be involved in change. Back then, one of the key features for the training of early local personnel was that they would become part of the CHC. This is where the linkage idea comes in – recruiting and training from local CHC areas.

The health center program began as, and still is, a challenge to traditional medicine and public health. They put medical care and public health activities in one operation. These oprations provide care for all residents of a geographic community. In a CHC, you are responsible for all of the residents of the community, whether or not they come to see you. A community-oriented model is a very different model of care.

When I trained, I learned only one model of care, office practice. That is, I would open an office and people would come to see me there. All the people I saw in the office would be the people for whom I cared. In 1965, most physicians were in solo practice, not even in group practice. A physician paid by salary practiced what then was called “socialized medicine”.

At that time, HMOs were just getting off the ground. Direct funding from the federal government for the community was considered radical, because it emphasized community health, as opposed to medical care. It put the consumers, rather than the doctors, in charge. That is where you see a lot of the conflicts between clinicians and communities. It arises from this concern over who is in charge.

Community Health Centers (CHCs)

CHCs are located in rural and urban areas throughout the nation. They provide recruitment and retention of health providers for underserved areas. There is tremenous patient diverstiy. They employ many experienced health professionals, people who have been working five to 20 years in a CHC. Their expertise is in the provision of care, usually in a team model. It is a quality workforce.

In these CHCs, arbitrary barriers between prevention, public health, and medical care, which developed in this century, have been eliminated. CHC providers do not see the difference between medical care versus prevention in public health. They provide comprehensive primary care services, which are more than just medical services.

The financial administrators of these health centers have well developed systems for running these centers, some in place for over 25 years now. (One comment, when you start talking about whom you link with, look closely at existing FQHCs or “look-alike” CHCs. Staring your own FWHC or CHC is a tremendous administrative undertaking.)

Recently, the Pew Health Professions Commssion listed 17 competencies that should be incorporated into the education of all health professions students by the year 2005. Topping the list is attention to the community’s health. A CHC provides every single one of those 17 competencies well. I actually wrote the authors of the Pew Commission study and said, “Somehow, you described CHCs without even referencing them.”

What is a CHC? It is a non-profit entity which provides a set of services to a community. It may do so either through staff and/or supporting resources or through contracts and/or cooperative arrangements with other public and private entities. If the CHC receives funds through the United States Public Health Service Act, it agrees to provide a set of services required by law.

Section 330 of the Title III of the Public Health Service Act funds CHCs, Section 329 funds migrant health centers, Section 340 is for homeless health projects and secction 348 for public health in housing projects, all of which are considered primary health programs administered by the Bureau of Primary Health Care. Training program faculty are all familiar with Title VII training grants, which is another part of the PHS Act.

Besides providing primary health services, CHCs also may provide supplemental services, which may include case management, including outreach counseling, referral and follow-up, and translation services. Many CHCs at their inception were involved with the provision of environmental health services, and still conduct such case studies as pesticide poisoning of farm workers.

Most people probably think of primary care as only medical care. The Public Health Service Act provides a statutory definition of primary health services. That definition (which, of course, affects the grants awarded under the Act), includes the services of physicians, physician assistants and nurse clinicians. It provides for diagnostic, laboratory and radiology services, and preventive health services – including prenatal, well-child immunizations, and family planning services.

The definition also speaks to emergency medical care, transportation, preventive dentistry and pharmaceutical services. This definition suggest that, although we talk about primary care a lot, we do not have a consensus in this country as to what it includes.

A CHC may provide a wide range of supplemental health services. Most of them do provide more than just medical services. As an example, I know of at least two CHCs that run nursing homes. You cannot with certainty predict, from just the health center’s name, what it is actually doing.

A community or migrant health center provides most of medical care as well as special services. They serve a medically underserved population. “Medically underserved” is an official legal term. To receive a grant you have to serve a medically underserved area (MUA) or medically underserved population. You have to apply for that designation following a defined process.

CHCs are private, non-profit corporations, organized similarly to group practices, but financially supported by grants as well as patient fee revenues. Presently, about 40 percent of the support of those CHCs designated as FQHCs come from the Public Health Service Act grants, 60 percent through other means.

All officially recognized CHCs are non-profit corporations with a governing board. At least 51 percent of the members of the governing board must be users of that CHC. They have a community service mission. They exist to improve health outcomes for that community. Not just health, but community health outcomes.

The CHCs are there to reduce all barriers to health care, especially financial and cultural barriers. They provide quality health care. A point that I made while I was medical diretor at the Naitonal Association of CHCs was that health centers are not there to provide second rate services for people, they are there to provide the very best care possible.

CHCs employ a team of professionals to do that. They certainly provide cost-effective care. They are part of a national system. They provide culturally sensitive care and respond to community needs. That is why CHCs conduct an assessment of the community’s needs.

Through the needs assessment, the community board members, the CHC administration and others in the community, produce a health plan which outlines what they are going to do and the resources available for doing it. They organize themselves to make an impact in that particular community, and that is the reason that no two health centers will look alike.

I will present a quick overview of the health career program. In 1991, there were about 550 grantees nationally, operating at 1500 clinic sites, most with more than one site. They are represented in every state in the country.

Whom do they serve? According to data from the National Association of Community Health Centers (NACHC), 44 percent of the users of CHCs are under age 29. Historically, CHCs have tended to serve a much younger population. But today, there is a fast growing population of elderly in need of primary health care services.

Only 39.2 percent of CHC patients are classified as White/Non-Hispanic. 28.8 percent are African-American, 26 percent are of Hispanic origin, and the remaining are Asian/Pacific Islander, American Indian and “other”.

Although the urban origin of the CHC’s cause some people still to think of the CHC program as an urban program, in fact the majority of grantees are in rural areas, and half of the 6.4 million patients served nationally in 1991, were served in rural areas.

We saw minorities in both rural and urbaOf the people served, about 44 percent have no health insurance whatsoever, not even Medicaid or Medicare; about 40 percent have Medicaid or Medicare, and the remaining 16 percent have private insurance.

The NACHC surveyed health centers in 1991, as to the most urgent health problems in their communities. For both rural and urban centers, teen pregnancy was considered the most urgent health problem in that community, followed in order by substance abuse, infant mortality, and family violence.

Thus, from the viewpoint of the responding CHCs, none of the four most urgent problems are medical problems. All of them are complicated social problems, social and health problems combined.

Who works in them? I do not think the CHC workforce data is great, but I estimate that there are about 3300 physicians in CHCs, about 2500 full-time and 800 part-time. Approximately 45% of the physicians are family physicians or general practitioners, 25% are internal medicine, 20 percent pediatricians and ten percent OB/GYN. The aggregate number of nurse practitioners, Pas and certified nurse midwives is around 1300, which means that there is one of these practitioners for every two full-time equivalent physicians. The data show that NPS and PAs are distributed proportionately in urban and rural areas.

All CHCs provide preventive as well as primary care. There are another 8,700 other health professionals, including such “health care team” members as dentists, dental hygienists, nutritionists, social workers, health educators, and community workers.

Workforce and Hospital General Information

The Bureau of Health Professions [BHPr] made projections of the expected growth in the number of United States physicians between 1986 and 2020. In 1986, the United States had 28.3 percent primary care specialties of family practice, general internal medicine and general pediatrics.

For the year 2020, BHPr has projected that there will be 800,000 physicians of whom26.4 percent will be in primary care. Thus, if the projections hold true, the nation will have a declining percentage of primary care physicians during the next two decades.

If the specialty choices of seniors graduating from allopathic medical schools between 1981 and 1992 are charted to show the percentage choosing primary care specialties as a percentage of the total choices, one notes a declining slope in the choice of primary care.

I did my own blasphemous projection that showed that if this trend continues on the slope of 1981 and 1992, within five years the number choosing primary care would drop to zero (laughter)!

Clearly, as of this date, that negative trend is starting to reverse and so the trend line appears likely to plateau. But I think the point is clear that over recent years we have experienced a drastic decline in primary care physicians.

If one charts revenue trend, one notes that in 1970, 12.2 percent of the income came from fee-for-service reimbursements, but, by 1991, 45 percent came from patient fees. There was a decline in federal research dollars from 25 percent to 20 percent. Interestingly, 3.7 percent from tuition and fees in 1970, but that percentage had only rise to 4.3 percent by 1990 – not an appreciable difference, even though the cost of medical education is considered very high, with the average debt of medical school graduates now exceeding $50,000 per student.

Using data from the American Association of Medical Colleges (AAMC), I calculated the differences in expenditure patterns between public schools and private schools. Public schools tend to spend more on teaching, 36 percent of each dollar, less on service and less on research.

Graduate Medical Education Financing

Many persons have argued that graduate medical education   (GME) financing is hard to understand, but I think the concepts are easily understood. The principal source of general financial support for teaching hospitals is Medicare. Currently, there are about 7,000 hospitals. 52 percent of these are in urban areas and 48 percent are rural.

Of the 7,000 hospitals, only 20 percent of hospitals are teaching hospitals. The 80 percent of hospitals that are not classified as teaching hospital, get no GME dollars. However, both teaching and non-teaching hospitals are eligible for disproportionate share payments [DSH].

There are four categories of Medicare funds available to teaching hospitals. Teaching hospitals are elgible to get direct medical education dollars (DME) and indirect medical education dollars (IME). They additionally are eligible to get “disproportionate share” payments. Teaching physicians are also allowed to bill for patient care services, provided these based on a “services were involved in teaching under part B of Medicare.

The DME and IME payments comprise the GME. 98 percent of GME goes to urban teaching hospitals and two percent goes to rural teaching hospitals. 65 percenet of the payments for IME goes to hospitals with greater than 400 beds.

There are additional funds paid hospitals that have more than their fair share of Medicaid patients and other low-income patients. DME is based on a “reasonable cost” reimbursement methodology. It is analogous to the “reasonable cost” reimbursement mechanism for FQHCs.

There are four allowable costs teaching hospitals can claim: (1) resident stipends, (2) faculty salaries, (3) administrative expenses and (4) overhead costs. The overhead costs are also known as indirect costs (a term I avoid because it immediately invites confustion with the IME category of Medicare funding.) Medicare paid 5.2 billion dollars for GME in fiscal year 1992. Of this, $1.6 billion was for DME and $3.6 billion for IME.

In 1983, Congress amended the Medicare Act to adjust the prospective payment system for hospitals in ways that increased the reimbursement to teaching hospitals. Four adjustments to the prospective payments were established: First, formulas were revised to account for wage level differences between geographical areas; second, reimbursements for teaching hospital were enriched to offset their inherently higher costs of providing services to Medicare patients; third, reimbursements for all hospitals with a disproportionately larger share of low-income patients were increased to offset their higher costs; and fourth, reimbursements for “outlier” (very high cost) cases were increased. All four of these adjustments proved advantageous to urban teaching hospitals.

How much is a teachibng hospital reimbursed by Medicare for heaving interns and residents? To estimate this, you first need to know what is called the Intern and Resident to Bed [IRB] ratio. To calculate that ratio, you divide the number of interns, residents, and fellow, by the number of approved Medicare beds. For example, for a hospital with a total of 100 physicians in training (residents, interns and fellows) and 400 Medicare approved beds, you divide 100 by 400 to establish the hospital IRB (in this example, .25). For every .10 of IRB, a teaching hospital receives roughtly 7.7 percent more Medicare payments than they would normally be reimbursed through the prospective payment system.

In our example, the IRB of .25 is first multiplied by 10 to yield a factor of 2.5, which is then multiplied by 7.7. Thus, the teaching hospital in our example receives an additional 18.75 percent for Medicare. So, if this hospital had 10 million dollars in Medicare payments through the prospective payment system, it would get an additional $1.875 million for a total of $11.875 million.

There indeed are hospital that approximate both the numerator and programs that are wholly based in ambulatory seettings. I think that one prediction that can be made for this round of medical education reform is that there will be a shift away from hospital-based training towards community-based training.There are multiple questions that can be raised about community-based training sites. Who will run these sites? Where are these sites going to be? What will be the quality of treatment?

I am excited about being with family medicine educators, because I think that family medicine is the one field that will be able to expand quickly into ambulatory sites. Remember, we are talking about a massive shift when this all ends. In terms of context, we are talking about a re-forumlation of primary care itself.

I think you have seen mention of it in the health care reform plan. But in the reform plan, the discussion of changes in primary care are all related to health care cost containment. That is not the reason I would favor a new societal emphasis on primary care. I think primary care is better for the people, and supports outcomes supported by the general population.

I will try, in the time I have, to convince you of three points. First, that primary care is actually what I would call an essential community service – a service that no community can do without. Second, that our method of financing graduate medical education needs to be reformed fundamentally. To this, I will provide an overview of how we finance graduate medical education today and how we might finance it in the future. And third, I hope to convince you that the CHC is the best place to teach primary health care.

Essential Community Service

Our goal must be to have primary health care recongized as an essential community-based service. There are several examples of community services that we now deem to be essential that previously were not. As an example, during th eearly parts of this century, electricity was only available to those who could afford it, the service was of variable quality and it was not available in many rural communities. Today, in all communities, rural and urban, reliable electricity is considered a lifeline or essential community service.

When will primary health care come to be recognized as an essential universal community service, that needs to be available 24 hours a day, 365 days a year, in all communities? How can reliable primary health care services be organized and who should be responsible? How would a commitment to primary health care services as an essential community service drive the health care system?

Consider a fictional community. If you plot over time the capacity to deliver primary care, and then assume that there is an ideal level, we could probably agree that there is some level that we would consider ideal and we could probably agree that there was some minimal level that would not be ideal. If you plotted a diagram for every single community today, particularly in rural communities, there would be an “ideal” capacity line, above which services exceed need.

If you drop to less than ideal, you may quickly drop further to a crisis level which would generate a response to try to return to the ideal level. This is the kind of system we have today. Every single community goes through cycles of surplus and shortages and some communities, medically underserved communities, have chronic shortages. The challenge to the current system is how to reorganize it to assure that it stays near the ideal level.

In closing, these are some of the characteristics that we have learned from the community Kellogg fellowships – a program that is still ongoing – characteristics which indicate whether the CHC is really going to be successful. First, is that the CHC seriously takes an equal responsibility for teaching, service and research.

My advice to health centers has been that teaching is not something to do on the side. If you are going to teach, then you must do it well. That is one message. I think that the teaching CHCs that are successful, as Norm Kahn has already mentioned, are those that are fully invested in the teaching mission.

Second, they are certainly community driven. Third, successful linkages are truly partnerships (and I hardly use the term linkage anymore, because partnership is the right term). I don’t think anyone is going to be successful in coming to CHCs saying we need you, because we need an ambulatory training site, and we need you because we need access to your patients for research. That is not going to fly in most CHCs. It will fly if they understand what is in it for them and the community. There is a lot in it for the CHC, but it has to be clearly identified.

To summarize my predicitons, primary care will become an essential community service. We will revitalize health care in this country. Creating an effective primary care system is one way we are going to do it. There will be major changes in the medical education system, marked by a massive shift in resources from hospital based training to ambulatory based training.

This is going to start today in this room and beyond from existing models that are out there. We have heard in this conference about several models – East Dayton, Sequoia, Sea Mar – that I believe will become the standard in the future and be successful from these new partnerships.

Thank you.

Dr Kahn: Thank you very much Dr Leong. Darryl has covered a tremendous amount of material. I know that there may be some issues or questions you wish to raise at this time. I would like to take seven or eight minutes at this point for questions for Dr Leong and then we will move on to our next speaker.

I will ask the first question. Darryl, what is your prediction about the probability of a major new initiative to provide for graduate medical education financing in ambulatory settings in general and CHCs in particular, either through pasage of any bills now before Congress or through implementation of the Clinton health reform plan? Will it happen or not?

Dr Leong: That sounds like a loaded question. The answer is that it will not happen very fast. That is why the FQHC funding mechanism will become increasingly important. The hospitals are controlling those dollars right now. Yes, Norm, your family practice residency programs are getting a big piece of that. But I do not think that the support for proposals to move those dollars into new entities called consortiums or to move funds directly to residency programs is as strong as it needs to be. To tell the truth, the shift in financing from hospitals to ambulatory teaching sites is not going to happen without advocacy. So that is the message, it will not happen right now.

Alvin Jones, MD (West Texas Family Medicine Department, Lubbock, Texas): The rural hospitals in West Texas are having difficulty surviving and we are looking at the possibility of becoming hospital-based “look-alike” rural health centers. Is there a way that rural hospitals in that situation could be designated as teaching hospitals?

Dr Leong: We do have rural hospitals that have rural residency training programs. Once you have an approved program from the Residency Review Committee, that hospital becomes a teaching hospital.

Dr Jones: Thank you very much.

John Payne, MD (Stanislaus Medical Center, Modesto, California): I thank there is a minimum size a hospital must be to qualify for the Medicare pass-through. Does it have to be at least a 100 bed hospital?

Dr Leong: No, the key is that he hospital has to have an approved program through Accrediting Council on Graduate Medical Education (ACGME). That is all you need.

Dr Payne: You talked quite a bit about changing the basis of payment from a hospital-based payment system to a CHC or to a community outpatient system based mechanism. But you said not to expect it right away. Can you give us any more precise definition of the time line we are working with?

Dr Leong:I think that time line is totally dependent on advocacy. You have to realize how much money we are talking about. I think it was Senator Kennedy who said this to one of his staff onece, that they have to understand that we are talking about taking billions of dollars from people who have it and giving it to people who do not. I mean this is really a change in policy. (laughter).

John Testerman, MD, PhD (Family Practice Residency Program, Loma Linda University, Loma Linda, California): I wanted to clarify somtheing I thought I heard you say, whtether CHCs can currently claim and pass through costs that they may expend on a resident’s salary or a resident’s malpractice coverage rather than expenses associated with having residents in their facility. Can they pass those through?

Dr Leong: The answer is yes. But, it is not the panacea because, again, if they called it a teaching cost it would get rejected. To the extent that they can show that these residents and faculty were also providing a service, they can claim that. The DME dollars are weighted to the number of Medicare patient days. Only ten percent of the patients in a community hospital are Medicare patients so they would only get back ten percent of their costs, but still it is new money. The answer is yes, but you have to be careful about how you claim it.

Gabriel Smilkstein, MD (Department of Family Practice, University of California, Davis): I am in the process of establishing a community-based educational center primarily for medical students, but also for residents, and I have run into a problem with funding. I wonder if you could help me with it.

Whereas the existing system of reimbursing care for service to the poor rewards you through fee-for-service, which is higher for those who are sicker, we soon will become part of a managed care program. In a managed care program, the sicker the patient is (and sickness goes along with being poor), the program is not reimbursed in a manner that compensates for the sicker patients.

The University is very concerned about taking on a group of patients who will require much hospitalization and much care. Is there any mechanism being considered now that will compensate for the managed care system?

Dr Leong: You’re saying tha the managed care patients are sicker? Is that what you said?

Dr Smilkstein: No, the poor patients that we’ll be seeing will be sicker and because it will be in a managed care system, the University is concerned that these individuals are going to cost them a great deal in terms of hospital care and services.

Dr Leong: What I think it comes down to is the bidding process of how much you are going to get per patient. The same thing goes for the CHCs – we have the same concern. The answer is noI think the only program right now that is subsidizing indigent patients is the disproportionate share program for teaching hsoptial and CHC programs. I cannot answer your question.

Dr Kahn: Thank you, Dr Leong. Perhaps you can’t answer that, but the next speaker can. I cannot think of a better question to lead into our next speaker than the one just asked.

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