His Branches, Inc.
Project #051147-B
Establish and construct a
primary care diagnostic
and treatment center to be
located at 340 Arnett
Boulevard, Rochester.
Project
Description
His
Branches, Inc. proposes to transition a not-for-profit corporation that has
been contracting with two individual private doctors to provide primary care
medical services to a medically underserved area of Rochester (the southwest)
into a diagnostic and treatment center (DTC). Services would remain at the same
location - 340 Arnett Boulevard. The services to be provided include drug abuse
screening; health education; and family practice/internal medicine, OB/GYN, prenatal, pediatric, and
well-child services. The mission of the corporation includes making services
“available to persons in need . . . without discrimination against any
individual on the basis of . . . ability to pay or insurance coverage.”
The
applicant seeks to begin operations with the two physicians currently in
private practice at the site. The staffing worksheet indicates His Branches
plans to add one physician, two support staff, and one nurse
practitioner/physicians’ assistant over the next three years. However,
projected patient visits, which increase by 2,000 over time, reflect solely the
addition of one physician.
The
capital cost to bring the building into compliance is $32,000. Moveable
equipment from the existing private practice will be used in the new center;
thus, there are no equipment costs.
Total
operating expenses by year 3 are projected at $681,300; total revenue by year 3
is projected to be $737,300.
The
number of patient visits would go from 5,000 to 7,500 with the addition of one
physician. A potential maximum of 11,000 visits might be reached with the
addition of a nurse practitioner and efficiencies created by the additional
support staff.
Staff Analysis
Community Need
His
Branches is located in southwest Rochester, in the area of zip codes 14608,
14611, and 14619. Median household income in the area was less than $25,000 in
1999. Most of the area is designated as a medically underserved area (MUA).
A
calculation of primary care need can be outlined:
·
The three zip
codes contain almost 47,000 people.
·
Assuming 2.7
physician visits per individual per year (per the National Health Care Survey,
1999-2000, published in September 2004), the residents of the area need 124,507
visits annually.
·
The Finger
Lakes Health Systems Agency identified 16.7 FTE physicians in private practice
and the one other DTC (Westside Health Services, with two sites) in the area.
Assuming 3,900 patient
visits per physician per year (per the experience of Bureau of Primary Health
Care Section 330 grantees, 2004), there is capacity to provide 65,130 visits in
the area.
·
Thus, there are
fewer than half the needed visits available in the area.
·
There are two
emergency departments (EDs) within five miles, serving 3,702 primary care
(triage level I) patients in 2005 (January - June 2005 figures annualized).
Thus, even if all the primary care patients in these EDs came from the zip
codes to be served, the primary care need in the area would still not be
satisfied.
Financial Issues
Capital
cost for the project is estimated at $32,000:
Renovation&
Demolition $20,000
Design
& Construction Contingencies $4,000
Architect/Engineering
Fees $8,000
TOTAL $32,000
Given the small size of the project, the $8,000 in
Architect/Engineering Fees is concerning, especially in light of the fact one
of the Board members is president of SWBR, the architectural firm.
His
Branches plans to finance the capital cost through fund raising, although they
indicate they have not seen a substantial return on fund raising efforts to
date.
The applicant provides the following financial
information:
Visit and Financial Information Year 1 Year 3
Patient Visits 5,500 7500
Patient Revenue $ 380,000 $
540,000
Non-patient Revenue $ 145,300 $
197,300
Donations
& Start-up Grant
$ 133,000
$ 177,000
Rent
& Investments $ 12,300 $ 20,300
Total
Operating Revenue $ 525,300 $ 737,300
Expenses $
469,300 $ 681,300
Net Margin $
56,000 $ 56,000
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Note
that:
1. Revenue from operations does not exceed
costs.
2. Non-patient revenue (in particular,
donations and start-up grant) equals more than 25% of revenue and is required
to provide a positive margin.
The
visit projections described in the text differ from the visits shown in the
revenue projections. Certainly, if the visit projections described in the text
are attained (and the expenses show the staff on board to attempt to meet
them), the revenue would be substantially greater, and the reliance on other
sources of income would be reduced.
Patient Visits
Source
of Visits Third
Year
First Year Low estimate High
estimate
Current physicians (2,500 visits 5,000 5,000 5,000
each)
Additional physician 2,000 2,500
Subtotal 5,000 7,000 7,500
Increased
service hours/addition 1,000 1,500
of PNNP
Ability of physicians to see 600 1,500
additional patients facilitated by
support staff alleviating
counseling burden (200-500 visits
per physician)
TOTAL 5,000 8,600 10,500
In summary, there are a number of areas where the finances are
confusing and concerning; staff cannot make a determination if the proposed
center is financially feasible.
Access to Care
Adding services to an
underserved area of the city of Rochester will increase residents’ access to
medical care.
Reflecting the low income
of the surrounding neighborhood, His Branches projects receiving 25 percent of
its revenue from Medicaid, eight percent from Medicare, 7 percent from private
pay, and 60% from commercial insurance; these proportions are the same ones as
currently received by the private practice at the location and, with regard to
access for low-income individuals, compare favorably to the proportions at the
other similar diagnostic and treatment centers, for example, the center
proposed for the former Genesee Hospital. His Branches further states its
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private pay clients are
charged rates based on the six most common commercial carriers; if necessary,
the rates are discounted according to a fee schedule based on income according
to the current poverty rate.
His Branches has a
faith-based emphasis and states it would attract a different population than
other facilities in the community because of this emphasis. His Branches
indicates it has a good relationship with the pastors of many churches,
particularly in the African-American community. Thus individuals who do not
trust the system may find a faith-based commonality with His Branches and be
encouraged to take advantages of its services.
Staff Recommendation
Staff
recommend approval based on the following rationale:
· There is a quantified need for the proposed
primary care capacity, and conversion to D&TC facilitates expansion of
capacity.
· The applicant
proposes to provide extensive care to Medicaid and self-pay clients.
However, there are a number of concerns about
the financial viability of the proposed D&TC.
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