2014 Government Regulations & Business Summit
Join PBN and our sponsors for our Government Regulations & Business Summit on Th ...
By Richard Asinof
By Richard Asinof
When the Providence Community Health Centers opened its new 41,000-square-foot Prairie Avenue Health Center in July in the former Federated Lithographers building, it began a new chapter in a community development saga that began in 2003.
The story is one of perseverance and vision to change the landscape for South Providence, creating not only a new comprehensive health center with 45 exam rooms in three primary care clinics for pediatrics, internal medicine, and ob/gyn, but serving as a magnet for future investment in the neighborhood.
Providence Business News asked Merrill Thomas, the CEO of Providence Community Health Centers, to share the business side of the new health center’s story.
PBN: How does the project work, as a business model? Is it similar to the way that hospitals finance construction of new facilities by leasing space?
THOMAS: We’re just a small nonprofit, a 501 (c) 3 tax-exempt corporation. We had to build a new health center because of increasing demand, and we bought a larger lot that we wanted to, using historic tax credits. We planned to split the property, but our original development partner bailed on the project, and we ended up with the whole thing.
The goal was to have the rental income from the office building help support the health center side.
Thanks to Lifespan [becoming an investor], their partnership allowed us to make the whole project go, to enable that part of the property to become sustainable.
PBN: How much did Lifespan invest?
THOMAS: Lifespan has committed to leasing 27,000 square feet in a 10-year lease. As a result of that commitment, there are now collaborations possible to having the property leased out.
I didn’t have lenders knocking down my door to support a project in my neighborhood. Obviously, when the partner was large enough and bankable, it can change the development and the neighborhood for the better.
We opened, bringing health care to the neighborhood, and we are also bringing jobs and more sustainable economic activity. Walgreen’s is coming, hopefully opening in September.
PBN: How has the new space changed your operations?
THOMAS: We have gone from a very cramped space in need of repair to a place where doctors can be more efficient and patients are not waiting as long. We can treat patients more quickly. With electronic health records, and a new wireless network, we’ve changed the environment quite a bit. We now have parking.
The new space focuses not just on the needs of the patient, but on the needs of the providers. We now have the necessary capacity, technology and space; we’ve never had those things before.
Community health centers in Rhode Island are the safety net providers doing primary care. Health centers are trying to step up and meet the need. We are going to be applying to become a patient-centered medical home.
PBN: What are the biggest business challenges that you face, now that you have opened?
THOMAS: We bought this property in 2003, and we paid as we went along. We did pick up debt. It’s not a walk in the park. We didn’t get this thing for free. It’s still a business where I have to perform so can live in my larger space. It still costs us something; it is not as if we were handed a free health center.
PBN: How will the changes in health care reform affect your operations?
THOMAS: We don’t know how exactly how health care reform is going to play out. In 2014, more people will be getting health insurance. There are a lot of unknowns in the details. We’re interested and involved.
I think the health care system is so schizophrenic; everyone does what’s in the best interest of their revenue stream. People that are need of simple care, such as for a stomach ache, don’t need to be going to an emergency room. Emergency rooms are too expensive a model to have so many people going there. The state can’t afford to have [so many] Medicaid patients in emergency rooms.
The delivery of health care needs to be coordinated, with a focus on what’s best for the patient. I think we’re moving toward a changing environment, but it’s going to take some time.