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  • Writer's pictureWilliam Franz

How Can Your Hospital Collaborate With A Federally Qualified Health Center (FQHC)?

Updated: Oct 19, 2021

Hospitals and healthcare systems (we will refer to both as hospitals in this post) have collaborated successfully with FQHCs in many areas around the country. Although these collaborations take form in many shapes and sizes, there is one common denominator for success – the partners understand the value each party brings to the table. This may sound like a basic tenant of any collaboration, but we often find that not enough due diligence and discussion happens prior to trying to iron out the details of an agreement. More often than not, this lack of fact finding leads to failed collaboration attempts.

Let’s explore FQHCs and different ways a hospital can start to develop a successful partnership.


What is an FQHC?

Designated under Section 330 of the Public Health Services Act, FQHCs are community-based organizations that are funded through the Health Resources and Services Administration (HRSA). This federal funding assists the FQHC in providing care for the uninsured, as well as economically and/or medically vulnerable populations. From the first FQHC established in 1965, the program has grown to include over 1,400 organizations, providing affordable healthcare options for over 28 million people. In 2020, HRSA provided over $33 billion in grant funding to FQHCs.

Benefits FQHCs Provide to the Community

FQHC’s confer many benefits to the communities in which they operate. Because they are a safety net provider of healthcare services, FQHCs provide:

  • Affordable and accessible quality healthcare

  • Integrated care including medical, dental, behavioral health and other services

  • Outreach programs to create awareness and to educate the community on health-related issues

  • Patient navigation services to assist the patient in accessing available resources as needed

  • Translation services to ensure each patient understands their individual care plan

  • Access to affordable medications through the 340B Federal Drug Pricing Program

  • Opportunity for teaching hospitals to have a community partner to enrich the experience of each resident while developing a pipeline of community providers

Market Advantages of an FQHC

In order to meet their goal of providing the highest quality healthcare for the underserved, FQHCs are afforded several advantages that create a financially sustainable business model. At a high level, these advantages are:

  • Federal grant funding

  • Enhanced Medicaid reimbursement

  • Enhanced Medicare reimbursement

  • 340B Federal Drug Pricing eligibility

  • National Health Services Corps Student Loan Forgiveness Program access for its providers

  • Federal Tort Claims Act coverage in lieu of malpractice insurance

  • FQHC Safe Harbor protections related to Anti-Kickback Statutes



When a hospital’s mission includes care for all members of a community, an FQHC collaboration can provide significant enhancements to the cause. These partnerships assist in providing availability of care for the underserved in the most appropriate provider setting. With FQHCs uniquely positioned as experts in providing care for patients with higher risk for avoidable care expense due to clinical and socio-economical factors, mutually beneficial partnerships based on collaboration and community benefit can be successfully formed. Successful strategies can include a focus on:

  • Managing the health of Medicaid, uninsured, and other vulnerable populations within the most efficient and sustainable model of care

  • Coordinating care through integrated clinical management

  • Providing access to specialty care

  • Increasing access to primary care for the entire community

  • Developing overall health and social value for the community

Examples of Health System/FQHC Collaboration

There are many ways in which a hospital and FQHC can collaborate to improve healthcare delivery within their community. Here are some examples of collaboration that can provide improved outcomes within financially sustainable models:

  • Transferring a hospital clinic to an existing FQHC – Patients have access to the right venue of care which is now operating within a sound business model.

  • Residency rotations – Residents can gain hands on experience with a vulnerable population while increasing the capacity of the FQHC. This can also be used as a tool for the FQHC to recruit new providers.

  • Specialist agreements – FQHC patients can receive services that they would otherwise be unable to obtain while the hospital reduces Emergency Department visits and avoidable admissions.

  • Referral Agreements – Specialist agreements that “contribute meaningfully” to the FQHC’s project goals can fall under the Anti-Kickback Statute Safe Harbor for FQHCs. These referral agreements can significantly increase health outcomes of patients in areas such as Obstetrics and Behavioral Health.

In order for a hospital and FQHC to successfully collaborate, it has to be a win/win for both parties. Clinical, financial, operational and leadership due diligence must be carefully performed by both parties to achieve success. Many organizations underestimate the amount of work needed to ensure both parties mutually understand and respect each other’s goals.

First Steps

The above article is a summary of the potential win/win/win (patient/FQHC/hospital) scenario that can be created with a hospital and FQHC partnership. The complexity of such arrangements takes time and patience on behalf of both parties in order to create a successful collaboration.

THRIVE specializes in the design and implementation of these collaborations. We would be happy to take the time to discuss your organization’s specific situation and provide advice and guidance on how to proceed. Please feel free to contact me directly at to discuss how we may be able to assist your hospital in developing a program. You can also visit our webpage at www.thriveandachieve,com to learn more about our firm and our team.

Bill Franz

President, THRIVE

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