IHP 450 Module 3 Final Project Milestone One example

Milestone One: Four Healthcare Trends and Their Impact on the Finances and Mission of a Composite Community Health Center

[Student Name]

Southern New Hampshire University

IHP 450: Healthcare Management and Finance

Module Three Final Project Milestone One

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

Milestone One: Four Healthcare Trends and Their Impact on the Finances and Mission of a Composite Community Health Center

The Organization

Tamarack Community Health Center, a composite, is a federally qualified health center operating from one small Midwestern city and two rural counties beside it, at three locations. It served 16,800 patients in fiscal year 2025 through adult medicine, pediatrics, dental, behavioral health and an in-house pharmacy. Its mission statement commits it to affordable primary care of high quality for everyone in its service area regardless of ability to pay. Its vision is a community in which no one goes without care because of income, insurance or language, and its stated values are respect, access, quality and stewardship. That last value matters for this project, because it commits the center to spending public and patient dollars where they do the most good.

The center's finances are typical of health centers and fragile. Table 1 shows fiscal year 2025 operating revenue by source.

Table 1

Tamarack Community Health Center Operating Revenue, Fiscal Year 2025

Note. Composite figures for illustration. Percentages are rounded.

Financial Position

Operating expenses were $31.0 million, leaving an operating margin of about 1.2 percent, and the center held 71 days of cash on hand. Seventeen percent of patients were uninsured and 52 percent had Medicaid at their last visit. A margin this thin means that a small change in any large revenue line, especially Medicaid, can erase the surplus, and that any new spending must be justified by revenue, savings or a clear gain for the mission (Reiter & Song, 2021).

Trend 1: Coverage Losses After the Medicaid Unwinding

When the pandemic-era continuous enrollment requirement ended in 2023, states resumed Medicaid eligibility reviews, and more than 25 million people were disenrolled nationally, most for procedural reasons such as missing paperwork rather than a finding that they were ineligible (KFF, 2024). For Tamarack, the effect is direct. Patients who lose Medicaid usually keep coming, but they move to the sliding fee scale, where the center collects a small fraction of what Medicaid paid. The center's Medicaid visits fell 6 percent between 2023 and 2025 while uninsured visits rose 19 percent. Financially this erodes the largest revenue line; for the mission it is a test, because the center has promised care regardless of ability to pay and will keep that promise at a cost.

Trend 2: Payment Tied to Quality

Medicaid managed care plans and other payers increasingly pay health centers partly on quality. A national analysis of all federally qualified health centers found that value-based payment reached 51.2 percent of centers by 2023 but made up only 2.4 percent of patient revenue on average, and that receiving it was associated with better performance on seven of nine preventive and primary care quality measures (Li et al., 2025). Tamarack fits the pattern: its incentives total $0.6 million, about 2 percent of revenue. The trend is small in dollars today but growing, and it rewards exactly the measures where the center lags. Its diabetic eye exam rate, a measure used in payer contracts, is 38 percent (National Committee for Quality Assurance [NCQA], n.d.), and the center's largest Medicaid plan pays an added incentive when the rate exceeds 60 percent. Quality contracts turn a clinical gap into a financial one, and they also make closing the gap partly self-funding.

Trend 3: Rising Labor Costs

Salaries and benefits make up about 70 percent of Tamarack's expenses, and competition for medical assistants, nurses and behavioral health clinicians has pushed wages up faster than revenue. The center gave a 4 percent increase in 2025 and expects about 3.5 percent in 2026, while Medicaid payment rates rise more slowly. The financial consequence is a squeeze on the margin; the mission consequence is that vacancies lengthen appointment waits for patients who have few alternatives. This trend argues for investments that let existing staff do more rather than proposals that require new positions.

Trend 4: Autonomous Diagnostic Technology

Diagnostic tools that once required a specialist are moving into primary care. In 2018 the Food and Drug Administration authorized the first autonomous artificial intelligence diagnostic system, a retinal camera that detects more than mild diabetic retinopathy without a clinician reading the image, after a trial of 900 patients in primary care offices showed sensitivity of 87.2 percent and specificity of 90.7 percent (Abramoff et al., 2018). For a center whose patients wait four months and travel 40 miles for an eye appointment, this trend is an opportunity. It could raise eye exam rates, earn billable exam revenue and quality incentives, and deliver a service the community cannot easily get elsewhere, all with existing medical assistants operating the camera.

What the Trends Mean Together

The four trends do not push in the same direction. Coverage losses and labor costs press on the margin from both sides, reducing collections while raising expenses, and they argue for caution with any new spending. Payment tied to quality and new diagnostic technology point the other way: they reward a center that invests in closing care gaps and give it tools that do not depend on hiring. For Tamarack, the balance favors investments that meet three tests at once. They should raise quality measures that payers reward, rely on staff the center already employs, and bring a service closer to patients who find it hard to travel or pay. Investments that fail any of the three tests put the margin at risk without protecting the mission, and the values statement's commitment to stewardship rules them out.

Area of Need for the Capital Proposal

Read together, the trends point to a need that is both financial and mission-driven: diabetic eye exams. The center's 2,350 adults with diabetes are screened at less than two-thirds the rate the incentive requires, coverage losses make referral to outside eye specialists harder, labor costs rule out hiring, and technology now allows the exam to happen during a primary care visit. Milestone Two will review the adult medicine department's budget history and outline a capital proposal to meet this need.

References

Abramoff, M. D., Lavin, P. T., Birch, M., Shah, N., & Folk, J. C. (2018). Pivotal trial of an autonomous AI-based diagnostic system for detection of diabetic retinopathy in primary care offices. npj Digital Medicine, 1, Article 39. https://doi.org/10.1038/s41746-018-0040-6

KFF. (2024). Medicaid enrollment and unwinding tracker. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-and-unwinding-tracker/

Li, K., Kwon, K. N., Markus, A., & Dor, A. (2025). Value-based payments associated with improved quality of care at federally qualified health centers, 2014-23. Health Affairs, 44(11), 1404-1410. https://doi.org/10.1377/hlthaff.2025.00483

National Committee for Quality Assurance. (n.d.). Eye exam for patients with diabetes (EED). https://www.ncqa.org/hedis/measures/eye-exam-for-patients-with-diabetes/

Reiter, K. L., & Song, P. H. (2021). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.