[Congressional Record Volume 149, Number 45 (Thursday, March 20, 2003)]
[Senate]
[Pages S4170-S4171]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND:
  S. 673. A bill to amend part D of title III of the Public Health 
Service Act to authorize grants and loan guarantees for health centers 
to enable the centers to fund capital needs projects, and for other 
purposes; to the Committee on Health, Education, Labor, and Pensions.
  Mr. BOND. Mr. President, I rise today to introduce an important piece 
of new legislation to help an essential part of our health care safety 
net--our Nation's health centers--serve the uninsured and medically-
underserved.
  The Building Better Health Centers Act will promote health centers' 
mission of providing care to anyone who needs it by getting rid of an 
artificial distinction existing in current law. Right now, federal 
grant dollars to health centers can be used for most things a health 
center needs to do--including salaries, supplies, and basic upkeep. But 
federal grants to health centers cannot be used for one of the most 
critical and expensive needs a health center, or any business or 
nonprofit organizations, will ever face--capital improvements.
  Unless we correct this silly distinction, many of our health centers 
are destined to be shackled to slowly deteriorating facilities. Over 
time, this will sap their ability to provide care. If we are serious 
about maximizing health centers' ability to deal with our health care 
access needs, we must allow Federal grant dollars to be used to meet 
our health centers' capital needs.
  I've been down here on the Senate floor many times to talk about 
health centers, but let me cover the basics once again. Health 
centers--which include community health centers, migrant health 
centers, homeless health centers, and public housing health centers--
address the health care access problem by providing primary care 
service in thousands of rural and urban medically-underserved 
communities throughout the United States.
  And as we all know, the health care access problem remains a serious 
issue in our country. Many health care experts believe that Americans' 
lack of access to basic health services is our single most pressing 
health care problem. Nearly 50 million Americans do not have access to 
a primary care provider, whether they are insured or not. In addition, 
over 41 million Americans lack health insurance and have difficulty 
accessing care due to the inability to pay.
  Health centers help fill part of this void. More than 3,400 health 
center clinics nationwide provide basic health care services to more 
than 12 million Americans, almost 8 million minorities, nearly 850,000 
farmworkers, and almost 750,000 homeless individuals each year. The 
care they provide has been repeatedly shown by studies to be high-
quality and cost-effective. In fact, health centers are one of the best 
health care bargains around--the average yearly cost for a health 
center patient is just over one dollar per day.
  I believe that one of the most effective ways to address our health 
care access problem is by dramatically expanding access to health 
centers. And I am pleased to report a strong consensus is developing to 
do exactly that. The Senate has voted in support of a proposal I have 
made with Sen. Hollings to double access to health centers by doubling 
funding over a five-year period. In addition, President Bush has 
proposed that we double the number of people that health centers care 
in the years ahead.

  But over the next few years, as we hopefully see additional resources 
flow to health centers, we will increasingly encounter problems that 
stem from an artificial distinction we see in current law. As I 
mentioned, Federal health center grants are currently allowed to be 
used for most purposes--including salaries for health professionals and 
administrators, medical supplies, basic upkeep of clinic facilities, 
even lease payments if the health center rents. But they simply cannot 
be used for capital improvements.
  This means that unless health centers can find some other way to 
finance their capital needs--and I will talk in a moment about the 
significant barriers they face in doing this--major projects that could 
provide substantial benefit to patients will never happen.
  It means that an urban community health center that has been slowly 
expanding staff and services over many years until it's bursting at the 
seams of its modest two-story building will have to continue to find 
ways to cope, even if that prevents additionally-needed expansion or 
even if upkeep costs on the old building begin to spiral out-of-
control.
  It means that a rural community health center in an area desperately 
in need of dental services may not be able to expand the facility and 
purchase dental chairs, X-ray machines and other major dental equipment 
needed for the desired expansion into dental services.
  It means that even if Federal Government is willing to commit grant 
funds to open a new health center in one of the hundreds of underserved 
communities nationwide which lacks any health care professionals for 
miles around, the new center may never come to be due to lack of 
funding for a facility in which to house it.
  This is more than theory--the evidence shows that many existing 
health centers operate in facilities that desperately need renovation 
or modernization. Approximately one of every three health centers 
reside in a building more than 30 years old, and one of every eight 
operate out of a facility more than half a century old.
  Moreover, a recent survey of health centers in 12 states showed that 
more than two-thirds of health centers had a specifically-identified 
need to renovate, expand, or replace their current facility. The 
average cost of a needed capital project was $1.8 million, and the 
needs ranged from ``small'' projects of $400,000 to major $5 million 
efforts. The survey demonstrates that there may be as much as $1.2 
billion in unmet capital needs in our nation's health centers.
  And that is just for existing health centers. As I mentioned, 
hundreds of

[[Page S4171]]

medically-underserved areas lack--and could desperately use--the 
services of a health center. This further shows the need for new 
facilities--and more capital--as we expand access to new communities.
  So what about possible sources of capital? There are plenty of ways--
in theory--that health centers might be able to get money for capital 
improvements. Businesses--large and small--do it all the time. So do 
other nonprofit organizations like universities and hospitals. They use 
built-up equity. They take out loans. They float bonds. They raise 
money through private donations as part of a capital campaign.

  But unfortunately, health centers just aren't quite like most other 
businesses or nonprofits, and many times these options are unrealistic 
as a way to provide the entire cost of a major project.
  Health centers simply don't have loads of cash in the bank. The 
revenue these clinics are able to cobble together from federal grants, 
low-income patients, Medicaid, private donations, and other health 
insurers is typically all put back into to patient care.
  Health centers already work hard to maximize the money they can raise 
through private donations and non-Federal grant sources. In fact, an 
average of 9 percent of health center revenue comes from these sources. 
Most of this private and public funding is used to meet operating 
expenses, and it is difficult to go back to the same sources to request 
further donations for capital needs. In fundraising, health centers 
also face a huge disadvantage compared to nonprofit organizations like 
universities and hospitals because health centers lack a natural 
middle- and upper-class donor base. And raising private funds is 
particularly hard in isolated rural areas that are often quite poor and 
which can have the most dire health care access problems.
  Finally, health centers have difficulties obtaining private loans for 
capital needs for a variety of reasons. The high number of uninsured 
patients health centers treat and the poor reimbursement rates received 
from most Medicaid programs mean health centers rarely have significant 
operating margins. Without these margins, banks are leery about loans 
because they don't feel assured that a health center will have 
sufficient cash flow to successfully manage loan payments. Banks are 
made even more nervous by the high proportion of health center revenue 
that comes from sometimes-unreliable government sources--such as the 
health centers' grant funding and Medicine and Medicaid reimbursements.
  So what should we do? This isn't exactly rocket science. We have a 
need--many health centers require significant help to build or maintain 
adequate facilities because they can't raise the money or obtain the 
loans themselves. And we have an existing law that prevents the federal 
government from using health center funding to do exactly that.
  We simply need to get rid of the artificial distinction we have right 
now and allow our health center grant dollars to go to further the 
health center mission in the best way possible--and that is going to 
mean at times that we should support some new construction or major 
renovation projects. If a crumbling building is constantly in need of 
repair, is soaking up money, and is reducing the number of patients a 
health center can reach out to, the Federal Government should help with 
the major renovation or the new construction needed.
  The Building Better Health Centers Act authorizes the Federal 
Government to make grants to health centers for facility construction, 
modernization, replacement, and major equipment purchases. If our goal 
is to help health centers provide high-quality care to as many 
uninsured and medically-underserved people as possible, we need to get 
rid of barriers to doing that, including capital barriers.

  Behond just the possibility of grant funding, the bill goes further 
and permits the Federal Government to guarantee loans made by a bank or 
another private lender to a health center to construct, replace, 
modernize, or expand a health center facility. This loan guarantee is 
an additional tool that will help allay the fears of banks and other 
private lenders by limiting their exposure if a health center defaults 
on a loan. An additional advantage of loan guarantees is that you can 
stretch funds farther. When guaranteeing a $1 million loan, the Federal 
Government need only set aside a much smaller amount of appropriated 
money--perhaps only a twelfth to a tenth of the loan total--to insure 
against that loan's possible default. This multiplier factor means that 
for every dollar appropriated for this purpose, many dollars worth of 
loans can be guaranteed.
  There is actually tremendous potential for these two new options--the 
facility grants and the facility loan guarantees--to work together. 
Sharing in up-front costs through grant funding, and helping further by 
guaranteeing a loan that covers the remainder of a project's cost may 
well be the best approach. This will balance the need to make sure 
specific projects get enough grant funding to make them realistic and 
the need to spread capital assistance among as many projects as 
possible.
  Let my try to respond in advance to a few potential criticism of this 
legislation. First, to those who simply think on principle that the 
government should stay out of private-sector bricks and mortar 
projects, I would say we're already at least halfway pregnant. In just 
about every appropriations bill, we have dozens if not hundreds of 
specific projects earmarked for major building or renovation projects.
  Some might worry that the potential large costs of construction 
projects could get out of hand and squeeze out funding actually used 
for patient care. But let me point out that we limit capital assistance 
to five percent of all health center funding. Based on this year's 
funding level, this would mean up to $75 million for facility grants 
and loan guarantees. Because the loan guarantee program would allow 
some of this money to be stretched, this level of support could easily 
mean help for more than $200 million in health center capital projects. 
But the main point is that capital projects are absolutely limited to 
five-percent of health center funding, which prevents any possible 
runaway spending.
  Finally, we should ask ourselves whether or not Federal assistance is 
going to give a free pass to communities, which really should be 
expected to help out with public-minded projects like the construction 
or renovation of a health center. In my bill, local communities are 
expected to help. No more than 90 percent of the total costs of a major 
project can come from Federal sources--and this is the absolute upper 
limit. Much more likely are evenly-shared costs or situations in which 
federal support represents a minority of the capital investment. This 
bill does not give local areas a free ride.
  The quick rationale for this bill is simple. Many health centers are 
hampered in their efforts to provide health care to the medically-
underserved by inadequate facilities. It doesn't make sense to help 
these vital community clinics only with day-to-day expenses if their 
building is literally crumbling around them.
  I urge my colleagues to join me in supporting this legislation. I 
look forward to working with my colleagues in the Senate and on the 
Health, Education, Labor, and Pensions Committee to aggressively help 
our nation's health centers meet their dire capital needs by making 
this bill law.
                                 ______