Insurers, Nonprofits Offer Low-Income Loans to Health Clinics
Impact Community Capital, a consortium of major insurance companies, and NCB Development Corp. (NCBDC) have teamed to offer as much as $50 million in low-interest loans to community health clinics that have difficulty obtaining conventional financing for clinic development or expansion.
The San Ysidro Health Center, a healthcare provider for low-income residents in South San Diego, is the first community-based healthcare provider to receive financing under the Healthy California program.
“This exciting new program will be a major shot in the arm for community-based healthcare providers that provide essential front-line medical care to California’s poor and under-served communities,” said Edward Martinez, CEO of the San Ysidro Health Center. “There is an urgent need for this kind of financial support to meet the ever-growing demand for services. Our hope is that Healthy California will demonstrate to other institutional investors there is an important role for them to play in financing community-based healthcare and still meet their fiduciary obligations,” Martinez said.
Impact investors are Allstate Insurance Co., Farmers Insurance Companies, Metropolitan Life Insurance Co., Nationwide Mutual Insurance Companies, Pacific Life Insurance Co., Safeco Insurance, State Farm Insurance Companies and 21st Century Insurance Co.
By helping community-based providers like SYHC buy and expand facilities, Impact investors to the Healthy California loan program help free up other resources and capital that can be put to use providing expanded and improved service to communities. Also, by offering rates that are substantially lower than those otherwise available, the Healthy California financing program saves SYHC critical and scarce dollars.
“The alliance between insurance company institutional investors, national nonprofit community development institutions like NCBDC and community-based health clinics is a first,” said Jeffrey Brenner of NCBDC. “Because they are nonprofits with a heavy reliance on public and foundation funds, community healthcare providers have had a difficult time accessing conventional means of financing new construction and expansion of existing facilities. We think this new alliance has the potential to change that.”
Impact and NCBDC are partnering with the California Primary Care Association (CPCA), a nonprofit association of community clinics and health centers, and the Community Clinics Initiative (CCI), a collaboration between The Tides Family of Organizations and The California Endowment, to provide resources for community health centers and clinics. Impact will provide the bulk of the capital for Healthy California; NCBDC will provide additional capital as well as administer program loans.
CPCA and CCI are providing additional monies and will also help promote Healthy California to their members and grantees. An initial $20 million fund will help finance between 10 and 15 community healthcare clinics across the state during the next two years. The typical loan amount is expected to be $1.5 million to $2 million. The clinics will provide comprehensive primary and preventative healthcare services, be community-based with community boards and will be accessible to everyone. The program participants are committed to raising an additional $30 million of capital for program expansion once the initial phase is complete.
Carmela Castellano-Garcia, CEO of CPCA, said Healthy California will put insurance industry investments to work providing needed financial support to primary healthcare clinics and clinic networks that provide affordable medical services to low-income communities and meet the linguistic and cultural needs of California’s diverse population.
“Healthy California represents a vital link between institutional investors who want to help California communities and the men and woman in those communities who are delivering basic healthcare to see that communities remain healthy and vibrant,” Castellano-Garcia said.
The loaned funds will leverage grant dollars also available through CCI directly to clinics across the state to expand their services. “As grant-makers exclusively to community clinics, it is an exciting opportunity to use our financial resources to expand lending opportunities that will be joined with our direct grants to expand access to care in underserved communities,” said Kathy Lim Ko, CCI program director.
Dan Sheehy, president and CEO of Impact Community Capital, said Healthy California is structured to meet insurer investor financial obligations by making use of tax credit programs, including the federal New Markets Tax Credit program.
NCBDC has more than 20 years of expertise in lending to nonprofit healthcare providers and a successful track record managing lending programs. Founded in 1982 by the National Cooperative Bank, NCBDC’s mission is to provide solutions that empower under-served communities to address the problems poverty creates in America. In addition to its healthcare focus, NCBDC has lending programs in education, affordable housing, economic development and affordable assisted living.
To date, NCBDC’s healthcare programs have loaned more than $120 million to 150 community healthcare centers, creating more than 2 million square feet of clinic space and serving more than 150,000 low-income people annually.
California Primary Care Association (CPCA) represents more than 600 not-for-profit community clinics and health centers that provide comprehensive, quality healthcare services, particularly for low-income, uninsured and under-served Californians who might otherwise not have access to health care. CPCA’s members include community and free clinics, federally funded and federally designated clinics, rural and urban clinics, large and small clinic corporations and clinics dedicated to special needs and special populations.
The Community Clinics Initiative (CCI) is a grant-making program established by Tides and The California Endowment in 1999 to provide resources, evidence-based programming and evaluation, education and training to support community health centers and clinics in California. More than $45 million in grants have been distributed to date, funding 90 percent of all clinics and their networks in California.
Impact Community Capital was created to invest insurance company funds in communities throughout California and the United States. To date, Impact has community development investments or commitments totaling approximately $750 million. While the majority of its investments are in affordable housing, Impact recently launched a program to invest in community child care and preschool facilities in California.