Does It Pay? An Examination of Interorganizational Relationships in Federally Qualified Health Centers

Abstract

Introduction: Due to financial and competitive pressures, Federally Qualified Health Centers (FQHC) have implemented various strategies to increase their financial well-being and improve the quality of care delivered. One promising strategy is the establishment of interorganizational relationships (IOR). The purpose of this study was to examine the association between IOR strategies and FQHCs’ clinical and financial performances.

Methods: We used a national sample of 1,015 FQHCs from the Uniform Data System (UDS) and the Internal Revenue Service (IRS) Form 990 for the periods 2009-2016. The dependent variables were clinical performance measures – diabetes and hypertension management, and the financial performance measure – total margin. The independent variable was the interorganizational relationship (IOR) status of the FQHCs, reported as horizontal, vertical, hybrid (both horizontal and vertical), or none – those that chose not to participate in any type of IORs. We ran generalized estimating equations models with year and state fixed effects where we regressed the IOR status on the clinical and financial performance measures.

Results: FQHC participation in organizational networks varied from a high of 21% in a horizontal network to a low of 4% in a vertical network, and 9% reporting that they participated in both (i.e., hybrid). FQHCs participating in a vertical network or a hybrid network reported better quality of care measures, compared to the ones reporting no network participation. However, FQHCs’ financial performance showed no association with any type of IOR.

Discussion: FQHCs are located in resource-constrained areas and serve low income and uninsured populations. Vertical and hybrid IORs assist FQHCs connect with other local providers expanding care access and resources for their patient base. FQHC administrators should consider collaborating with local providers in order to improve their quality of health care.