Lane County officials review Community Health Centers’ $8.4 million projected gap, outline cuts and recovery plan

Lane County health officials presented an update to the Board of County Commissioners on April 23, 2025, saying the county’s Community Health Centers (CHC) are projecting an $8.4 million operating deficit for the current fiscal year but outlined steps intended to return the clinics toward sustainability next year.

The presentation explained why the CHC entered a deficit position and what county staff are doing to correct it, including trimming ancillary services, cutting vacant positions, reducing use of expensive temporary providers and seeking higher capitation payments from local coordinated care organizations (CCOs). The presentation also flagged federal funding uncertainty — including possible changes to the 340B program and draft HHS budget recommendations — as a key downside risk to recovery.

Lane County Health and Human Services Director Ed Gray set the context by describing several near-simultaneous developments last year: the announced closure of Eugene’s hospital campus operated by PeaceHealth, an Optum acquisition that led many Oregon Medical Group providers to seek new employers, and the county’s need to replace an electronic health record system that no longer met federal meaningful-use requirements. "We are required to meet meaningful use," Gray told commissioners, and those combined factors prompted the county to open new access points and hire providers rapidly to avoid a further access collapse.

Those rapid responses included opening the West Eleventh Rapid Access clinic in July 2024 (located near the West Eleventh Fred Meyer) and bringing the long-planned South Lane clinic online in late September 2024. County staff said West Eleventh saw more than 2,000 patient visits from January through March 2025; South Lane saw about 1,200 visits in the same period (roughly 400 per month). New clinics and new hires created predictable startup losses, staff said, and the transition from NextGen to an OCHIN-hosted Epic instance produced planned and unplanned revenue disruption as staff and providers adjusted to the new workflow.

In addition to EHR transition challenges, staff described external vendor problems that damaged near-term revenue flow: difficulties using OCHIN’s preferred clearinghouse TriZetto under the county tax ID, a broader security breach at Change Healthcare that forced manual payment posting, and timing issues with Medicare revalidation of facilities and individual provider enrollments. Those events increased back-office workload, slowed claims submission and led to some lost or delayed claims.

Staff described several specific adjustments designed to reduce expenses and strengthen revenue: pausing in-house pain management and acupuncture services while retaining integrated behavioral health and allergy clinics; eliminating about 53 full-time-equivalent positions that were vacant (the county said no current employees were displaced); sharply limiting use of locum (temporary) clinicians; and focusing CHC operations on core primary-care functions. The CHC also reported an active outreach strategy to increase panel penetration and new enrollees: staff committed to serving 100 new patients per week across all clinics and said reports show the clinics have met that goal since January 2025.

The CHC receives revenue from multiple sources: HRSA federal grant funding for FQHCs, state alternative payment model funds, capitation (PMPM) payments from CCOs (PacificSource and Trillium were named), 340B program revenue and quality payments tied to CCO metrics. County staff noted they receive no general-fund support to operate the CHC and stressed the system’s sensitivity to federal and state funding changes. Gray and staff said they are negotiating capitation rates with the CCOs and are asking the state to re-evaluate PMPM amounts to reflect CHC service mix and the costs of serving a higher-need population.

On the clinic-specific front, staff said West Eleventh operates as a rapid-access site without patient panels and functions as an intake pipeline for other CHC clinics; by contrast, the Cottage Grove rural health clinic and other brick-and-mortar sites maintain panels. South Lane, long planned and opened in late 2024, has struggled to ramp up primarily because of shortages of medical assistants and licensed practical nurses. Staff described outreach to Lane Community College and apprenticeship programs and said they are exploring alternate classifications (phlebotomists, EMTs) to help with rooming and support tasks.

Staff also addressed planned services at South Lane. The county had planned integrated dental services there but will delay full dental operations until fiscal year 2027, contingent on the CHC’s financial trajectory. In the interim the county will seek community partnerships or short-term uses of the dental space (including educational programming with LCC or temporary rental) with no long-term lease commitments, staff said.

Financial projections presented to commissioners were range-based and contingent on meeting operational goals and federal funding stability. Staff said the current-year operating deficit is projected at about $8.4 million; in a positive scenario in which the CHC meets outreach and contract goals, staff projected as much as an $11 million operating surplus next year that could eliminate the negative fund balance. County staff also noted that Lane County’s behavioral health treatment programs (referred to as LaneCare/Lane County Treatment Center in the presentation) typically produce positive fund balance in some years and could provide cushion if needed; staff emphasized these are accounting-level mitigations and not new permanent general-fund allocations.

Commissioners asked clarifying questions about capitation negotiation timing (contracts are calendar-year and re-negotiated annually), which CCOs were affected by clearinghouse issues (staff said the TriZetto and Change Healthcare disruptions were specific to PacificSource-related processes in key incidents), and how new patients are identified (CCO referral lists, direct outreach to members assigned to the CHC who are not active in care, and word-of-mouth). Staff said the CHC serves patients assigned from other counties (for example Douglas County members) but cannot carry panels for those out-of-county CCO members.

Commissioners and staff emphasized the balance of risk and purpose: the county took near-term financial risk to preserve primary-care access in Eugene and surrounding communities after health system contraction, and commissioners praised staff for expanding services and pursuing recovery steps. Staff asked the board to note the primary remaining risks are federal funding changes (including 340B and potential HHS budget shifts) and CCO reimbursement levels.

The board did not take any formal vote during the work session; staff presented the financial update and received direction to continue negotiations with CCOs, pursue revenue and cost-reduction measures described above, and return with further budget materials during the formal budget process.

Lane County staff said they will continue to report monthly operational metrics and will bring additional budget detail to the county’s formal budget process and the upcoming budget-committee review.