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Vermont FQHCs operating on thin margins as Bi-State warns of deficits and closures
Summary
Mary Kate Mollman of Bi-State Primary Care Association told the House Health Care Committee that federally qualified health centers (FQHCs) across Vermont face mounting deficits, site consolidations and cash shortages, citing an estimated statewide operating shortfall and rising costs that federal grants and drug savings no longer fully cover.
Mary Kate Mollman, director of Vermont public policy for the Bi-State Primary Care Association, told the Vermont House Committee on Health Care on Jan. 15, 2025, that the state’s federally qualified health centers are “operating on a very, very slim margin” and face an estimated combined operating deficit of about $8,500,000.
“Little spoiler alert, it's not pretty,” Mollman said during a presentation that described FQHC roles, funding mechanisms and current financial stress. She said several centers have consolidated sites and some have less than 20 days cash on hand.
Bi-State, the primary care association representing community health centers in Vermont and New Hampshire, said Vermont has 11 FQHC parent organizations operating about 96 physical sites and that those centers serve roughly one in three Vermonters and more than a third of the state’s Medicaid enrollees. By federal designation, FQHCs must treat patients regardless of ability to pay, maintain a sliding fee scale and have boards with a majority of patient members.
Mollman detailed how federal support is structured: FQHCs receive Section 330 federal grants and participate in the 340B prescription drug program, which lowers medication purchase costs so centers can reinvest savings in community services. She said both grant levels and 340B-derived savings have not kept pace with rising labor and operating costs.
“Across our health centers, we're looking at about 8,500,000 deficit,” Mollman said, adding that several centers have had to consolidate or close sites because they could not afford to keep them open. She said the Medicaid encounter rate has not materially changed and that Bi-State has pursued an encounter-rate review with the state for the last 11 months without a resolution.
Committee members pressed for detail on services and geography, including housing-related supports FQHCs provide as enabling services and whether FQHC coverage extended to Windham County. Mollman said enabling services can include housing counseling, referrals and coordination with community partners but that she would confirm county coverage for specific sites.
Why it matters: FQHCs function as safety-net providers for low-income and Medicaid patients. Mollman warned that continuing underfunding could reduce access to primary care, dental and behavioral health services in communities already facing provider shortages.
Mollman said Bi-State members are pursuing cost-containment, payer renegotiations, technology investments and other strategies, but cautioned those steps have limited reach without changes to reimbursement and grant funding.
Looking ahead, Mollman offered to provide additional information to the committee and make follow-up clarifications on county coverage and encounter-rate negotiations.
