CPCA COVID Response Loan Fund Designed to Bridge Gap as Health Centers Face Lost Revenue Due to Coronavirus Pandemic

Announced October 7, 2020. California’s community health centers (CHCs) are facing significant lost revenue as a result of business disruptions due to the COVID-19 pandemic. At the same time, CHCs are incurring unforeseen costs to implement technology for virtual health consultations. The impacts of the pandemic have been further exacerbated for many CHCs by the wildfires plaguing the state.

To bridge this cash flow gap, the California Primary Care Association (CPCA) and Capital Impact Partners have launched the $25 million CPCA COVID Response Loan Fund to provide flexible financing for CHCs. Fund investors include the Alliance Healthcare Foundation, The California Endowment, The California Wellness Foundation, JPMorgan Chase, Richard W. Goldman Family Foundation, and UnitedHealth Group.

It is a vital need, as CHCs not only serve one-in-six Californians, but also a predominate number of patients who fall below the federal poverty level.  California CHCs provide culturally competent care to the state’s most diverse communities, and serve one in every three Medi-Cal recipients. These residents are also largely impacted by both the health and financial effects of the pandemic.

Applications will be accepted through November 6th, 2020. Eligible organizations (see below) interested in applying for a loan can access the application here. Further details can be found through our webinar and FAQs found online here.

“Our more than 1,370 nonprofit members operate on razor-thin margins, often relying on federal program support based on patient visits. At the onset of the COVID-19 pandemic, patient visits severely dropped and are still not back to pre-COVID levels. This has a huge impact on their financial stability and their ability to keep their doors open to serve their communities. The CPCA COVID Response Loan Fund is a critical stopgap measure to prevent unnecessary closures of their operations,” said CPCA President & CEO Carmela Castellano-Garcia.

Since the beginning of the COVID-19 pandemic, CHCs have seen primary and preventive care visits drop by more than 50 percent, leading to temporary site closures, as well as staff layoffs and closures. CHCs are utilizing already strained budgets for testing and treating COVID-19 patients, purchasing personal protective equipment for staff, and implementing new technology solutions. In a recent poll of CPCA members, 70 percent indicated the need to explore how to create and deploy an emergency cash flow fund that they could access.

“The global pandemic has magnified the lack of a safety net for our most vulnerable populations – especially Black and Latinx communities,” said Capital Impact Partners’ President and CEO Ellis Carr. “Community health centers are often the only places where uninsured and underinsured patients can access equitable health care. If they must close or reduce services as a result of this crisis, untold millions will be severely impacted. We simply cannot let that happen.”

“We know the critical role community health centers play in San Diego and Imperial Counties, and this is one important way we can support them during an extremely challenging time,” said Sarah Lyman, Executive Director of Alliance Healthcare Foundation.

Key features of the CPCA COVID Response Loan Fund managed by Capital Impact:

• Loans from $250,000 up to $1.5 million
• 3% interest rate
• No payments during the first year, then fully amortizing over 6 years
• Loan will be secured by a general all asset lien. No real estate collateral required
• Each borrower will automatically receive a grant for technical assistance and COVID-related expenses
• No fees associated with loan closing
• Prohibited Uses:
  • New facility development
  • Facility renovations unrelated to patient service in response to COVID-19
  • Refinancing existing debt

Eligible uses include any working capital need resulting from the COVID-19 pandemic. Uses include, but are not limited to:

• Operating revenue shortfalls
• Telemedicine infrastructure
• Capital and operating costs related to COVID-19
• Minor renovations to support better COVID-19 related care

Eligible Organizations:

• Non-profit health centers – including non-CPCA members – licensed in the state of California under Section 1204 of the California Health and Safety Code are eligible and encouraged to apply. These organizations include but are not limited to, FQHCs, FQHC-Look-Alikes, rural health clinics, Indian Health Clinics, free clinics, etc.
• Non-profit consortiums with a majority membership comprised of the non-profit health centers described above
• Health centers located on land recognized by the United States government as tribal land in California and operated by an Indian tribe recognized by the United States government

Applying organizations must also have been in operation for a minimum of three years and demonstrate negative operational impact resulting from the COVID-19 pandemic.

Timeline

Loan decisions will be made in late November with loan funding planned for mid-December.

CPCA and Capital Impact: Long-time advocates for CHCs

This is not the first time that Capital Impact and CPCA have partnered to meet the needs of CHCs during a time of uncertainty. During California’s 2008 budget crisis, which resulted in delayed Medi-Cal payments, Capital Impact and CPCA stepped in with a similar fund to help these facilities meet cash flow needs. In total, that fund supported 52 clinics with $40 million in financing.

In addition, Capital Impact and CPCA have managed the CPCA Ventures Loan Fund since 1998. This low-cost financing resource was put in place to support health centers in need of construction, equipment and working capital financing.

##########About California Primary Care Association
The California Primary Care Association (CPCA) represents more than 1,370 non-profit community health centers who provide care to more than 7.2 million patients each year. Community health centers (CHCs) are committed to providing comprehensive, high quality health care to everyone who walks through our doors, in a compassionate and culturally sensitive manner. CHCs include federally qualified health centers (FQHC) and FQHC look-a-likes, community clinics, free clinics, rural health clinics, migrant health centers, Indian health service clinics, and family planning clinics. Services include comprehensive primary and preventive care, women’s health, dental, mental health, substance use treatment, health education, outreach and enrollment, pharmacy and more. https://www.cpca.org/

About Capital Impact Partners
Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. Through mission-driven financing, social innovation programs, capacity building, and impact investing, we work to champion key issues of equity and social and economic justice. Our commitment to community focuses on ensuring that individuals have access to quality health care and education, healthy foods, affordable housing, cooperative development, and the ability to age with dignity.

A nonprofit Community Development Financial Institution, Capital Impact has disbursed more than $2.5 billion since 1982. Our leadership in delivering financial and social impact has resulted in Capital Impact being rated by S&P Global and recognized by Aeris for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Austin, TX, Detroit, MI, New York, NY, and Oakland, CA. Learn more at www.capitalimpact.

About The California Endowment
The California Endowment, a private, statewide health foundation, was established in 1996 to expand access to, quality health care for underserved individuals and communities, and to promote fundamental affordable improvements in the health status of all Californians. The Endowment challenges the conventional wisdom that medical settings and individual choices are solely responsible for people’s health. At its core, The Endowment believes that health happens in neighborhoods, schools, and with prevention. Learn more at www.calendow.org.

About Alliance Healthcare Foundation.
We work to advance health and wellness for the most vulnerable in San Diego and Imperial counties through collaborative funding, convening and advocacy.

We believe all people have a desire, and a basic human right, to be well.

We define wellness as a state of complete physical, mental, spiritual, economic and social well-being and not merely the absence of disease or infirmity. Society, structural systems, community, neighborhood, and family are collectively responsible for creating an environment of health and wellness. Wellness is personal and is not the same for everyone.

Health equity exists only when people can attain their full health potential, regardless of resources, circumstance, skin color or identity. This potential can only be reached when we reduce – and ultimately eliminate –the disparities that adversely impact marginalized and under-resourced communities.

We currently operate a portfolio of five programs:

1. i2 Innovation Initiative — also referred to as “venture philanthropy”—based on the thesis that innovation capital (often high risk, high reward) is needed to transform the current paradigm (high cost and poor outcomes) and improve quality, increase capacity and reduce costs (The 2020/21 i2 has been postponed indefinitely due to COVID-19 impact);
2. Mission Support—based on the belief that trusting those closest to our constituents and providing core operating support for great organizations will best advance our mission;
3. Responsive Funding—based on the belief that it is important to be responsive to time-sensitive community needs and opportunities;
4. InvestUp—based on the belief that it is important to actively and strategically be looking for ways to meaningfully advance our mission and it is worth spending some or all of our corpus—beyond the earnings off of our endowment—if we can substantively, sustainably and positively change the dynamics; and
5. Impact Investments–based on the thesis that we can activate our investment portfolio to achieve more positive impact.

Our History. In 1982, the San Diego Community Healthcare Alliance (Alliance) created the first Preferred Provider Organization/Network (PPO) in the United States. From 1989 through 1994, the Alliance funded Alliance Healthcare Foundation (AHF) through profits from its Community Care Network (CCN) operations. In 1994, Alliance sold CCN to a national healthcare company and channeled the proceeds from CCN’s sale into an endowment of $83 million for AHF. That endowment has enabled funding of approximately $64 million (USD) in direct funding and approximately $41 million (USD) from national and local funding partners in San Diego and Imperial counties. Our endowment holds approximately $80 million in assets today, with funding for programs and operations derived from endowment investment earnings.

AHF Media contact:
Karen Winston, Communications Director, Alliance Healthcare Foundation
P 858-348-6472 E karen.winston@alliancehf.org