Cost Implications of Competition Among Federally Qualified Health Centers

Federally Qualified Health Centers (FQHCs) are pivotal in delivering healthcare services to underserved populations in the United States. While the number of FQHCs and FQHC look-alikes has been increasing, intensifying competition, limited research has examined the cost implications associated with this growing competition among FQHCs. This study aims to fill the research gap by analyzing the relationship between the level of competition among FQHCs and the cost of care per patient. Understanding this relationship is crucial for managers and policymakers in deriving informed decisions related to the expansion of FQHCs. The study comprehensively analyzed data from FQHCs from 2016 to 2022. The analysis involved examining the cost per patient in relation to the level of FQHC competition, measured by FQHC saturation in the area. The study’s findings reveal a positive association between FQHC competition and the cost of care. Specifically, FQHCs in areas with higher levels of FQHC competition reported a higher cost per patient. This relationship underscores the potential financial dynamics influenced by the competitive environment among FQHCs. The results of this study have important implications for healthcare management and policy formulation. FQHC managers are suggested to consider the cost implications of increased competition in their strategic planning and operations. Meanwhile, policymakers should consider the potential cost ramifications of FQHC competition when designing and implementing policies related to FQHC expansion, especially those aimed at optimizing resource allocation and ensuring care affordability. Recognizing the impact of competition on cost can lead to more informed decisions regarding the funding, establishment, and distribution of FQHCs, ultimately contributing to the sustainability and efficacy of healthcare services in underserved areas.