Bringing Healthcare to Rural Pennsylvania

Drew Pierce, CEO, Prinary Health Network

Drew Pierce, CEO, Prinary Health Network

Primary Health Network (PHN) is a nonprofit Federally Qualified Health Center (FQHC) that began providing community-based comprehensive medical care in 1984. We are Pennsylvania’s largest FQHC with 32 service sites in 11 northwestern counties. We also serve 2 northeastern Ohio counties. In recognition of our high quality of care, PHN has been Joint Commission accredited since 1997 and in 2013, the Joint Commission recognized us as a Primary Care Medical Home.

As part of our service line, PHN is constructing a 45,000 square foot, $11.5 million health and social services facility in Punxsutawney, PA.  This new facility will be completed in mid-2014 and is modeled as an FQHC-Anchored Multi-Service Facility (FQHC-MSF) where our FQHC is the anchor tenant.  Located in rural Jefferson County, the facility will house a variety of services including primary care, a 340(b) pharmacy, services from the local community hospital, women’s health, behavioral health, a café and a public meeting room for community use.

The primary care and behavioral health suites, operated by PHN, will feature 20 medical and 10 behavioral health exam rooms, more than doubling our current capacity in Punxsutawney. The new facility will allow us to serve 38,000 patients per year and increase the types of services offered. With a variety of other health and social service providers co-located in the new building, the facility is expected to significantly enhance the community’s access to care and help the providers realize operating efficiencies and benefit from cross referrals.  It’s estimated that the convenience provided by the co-locators in this FQHC-MSF will provide PHN an additional 7,500 encounters per year and 1,500 additional 340(b) prescriptions per year.

We cannot overstate the value that the FQHC-MSF will bring to Punxsutawney. This project will not only improve health outcomes, but also spur economic growth and development in a struggling community. The facility is expected to house 100 jobs, many of which will be new to the area. The increased foot traffic generated by the facility will also help to shore up other Punxsutawney businesses. The economic impact according to the IMPLAN model conducted for the project suggests the annual economic output for this facility is almost $7 Million.

After struggling to secure financing from traditional banking sources, The Reinvestment Fund (TRF) came through. “There is no luck in business. There is only determination and the development of partnerships with organizations and people who share a similar vision and drive,” explains Jack Laeng, PHN’s CEO. “TRF is such a company with people who understand the mission of health care and our desire to initiate positive change for the communities we serve.”

Stock Photo by Sean Locke

Mr. Laeng’s quote alludes to the nature of the FQHC business.  While exceptionally reliable borrowers, FQHCs cannot accumulate assets or grow assets similar to regular private businesses. This makes it difficult to raise funds for development or large amounts of funds as equity for projects.  Local banks in today’s lending environment are averse to lending to projects with limited assets or equity.

New Markets Tax Credits provided the perfect financing mechanism for this project to move forward.  NMTC became the main cog in the wheel of financing for the FQHC-MSF. It gave us an affordable method of financing that reduces the debt burden on the project so substantially that it allows us to pass on those savings to the FQHC and other Health Care and Social Service Organizations that typically are very budget-conscious.

TRF and JPMorgan Chase provided $11.5 million of NMTC, which generated $3.4 million in equity from Chase. TRF, partnered with the Low Income Investment Fund (LIIF), to provide a $3.5 million senior leverage loan. TRF also funded an additional $2 million leverage loan for the energy-efficient components of the project. TRF and LIIF also made a $2 million short-term loan to PHN outside of the NMTC transaction to help us make a $3.1 million loan to the project.

This project is part of a national initiative to finance community health centers by LIIF and TRF, with support from the Kresge Foundation. LIIF and TRF are leading nonprofit community development financial institutions that, together, have lent more than $2 billion to support community businesses. They combine this expertise with a patient, nimble approach to financing, especially when working with organizations that are new to capital projects and debt.


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