Community health centers face significant challenges in expanding their facilities to handle the expected increase in patient demands resulting from the Affordable Care Act (“ACA”) at the same time that federal and state governments continue to examine ways to make the Medicaid reimbursement program more cost-effective. Community health centers are a mainstay of the primary care delivery system in the U.S. and have a decades-long track record. ACA only increases their importance and the likelihood that federal and state government will continue to strongly support well-managed community health centers. Yet creative and informed financing techniques remain necessary to afford access to the capital markets for these critical components of the patient safety net.

The Health Resources and Services Administration (“HRSA”), a division of the U.S. Department of Health and Human Services, has issued guidance that may help health centers design capital financing transactions that combine federal incentive programs. The guidance clarifies the extent to which community health centers may supplement their HRSA capital grant awards with additional project financing involving the federal New Market Tax Credit (“NMTC”) and/or Historic Tax Credit (“HTC”) program.