La Red Health Center’s economic impact in Sussex County


It should be noted that, federal dollars in excess of $1.6 million awarded to La Red Health Center and brought into Sussex County, Delaware via the FQHC, RHOG, IDS, CIP and other grants contribute significantly to LRHC’s ability to create an economic impact.

The 2009 economic impact numbers reported for LRHC’s existing Georgetown Operations and its 2011 capital construction project are the result of analyses conducted by Capital Link, a Boston based health care consulting firm, in conjunction with both the National Association of Community Health Centers and the Mid-Atlantic Association of Community Health Care Centers. The model applies a multiplier effect to capture the direct, indirect and induced economic effects of LRHC’s economic activities. LRHC then used a similar approach to estimate the 2010 and 2011 economic impact for LRHC’s Georgetown Operations, as well as the partnership with the Sussex Technical Vocational High School and the New Access Point in Seaford.

The economic effects included in the analyses are defined as follows:

Direct effects: represents the response for a given industry (Total Operating Expenditures of the health center).

Indirect effects: represents the response by all local industries caused by “the iteration industries purchasing.”

Induced effects: represents the response by all local industries to the expenditures of new household income by the direct and indirect effects.

La Red Health Center’s four major areas of economic activity include:

The Georgetown Operations

LRHC provides Pre-natal Care, Family Practice Services, Behavioral Health Services, Oral Health Services, as well as Transportation and Interpretation Services out of our two Georgetown sites. In addition, LRHC’s Administrative offices are also located in Georgetown.

In 2009, LRHC injected $3.0 million of operating expenses directly into the local economy, and stimulated additional indirect and induced economic activity of $1.5 million for an overall economic impact of $4.5 million, which generated 50 jobs and supported an additional 15 jobs in other industries. In 2010, LRHC injected $4.0 million of operating expenses directly into the local economy, and stimulated additional indirect and induced economic activity of $2.0 million for an overall economic impact of $6.0 million.

Through the expansion of clinical services, specifically oral health and behavioral health services, LRHC anticipates having an overall economic impact of $5.1 million on the local economy in 2011. The Georgetown Operations will serve an estimated 5,000 unduplicated users who will at full capacity generate over 15,000 visits per year. Prenatal care, primary care, preventive, oral health and mental/behavioral health services will be provided by a 5.3 FTE provider team as well as 6 contracted providers.

Seaford Satellite Site

To meet a significant unmet health care need, LRHC opened a satellite site in June of 2010 in Seaford, DE to target the poor health statistics experienced by individuals in western Sussex.

Our Seaford Office will serve an estimated 4500 unduplicated users who will at full capacity generate over 10,000 visits per year. Primary care, preventive, and mental/behavioral health services will be provided by a 3.6 FTE provider team. Prenatal and oral health services will be provided at LRHC’s Georgetown site and transportation services will be provided between the service sites. The New Access Point will also coordinate outreach, case management and primary care service delivery for Sussex County’s homeless population –a special population of marginally homeless (“doubled up” family home sharing), prisoner re-entrants, and shelter inhabitants.

As a start up operation, the Seaford Satellite site had a modest budget of $399,877 and by adding the prorated New Access Point Funding of $270,000 and applying the appropriate economic multiplier; LRHC expects to have an overall economic impact including direct, indirect and induced economic effects of $1.0 million in the local Sussex County economy in 2011. LRHC’s impact on the local economy will increase in 2012, when LRHC receives the full annual New Access Point Funding of $650,000 per year.

Sussex Technical Vocation High School Wellness Center

In 2011, the Delaware Division of Public Health awarded LRHC a contract to manage the Wellness Center at the Sussex Technical High School.

The Wellness Center allows teens to access services such as physical examinations, health screenings, including those for communicable infections, immunizations, behavioral health, reproductive health, nutrition and weight management and group counseling.

The partnership will create one major change. The State of Delaware has required all medical vendors in school based wellness centers to charge for services. La Red Health Center has contracted with Medicaid for reimbursement and will use a sliding fee scale to provide discounts to uninsured students.

To date, LRHC has accommodated 460 visits to the Wellness Center and anticipates a total of 772 by year end.

To ensure a smooth transition, LRHC hired the three existing school based wellness staff and as a result anticipates a full year economic impact of $270,000 in 2011.

Capital Construction Project

LRHC’s current two Georgetown facilities are leased, undersized, and outdated. Space constraints have historically impeded LRHC from expanding patient services.

Accordingly, LRHC has acquired 3.21 acres of land and is constructing a new 25,000 square foot ambulatory health care facility in order to triple its clinical space to provide primary, preventative and oral health care to the under and uninsured population and to consolidate its prenatal and behavioral health programs, as well as its administrative offices into one building. This will provide us with the opportunity to expand services and achieve greater efficiencies in delivering patient care.

The total cost for La Red Health Center’s, (LRHC) New Ambulatory Health Care Facility is approximately $4,700,000 and to date, LRHC has raised $1,200,000 through grants from private banks and foundations as well from state and federal agencies. In addition, LRHC used an unusual approach to obtain a $3,500,000 financing package by turning to a lesser-known lender called a community development financial institution, which in this case was the Dover-based, National Council on Agricultural Life and Labor Research Fund, Inc, (NCALL) for the short- term construction financing. The United States Department of Agriculture- Rural Development, (USDA) will provide the long-term financing. The building is scheduled to be completed and LRHC to take occupancy during the second quarter of 2012. By expanding its physical capacity, LRHC expects to serve an estimated 20,000 underserved individuals- approximately 10% of the County’s overall population.

In support of this effort, LRHC has partnered with the Becker Morgan Group, Inc. for architectural services and Regional Builders for construction management. The direct cost for this project is $4.7 million and it is expected to generate $691K in indirect costs and $1.2 million in induced costs for a total economic impact of $6.6 million.

Overall, in 2011 La Red Health Center will generate an approximate 13 million dollar impact in Sussex County, Delaware through its ongoing operations, and special construction project. Not factored into the impact LRHC has on the local economy is the cost savings passed on to the local health industry by creating a medical home for individuals that keeps Sussex Countians healthy and out of the area hospitals, as well as the expense avoidance associated with patients visiting LRHC instead of inappropriately using the local emergency departments for routine health care.