-- Kathleen Johnston, Memphis/Shelby County Department of Health

"Even though we've seen progress in Massachusetts, we still have a basic problem: there does not seem to be any agreement as to whether, ultimately, school-based health centers afford better or lower cost care for adolescents. And it seems like until we can reach that agreement, it will be hard to negotiate other possibilities."

-- Karen Hacker, Boston Health & Hospitals

"There are many larger providers at the same table with school-based health centers. They give the same sets of services. So, to pluck school-based health centers out and treat them differently is a problem."

--Mary Applegate, New York State Department of Health

In recent years, increased state interest in school-based health centers has been reflected in greatly expanded financial support for the centers. In 1994, 25 state governments invested $12 million of their Maternal and Child Health (MCH) block grant dollars and $22.3 million of general fund dollars in school-based health centers, increases of 45 percent and 140 percent respectively over the preceding two years. As a result, the number of school-based health centers in the United States has doubled since 1991. By spring 1995, there were approximately 650 health centers in schools across the country.

Despite this unprecedented level of state support as well as new federal funding from the U.S. Department of Health and Human Services, school-based health centers face a difficult future. MCH block grant dollars are under attack in the 104th Congress. State general funds are being used to fill in for federal cuts, and the state surpluses that eased the way for earlier school-based health center initiatives have largely disappeared. With no apparent new sources of support for continued expansion of the centers and increased competition among community providers for existing public health dollars, the future of school-based health centers is uncertain. To survive, school-based health centers and their sponsors must secure reliable sources of funding.

Propelled by impending limits on federal and state grant funds, school-based health centers have looked to patient care revenues as an untapped source of support. Historically, these revenues have played a small role in health center finances. National data from 1991 documented that patient revenue accounted for less than five percent of total school-based health center support. Two years later, data from 23 school-based health centers funded by The Robert Wood Johnson Foundation indicated that patient revenues had contributed 15 percent of health center costs.

Located primarily in low-income communities, which are home to large numbers of Medicaid-insured students, school-based health centers have become more aggressive in implementing billing and collection procedures. Simultaneously, however, many states have initiated Medicaid managed care programs that have complicated the process of securing payments for services to Medicaid beneficiaries.

Even the most efficient Medicaid billing operation, however, will leave many school-based health center costs uncovered. Uninsured students, services that are not reimbursable, and inadequate managed care capitation rates will all result in funding shortfalls. Securing adequate financing for school-based health centers will require more than adept administrators at the community level. The fragility of these newest members of the primary care delivery system may require policy makers to provide special protections if the centers are to survive in a market-driven environment with increasingly limited public health dollars.

Challenging dilemmas confront public officials, especially those who support both school-based health centers as a way to increase access to care and managed care as a vehicle to organize and pay for that care. Should these states ensure the survival and expansion of the centers by guaranteeing funds to support them? Should school-based health centers be considered a safety net service, which would entitle them to a protected place at the managed care table? Or, can states create a supportive policy environment for school-based health centers while not mandating a flow