The Commonwealth Fund recently ranked New York dead last in the nation for avoidable hospital expenses, but new loans available to low-income areas of the state are aimed at solving that.
The nonprofit Primary Care Development Corporation, working with HSBC Bank, is deploying a $40 million New Markets Loan Fund – the largest New Markets Tax Credits (NMTC) loan fund targeting primary care yet – at below-market terms to accelerate primary care development and address the lack of access to quality, affordable primary care throughout the state.
“This partnership is great news for the Bronx and other underserved communities in New York State,” said State Rep. Jose Serrano (D-Bronx), who oversees the CDFI Fund and NMTC program. “In this economic downturn, credit is very tight and low-income communities suffer the most.”
The program will benefit many primary care practices, as federal stimulus funds are not presumed to cover all new projects when money is finally deployed.
“Demand far outstretches the supply of federal stimulus money,” said Tom Manning, director of capital financing for the PCDC. “We don’t know how things will be allocated state-by-state, but we’re expecting that New York is more than six times oversubscribed.”
Financing these facilities is tough. It’s going to require a lot of lending to do the job, according to Daniel Lowenstein, MBA, director of external affairs for the PCDC.
“There has been a lot of interest among primary care providers in New York,” he said. “Many of them don’t have options; there isn’t a lot of affordable financing.”
The below-market, long-term fixed rate loans will deploy with about a 5 percent interest rate. To qualify for the loan, a practice needs to be a not-for-profit organization serving a low-income community. Funds were made available as of Oct. 15.
The loans are expected to help create more state-of-the-art facilities serving an estimated 110,000 New Yorkers each year, as well as creating some 525 permanent jobs and 365 construction jobs and many more in the community as a result of economic activity.
Hudson River Healthcare in Monticello, N.Y., is the first facility to take advantage of the loans. It was originally financed on a temporary basis with an anticipation of this new market participation.
“The U.S. is underinvested in primary care, and the results are pretty shocking,” said Lowenstein. “(New York is) dead last in wait times for emergency rooms, which is symptomatic of failing primary care.”