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F I S C A L I M P A C T R E P O R T

SPONSOR A. Lujan

ORIGINAL DATE

LAST UPDATED

01/28/08

HB 260

SHORT TITLE Primary Care Safety Net Clinic Salaries

SB

ANALYST Geisler

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$1,500.0

Recurring

General

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: SB 127

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health (DOH)

Health Policy Commission (HPC)

SUMMARY

Synopsis of Bill

House Bill 260 would appropriate $1,500,000 from the general fund to the Department of Health

in fiscal year 2009 to support salary increases to retain physicians, advanced clinicians and

dentists at the state’s primary care safety net clinics pursuant to the Rural Primary Health Care

Act. Any unexpended balances remaining at the end of the fiscal year would revert to the

General Fund.

FISCAL IMPLICATIONS

The appropriation contained in HB 260, which would support salary increases to retain

physicians, clinicians, and dentists at rural primary health care clines, was not in the DOH budget

request for FY09. However, the executive budget recommendation did include a $300,000

increase for stipends to attract and retain physicians and dentists for rural primary health care

clinics. This funding was not included in the Legislative Finance Committee recommendation,

which was adopted by the House Appropriations & Finance Committee.

House Bill 260 – Page

2

Base general fund to support rural primary health care clinics in FY09 is $13.5 million.

SIGNIFICANT ISSUES

New Mexico’s community-based primary care centers provide basic medical and dental care to

residents of underserved areas, with special emphasis on uninsured and Medicaid eligible

individuals. This safety net of clinics has over 250 clinical providers providing healthcare homes

for 300,000 New Mexicans at 149 Primary Care clinics (93 medical, 39 dental, and 17 school-

based health clinics). Primary care centers have difficulty retaining professional staff, as rapidly

increasing compensation rates for physicians, dentists and other health care providers exceed

their limited budgets.

According to Merritt Hawkins, a national physician recruiting company, recruitment requests for

family physicians surged by 55 percent in 2006, outpacing all specialty and sub-specialty

categories. The high demand for these providers has driven up salaries significantly in a short

time. Ten national recruiters report starting salary ranges of $145,000 to $195,000 for Family

Practice placements in 2007, substantially higher than the average salary of family practice

physicians in the safety net centers in New Mexico. This is indicative of the situation with other

health professionals working at primary care centers. In October 2007, New Mexico Health

Resources reported that primary care centers in New Mexico were recruiting for a very large

number of health professionals:

Family Nurse Practitioners 20 Nurse Midwife: 1

Physicians 48 Psychiatrists: 4

Physician Assistants 9 Pharmacists: 2

Dentists 16 Physical Therapist: 1

Primary care centers are devoting significant effort to retention and recruitment, but have had

only limited success. Centers report that due to shortages, salary expectations for new clinicians

often place them in the mid to upper range of existing experienced staff. New clinicians

generally also receive loan repayment or forgiveness. This creates a dilemma for the hiring

organization, with new staff potentially earning significantly more than existing staff. All

salaries of health professionals will need to be raised to be able to address this situation.

At a Legislative Finance Committee meeting, the New Mexico Primary Care Association

presented a request for an additional $1,500,000 in recurring funds to provide an additional 4%

increase to clinician salaries and benefits. This request was based upon the following estimate.

Provider Type

Number Increase

Extension

Physicians

120

$7,200

864,000

CNP/Pas

81

$4,300

348,300

Dentists

50

$5,760

288,000

Total

251

$1,500,300

The increased appropriation proposed in HB 260 appears linked to this request.

According the Health Policy Commission’s publication, Quick Facts 2008, the Bureau of Health

House Bill 260 – Page

3

Professions National Center for Health Workforce Analysis designates a geographical area or

population group as a Health Professional Shortage Areas or a Medically Underserved Area or

Population. Every county in New Mexico, except Los Alamos County, has a type of shortage

designation. Of the 33 New Mexico counties, 17 have whole county designation and three have

partial or total low income designations.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

HB 260 relates to SB 127, which proposes to amend the Medical Practice Act by adding a new

section giving the New Mexico Medical Board the authority to waive licensure fees for the

purpose of medical doctor recruitment and retention.

OTHER SUBSTANTIVE ISSUES

HPC provided background on the Rural Primary Health Care Act

:

The purpose of the Rural Primary Health Care Act [24-1A-1 NMSA 1978] is to recruit and retain

health care personnel and assist in the provision of primary health care services through eligible

programs in underserved areas of the state in order to better serve the health needs of the public.

Statute [24-1A-3.1 NMSA 1978] states, to the extent funds are made available for the purposes

of the Rural Primary Health Care Act, the department is authorized to:

A. provide for a program to recruit and retain health care personnel in health care

underserved areas;

B. develop plans for and coordinate the efforts of other public and private entities assisting

in the provision of primary health care services through eligible programs;

C. provide for technical assistance to eligible programs in the areas of administrative and

financial management, clinical services, outreach and planning;

D. provide for distribution of financial assistance to eligible programs that have applied for

and demonstrated a need for assistance in order to sustain a minimum level of delivery of

primary health care services; and

E. provide a program for enabling the development of new primary care health care services

or facilities, and that program:

Statute [24-1A-3 NMSA 1978] defines "eligible programs" as nonprofit community-based

entities that provide or commit to provide primary health care services for residents of health

care underserved areas and includes rural health facilities and those serving primarily low-

income populations;

GG/mt