Inflation is hitting everyone right now, but for Federally Qualified Health Centers (FQHCs), the stakes are especially high. Rising labor costs, supply chain issues, and stagnant reimbursement rates are squeezing already-thin margins. In 2025, the average health center is navigating this economic pressure while still recovering from funding uncertainty, Medicaid redeterminations, and ongoing workforce shortages.
If you’re leading an FQHC, you’re likely already feeling it: your budget isn’t stretching as far, staffing is harder than ever, and costs are climbing faster than your revenue. The good news? There are some practical, low-lift strategies you can implement right now to help offset inflation’s impact and stay focused on what matters most: patient care.
1. Reevaluate Vendor Contracts and Supply Costs
You may not be able to control inflation, but you can control how you respond to it, starting with your expenses. Routine reviews of your vendor contracts can uncover savings opportunities or outdated pricing structures that no longer reflect market conditions.
- Negotiate or re-bid key contracts every 1–2 years to avoid automatic rate increases. This includes everything from medical supplies to janitorial services.
- Look for group purchasing opportunities through Primary Care Associations (PCAs), GPOs or health center collaboratives. Joining a cooperative can help you access lower prices on bulk orders and can include discounted pricing on everything from office supplies to services.
- Eliminate or consolidate underutilized subscriptions (think software platforms or duplicate services). Even small monthly charges add up over time, and eliminating unnecessary subscriptions will save money and help simplify processes and procedures.
2. Optimize Staffing Without Overworking Your Team
Staffing is both your biggest expense and your most important asset. While cutting staff isn’t an option for most FQHCs, optimizing how your team operates can reduce overtime and burnout while improving efficiency.
- Cross-train administrative staff so they can flex between roles as needed. This adds coverage during sick days or turnover without the need to over-hire.
- Use data to match staffing levels to peak demand. Reviewing visit volume by hour or day can help you adjust schedules to prevent overtime and underutilization, helping you keep enough hands-on-deck when you need it most. This can reduce the strain on your team, allow for flexible scheduling, and improve the care you provide to your patients.
- Encourage retention with low-cost incentives like flexible scheduling, remote work options, career development pathways, or peer recognition programs. Use surveys or a suggestion box (digital or traditional drop boxes) to ask your employees what kinds of incentives would mean the most to them and do what you can to implement those. Not every team wants the same types of perks, and keeping good people is cheaper than recruiting replacements!
3. Invest in Process Improvements That Pay Off
When inflation hits, streamlining processes can yield real savings. Time spent fixing errors, chasing down denials, or duplicating work drains both morale and money. Investing that same amount of time into optimizing your processes and procedures relieves pressure on your staff and reduces redundant, expensive, duplicative efforts.
- Audit your revenue cycle workflows regularly to catch inefficiencies or bottlenecks that lead to delayed payments or write-offs.
- Standardize intake and eligibility verification processes to reduce billing errors and ensure patients are properly categorized from the start. Digitizing intake forms can also help reduce expenses and speed up these processes.
- Consider outsourcing complex or time-consuming tasks like billing, coding, or AR cleanup. This can improve cash flow and reduce the administrative burden on your internal teams, which is especially helpful when hiring is tough.
4. Improve Budget Visibility and Forecasting
Inflation is unpredictable, but that doesn’t mean you have to operate blindly. Getting a clearer picture of your cash flow and long-term financial position can help you make smarter decisions in uncertain times.
- Update your budget more frequently. Quarterly revisions help account for unexpected cost increases and give you time to course-correct.
- Segment your budget by fixed vs. variable costs so you know where you have room to adjust. Fixed costs may be immovable, but small shifts in variable expenses can create meaningful savings.
- Use dashboards or simple visual tools to share financial performance with department leads. Empowering your team with data encourages smarter day-to-day decisions, and getting your leadership team onboard with a cost-saving mindset without micromanaging their day-to-day activities helps create a company culture of mindful spending.
5. Plan for Flexibility—Not Just Stability
Rigid financial plans don’t work well in a volatile environment. Instead, FQHCs should build flexible strategies that allow them to pivot quickly when costs spike or funding changes.
- Create tiered contingency plans for different inflation scenarios. For example, plan how you’d adjust operations at a 3%, 5%, or 7% increase in vendor pricing. These don’t need to be updated monthly – working them into your annual budget-building process will help you stay flexible.
- Reserve some funding for rapid-response projects that help manage sudden challenges like temporary staffing, emergency tech upgrades, or patient outreach for re-enrollment after Medicaid changes.
- Engage your board early and often. Financial flexibility is easier when leadership is aligned and supportive of adaptive strategies. Bring your board on board and help them feel informed and empowered to advocate for funding and support in your community.
Inflation isn’t just a headline, it’s a daily reality for FQHCs balancing mission with margin. But with practical planning, clear priorities, and strategic adjustments, your health center can weather the economic storm without compromising care.
Looking for ways to streamline your revenue cycle and protect your cash flow during turbulent times? Learn more here.