Turf Wars: How Growth and Competitive Shocks Have Affected the Performance and Stability of Community Health Centers.

Policy Points Community health centers (CHCs) are mandated to simultaneously maintain collaborative relationships with all other health care providers in their service area while consistently expanding their footprint to serve more patients, creating a contradictory policy environment. This study suggests that CHCs may respond to competitive shocks by engaging in a turf war with encroaching rivals at the expense of their financial solvency and social mission. Compounded in part by mounting fiscal austerity that may exacerbate competitive pressures, new approaches are needed that strengthen guardrails against patient selection and create incentives for CHCs to move into persistently underserved communities.

Context: Community health centers (CHCs) are a critical and growing part of the health care safety net, doubling over the past 15 years to expand access to essential health care services to over 31 million patients in traditionally underserved communities. However, increasingly, CHCs have opened care delivery locations in communities already served by another CHC, potentially creating competitive markets with unknown implications for how this safety net operates.

Methods: This retrospective cohort study was performed in 810 CHCs that operated between 2009 and 2023. A difference-in-differences design was used with staggered implementation to examine the impacts of competitive shocks on clinic performance and, consequently, whether this changes the types of patients served and how clinics operate.

Findings: When a rival CHCs' growth results in a competitive shock, 95% of new sites are located no more than ten miles away from their existing service area. After a competitive shock, incumbent CHCs on average experienced significant decreases in financial stability and shifts in their patient mix toward those with Medicaid and away from patients who are uninsured and have more chronic conditions. Clinics also reallocated 11% of their resources closer to the encroaching rival, recentering and concentrating their organizations. Strikingly, multiple competitive shocks increased the annual probability of a closure, acquisition, or loss of CHC status from 0% to 1.67%.

Conclusions: Despite explicit policy guardrails, this pattern of rapid, recent, and localized growth has distorted incentives for individual clinics, weakening this critical safety net. Clinics may respond to such mounting pressures by engaging in a turf war, reallocating and concentrating resources closer toward the encroaching rival at the expense of their social mission and financial solvency. Both state and federal policymakers must incentivize CHCs to disperse into communities without established clinics and introduce new protections against underservice by stabilizing clinic budgets.