Budget Cuts at the Riverside Clinic
A county health department runs a clinic serving 1,200 patients, 70 percent of whom earn below the federal poverty line. The county faces a 12 percent budget reduction and must cut $600,000 from the clinic's $5 million budget. The director is weighing three options: (A) close the clinic two days per week, saving $380,000 but reducing appointment capacity by 30 percent; (B) eliminate the sliding-fee discount for patients above 150 percent of the poverty line, saving $210,000; or (C) contract with a private provider to absorb overflow, saving $150,000 but adding a 25-minute average travel time for displaced patients. A county commissioner argues the clinic should simply raise fees for everyone to preserve services. The director must recommend a package that meets the savings target while protecting access for the poorest patients.
1. Evaluate each option against the goal of protecting access for the poorest patients.
Read the worked answer
Option A (close two days): Saves the most ($380,000) but cuts capacity 30 percent. Because 70 percent of patients are low-income, the reduced slots fall hardest on people with the least ability to travel or pay elsewhere. High equity cost.
Option B (end sliding fee above 150 percent of poverty): Saves $210,000 and touches only patients above 150 percent of the poverty line, who have more capacity to pay. Moderate equity cost, but it may push some near-threshold patients to delay care.
Option C (private overflow contract): Saves least ($150,000) and adds 25 minutes of travel, which is a real barrier for patients without cars. Low fiscal yield, moderate access cost.
Commissioner's fee increase: Raising fees for all patients shifts the burden onto the poorest, directly contradicting the access goal; it may also reduce revenue if low-income patients stop coming.
2. Recommend a package that reaches $600,000 and explain the trade-offs you accept.
Read the worked answer
No single option reaches $600,000, so a package is required. A defensible combination: B ($210,000) + C ($150,000) + a scaled version of A, closing one day per week rather than two (roughly $190,000), plus administrative efficiencies of about $50,000. Total: approximately $600,000.
Trade-offs accepted:
- Ending the sliding fee above 150 percent of poverty protects the poorest 70 percent while asking more of higher-income patients.
- One closure day, not two, limits the capacity loss to roughly 15 percent.
- The private contract absorbs some overflow, though the 25-minute travel burden remains for a subset of patients.
Justification: the package meets the fiscal target while concentrating the pain away from the lowest-income patients. The director should also monitor no-show rates and reallocate slots if displaced patients drop out.