Growth is not optional for most FQHCs — it is a strategic imperative driven by increasing community need, the economics of the health center model (which rewards scale), and the reality that a health center standing still is losing ground to rising costs and evolving population health needs. But growth must be intentional, well-funded, and sustainable. This guide covers the primary pathways for FQHC expansion and the funding mechanisms that support each.
New Access Points (NAP) Program
The New Access Point program is HRSA's primary mechanism for expanding the Health Center Program to new communities. NAP awards provide Section 330 funding to establish new health center service delivery sites in areas that do not currently have access to a Section 330-funded health center. NAP competitions occur when Congress appropriates expansion funding, which has happened periodically but not on a predictable schedule.
Who Can Apply for NAP
NAP applications are open to both existing Section 330 grantees (seeking to add a new service area) and to organizations that do not currently receive Section 330 funding. For existing grantees, a NAP application represents an opportunity to expand geographic reach, add new sites, and increase the base grant award. For new organizations, a successful NAP application provides both initial Section 330 funding and FQHC designation, unlocking the full suite of designation benefits — PPS reimbursement, 340B eligibility, FTCA coverage, and NHSC site status.
NAP Application Strategy
NAP applications are highly competitive, with scoring based on documented community need, organizational capacity, clinical service plan, financial viability, and community support. Key strategic considerations include:
- Service area selection — the proposed service area must include a federally designated MUA/MUP or demonstrate equivalent need. Areas with high uninsured rates, limited existing primary care capacity, and documented health disparities score highest. Use HRSA's Shortage Designation data and the UDS Mapper to identify gaps.
- Needs assessment depth — a compelling needs assessment uses multiple data sources (census, BRFSS/CHIP data, hospital discharge data, community health needs assessments, stakeholder input) and identifies specific gaps that the proposed site will address. Generic claims of “underserved population” without data support will not score well.
- Operational readiness — NAP reviewers evaluate whether the applicant can realistically start delivering services within the award timeline (typically 120 days). Having a site identified, a staffing plan in progress, and key partnerships established before the application significantly strengthens the proposal.
- Financial sustainability — the budget must demonstrate that the new site can achieve financial sustainability within the grant period, using realistic patient volume projections, payer mix assumptions, and revenue per visit estimates. HRSA does not fund sites that will require perpetual grant support beyond the initial ramp-up period.
Service Area Competition (SAC)
The Service Area Competition is the process through which existing Section 330 service areas are re-competed on a rolling 3–5 year cycle. Unlike the Non-Competing Continuation (NCC), SAC is a full competitive application where the current grantee must demonstrate continued need, organizational capacity, and program performance to retain funding. If another organization submits a stronger application for the same service area, it can be awarded the funding instead.
Defending Your Service Area
SAC defense is one of the most critical activities for any Section 330 grantee. Losing a SAC competition means losing the Section 330 grant, which means losing FQHC designation and all associated benefits. Key defense strategies include:
- UDS performance — UDS data is the primary performance record that reviewers evaluate. Health centers with clinical quality measures above national averages, strong patient growth trends, and high enabling service utilization have a significant advantage. Invest in UDS data quality and clinical quality improvement continuously, not just before SAC.
- Clean compliance record — a health center with no unresolved OSV findings, clean Single Audits, and no conditions of award demonstrates the organizational capacity that reviewers are looking for. Compliance remediation should be completed well before the SAC application is due.
- Community engagement — letters of support from community partners, local government officials, hospital systems, and patient advisory councils demonstrate community investment. Build these relationships continuously, not just when SAC is approaching.
- Narrative strength — the application narrative must tell a compelling story about the health center's impact, its responsiveness to community needs, and its plans for the next project period. This is not a compliance document — it is a persuasive argument for why this organization should continue serving this community.
Capital Improvement Program (CHIP)
The Capital Improvement Program provides grant funding specifically for construction, renovation, and equipment purchases at existing health center sites. CHIP awards are available only to current Section 330 grantees and are funded when Congress appropriates capital development funds for the Health Center Program.
CHIP applications require:
- A capital needs assessment documenting the specific deficiency or opportunity the project addresses (aging infrastructure, ADA compliance, capacity constraints, infection control upgrades)
- Architectural or engineering plans at least at the schematic design stage, with cost estimates from qualified contractors
- Evidence of construction readiness including zoning verification, environmental review (NEPA), and permit status
- A financing plan that shows how the full project cost will be covered if the CHIP award does not fund the entire project (leveraged funds, loans, other grants)
- A project timeline demonstrating completion within the grant period (typically 2–3 years)
For additional capital funding sources beyond CHIP, including New Markets Tax Credits and USDA Community Facilities programs, see our funding sources guide.
Expanding Scope of Services
One of the most common FQHC growth strategies is adding new service lines at existing sites. This approach leverages existing infrastructure, patient relationships, and brand recognition to grow revenue and impact without the overhead of new site development. Common scope expansions include:
Behavioral Health Integration
Adding or expanding behavioral health services is one of the highest-impact expansions for FQHCs, driven by patient demand, funder priorities, and the integrated care model that health centers are uniquely positioned to deliver. Funding sources include SAMHSA CCBHC demonstration grants (which provide a cost-based payment rate), state behavioral health contracts, HRSA behavioral health supplements, and Medicaid behavioral health reimbursement. The CCBHC model is particularly attractive because it provides a sustainable payment mechanism — unlike many behavioral health grants that fund time-limited programs without ongoing reimbursement.
Dental Services
Dental is the most frequently requested unmet need in FQHC patient populations and is a required service under the 19 Program Requirements (though it can be provided through referral rather than directly). Adding an on-site dental program generates significant patient revenue through Medicaid dental reimbursement and creates a strong value proposition for patients and communities. However, dental program startup is capital-intensive — operatory construction, equipment, and staffing costs require either grant-funded capital investment or a phased approach using portable equipment before investing in permanent infrastructure.
Pharmacy (In-House)
Operating an in-house pharmacy allows the FQHC to capture the full value of 340B drug pricing — the spread between the 340B purchase price and the reimbursement from payers or patient payments. For many health centers, 340B savings from an in-house pharmacy generate revenue that subsidizes other clinical services. In-house pharmacy also improves medication adherence by reducing barriers to prescription pickup. The startup investment includes pharmacy construction (clean room, storage, dispensing area), pharmacist and technician recruitment, pharmacy management system implementation, and state pharmacy licensure. Many FQHCs start with a small dispensing operation and expand as volume grows.
Vision and Optometry
Vision services address a significant unmet need in underserved populations, particularly for pediatric patients and adults with diabetes. Adding optometry services requires less capital than dental and can be started with a single exam room and a part-time optometrist. Vision services are reimbursable under many state Medicaid programs and may be fundable through state vision program grants, VSP (Vision Service Plan) charity partnerships, or Lions Club International foundations.
Look-Alike to FQHC Conversion
Organizations that hold FQHC Look-Alike designation have already demonstrated compliance with the 19 Program Requirements. The conversion path from Look-Alike to full Section 330 grantee status requires successfully competing for a New Access Point (NAP) award. Look-Alikes have a built-in advantage in NAP competitions because they can demonstrate an established track record of FQHC-compliant operations, existing patient relationships, and UDS-equivalent data on service delivery and outcomes.
The conversion timeline should account for:
- NAP availability — NAP competitions occur on a non-predictable schedule based on Congressional appropriations. Maintain readiness continuously so that you can respond quickly when a NOFO is published.
- Financial modeling — model the financial impact of full FQHC designation, including the transition from Look-Alike PPS rates to grantee PPS rates, FTCA coverage (replacing commercial malpractice insurance), and the Section 330 grant revenue itself. The net financial benefit of conversion is typically substantial.
- Compliance alignment — ensure that Look-Alike compliance documentation (governance records, SFDP, credentialing, needs assessment) is current and ready for NAP application requirements.
- Primary Care Association engagement — state and regional Primary Care Associations (PCAs) provide technical assistance for NAP applicants and can help Look-Alikes strengthen their application. Engage with the PCA early in the conversion process.
School-Based Health Centers
School-based health centers (SBHCs) are an increasingly popular expansion pathway for FQHCs, allowing health centers to deliver primary care, behavioral health, and preventive services in school settings. SBHCs improve access for children and adolescents who face barriers to accessing care at traditional health center sites — transportation, parental work schedules, and stigma around seeking behavioral health services.
Funding for SBHCs comes from multiple sources:
- Section 330 funding (if the SBHC is added to the health center's scope of project as an approved service delivery site)
- Medicaid reimbursement for clinical services provided at the school site (FQHC PPS rates apply if the site is in scope)
- State SBHC grant programs (many states provide dedicated SBHC funding through the state health department or education department)
- School district partnerships that provide space, utilities, and in-kind support
- Private foundation grants focused on child and adolescent health
SBHC expansion requires partnership with school districts, parental consent processes, compliance with FERPA (student records) in addition to HIPAA, and careful scope management to ensure the school site is properly registered with HRSA. If the school site is within the FQHC's approved scope, FTCA coverage applies to clinical services provided there.
Telehealth Expansion Funding
Telehealth has become a permanent part of FQHC service delivery following the rapid expansion during the COVID-19 pandemic. FQHCs have access to several telehealth-specific funding sources:
- FCC Connected Health Care Program — provides up to 65% discounts on broadband connectivity and network equipment for eligible healthcare facilities, including FQHCs
- HRSA telehealth supplements — HRSA has periodically provided supplemental funding for telehealth infrastructure, including equipment purchases, software licensing, and workflow redesign
- State telehealth grants — many states offer telehealth infrastructure grants funded through state appropriations, ARPA funds, or broadband development programs
- Medicaid telehealth reimbursement — most states now reimburse FQHCs for telehealth visits at or near the PPS rate, making telehealth financially sustainable beyond the grant-funded startup period
Telehealth expansion intersects with scope of project management — HRSA has established guidance on how telehealth services are reflected in the scope, including whether the originating site (where the patient is) or the distant site (where the provider is) is the site of record. Health centers should work with their BPHC project officer to ensure telehealth services are properly documented in the scope.
State-Level Expansion Grants
Beyond federal HRSA funding, many states provide their own grant programs to support FQHC expansion. These programs vary widely by state but may include:
- State capital development programs for community health centers (some states have dedicated capital funds for health center construction and renovation)
- Medicaid 1115 waiver programs that fund FQHC capacity expansion (e.g., delivery system reform incentive payments that include health center components)
- Opioid settlement funds directed to community-based behavioral health and SUD treatment expansion, for which FQHCs are often eligible recipients
- State primary care workforce programs that subsidize provider recruitment and retention at health centers
- ARPA (American Rescue Plan Act) and IIJA (Infrastructure Investment and Jobs Act) funds flowing through state agencies for community health infrastructure
For state-specific guidance, see our state grant guides for Washington State and Oregon.
Building the Case for Expansion
Every expansion funding application requires a compelling case that demonstrates need, capacity, and sustainability. The strongest applications build the case using multiple evidence types:
UDS Data as Evidence
Your UDS report is the single most powerful evidence tool for expansion applications. Key data points include patient growth trends over 3–5 years (demonstrating demand), payer mix trends (showing the proportion of uninsured and Medicaid patients served), clinical quality measures that exceed national averages (demonstrating capacity for quality delivery at scale), enabling services utilization (showing that the health center addresses social determinants), and wait time data (showing that current capacity is insufficient to meet demand). Present UDS data in the application as trend lines, not just point-in-time snapshots.
Community Needs Assessment
A current (within 3 years) community needs assessment that uses quantitative data, community input, and provider perspectives strengthens any expansion application. The assessment should identify specific gaps that the proposed expansion will address and should quantify the population that currently lacks access. For NAP and SAC applications, the needs assessment is a scored component — an outdated, generic, or data-poor assessment will directly reduce the application score.
Community Support Documentation
Letters of support from community stakeholders — local government, hospital systems, school districts, social service organizations, faith communities, and patient advisory councils — demonstrate community investment in the health center's expansion. These letters should be specific to the proposed expansion (not generic endorsements), should describe the writer's relationship with the health center, and should articulate how the expansion will benefit the community they serve. Memoranda of understanding (MOUs) with specific partner organizations carry more weight than general letters of support.
Financial Sustainability Planning
The most critical question for any FQHC expansion is: how will these services be sustained after the grant period ends? Funders scrutinize sustainability plans because they do not want to invest in programs that will collapse when grant funding expires. A credible sustainability plan addresses:
Revenue Diversification
The expansion should not be dependent on a single funding source. A sustainable FQHC service line generates revenue from multiple streams — Medicaid PPS reimbursement, Medicare cost-based reimbursement, private insurance, patient sliding fee payments, 340B savings (for pharmacy services), and potentially multiple grant sources. The sustainability plan should project revenue by payer over a 3–5 year period with realistic assumptions about patient volume ramp-up, payer mix, and reimbursement rates.
Break-Even Analysis
For any new service line or site, calculate the break-even point — the patient volume at which revenue covers operating costs without grant support. This analysis should include direct costs (provider salaries, supplies, equipment), allocated indirect costs (facility, administration, IT), and revenue per visit by payer type. A new service line that cannot break even within 2–3 years on operating revenue should be scrutinized carefully — unless there is a reliable ongoing funding source (such as CCBHC payment or a recurring state contract).
Workforce Sustainability
Provider recruitment and retention is the single largest operational risk for FQHC expansion. The sustainability plan must address how the health center will compete for talent in a tight healthcare labor market. NHSC loan repayment, competitive compensation, quality-of-life benefits, and mission alignment are all tools in the recruitment toolkit. For clinical specialties in high demand (psychiatrists, dentists, pediatric specialists), build a longer recruitment timeline into the expansion plan and consider interim strategies such as telehealth coverage or locum tenens while permanent providers are recruited.
For a structured assessment of your organization's readiness to pursue expansion funding, see our readiness checklist. For detailed guidance on the HRSA 330 program that underpins FQHC expansion, see the HRSA 330 Health Center Program Guide.