Facing significant financial challenges less than two years after opening its clinic on Vashon, Neighborcare Health is altering its lineup of health care providers there, taking steps to improve efficiencies and considering proposing a health taxing district.

Neighborcare opened on the island in September 2016, after CHI-Franciscan had left the previous May, citing losses of up to $500,000 per year at the Sunrise Ridge clinic. Last fall, after one year of operations, Neighborcare CEO Michael Erickson reported that some 3,000 additional patients were needed at the clinic to make it financially viable. Now, Neighborcare and clinic officials say the roots of the financial problems are in part about the number of patients — still well below target figures — but more about what type of health coverage patients have: Medicaid, Medicare or private insurance. They also stress they are working to improve the financial picture and have no plans to leave.

“We are committed to the clinic and creating a sustainable model so we can stay and be part of the community and provide medical care,” said Neighborcare Health Chief Operating Officer Meredith Vaughan last week.

Vaughan declined to provide a figure for the clinic’s operating deficit, saying that the number fluctuates as changes are made.

Signs that the clinic is struggling financially appeared publicly last month, when Granny’s Attic awarded its twice-yearly round of grants, including $47,000 to Neighborcare from the $75,000 request it had submitted.

More recently, word has traveled the island that Neighborcare is eliminating two providers, doctors Scott Chaffin, who joined the clinic in 2014, and Gary Koch, who has served the island at the Sunrise Ridge facility for decades. Koch did not respond to an email seeking comment about his departure, but Vaughan said that he had been planning on retiring at the end of the year, and that he and Neighborcare agreed on an earlier retirement date because of the financial challenges the clinic is facing. Koch and Chaffin are expected to leave in June and will be replaced by either a physician’s assistant or an advanced registered nurse practitioner.

Dr. Jessica Wesch, the medical director of the clinic, said the goal of having two full-time medical doctors and the equivalent of two full-time nurse practitioners is in line with the typical community clinic staffing model. Both she and Vaughan said that given the high number of senior patients that use the clinic, they are looking for a provider who is experienced with complex care and geriatrics.

Neighborcare is a federally qualified health center and as such receives higher payments than other clinics do for patients with Medicaid, health coverage primarily for people with low incomes, and Medicare, health insurance for those who are 65 and older. To be financially healthy, the clinic would need to have the majority of patients be covered by Medicaid, Vaughan said. Currently, only about 15 percent have such coverage.

With Medicaid patients, Wesch said, Neighborcare receives the full cost of clinic visits. Medicare covers 75 percent of the cost of patient visits, and private health insurance provides about 65 percent. Moreover, Wesch noted that primary health clinics routinely lose money but are subsidized by hospitals or specialty systems, resources Neighborcare does not have. Additionally, she said federally qualified health centers typically receive funds from federal, state and county governments, but Vashon is too wealthy to qualify for some of those grants.

Given this challenging financial picture, Wesch said the clinic is looking at innovative, more efficient ways to deliver care, which she had experience with as a provider at a Swedish clinic in Seattle. More information about those changes will be coming this summer, she said, declining to elaborate now on what they may include.

While these changes will help the clinic’s bottom line, to fully address the health care financial challenges, Wesch is looking into the creation of a health district. Many islanders may remember the 2006 effort to create a hospital district, a measure proposed by Vashon Community Care and the Vashon Health Center, which was then operated by Highline Medical Center.

With the creation of a health or hospital district, islanders would support health services through their property taxes, and an island board would determine how much to levy and who would get the money. Wesch noted the creation of a health district would address the persistent clinic shortfall and give islanders more control over Vashon’s health care services. Based on the history of the island clinic, Wesch said she believes raising about $350,000 in this way would be sufficient. She also acknowledged the recent substantial increase in property taxes many islanders experienced this year.

“This is bad timing,” she said, but indicated she believes the matter is important, no matter the timing.

“I feel like it is a community conversation that we have to have. I think we need to keep it as an option as a community,” she said, adding that she is willing to talk about the idea with anyone who might want to have the conversation with her.

When discussing the financial challenges of the clinic, Vaughan also noted that changes are occurring with the new call center, which many islanders have expressed frustration about. Previously, callers to the clinic talked to the front desk, but earlier this year that changed, and Vashon callers were routed to a general Neighborcare call center off-island. Now, Vaughan said, work is underway to establish a satellite call center at the island clinic. She added that establishing the center there will address some concerns island patients raised and will allow Neighborcare to keep the staff that would have otherwise lost their jobs when Chaffin and Koch leave.

Looking ahead, Vaughan said that Neighborcare is still “eager” to renovate the clinic building or build a new building.

“We are very much trying to find a way to address the facility issue,” she said.

Currently, the only money Neighborcare has for such an undertaking is the $3 million allocated in the state capital budget. That is not enough to renovate the current facility, she said, and is just one-third of the cost of a new clinic.

Despite the financial challenges overall at the Vashon clinic, Vaughan said Neighborcare officials remain optimistic about providing services there.

“We never stopped being optimistic,” she said. “We remain committed to Vashon and to providing quality health care, and to do that we have to reach a sustainable model of care.”