Objective.

School-based health services have evolved from primarily controlling communicable disease to comprehensive programs with direct services, education, and improvement of the school environment. School-based health clinics (SBHCs), currently 1157 in number, are used to reach children for preventive and other routine care. Although several studies have examined the costs and effects of such programs, few, if any, have examined their potential to save Medicaid program outlays. The objective of this study was to assess the effect of the Whitefoord Elementary School-Based Health Clinic (WESBHC), located in Atlanta, Georgia, on health care costs paid by Georgia Medicaid over the 1994–1996 period. This clinic has been in operation since late 1994.

Design.

The analysis uses 1994–1996 claims data for Medicaid-enrolled children 4 through 12 years old served by the WESBHC and similar children in a comparison school district without such a clinic. Descriptive and multivariate analyses are used to discern the differences in the changes in Medicaid expenses per child-year enrolled for these 2 groups of children. Both those who only used the WESBHC sporadically and those for whom it was their medical home were identified for analysis.

Results.

The descriptive analysis shows that although there were no significant differences in the Medicaid expenses for the WESBHC and comparison children in 1994, before the operation of the WESBHC, by 1995, the WESBHC children had significantly lower emergency department expenses. In addition, they had higher Early Periodic Screening Diagnosis and Treatment preventive care expenses. By 1996, the WESBHC children had significantly lower inpatient, nonemergency department transportation, drug, and emergency department Medi- caid expenses. Multivariate analysis confirmed the effect of the WESBHC on lowering emergency department expenses.

Conclusions.

The results strongly suggest that the operation of a SBHC can have effects on the child's use of services and health care expenses. Given that these clinics serve all those who come for care and many of these are low-income children, these savings are likely to accrue to the Medicaid program of the state. As states continue to implement Medicaid-managed care for their child populations, they will need to consider the ability of SBHCs to participate in and receive Medicaid revenues through health maintenance organization networks.

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