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Safety Net Hospitals Are Methodically Being Destroyed.


Stanley Feld M.D., FACP,MACE

Safety net hospitals have played a vital role in the care of America’s indigent population for over one hundred years.

Over the past few years’ safety net hospitals throughout the country have gone out of business. Fifteen percent of the hospitals in the United States are publically owned safety net hospitals. These are city or county hospitals.   

The urban public hospitals are often associated with medical schools.[7] The largest public hospital system in America is the New York City Health and Hospitals Corporation, which is associated with the New York University School of Medicine.”

These hospitals receive funding from local, state, and federal government. They are also allowed to charge Medicaid, Medicare, and private insurers for the care of patients that have these forms of insurance.

Poor uninsured patients receive their care free from safety net hospitals.

Public hospitals, especially in urban areas, have a high concentration of uncompensated care. Their association with medical schools as teaching hospitals is an additional funding source provided by the federal government.

“The federal government provides funding to hospitals that treat indigent patients through the Disproportionate Share Hospital (DSH) payments.”

 About 2,000 hospitals receive this funding. The problem is these DSH payments are highly concentrated.

Sixty-three percent of total DSH payments go to large teaching hospitals in urban areas.

DSH funding method is political and bureaucratic. Payments are manipulated.  Medicaid eligibility and coverage vary widely across states and change the distribution of funds.

DSH payments have been distributed unevenly across geographic areas and away from rural safety net hospitals.

The uneven distribution is toward large urban safety net hospitals in the Middle Atlantic, South Atlantic, and Pacific regions. Those hospitals account for 60 percent of all DSH payments but only account for 46 percent of Medicare discharges.[2]

The result is public safety net hospitals in America are closing at a much faster rate than hospitals overall.

The number of public hospitals in major suburbs declined 27% (134 to 98) from 1996 to 2002.”

As the number of uninsured and indigent patients has increased, their expenses in providing uncompensated care have drained the suburban and rural public hospitals funds.

Treating patients without receiving compensation has also drained urban non teaching hospitals.

Public and non-profit rural hospitals form a large part of the health care safety net for the indigent and uninsured in the U.S.[9]

 Several large safety net hospitals have gone into bankruptcy because cities and states could not afford to fund them.

Two prominent examples are Martin Luther King in Los Angeles and Grady Memorial in Atlanta. Grady Memorial in Atlanta has gone into bankruptcy twice only to be rescued the citizens of the city of Atlanta.

 Non-profit community hospitals can collect federal funds if they treated a certain percentage of indigent and Medicaid patients.

In order to reach that percentage the federal government has allowed community hospitals to eliminate certain beds from its total hospital bed count. The hospitals can eliminate outpatient observation beds, skilled nursing swing beds and ancillary labor/delivery services beds from its total bed count.

It inflates the percentage of charity beds a non-profit hospital counts toward government subsidy. This is a totally political maneuver.

In effect it decreases federal funding to city and county safety net hospitals.

In October 2012, Obamacare is starting to adjust federal hospital payments based on quality of care. One of the primary metrics will be patient experience rating that covers everything from the communication skills of doctors and nurses to their promptness in responding to complaints about pain.

A new study in the Archives of Internal Medicine finds that this change may add to the financial troubles of safety net hospitals, which primarily serve poor patients. The safety net hospitals tend to get poorer marks from patients than do other hospitals.

“On average, they drew top ratings from 63.9 percent of patients while the hospitals that treated the fewest poor people got top ratings from 69.5 percent of patients.”

The gap has gotten widen over time. It means that the non-profit hospital will get a larger share of the federal money than the safety net hospitals.

I have written several articles on how the federal government has been destroying these safety net hospitals throughout the country.

In the first year of the Hospital Value-Based Purchasing program that starts this October, patient experience scores will determine 30 percent of the bonus.

The rest of the bonus will be determined by how hospitals adhere to basic guidelines for clinically recommended care.

The hospitals that perform best will receive a higher bonus. Those that lag in their scores will end up with less.

 Many safety net hospitals do not have the funds to buy adequate information technology to record the required treatment protocols.

It means that non-profit hospitals will receive additional bonus money and safety net hospitals will be penalized.

To add insult to injury the vital safety net hospitals’ decrease in federal funds could push them  “closer to bankruptcy.”

President Obama’s program will make it even worse for safety net hospitals in October 2013.

Obamacare will start reducing special payments to hospitals that treat disproportionately large numbers of indigent patients. Safety net hospitals are the hospital treating a disproportionately larger number of indigent patients.

Without this funding the safety net hospitals cannot improve quality or provide services to indigent people.

The questions to ask are,

  • Are the measurement used to determine quality care wrong?
  • Is President Obama trying to destroy the safety net hospital system on purpose?
  • Does he not realize that many indigent Americans depend on safety net hospitals?

What is going on here?

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone. 

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