Healthcare Business News
Dr. Patricia Gabow is executive officer of 
Denver Health.
Dr. Patricia Gabow is executive officer of Denver Health.

An ‘open door' for the vulnerable

Even after reform is in place, need for safety net providers will be great

By Patricia Gabow
Posted: August 8, 2011 - 12:01 am ET

A frequently asked question in health reform discussions is, “Will there still be a need for the healthcare safety net?” This is an interesting question for several reasons.

First, it reflects the belief that healthcare safety net providers' prime role is to care for uninsured patients who cannot access care elsewhere. This belief conforms to the Institute of Medicine's definition of the core safety net: “Those institutions who by legal mandate or explicitly adopted mission maintain an ‘open door' offering access to services to patients regardless of their ability to pay.”

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Public hospitals and community health centers fit this definition as the patients they serve are often uninsured. About 18% of public hospital admissions are uninsured patients, reaching more than 50% in some hospitals. And uninsured patients constitute 31% of outpatient visits, climbing to more than 60% of visits in some hospitals. With the recession, Denver Health's uninsured care increased from $275 million in 2007 to $389 million in 2010. The National Association of Public Hospitals and Health Systems' members represent 2% of the nation's acute-care hospitals but provide 20% of the uninsured care. Similarly, 38% of community health centers visits are for uninsured patients.

Thus, one might reasonably assume that health reform's substantial expansion of insurance coverage by broadening Medicaid eligibility and providing premium subsidies would eliminate or markedly decrease the number of uninsured and the need for these institutions. However, even the most optimistic estimates predict that 23 million people will remain uninsured, including many of the most vulnerable, such as the chronically mentally ill, substance abusers and the homeless—who are unlikely ever to enroll in a plan—as well as an estimated 11 million undocumented immigrants.

The uninsured population may be larger if there is no individual mandate or if the penalties for failure to enroll are small compared with the cost of subsidized premiums.

The second interesting aspect about questioning the future of the safety net is the assumption that other providers want to or can effectively care for the poor and socially disenfranchised even if they are insured. Medicaid provider data may shed some light on this. Only about 65% of physicians accept new Medicaid patients compared with 88% who accept new commercially insured patients, and the Medicaid patients they actually see is not known.

Similarly, in Colorado, 47% of Denver Health's (the primary safety net hospital) admissions are Medicaid patients compared with 18% for the other metropolitan general hospitals. In a recent meeting of Colorado providers, some indicated concern about accepting Medicaid patients with complex or social conditions such as chronic mental illness or language barriers. This reflects the reality that many practices do not have wrap-around services such as social workers, translators and transportation, which community health centers and public hospitals provide to facilitate the healthcare of vulnerable patients.

Patient choice is the other side of the coin from provider choice. In Massachusetts, less than 2% of the population is uninsured, yet community health centers' medical visits increased by more than 70,000 from 2007 to 2009. Boston Medical Center, Massachusetts' largest public hospital with 509 beds, has seen an increase in its inpatient admissions from 28,366 to 30,030 and in outpatient visits from 775,900 to 935,385 from 2006 to 2010. The majority of this increase was for low-income patients in the publicly funded programs. This patient choice may reflect the culturally appropriate and high-quality care these institutions provide to vulnerable populations and hence their use of them for care.

The third interesting aspect of the question is the inference that caring for the uninsured is the sole role of safety net providers. This is not the case for urban public hospitals. They not only serve the needs of special populations but also the special needs of the entire population through their trauma, burn, psychiatric and poison centers, large emergency departments, neonatal intensive-care units, public health and emergency preparedness services, and education of physician trainees. NAPH members in the largest urban areas represent 40% of the trauma and 63% of the burn centers. The average number of emergency department visits a year at NAPH hospitals is 78,467 compared with 26,432 for acute-care hospitals nationally. And 23% of physicians in training are in these institutions.

Finally, there is the assumption that the safety net would be there in 2014 and beyond, if needed. These institutions are fragile. In 2009, the average margin at NAPH hospitals was 2.5% compared with 5% for other hospitals. Without the supplemental payments such as Medicaid Disproportionate Share payments, the safety nets' margins would have been substantially negative, a nonsustainable condition for any enterprise.

Thirty-five percent of net revenue for NAPH members is Medicaid, and 12% is from state and local governments. Sixty-two percent of community health center patient revenue comes from Medicaid/CHIP. As all levels of government struggle with their budgets, these sources of revenue either have decreased or are at risk. Medicaid DSH deserves special comment. It is slated to begin decreasing in 2014 based on the expectation that uninsured expenditures would markedly decrease with health reform. The challenge will be to make certain that any decrease in Medicaid DSH is tightly linked in timing and amount to the decrease in uninsured care at the individual safety net hospital.

The healthcare safety net has been critically important for more than a century. While there may come a time when everyone has coverage—and when that coverage creates equal access for all—and the special needs of all the population are met by others, we are not there yet and will not be there in 2014. Therefore, we can answer a definite “yes” to the question, “Will we need the healthcare safety net after health reform?”

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