The Value of the Safety Net

Today the primary health care safety net is maintained by a handful of public and non-profit safety net hospitals, which not only provide indigent care but also serve their communities as important providers of trauma, burn, neonatal, cancer and other forms of tertiary care, as well as supporting homeland security needs.

Non-profit hospitals serve as the foundation for massive systems of primary care, often coordinating efforts with public health entities. Such hospitals train a significant number of physicians, nurses and other medical personnel and provide the laboratory for clinical medical research and health policy design.

The impact of federal cuts such as the Balanced Budget Act of 1997, recent state budget deficits, competition for Medicaid Managed Care and the growth in the number of uninsured individuals resulted in a significant impact and a decline in revenues among large urban public hospitals. These health systems are mandated to provide healthcare for the indigent and uninsured poor in their communities. By legal mandate or explicitly adopted mission, they maintain an “open door,” offering patients access to services regardless of their ability to pay.

Not-for-profit safety net institutions can provide care to the indigent and vulnerable populations only to the degree that they have a margin. There is considerable and complementary overlap between these safety net components regardless of governance. Each is more vulnerable as a business entity than the majority of hospitals in this nation.

Urban public hospitals provide significant amounts of outpatient care, much of which is primary care in nature. In 2001, 82 public hospitals provided almost 31 million outpatient visits. Only 17 percent of these visits occurred in the emergency department. Almost half of the ambulatory visits were for primary care.

An American Hospital Association survey from 2002 shows that the average inpatient volume for public hospital facilities, estimated using admissions, was more than double the volume at the average acute care hospital in the nation in 2000. Over 60 percent of the hos-pitals surveyed reported that they met or exceeded capacity in the emergency department.

Uninsured patients treated in the emergency room tended to be sicker and have more serious medical conditions than patients with health cov- erage. The uninsured patients typically delayed getting help for conditions that might have been cured or minimized with early intervention.

Caring for the uninsured is a fundamental mission yet that respon- sibility carries significant costs. Teaching hospitals comprise only 29 percent of the nation’s hospitals yet they shoulder 80 percent of the cost of charity care. Teaching hospitals accounted for $9.2 billion out of $11.5 billion in hospital charity care costs during 2003. The 275 major teaching hospitals account for $5.9 billion of the $9.2 billion. AAMC teaching hospitals account for just 6 percent of all hospitals, but they are responsible for 46 percent of charity care.

As large public hospitals become more crowded with uninsured patients, their relationship with other safety net hospitals is greatly affected. If the public safety net hospitals cannot handle the volume of uninsured, the patients will utilize other hospitals resulting in decreased accessibility for insured patients as well as declining hospital margins. This compromises not-for-profit and for-profit facilities both financially and clinically and creates a hidden tax on these institutions and their patients.

In response to the financial and volume constraints, public safety net hospitals have been forced to delay care by queuing patients or erecting barriers to access through co-pays or deductibles or creating inconveniences such as closing evening clinics and reducing elective surgeries.

Hospital experts state that access to capital markets will become increasingly difficult for public and non-profit hospitals in the short term. Decreasing margins contributed to increased difficulty in issuing bonds. As a result, upgrading facilities in order to compete for paying patients becomes more difficult.

We, as a nation, and as individual communities of people who may need the safety net must insist on collaborative efforts from our national, state and local policy leaders. Clearly, the recent work of the Institute of Medicine reveals that a safety net is required but not sufficient to prevent excess mortality and morbidity. Still, supporting the safety net infrastructure is a wise investment that will complement the most important thing we as a nation can do, and that is to provide access to health insurance for our entire nation.

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