Public Hospitals Adopt 6 Strategies to Respond to Growing Capacity and Financial Pressures

Expanding primary care access, attracting privately insured patients and ensuring financial payments are some of the strategies public hospitals have used to accommodate the growing number of uninsured and Medicaid patients, according to a study from the Center for Studying Health System Change (HSC).

Since 1996, HSC researchers have tracked how local public hospitals in five communities — Boston, Cleveland, Indianapolis, Miami and Phoenix — have functioned as primary safety net providers amid fluctuating public funding and increasing patient loads.

Researchers found that all five hospitals adopted six key strategies. They are:

  • Establishing independent governance structures;
  • Securing predictable local funding sources;
  • Shoring up Medicaid revenues;
  • Increasing attention to revenue collection;
  • Attracting privately insured patients; and
  • Expanding access to community-based primary care.

A major concern for public hospitals since the ACA was enacted is the financial impact if their states choose not to opt into Medicaid expansion, study researchers note. The health reform law is expected to impact public hospital finances in two opposing ways:

  • Improved revenues as lower-income, uninsured people gain Medicaid or subsidized private insurance coverage; and
  • Reduced federal Medicaid and Medicare subsidies to help defray the cost of care for low-income, uninsured patients, known as disproportionate share hospital, or DSH, payments.

While public hospitals appear poised for changes under national health reform, they will need to adapt to changing payment sources and reduced federal subsidies and compete for newly insured people, according to the study.

Source: Center for Studying Health System Care (HSC), November 29, 2012

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