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Strategies in 4 Safety-Net Hospitals to Adapt to the ACA

Safety-net hospitals have long played an important role in the US health care system in serving vulnerable populations, providing high cost services such as trauma and burn care and often in training medical and nursing students.  The Affordable Care Act (ACA) fundamentally changes the health care landscape and safety-net hospitals need to make major changes to compete.  New coverage from Medicaid expansions and new Marketplace coverage provide opportunities for safety-net hospitals.  However, these providers face challenges competing for newly insured patients and continuing to serve the remaining uninsured (including adults in states not expanding Medicaid and undocumented immigrants who remain ineligible for Medicaid or new ACA coverage).  Safety-net hospitals also face reductions in financing for uncompensated care.

Building off of a 2012 Health Affairs brief that looked at early ACA preparations by safety-net hospitals,1 this brief examines four safety-net hospitals to learn how they were preparing for the full implementation of health reform, in order to gain additional insight into the strategies being used and challenges being faced among safety-net hospitals across the country.  The four hospitals are Cook County Health and Hospitals System (Cook County HHS) in Chicago, Illinois; Harris Health System (Harris Health) in Houston, Texas; Santa Clara Valley Medical Center (SCVMC) in San Jose, California; and University Medical Center of Southern Nevada (UMC) in Las Vegas, Nevada (see tables in the Appendix for additional hospital information).  The findings are based on information gathered from site visits and interviews between June and September 2013 with local health care stakeholders and key hospital management.  While hospitals were employing strategies with different intensity, key findings about adapting for changes from health reform include:

  • Study hospitals were implementing an array of financial strategies focused on tapping Medicaid revenues (through early coverage expansion and delivery system reform waivers), improving patient billing, lowering cost structures to shore up revenues and using strategic contracting and purchasing arrangements.
  • To reduce fragmentation and increase efficiency, study hospitals were adopting delivery system reforms particularly related to developing community-based partners and systems of care.
  • Most study hospitals implemented changes in hospital leadership and management structure as well as efforts to better align physician incentives with hospitals and changing the culture of patient care to be more responsive to changing markets.
  • Improving infrastructure and Health Information Technology (HIT) were being employed to make hospitals more attractive to consumers and to increase efficiency.

Even after full implementation of the ACA, the study hospitals, as well as other safety-net hospitals across the country, are expected to continue to serve a critical role in their communities. While safety-net hospitals must adopt new strategies to thrive under reform, policy makers at the federal, state, and local levels of government will need to monitor and evaluate how safety-net hospitals are faring as the ACA is implemented to ensure that the safety-net is sustainable for vulnerable populations and for broader community needs.

 

Introduction