Safety net hospitals provide a significant amount of care currently to those uninsured or underinsured. Under the Affordable Care Act, the payments to these hospitals will move into the expanded Medicaid Coverage (where the real money for “ObamaCare” came from) and these folks may not seek care from the traditional safety net providers. Unfortunately, because of holes in the system (undocumented workers, folks not opting into the system, folks who are underinsured), there will still be a need for safety net providers.

The Journal Health Affairs recently published an article detailing the strategies employed by the “successful” safety net hospitals (low debt, efficient organization) to stay afloat in these tough economic times. The hospitals selected were Bellevue, Parkland, Denver Health, San Francisco General, and VCU Health System. All are classic Academic Health Centers with a shared mission to care for the poor and educat residents and students. The strategies are pretty interesting:

1) Double down on health information technology – “Health information technology has played a key role in helping these hospitals improve performance and respond to market and regulatory demands for increased efficiency and accountability. It has also yielded other advances” such as improved clinical efficiency, improved financial management, increased accountability

2) Create integrated systems of care –

Hospital leaders report that integration has been their most important asset in dealing with recent challenges because it allows for rapid deployment of change, whether in care systems, staffing, or resource allocation.

Leaders at all of the hospitals in this study reported that integration has expanded their capacity for primary care and subspecialty services, which will increase their ability to care for the increased volume of patients expected after the full implementation of health reform. The leaders whom we interviewed emphasized that integration reinforces financial stability by allowing hospitals to diversify clinical service lines and cross-subsidize unprofitable services.

3) Make the academics work for the safety net and visa versa – This has been the most difficult to achieve:

Many safety-net hospitals are affiliated with medical schools. Such affiliations confer strengths but also create competing agendas.

Academic activities that are rewarded by medical schools, such as research and teaching, often differ from the improved efficiency, productivity, and customer service sought by safety-net hospitals. Given this situation, there is the potential at these institutions for conflict in balancing the roles of care delivery, medical education, and research.

These institutions realize they will need to compete in the broader health care market after the ACA is fully implemented in 2014 as caring for the poorest of the poor is a mission and not a business plan. They report the following strategies:

1) Focus on efficiency and quality – “Because safety-net hospitals typically operate under narrow financial margins, increasing efficiency, reducing costs, and improving quality have long been core strategies. The hospitals in this study have renewed their focus on these efforts after recognizing the very real possibility of increased demand for services, uncertain reimbursement, and intensified competition under reform.” Denver Health, Bellevue, and Parkland have each implemented variations of Lean performance improvement strategies.

2) Attracting and retaining patients – “Each hospital is keenly aware that reform will present the challenge of retaining current patients as well as attracting newly insured patients, who will have a choice of providers. The hospitals already have much experience working with Medicaid and low-income uninsured patients, many of whom will be gaining coverage.” San Francisco General, for example, is forming more patient advisory committees and involving patients in hospital decisions

3) Expanding the medical home model – “Hospitals in this study have already used their health IT resources and system integration to provide coordinated and cost-effective care for patients, including those with high-cost chronic diseases. This approach serves as a foundation on which to establish patient-centered medical homes and accountable care organizations.” For example, primary care clinics at Bellevue have received patient-centered medical home designation from the National Center for Quality Assurance. And since 2000 Virginia Commonwealth has operated its Virginia Coordinated Care program, which provides a medical home for indigent patients. Parkland also provides medical homes to uninsured patients through its extensive network of community-based clinics, which offer primary and acute care services and care coordination.

4) Prepare to function in a world of global payment – “Leaders at each hospital are cautiously optimistic about new payment systems, especially global payment systems that provide a set payment to manage care for conditions across the care spectrum. Global payment systems associated with accountable care organizations are an important component of reform and are expected to improve quality while lowering costs.” Because of previous investment in chronic disease management capabilities they will be able to focus on patient outcomes, leading to improvements in prevention of and care for high-cost chronic conditions. They also expect that these new payment systems will enable them to develop a strong business case for the further expansion of primary care and urgent care services, better coordination of primary and specialty services, and investment in pay-for-performance initiatives that will drive improvements in the quality and efficiency of care.

For those of you interested in the state of the safety net, this article is a must read.

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