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

Overview of Study Hospitals

In selecting the hospitals diversity was sought along several dimensions— geography, whether the hospital is located in a state implementing the ACA Medicaid expansion, and level of state Medicaid DSH payments prior to the ACA (Table 1).  Each of the hospitals is located in an area expected to have significant numbers of uninsured remaining after ACA implementation due to high shares of immigrants (both undocumented and documented immigrants who have been in the US for less than five years) who will not be eligible for coverage under the ACA coverage expansions. For hospitals in states not implementing the Medicaid expansion, the number of uninsured will remain higher because many adults will not have a new coverage option.

Each hospital was described as the principal provider of inpatient and outpatient care in its community for the low-income and uninsured populations. For Cook County HHS and Harris Health, 85 percent of hospital discharges are either uninsured or Medicaid beneficiaries, with SCVMC and UMC somewhat lower at 76 and 63 percent, respectively (Table 2).  These are substantially higher than the figure for the average US hospital (25 percent; data not shown), and higher than the average safety-net hospital (54 percent; data not shown).¹

Characteristic of safety-net hospitals generally, the study hospitals rely heavily on revenues from Medicaid, Medicare, and state and local support (Table 2). They do differ, however, in their level of commercial revenue: Nearly 20 percent of SCVMC and UMC’s revenues come from commercial sources, whereas Cook County HHS and Harris Health have very little commercial revenue. Managed care plays a role to varying degrees across the four hospitals. For example, Medicaid managed care enrollment in 2010 accounted for 14 percent of total non-elderly Medicaid enrollment in Cook County; 46 percent in Santa Clara County; 76 percent in Clark County; and 82 percent in Harris County.² Most individuals newly enrolled through ACA coverage initiatives in these states will receive care through managed care, providing yet another incentive for hospitals to cost-effectively coordinate and integrate care.

The study hospitals’ quality performance is comparable to national averages on some measures, including an “effective care” measure related to appropriate antibiotic use after outpatient surgery and 30-day mortality and readmission rates (Table 3). All four hospitals, however, scored lower on a measure of timely care based on the wait for an admission from the emergency department and on patient willingness to recommend the hospital. Nonetheless, UMC and SCVMC were categorized regionally as a top-ranked hospital in their respective metropolitan areas, according to US News and World Report’s ranking.³

The context in which the study hospitals are operating varies greatly, including state preparations and support for the ACA (Table 1). SCVMC and Cook County HHS have benefited from active state preparations for the ACA. California (where SCVMC is located) opted to expand Medicaid early across the state and Illinois (where Cook County HHS is located) has supported a Medicaid Section 1115 waiver that has expanded Medicaid early in Cook County (see below). While Nevada (where UMC is located) is taking up the Medicaid expansion, the state has been less active in ACA preparations and did not seek a Medicaid waiver to expand coverage early. In contrast, Texas (where Harris Health is located) has not participated in the ACA expansion of coverage, opting not to implement the Medicaid expansion and deferring to a Federally-Facilitated Marketplace. Since Texas had a pre-ACA uninsurance rate that was the highest in the nation, Harris Health, in particular, will continue to serve a large number of uninsured adults as the ACA moves forward.⁴