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Safety Net Hospitals: Essential Providers of Public Health and Specialty Services

Safety net hospitals, primarily known for providing medical care for the poor and uninsured, are also vital sources of public health and specialty care services for entire communities. In a new study, Safety Net Hospitals: Essential Providers of Public Health and Specialty Services, Darrell J. Gaskin of Georgetown University examines to what extent communities rely on these hospitals for specialty services such as pediatric and neonatal intensive care, trauma care, psychiatric care, alcoholism inpatient treatment, and burn care. These high-cost, often unprofitable services tend to attract difficult-to-treat patient populations.

Through analysis of data from the American Hospital Association's Annual Survey of Hospitals for 1991 and 1995, Gaskin shows that although safety net hospitals are often the primary provider of these services, they face an uncertain future because of cuts in public subsidies like Medicare and Medicaid disproportionate share hospital (DSH) payments that help sustain them. Reduced DSH payments could hinder these hospitals' ability to finance indigent and specialty care.

Another threat to safety net hospitals is the continued growth of managed care under both private and public insurance plans. Hospital administrators fear that managed care plans will steer Medicaid managed care patients toward other, less-expensive facilities for acute hospital care, thus eroding patient revenues and further constraining the ability of safety net hospitals to finance their missions.

If safety net hospitals were to succumb to fiscal pressures by discontinuing essential services or by closing entirely, other area community hospitals may not be able to absorb the demand.

Gaskin suggests that the best solution would be for state and local governments to provide safety net hospitals with direct grants for those services that communities want to maintain. Such targeted subsidies would preserve the public health and specialty care missions of safety net hospitals while allowing market forces and federal policy to promote the cost-efficient delivery of hospital services.

Facts and Figures

  • In 1995, Medicaid and uninsured patients comprised 74 percent of discharges and 77 percent of outpatient visits at safety net hospitals.
  • Medicaid, Medicare, and local subsidies accounted for more than 67 percent of safety net hospitals' total revenue; payments from commercial insurers comprised 15.7 percent of total revenues.
  • Safety net hospitals provide a disproportionate share of some services for both privately insured and Medicare patients, including nearly three times their share of burn patients and more than two times their share of transplant and AIDS patients.
  • Although safety net hospitals accounted for only 20.4 percent of inpatient days in 1993, they delivered 33.5 percent of neonatal intensive care, 37.7 percent of burn care, and 43.4 percent of pediatric intensive care for their communities.

Publication Details



Safety Net Hospitals: Essential Providers of Public Health and Specialty Services, Darrell J. Gaskin, Georgetown University, The Commonwealth Fund, February 1999