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Popescu I, Fingar KR, Cutler E, Guo J, Jiang HJ. Comparison of 3 Safety-Net Hospital Definitions and Association With Hospital Characteristics. JAMA Netw Open. 2019;2(8):e198577. doi:10.1001/jamanetworkopen.2019.8577
Does a safety-net hospital definition based on uncompensated care identify different types of hospitals compared with other definitions?
In this cross-sectional study of 2066 hospitals, the Medicare Disproportionate Share Hospital index identified larger teaching safety-net hospitals, whereas a definition based on uncompensated care captured smaller, rural safety-net hospitals at greater financial risk. Bad debt and charity care were approximately twice as high for safety-net hospitals as for non–safety-net hospitals, unreimbursed costs were 38% higher, and operating margins were more than 6 times lower.
Medicare Disproportionate Share Hospital payment formulas are evolving to emphasize uncompensated care, and hospitals may experience funding changes as a result.
No consensus exists on how to define safety-net hospitals (SNHs) for research or policy decision-making. Identifying which types of hospitals are classified as SNHs under different definitions is key to assessing policies that affect SNH funding.
To examine characteristics of SNHs as classified under 3 common definitions.
Design, Setting, and Participants
This cross-sectional analysis includes noncritical-access hospitals in the Healthcare Cost and Utilization Project State Inpatient Databases from 47 US states for fiscal year 2015, linked to the Centers for Medicare & Medicaid Services Hospital Cost Reports and to the American Hospital Association Annual Survey. Data were analyzed from March 1 through September 30, 2018.
Hospital characteristics including organizational characteristics, scope of services provided, and financial attributes.
Main Outcomes and Measures
Definitions of SNH based on Medicaid and Medicare Supplemental Security Income inpatient days historically used to determine Medicare Disproportionate Share Hospital (DSH) payments; Medicaid and uninsured caseload; and uncompensated care costs. For each measure, SNHs were defined as those within the top quartile for each state.
The 2066 hospitals in this study were distributed across the Northeast (340 [16.5%]), Midwest (587 [28.4%]), South (790 [38.2%]), and West (349 [16.9%]). Concordance between definitions was low; 269 hospitals (13.0%) or fewer were identified as SNHs under any 2 definitions. Uncompensated care captured smaller (200 of 523 [38.2%]) and more rural (65 of 523 [12.4%]) SNHs, whereas DSH index and Medicaid and uncompensated caseload identified SNHs that were larger (264 of 518 [51.0%] and 158 of 487 [32.4%], respectively) and teaching facilities (337 of 518 [65.1%] and 229 of 487 [47.0%], respectively) that provided more essential services than non-SNHs. Uncompensated care also distinguished remarkable financial differences between SNHs and non-SNHs. Under the uncompensated care definition, median (interquartile range [IQR]) bad debt ($27.1 [$15.5-$44.3] vs $12.8 [$6.7-$21.6] per $1000 of operating expenses; P < .001) and charity care ($19.9 [$9.3-$34.1] vs $9.1 [$4.0-$18.7] per $1000 of operating expenses) were twice as high and median (IQR) unreimbursed costs ($32.6 [$12.4-$55.4] vs $23.6 [$9.0-$42.7] per $1000 of operating expenses; P < .001) were 38% higher for SNHs than for non-SNHs. Safety-net hospitals defined by uncompensated care burden had lower median (IQR) total (4.7% [0%-9.9%] vs 5.8% [1.2%-11.2%]; P = .003) and operating (0.3% [−8.0% to 7.2%] vs 2.3% [−3.9% to 8.9%]; P < .001) margins than their non-SNH counterparts, whereas differences between SNH and non-SNH profit margins generally were not statistically significant under the other 2 definitions.
Conclusions and Relevance
Different SNH definitions identify hospitals with different characteristics and financial conditions. The new DSH formula, which accounts for uncompensated care, may lead to redistributed payments across hospitals. Our results may inform which types of hospitals will experience funding changes as DSH payment policies evolve.
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