Healthcare reform proposals represent potential catastrophe for safety-net systems

Patient and nurse in hospital
Coverage declines threaten recent progress in improved care delivery among safety-net healthcare providers. Getty/monkeybusinessimages

For safety-net healthcare facilities, the decreases in insurance coverage likely to emerge under proposed healthcare reform legislation will lead to increased budgetary strain.

Hospitals that provide care for some of the most vulnerable patient populations face unique financial issues when it comes to improving care delivery, according to a blog post from leaders at OneCity Health, New York City Health + Hospitals for NEJM Catalyst. Improving care delivery often requires high upfront expenses, but revenue streams tend to be thin at safety-net facilities because they have traditionally served a high proportion of underinsured and uninsured patients. The money needed to meet those costs typically comes from the insured population, whose payments subsidize the care for those without insurance.

The authors suggest coverage gains under the Affordable Care Act, particularly those generated through Medicaid expansion, created a firmer foundation on which to improve overall care. Uninsured patients tend to be more reticent about seeking care, which in turn means missed opportunities for preventive care that could avoid more costly visits to the emergency room, or situations that result in admissions. Combine the reduced expenses from improved care with increased revenues as value-based payment methodologies deliver increased revenue to the hospitals, and a virtuous cycle evolves.

The hospital leaders point to a set of studies showing the financial benefits of Medicaid expansion, and note that the early progress on these fronts remains tenuous. For that reason, safety-net providers and other facilities that work with underprivileged populations see an existential threat in the latest round of healthcare reform proposals.

Advocacy groups broadly panned the latest version of healthcare repeal, citing loss of coverage, potential cost increases and Medicaid cuts, among other issues. The article points out that for safety-net systems, the stakes are even higher because their thin margins mean increasing the number of patients with insurance coverage represents a key part of improved care delivery. A decrease in coverage could be catastrophic for them.