Study: Safety-net hospitals at risk

Hospitals that primarily serve low-income patients and underserved areas are facing a major financial risk from the sluggish economy and President Obama’s healthcare law, a new study says.

The research, conducted by the Commonwealth Fund, says safety-net hospitals need to adjust their business practices to avoid taking a big financial hit.

“To overcome declining government subsidies, safety-net hospitals governed by elected politicians must focus on cost control, quality improvement, and services that attract insured patients,” the study says.

“Such efforts will be important to ensure that the 23 million people who will be without insurance coverage even when the health reform law takes full effect — including illegal immigrants, people with chronic psychological illnesses, and those whose incomes are not high enough to afford private insurance — continue to receive the range of health care and specialized services, like transportation and language translation, that these hospitals provide.”

The study is based on financial data from 150 urban hospitals that served a high share of Medicaid patients or minorities.

The Affordable Care Act will reduce certain subsidies to public hospitals, the study says, so the facilities need to prepare for that looming hit. The researchers also cited the weak economy as a challenge for safety-net hospitals.

“Safety-net hospitals that currently rely on politically negotiated funding must adapt to increasing fiscal austerity and intensified competition by revamping their business strategies,” the study says.

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