Hospitals across the country are facing financial pressure. But the situation is especially severe among safety net hospitals — those that treat patients regardless of their ability to pay. Low-income Americans already face major barriers when it comes to healthcare access, and that problem could worsen significantly if safety net hospitals across the country close because of financial challenges.
A shift from fee-for-service payment models to value-based payments models won’t do much to remedy this problem, experts argued during a session that took place last week at the HIMSS conference in Chicago.
Care provided to low-income individuals in the U.S. is extremely concentrated, Paula Chatterjee, a professor at the University of Pennsylvania School of Medicine, pointed out. About 80% of healthcare provided to this population is delivered by 20-30% of health systems, she said.
Safety net hospitals are battling all the same issues as other hospitals face, such as the workforce shortage and rising supply costs. But on top of that, they’re also serving a disproportionate number of low-income patients who have a difficult time paying for their care — which means that safety net providers are uncompensated for much of the care they provide.
These financial pressures were present before the pandemic, Chatterjee said. She pointed to an example she saw in her own local area — Hahnemann Hospital, which used to be one of Philadelphia’s largest safety net facilities, closed its doors in 2019 due to unsustainable financial losses.
The market pressures and financial challenges that caused Hahnemann to close have only gotten worse in the past couple years, Chatterjee declared. The few safety net facilities that Philadelphia has left could face a similar fate. They lack sufficient resources and staff, but they don’t have the money to effectively invest in fixing those problems, Chatterjee explained.
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“That is sort of the national history of some of these challenges when you’re talking about the healthcare safety net,” she said. “They are already financially strapped at the baseline, and then you layer on these temporal challenges. In some situations that pushes them to the brink.”
There has been a push for more value-based care payment models in the past decade, but Chatterjee isn’t sure that this is the best way to address the problems that safety net hospitals face.
In her view, applying a cost containment strategy doesn’t make sense as a way to improve outcomes for people who have historically been under-invested in by the healthcare system.
“For decades now, we have had so much literature showing that value-based payment programs can often disproportionately harm the safety net. And part of that is because of this historical underinvestment that hasn’t been corrected,” Chatterjee declared.
She called for a paradigmatic shift “away from cost savings and toward understanding where investments are needed.”
Jonathan Blum, chief operating officer of the Center for Medicare and Medicaid Services, agreed with Chatterjee. He said the framework around value-based care has historically centered around how providers can take costs out of the healthcare system, but he thinks the conversation “needs to shift more to how we promote the right care access.”
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