Safety net hospitals have become a growing and important segment of the healthcare market. Historically, safety net hospitals have served economically-distressed people and those with limited access to acute care. Over the last several decades these hospitals have been defined or classified by the demographic make-up of their patient populations. In 1981 these institutions were given an official designation when the federal government created the Medicaid Disproportionate Share Hospital payment adjustment. This defined specific criteria for qualifying for additional government payments based on the economic status of patients served.
Although these hospitals are characterized by the financial status of their patients, they share similarities in geographic locations, clinical service mix and governance structures. Safety net hospitals maintain a high profile in communities for two reasons: 1) the poor health status and high needs of the patient population and 2) the perilous financial situation of individuals within these communities that generates the need for additional government support.
Challenges
Even prior to the 2008 economic downturn, financial support for these institutions was very limited. Access to cash for capital project funding over the past years has always been the source of political discord. Lack of resources has rendered many physical plants outdated or in need of routine capital improvements. Due to the dependence on governmental funding from local, state and federal (DSH) sources to sustain operations, these hospitals are often viewed as political institutions rather than essential providers of care. This is further complicated given patients' clinical conditions and the lack of pre and post-lateral clinical support systems.
The legal structure of safety net institutions often presents significant governance challenges. Politics directly impacts all major decisions regarding the strategic or managerial operation of a safety net hospital. Administrative leaders must always be conscious of the far-reaching impact of their decisions beyond routine daily operations. This is the type of perspective and analysis that a professional services firm could offer safety net clients.
While the daily mission of providing clinical care is paramount, a significant factor for safety net hospitals is "jobs." Recognized first for the goodwill created in serving as access points for care, safety net hospitals are commonly major economic engines for the communities they serve. In this sense they not only determine the clinical well-being of the host community, but often the financial strength as well.
The financial status of safety net hospitals coupled with the economics of jobs adds a unique dimension to strategy and operations. The pressure to provide care and maintain jobs in the safety net hospital milieu will not abate, and neither will the challenges of supporting these sometimes conflicting priorities.
Opportunities
Safety net hospitals have the opportunity to take advantage of healthcare reform by developing a strategic approach while leveraging financial and operating tools essential to this unique segment of the provider market. Understanding that communities will necessarily continue their commitment to funding and supporting these critical institutions into the future, opportunities for achieving revenue growth should steadily increase over the next few years.
Healthcare reform will become a key driver for growth.With a mandate to cover underprivileged populations, the recent legislation should fuel growth by adding millions to the insured population through exchanges and Medicaid expansion. Safety net hospitals will require assistance in optimizing this new opportunity by setting the strategic foundation for providing care to new populations in the context of political, financial and operational factors unique to this market.
The following are some key approaches for safety net hospitals:
Learn more about Azul Health Group.
Although these hospitals are characterized by the financial status of their patients, they share similarities in geographic locations, clinical service mix and governance structures. Safety net hospitals maintain a high profile in communities for two reasons: 1) the poor health status and high needs of the patient population and 2) the perilous financial situation of individuals within these communities that generates the need for additional government support.
Challenges
Even prior to the 2008 economic downturn, financial support for these institutions was very limited. Access to cash for capital project funding over the past years has always been the source of political discord. Lack of resources has rendered many physical plants outdated or in need of routine capital improvements. Due to the dependence on governmental funding from local, state and federal (DSH) sources to sustain operations, these hospitals are often viewed as political institutions rather than essential providers of care. This is further complicated given patients' clinical conditions and the lack of pre and post-lateral clinical support systems.
The legal structure of safety net institutions often presents significant governance challenges. Politics directly impacts all major decisions regarding the strategic or managerial operation of a safety net hospital. Administrative leaders must always be conscious of the far-reaching impact of their decisions beyond routine daily operations. This is the type of perspective and analysis that a professional services firm could offer safety net clients.
While the daily mission of providing clinical care is paramount, a significant factor for safety net hospitals is "jobs." Recognized first for the goodwill created in serving as access points for care, safety net hospitals are commonly major economic engines for the communities they serve. In this sense they not only determine the clinical well-being of the host community, but often the financial strength as well.
The financial status of safety net hospitals coupled with the economics of jobs adds a unique dimension to strategy and operations. The pressure to provide care and maintain jobs in the safety net hospital milieu will not abate, and neither will the challenges of supporting these sometimes conflicting priorities.
Opportunities
Safety net hospitals have the opportunity to take advantage of healthcare reform by developing a strategic approach while leveraging financial and operating tools essential to this unique segment of the provider market. Understanding that communities will necessarily continue their commitment to funding and supporting these critical institutions into the future, opportunities for achieving revenue growth should steadily increase over the next few years.
Healthcare reform will become a key driver for growth.With a mandate to cover underprivileged populations, the recent legislation should fuel growth by adding millions to the insured population through exchanges and Medicaid expansion. Safety net hospitals will require assistance in optimizing this new opportunity by setting the strategic foundation for providing care to new populations in the context of political, financial and operational factors unique to this market.
The following are some key approaches for safety net hospitals:
- Leverage the impact of healthcare reform to transform community health.
- Engage community thought leaders and key influencers.
- Build a strategic and operating model to optimize financial opportunity.
- Reach out to political leaders to strengthen long-term support .
- Develop population-based approaches to healthcare, including accountable care and patient-centered medical homes.
- Expand access through strategically-located access points and virtual care models.
- Develop a business approach to population health management.
Learn more about Azul Health Group.