Center for Studying Health System Change

Conclusion

We found little evidence that the organizations typically referred to as the safety net form much of a net in the 12 metropolitan study areas. In most sites, a limited set of medical care providers deliver care to the poor, whether they are uninsured or covered by Medicaid. A public or teaching hospital and its clinic system typically dominate delivery of care, with participation by community health centers and sometimes another locally owned mission-oriented hospital. In half of the sites, care for the poor was concentrated in a very small set of institutions, in effect creating separate systems of care for the poor and non-poor. In four of the sites, historic collaborative relationships among major providers, largely not-for-profit institutions, led to a sharing of responsibility for care to the poor, with only a few institutions not participating. In two sites with well-established Medicaid managed care programs we saw a split between care for the Medicaid population, which was widely dispersed across providers, and care for the uninsured, which remained highly concentrated in public teaching hospitals and community clinics. Neither concentrated nor dispersed scenarios typically represent real coordinated multi-provider care systems, and there was frequently competition among participating hospitals or community health centers for the insured poor.

The vulnerability of organizations caring for the poor in these 12 sites is not simple to gauge. Individual hospitals in most sites are undertaking promising adaptations to the forces confronting them. One commonly described threat is federal welfare reform, particularly, provisions affecting Medicaid coverage for immigrants which are expected to increase the uninsured population and associated burdens. A second - the expansion of mandatory Medicaid managed care - is credited with improving access and choice for poor people, while, ironically, threatening the revenue base of some of the institutions which historically served the most Medicaid and uninsured persons. Community health centers appear most threatened by this new competition for Medicaid patients. Some hospitals that are heavily dependent on disproportionate share funds are also seriously threatened by this competition for Medicaid patients. But safety net hospitals in general appear to be more vulnerable to a broader set of economic factors, including payment reductions, because so many have historically been high- cost teaching institutions or financially fragile inner city hospitals.

One of the interesting developments was the extent to which traditional safety net providers were exploring the same types of alliances and conversions being tried by providers. Their development of vertical networks - e.g., expanded capacity or linkages with ambulatory and long-term care services, sponsorship of physician-hospital organizations and insurance plans - and horizontal consolidations or alliances - e.g., community health center network or joint contracting ventures with other hospitals - was consistent with strategies pursued by most providers in their markets. In fact, in some communities these safety net providers tended to lead the market, because they had to respond to sweeping shifts to capitation or selective contracting by Medicaid. More striking and somewhat surprising was the extent to which public and not-for-profit safety net hospitals were pursuing alliances or acquisitions with national investor-owned hospital companies (though a number of these were recently abandoned), sparking ocal concerns about whether they would continue to fulfill their historic role.

The tension between health care organizations’ being mission-driven and, at the same time, participating in the marketplace, illuminates the challenge for those organizations most involved in care for the poor. If Medicaid managed care, and potentially, managed care for the uninsured, can bring care for the poor into the mainstream health care market place, what will be the special role of mission-driven health care organizations? Many respondents believed that the improved access provided by Medicaid managed care involved a redistribution of care for the healthier and lower-cost poor, leaving the more difficult and expensive patients with no alternative but to seek help from the traditional mission-driven institutions that have historically borne this responsibility.

The most novel emergent arrangement found in this study is the development of managed care-like plans for the uninsured. If these arrangements are successful, will they control costs and possibly coordinate care for this population without shifting care to different providers? Will Medicaid health plans or others become involved?

It will be important to monitor the success of these organizational, network development and performance strategies among providers of care for the poor. The fortunes of local Medicaid managed care plans will depend on their ability to compete with the incursion of regional and national plans with Medicaid products. It will be important to determine whether fears are realized about uncompensated care burdens increasing as the result of welfare reform and provisions to limit care for immigrants; and if realized, how safety net providers and policymakers respond. Implementation of child health insurance expansion by the states may create new opportunities, particularly for community health centers, providers of primary care for children and Medicaid health plans.