Analysis of the Joint Distribution of Disproportionate Share Hospital Payments. 2. A Policy Framework for Targeting Financially Vulnerable Safety Net Hospitals

09/01/2002

Researchers, states and federal policymakers have used a broad range of definitions to characterize safety net hospitals. While the definitions vary, a common theme is that safety net hospitals provide a disproportionate amount of care to vulnerable populations. However, how vulnerable, disproportionate, or care is defined varies greatly. To complicate matters, what constitutes a safety net hospital can vary from community to community (Baxter and Mechanic 1997). For example, in some communities, such as Dallas, a single public hospital is the heart of the local safety net. By contrast, in Milwaukee, which recently closed its public hospital, a few community hospitals form the safety net.

Which hospitals are ulti amately identified as safety net providers has important implications for evaluating whether DSH payments are well targeted: Is the purpose to help relieve hospitals financial burden of caring for low-income populations? Help hospitals in financial distress? Protect low-income Medicare and Medicaid recipients' access to care? Compensate hospitals for providing care to the uninsured? Help states and local governments in areas with high levels of need? Encourage selected hospital behavior suchs providing special services — teaching, emergency room care, trauma care and the like? Or, perhaps, the purpose is some combination of these. The definition of safety net hospital that is adopted has direct implications for which facilities would receive money under a federal DSH fund.

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