Environmental Scan to Identify the Major Research Questions and Metrics for Monitoring the Effects of the Affordable Care Act on Safety Net Hospitals. b. Competition for Newly Insured Patients


Prior research has shown that greater competition between hospitals in a community generally reduces financial margins as well as the amount of uncompensated care provided, including by safety net hospitals (Vogt and Town 2006). However, more recent research shows that the effects of competition on safety net hospitals specifically are more complex and not always consistent with expectations. Kane et al. (2012) found that some public hospitals (for example, those governed directly by elected officials) in highly competitive markets were more profitable than other public hospitals in less competitive markets.

Competition for patients newly insured through the ACA-related coverage expansions may add a new dynamic to hospital competition. Even if safety net hospitals are included in health plan networks as essential community providers, they could still face greater competition from other hospitals in the community for previously uninsured patients who gain coverage through the ACA. Similar concerns were expressed by safety net hospitals in Massachusetts prior to the state’s reform, although research indicates that previously uninsured patients at safety net providers continued to seek care at the same providers when they gained coverage (Ku et al. 2011). Convenience, proximity of the provider to where they live, the availability of culturally appropriate services for racial/ethnic minorities, and satisfaction with the quality of care were cited as reasons why newly insured persons continued to seek care at the same providers.

Increased competition for insured patients in the community could result in some non-safety net hospitals decreasing or even eliminating care provided to uninsured patients, resulting in care for the remaining uninsured becoming more concentrated in safety net providers. For the past decade, researchers have documented increasing concentration of care for the uninsured and Medicaid beneficiaries at safety net providers, as private health care providers are becoming less willing and able to accept the low reimbursement rates in Medicaid and to cross-subsidize free care to the uninsured by charging higher rates to privately insured patients (Cunningham et al. 2008; Cunningham and May 2006). With health reform, this trend may accelerate, as public and private purchasers will continue to exert pressure on health care providers to lower costs and some providers will perceive that it is no longer necessary to provide charity care because of the ACA-related expansions in coverage.

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