Health Policy$ense

Safety-Net Hospitals After Medicaid Expansion

Little Improvement in Care Quality, but Scale-Up of Safety-Net Services

In states that expanded Medicaid after the Affordable Care Act (ACA), safety-net hospitals (SNHs) saw their operating margins improve and levels of uncompensated care decrease. But a new study finds that while SNHs were also able to scale up some safety-net services—such as inpatient psychiatric care—these changes did not translate into measurable improvements in quality.

SNHs provide essential care to patients and are a vital part of many communities. Despite their crucial role, many SNHs perform poorly on quality measures, and often lack the resources to invest in quality improvement initiatives.

In the new JAMA Internal Medicine study, Paula Chatterjee and Rachel Werner compared quality, financial, and operational outcomes between 495 SNHs in expansion states and 316 SNHs in non-expansion states from 2012 to 2018. Since there is no universal definition for SNHs, they considered a hospital to be a safety-net institution if it was in the top 25% of hospitals for uncompensated care provided in 2010 or 2011 (pre-ACA).

Using difference-in-differences analyses, the authors confirmed prior work finding that Medicaid expansion was associated with better operating margins and lower uncompensated care. It was also associated with SNHs implementing slightly more safety-net services and service lines, such as the number of inpatient psychiatric care beds. SNHs were also more likely to adopt or implement electronic health records. However, there were no differences in quality of care once Medicaid expanded, including patient-reported experience, rates of health-care associated infections, and 30-day readmissions or mortality.

The ACA’s Medicaid expansion has had many positive effects, including reducing uninsurance, lessening racial disparities in coverage, and improving beneficiary well-being. It also resulted in financial gains for SNHs. But why did that not translate into better quality of care? The authors offer several potential reasons.

First, SNHs primarily serve patients with complex health and social needs. They are also frequently the only provider of critical services in a community, generating long wait times and inadequate access to care. While SNHs gained financial resources, they have been inadequate to make the investments in staff and infrastructure that are needed to meet demand, which limits their ability to invest in quality improvement efforts.

Second, SNHs face other potential financial challenges and cuts to critical Medicaid funding streams, including disproportionate share hospital payments. Policymakers should consider how such funding cuts affect quality of care and quality improvement, exploring additional sources for SNH funding. Future research and policy efforts should also seek to understand the role of state and local subsidies in SNH financing.

Finally, developing a common definition for SNHs is critical to better targeting these funds. In a recent New England Journal of Medicine perspective, Chatterjee and colleagues proposed a definition that would identify SNHs on a “sliding scale” composite measure, based on the types of safety-net services they provide and the populations they serve, rather than purely financial thresholds that vary by state.

The study, "Association of Medicaid Expansion With Quality in Safety-Net Hospitals," was published in JAMA Internal Medicine on February 15, 2021. Authors include Paula Chatterjee, Mingyu Qi, and Rachel M. Werner.