Facing the Recession: How Did Safety-Net Hospitals Fare Financially Compared with Their Peers

ObjectiveTo examine the effect of the recession on the financial performance of safety-net versus non-safety-net hospitals. Data Sources/Study SettingAgency for Healthcare Research and Quality Hospital Cost and Utilization Project State Inpatient Databases, Medicare Cost Reports, American Hospital Association Annual Survey, InterStudy, and Area Health Resource File. Study DesignRetrospective, longitudinal panel of hospitals, 2007-2011. Safety-net hospitals were identified using percentage of patients who were Medicaid or uninsured. Generalized estimating equations were used to estimate average effects of the recession on hospital operating and total margins, revenues and expenses in each year, 2008-2011, comparing safety-net with non-safety-net hospitals. Data Collection/Extraction Methods1,453 urban, nonfederal, general acute hospitals in 32 states with complete data. Principal FindingsSafety-net hospitals, as identified in 2007, had lower operating and total margins. The gap in operating margin between safety-net and non-safety-net hospitals was sustained throughout the recession; however, total margin was more negatively affected for non-safety-net hospitals in 2008. Higher percentages of Medicaid and uninsured patients were associated with lower revenue in private hospitals in all years, and lower revenue and expenses in public hospitals in 2011. ConclusionsSafety-net hospitals may not be disproportionately vulnerable to macro-economic fluctuations, but their significantly lower margins leave less financial cushion to weather sustained financial pressure.