Safety-Net Hospitals Are Losing their Safety Nets

Financial strain from COVID-19 has been a major headache for every healthcare organization, although safety-net hospitals have shouldered excessive financial burden.

New reports reveal how bad the struggle continues to be for safety-net providers. These disproportionate share hospitals and federally qualified, rural, and community health centers span 56 safety nets across the U.S.; a current map of these entities can be found on the America’s Essential Hospitals’ website. Care is provided for:

• Patients independent of ability to pay and immigration status;
  • For the highest share of Medicaid and uninsured patients, approximately 75 and 60 percent, respectively;. and
• Spanning rural and urban areas, as well as both public (county) and nonprofit entities;
  • Past articles discussed the mass closures of rural hospitals: 200 in the past 16 years; 50 percent of 2020 closures have been for safety-net programs.

Financial strain from the COVID-19 pandemic has been a major headache for every healthcare organization, although safety-net hospitals have shouldered excessive financial burden. A recent Kaiser Family Foundation issue brief reviews the pandemic’s disproportionate impact on populations primarily covered by Medicaid and Medicare Advantage (MA), including people of color and those who use long-term services and supports.

Providers that tend to serve Medicaid patients were less likely to have received monies from the $178 billion in federal provider relief funds. Of that total amount of available dollars, a mere $13.1 billion went directly to safety-net hospitals, and another $11 billion to rural providers. Perhaps this reality contributes to the tally of national health expenditures soaring to $4.1 trillion. This amount accounts for 2020 and the start of the pandemic, which hit safety-net regions hard. Early pandemic-related losses for the largest safety-net hospitals were estimated to be at 50 percent of quarterly revenue.

The recent loss of 340B drug discounts has meant further fiscal issues for safety-net programs. Lawyers continue to fight drugmakers and this action in the courts, but a study of 510 urban facilities identified losses at 23 percent of savings (a median of $1 million) received from these discounts from partnerships with community pharmacies.

Critical-access hospitals had losses upwards of 40 percent (roughly $220,000); remember, these rural hospitals often have barely 25 beds, and are the only facilities within 10 miles of other providers. While dollars and losses are relative to the needs of each organization, the bottom line is the same: concerns for long-term survival. There isn’t a safety net wide enough to support these essential facilities and the communities that rely on them. More must be done, and quickly, to ensure their sustainability.

This week’s Monitor Mondays survey asked our listeners whether they are in favor of legal actions to protect 340B drug discounts. The answers may surprise you, and can be viewed here.

Programming Note: Listen to Monitor Monday, Feb. 14 when Maureen Testoni, president and CEO for 340B Health, reports the latest news regarding the beleaguered 340B drug program.