Safety-net hospitals are central to healthcare delivery systems and as such play a critical role in achieving high-performance healthcare for vulnerable populations. These hospitals serve disproportionately large numbers of low-income patients, both insured and uninsured, and rely disproportionately on Medicaid and disproportionate share hospital (DSH) payments to sustain their operations and public funds to underwrite their capital needs. Both the financial pressures induced by dependence on these funding streams, as well as the anticipated changes in these streams due to the expected influx of Medicaid patients and reduction of DSH payments under health reform, pose challenges to the short- and long-term viability of safety-net hospitals.

A new report, “Toward a High Performance Health Care System for Vulnerable Populations: Funding for Safety Net Hospitals,” co-authored by the Manatt Health Solutions team of Deborah Bachrach, Laura Braslow and Anne Karl and prepared for the Commonwealth Fund Commission on a High Performance Health System, examines the funding streams on which safety-net hospitals must rely and suggests strategies to better target financial resources to these hospitals. Rather than focusing on simply sustaining these hospitals, the paper offers tactics to stimulate and reward high performance.