Local public hospitals: changing with the times

Over the last 15 years, public hospitals have pursued multiple strategies to help maintain financial viability without abandoning their mission to care for low-income people, according to findings from the Center for Studying Health System Change's (HSC) site visits to 12 nationally representative metropolitan communities. Local public hospitals serve as core safety net providers in five of these communities--Boston, Cleveland, Indianapolis, Miami and Phoenix--weathering increased demand for care from growing numbers of uninsured and Medicaid patients and fluctuations in public funding over the past 15 years. Generally, these public hospitals have adopted six key strategies to respond to growing capacity and financial pressures: establishing independent governance structures; securing predictable local funding sources; shoring up Medicaid revenues; increasing attention to revenue collection; attracting privately insured patients; and expanding access to community-based primary care. These strategies demonstrate how public hospitals often benefit from functioning somewhat independently from local government, while at the same time, relying heavily on policy decisions and funding from local, state and federal governments. While public hospitals appear poised for changes under national health reform, they will need to adapt to changing payment sources and reduced federal subsidies and compete for newly insured people. Moreover, public hospitals in states that do not expand Medicaid eligibility to most low-income people as envisioned under health reform will likely face significant demand from uninsured patients with less federal Medicaid funding.