Podcast: A Disproportionate Share: Meditations on Safety Net Hospitals & How We Pay For Them


Welcome back to Health Affairs Pathways, the podcast fellowship program from Health Affairs.

In 2023, we have two exciting seasons for listeners, one on safety net hospitals and another on palliative and hospice care.

In A Disproportionate Share, NYC Health + Hospitals’s Michael Shen, a primary care doctor and Chief Creative Officer for the medical education podcast Core IM, explores safety net hospitals and how we pay for them.

In this first episode, Shen looks at the closure of Hahnemann University Hospital, a large urban hospital affiliated with a major academic medical center, to ask how safety net hospitals sustain themselves on thin financial margins. He shares what safety net hospitals are and their role in caring for America’s vulnerable populations.

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FULL TRANSCRIPT

00;00;01;09 – 00;00;07;20
Michael Shen
When Hahnemann University Hospital was under threat of closure in 2019, it drew national attention.

00;00;07;21 – 00;00;14;07
Reporter
Today, health care professionals rallied over what they’re calling the public health emergency that will happen when Hahnemann pulls the plug.

00;00;14;09 – 00;00;27;12
Michael Shen
Philadelphia is a city wracked by the highest poverty rate among the nation’s ten most populated cities. What would it do without its single largest safety net hospital?

00;00;30;03 – 00;01;04;10
Michael Shen
In September of 2019, Hahnemann Hospital finally locked its emergency room doors for good. Its closure displaced nearly 2500 health care staff, 570 medical trainees, and over 50,000 patients, nearly all of whom had public insurance or were uninsured. In the months following the closure, nearby hospitals saw a 15 to 20% jump in their emergency room volume, increases that most likely put stress on both staff and patients.

00;01;05;04 – 00;01;31;03
Michael Shen
My name is Michael Shen, and as a primary care doctor, I wonder what happened to all of those people. Those same patients already experienced barriers to accessing care, and now one more door was closed to them. When I was still in medical training, I spent half my time rotating through a well-endowed private hospital, and the other half just down the street in the public hospital, a safety net hospital.

00;01;31;24 – 00;01;59;00
Michael Shen
I remember being surprised by how different the two worlds felt, how different even the waiting rooms looked. And I wondered why, in a wealthy nation like America, do I see such differences in health care? Right across the street from each other. Why do safety net hospitals, which serve the most vulnerable Americans, exist on such thin financial margins? And something I still wonder today:

00;01;59;19 – 00;02;04;26
Michael Shen
What’s keeping my hospital from ending up just like Hahnemann?

00;02;09;16 – 00;02;40;09
Michael Shen
Welcome to a three part series, “The Story of America’s Safety Net Hospitals And How We Pay For Them” from Health Affairs. Again, my name is Michael Shen. I’m a primary care doctor in New York City’s public hospital system. Today, in part one, we’ll explore what safety net hospitals are and their critical role in caring for America. This is “A Disproportionate Share.”

00;02;44;02 – 00;03;09;17
Michael Shen
So Hahnemann Hospital, at the time of its closure, was owned by a private equity firm and that company made the decision to shut it down because in the end, they couldn’t turn it around. It just wasn’t profitable. Now, what happened at Hahnemann will go down as a historically significant event in health policy forums. The closure of a large urban hospital affiliated with a major academic medical center.

00;03;09;17 – 00;03;31;11
Michael Shen
It raises red flags about the state of care for vulnerable populations. But before diving into why safety net hospitals are at risk, I wanted to start with the basics of what a safety net hospital is. For some people, they might have a mental image of a large urban hospital in the inner city and for others they might think of a small rural hospital in the countryside.

00;03;32;00 – 00;03;34;09
Michael Shen
And for the most part, they’re both correct.

00;03;34;13 – 00;03;50;23
Paula Chatterjee
Safety net hospitals are not a monolithic concept, and so for that reason, we actually don’t have a universally accepted definition for how we define safety net hospitals. My name is Paula Chatterjee, I’m a physician and assistant professor of medicine at the University of Pennsylvania.

00;03;50;25 – 00;03;56;01
Michael Shen
Dr. Chatterjee is also a senior fellow at the Leonard Davis Institute of Health Economics.

00;03;56;02 – 00;04;00;05
Paula Chatterjee
We’re often left with this like, know it when you see it determination.

00;04;00;07 – 00;04;13;08
Michael Shen
In fact, the lack of an accepted definition is a major policy challenge, which we’ll get to later in the series. But let’s start with the “you know it when you see it” definition. The key element is that of health care access.

00;04;13;09 – 00;04;22;10
Paula Chatterjee
Care for low income patients, care for patients of color is really concentrated and that the majority of care is provided in a very small subset of facilities.

00;04;22;11 – 00;04;29;13
Michael Shen
What she’s saying is that most care for those who can’t afford it takes place in a select group of hospitals, safety net

00;04;29;13 – 00;04;48;25
Paula Chatterjee
hospitals. And it was really that observation of how concentrated care is that stood out to me and made me ask the question of why and that sort of led me to understand what the concept of the safety net meant in the U.S.. You know, if you talk to folks from other health systems around the world, sort of our concept of a safety net is different from theirs.

00;04;48;25 – 00;04;57;24
Paula Chatterjee
You know, our health care safety net is very much rooted in this concept of insurance and sort of how you pay for your medical care. And that is a a somewhat uniquely American

00;04;57;24 – 00;05;08;24
Michael Shen
concept. In countries with universal health insurance, there’s no concept of a safety net hospital because there’s no need for one, everybody has access, at least from an insurance standpoint.

00;05;08;25 – 00;05;19;01
Paula Chatterjee
So colloquially, when we think about safety net hospitals, they’re they’re typically these hospitals that disproportionately serve low income, uninsured, or under-insured patients.

00;05;19;05 – 00;05;48;10
Michael Shen
And I want to pause here to point out that word: disproportionate. Safety net hospitals are those that take care of a disproportionate share, a certain higher percentage as defined by policy, of uninsured and Medicaid patients. And one of the main funding mechanisms for supplementing that care is also called the disproportionate share hospital payment, or DSH payment. But for now, put that term in the back of your mind because we’ll talk more about it in episode two.

00;05;48;25 – 00;06;16;02
Paula Chatterjee
However, the types of hospitals that fall under this big umbrella vary a lot across local contexts and geography. So, for example, safety net hospitals in urban areas tend to be these like large nonprofit academic teaching hospitals in rural areas, safety net hospitals can look different. They can be these smaller facilities that are often sort of the sole providers of care for these large geographic areas.

00;06;16;02 – 00;06;37;17
Michael Shen
An easy way to think about it is that this represents the different forms of limited access we might see in this country. One is by insurance status and another is by geography. Now, safety net hospitals can also vary by ownership. They can be public like a county hospital or like the public hospital system I work in: New York City Health + Hospitals.

00;06;38;03 – 00;07;00;27
Michael Shen
They can also be private and hold either nonprofit or for-profit status. Hahnemann, for example, was a privately owned for-profit hospital at the time of its closure. Ultimately, it’s really about being the door to health care for those who have structural barriers to access, regardless of insurance status, ability to pay and immigration status.

00;07;00;27 – 00;07;12;05
Paula Chatterjee
And I think this heterogeneity makes sense, right? Safety net is a broad term. And it’s meant to capture many different aspects of what it means to have limited access to care.

00;07;12;06 – 00;07;17;15
Michael Shen
But there is a more nuanced conversation beyond just the population a hospital serves.

00;07;17;18 – 00;07;21;14
Matthew Siegler
The most important thing about being a safety net hospital is wanting to be a safety net hospital.

00;07;21;15 – 00;07;28;27
Michael Shen
I spoke with Matt Siegler, Senior Vice President of Managed Care and Patient Growth in the system where I work, NYC Health + Hospitals.

00;07;28;29 – 00;07;44;20
Matthew Siegler
Does your culture internally, your physicians, your teams, your leadership view that safety net status as an asset and a part of the mission? If you view it as a disadvantage, I think that sets you up for a lot of struggles.

00;07;44;21 – 00;07;50;23
Michael Shen
There are hospitals that, for various historical reasons, serve disadvantaged and low income communities.

00;07;50;24 – 00;08;07;22
Matthew Siegler
There are all kinds of structural issues structural racism, demographic issues, economic redlining, other things that move certain populations towards certain hospitals and make them into lower resource hospitals that end up being called safety net hospitals.

00;08;07;22 – 00;08;22;05
Michael Shen
So by the numbers, they’re a safety net. But an even more nuanced definition might include what actions and services they provide, their underlying drive and mission. Do those go towards fulfilling the essential needs of the community?

00;08;22;06 – 00;08;43;08
Matthew Siegler
For policymakers and for health care leaders, that orientation of, “is this the community I want to serve and is this the mission I want to have, or am I struggling to be a well resourced hospital that chases after commercial business?” is an important one to kind of gut check with yourself as a as a leader and as a policymaker

00;08;43;08 – 00;08;44;27
Matthew Siegler
in all these conversations.

00;08;44;29 – 00;09;12;01
Michael Shen
And so when I think about the work that my hospital system does, I really feel like we embody all of that. In addition to emergency trauma and inpatient services, my hospital invests in things like primary care, HIV care, psychiatric care, substance use treatment, dental services, OB and prenatal care. These are all considered essential services. In addition, we charge sliding scale fees if you can’t afford to pay.

00;09;12;11 – 00;09;35;04
Michael Shen
And we have an access program if you don’t have documentation to get insurance in the first place. And then right across the street, I look at the glass facade of the other hospital where I also used to work, where we provided a range of advanced specialty services, but for a completely different patient population, a population that to me seemed very different by income and race.

00;09;36;01 – 00;10;05;24
Michael Shen
And it really made me wonder what was the course of historical health policy that brought us to where we are now, in need of that safety net to catch those who can’t afford care at the wealthy hospital. It used to be that philanthropic hospitals ruled the scene of charity care that is, care for low income individuals. But the turn of the century, these hospitals had started becoming more for profit, seeing patients both rich and poor.

00;10;06;16 – 00;10;32;12
Michael Shen
But during this time in the 1900s, the Jim Crow era was also in full swing. And a lot of these hospitals were actually segregated by laws that denied equal access to health care. For example, a 1915 Alabama law that said that White nurses couldn’t take care of Black male patients. And in 1917, Mississippi law that said every hospital had to have separate entrances and waiting rooms for White and Black people.

00;10;32;26 – 00;10;56;22
Michael Shen
Apart from these biracial hospitals, there were also White-only facilities that denied Black patients completely. I mentioned this background because it’s important to understand the state of health care. When the civil rights movement arrived in the 1960s, bringing along with it Medicaid and Medicare in 1965, both of which are essential to our conversation about safety net hospitals.

00;10;57;04 – 00;11;06;28
Michael Shen
In fact, when it comes to the civil rights movement, it’s often stated that Medicaid and Medicare are two of the most underrated and significant civil rights achievements in our history.

00;11;06;29 – 00;11;21;24
Brietta Clark
This was an incredible step forward in terms of helping the most vulnerable people. And in particular, it definitely helped racial minorities, especially many of the black people who had been excluded largely from health care.

00;11;21;25 – 00;11;26;12
Michael Shen
This is Brietta Clark, Professor of Law at Loyola Law School in Los Angeles.

00;11;26;13 – 00;11;44;11
Brietta Clark
It was the key financial leverage that the federal government was able to use to actually enforce civil rights laws that were passed in 1964. In particular, the laws prohibiting discrimination on the basis of race by recipients of federal funding.

00;11;44;12 – 00;11;50;01
Michael Shen
Medicaid and Medicare meant that all of a sudden hospitals were major recipient of federal funding.

00;11;50;01 – 00;12;03;21
Brietta Clark
And that meant that the government had leverage to go after them and say, you can’t exclude Black people anymore. Not only can you not exclude them, you can’t segregate them even within your hospitals, which is something else that was happening. You’ve got to give them truly equal care.

00;12;03;21 – 00;12;30;00
Michael Shen
Medicare, which is government sponsored insurance for the elderly, was and still is a very politically favorable program. And at its inception, it forced the desegregation of every hospital in America virtually overnight. But when it comes to Medicaid, which is government insurance for low income people, Professor Clark says that there’s a paradox in the way it’s enacted that undermines some of that progress.

00;12;30;01 – 00;12;53;02
Brietta Clark
But of course, nothing’s perfect. And so there were there are a few reasons why, even as it was actually helping in many ways to try to provide essential health care for minority populations, it at the same time continue to exclude primarily minority populations and helped reinforce a system of unequal care.

00;12;53;02 – 00;13;01;12
Michael Shen
And there were a few ways it did that. Medicaid originally only covered certain categories of people who were deemed deserving of aid.

00;13;01;17 – 00;13;23;18
Brietta Clark
Children in some cases pregnant women, in very few instances low income families, which got expanded over time to cover more low income families, people with severe disabilities who could not otherwise work. And so that did a couple of things. First, it meant that there were a lot of people who could work, wanted to work, had been excluded, but still could not afford health care.

00;13;23;22 – 00;13;27;24
Michael Shen
And I think it also reinforces a certain kind of stigma.

00;13;27;26 – 00;13;43;25
Brietta Clark
Of people who can’t somehow get it on their own right. If you’re not somebody we’ve deemed as worthy and deserving of help in this system. You know, we see you as somebody who somehow has failed in character or in your work ethic.

00;13;43;28 – 00;13;51;29
Michael Shen
And this culture of the “deserving and undeserving”, that’s a mentality that has real effects on Medicaid policy and safety net funding.

00;13;52;02 – 00;14;20;10
Brietta Clark
It basically creates a kind of snowball effect for other health policies, other social supports that we kind of were looking at, considering how to reform over the years, and which kept getting stymied by this notion of people who aren’t deserving and not wanting to help the people who aren’t deserving. So that’s what’s really made it so hard until the Affordable Care Act really to be able to make such inroads in terms of providing these essential supports.

00;14;20;11 – 00;14;26;23
Michael Shen
And part of the way that Medicaid is structurally vulnerable is in the way that it’s administered through the states.

00;14;26;24 – 00;14;51;16
Brietta Clark
In a way that a lot of people don’t talk about, but that’s part of the record of why Medicaid is structured differently from Medicare. So Medicare, the program tied to social insurance sort of originally to help retirees is a federal program, right? And so there’s a universal nature to that. There’s a commitment to that that withstands political attack.

00;14;51;17 – 00;14;59;24
Michael Shen
Medicare has always been politically favorable because it covers people who’ve worked their whole lives, are now retired and deserve care.

00;15;00;02 – 00;15;14;17
Brietta Clark
Medicaid, though, the program that was seen as helping folks who were poor and again, only the very deserving, so we have to be very careful about who we let into that program, that was structured as a state-based program.

00;15;14;18 – 00;15;22;11
Michael Shen
Medicaid is funded by both the federal government and states, but the states determine where that money goes and how it’s used.

00;15;22;14 – 00;15;48;04
Brietta Clark
The states are the administrators and they have tremendous discretion in how they design the program. At the time it was enacted, it was very clear that there were Southern states that did not want to be forced to kind of participate in a program, right, that would start forcing them to treat certain groups equally, to start giving resources to groups that they’d long excluded.

00;15;48;04 – 00;16;02;09
Brietta Clark
That was just that was seen as something that going to be too disruptive. And so it was very much this system of segregation that predated 1964 that was still in the ethos and culture, and that led to treating Medicaid less favorably.

00;16;02;09 – 00;16;10;07
Michael Shen
And because of this history, Medicaid, which is so important to safety net hospital functioning, has been vulnerable ever since.

00;16;10;15 – 00;16;24;05
Brietta Clark
It has been especially vulnerable to federal attacks. But it is also extremely vulnerable to state political attacks. Whenever states are having trouble with their budgets, one of the first places they go to cut is Medicaid.

00;16;24;06 – 00;17;25;20
Michael Shen
About one in five Americans are covered by Medicaid. It’s the primary source of health insurance coverage for low income Americans. But because of the way health insurance and Medicaid work in this country, a lot of people aren’t covered, or are underinsured. And many are people of color. That’s the paradox talking about. That we created a solution, that that solution doesn’t work for everyone. In the next episode, we’re going to dive more deeply into hospital financing and understand some of the current day challenges that our safety net hospitals are facing. You’re listening to “A Disproportionate Share.” See you next time.

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