Our experience working with leaders of safety-net hospitals has led us to share this recent article with you. Prior to the pandemic, these healthcare institutions were having a difficult time surviving financially.
The COVID-19 pandemic has put significant strain on safety-net hospital profitability, as explored in The Healthcare Divide, a new documentary from FRONTLINE, NPR, and American University’s Investigative Reporting Workshop.
While there is no official definition, safety-net hospitals treat underserved populations and will not turn away uninsured patients. Because these hospitals tend to have many patients whose costs are not covered by insurance, it can be extremely difficult for them to make a profit.
In addition, safety-net hospitals disproportionately treat communities of color, who have been hit particularly hard by COVID-19. Systemic health disparities have led to significantly higher death rates among the Black population during the pandemic.
In June 2020, HHS allocated $10 billion from the Provider Relief Fund, part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to safety-net hospitals. Despite the increased funding, the hospitals are still fighting to stay afloat.
Safety-net hospitals are in a unique situation: as more patients come through the door, their financial burden increases. While costs skyrocket, revenue is plummeting. As a result, some safety-net hospitals have been forced to close their doors, the documentary reports, leaving uninsured and underserved populations with even less health care options.
One of the biggest issues safety-net hospitals face is the lack of a formal definition. A 2020 report in the New England Journal of Medicine explains that “the absence of a clear definition for safety-net hospitals has made it difficult to effectively target pandemic-related resources.”
Despite initial funding under the CARES Act, which provided funds based on the number of COVID-19 cases in a hospital, “this allocation system didn’t account for the fact that safety-net hospitals had fewer resources than other hospitals at baseline and were, therefore, less able to respond to the pandemic early on,” the report stated.
Multiple funding adjustments and misunderstandings led to delays in safety-net hospitals receiving essential funds, which the report credits to the lack of a solidified definition of what constitutes a safety-net hospital.
Meanwhile, the documentary points out that HCA Healthcare, one of the largest hospital systems in the US, made a $3.8 billion profit in 2020.
The lack of understanding of the financial difficulties faced by safety-net hospitals has placed many of them in dire financial situations or they have already closed. The population typically served by these institutions needs more federal and local governmental support.