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Survival of safety-net hospitals at risk
Date:9/20/2012

UNIVERSITY PARK, Pa. -- Many public safety-net hospitals are likely to face increasing financial and competitive pressures stemming in part from the recent Supreme Court decision on the Affordable Care Act, according to researchers at Penn State and the Harvard School of Public Health.

"The issue for these hospitals going forward is that the Affordable Care Act promises to change how care for low-income and uninsured populations is funded, potentially reshaping the competitive landscape," said Jonathan Clark, assistant professor of health policy and administration, Penn State. "Our research suggests that adapting to these changes may be a struggle for some public safety-net hospitals." Safety-net hospitals provide a disproportionate share of charity and under-reimbursed care to uninsured and low-income populations. They often tailor their services to meet the special needs of these populations, and they frequently provide needed, but unprofitable, services, such as regional trauma and inpatient mental health services.

Working with Nancy Kane, professor of management and associate dean for educational programs, and Sara Singer, assistant professor, both at the Harvard School of Public Health, among others, Clark analyzed the financial performance and governance of 150 safety-net hospitals between 2003 and 2007. The team of researchers categorized the hospitals into governance types -- directly controlled public, delegated public authority, private non-profit and private for-profit. The team then analyzed the relationship between governance type and profitability.

"We found, counter-intuitively, that public hospitals directly controlled by governments, especially those in highly competitive markets, were more profitable than other safety-net hospitals," Clark said.

Seeking to better understand these findings, the research team chose two highly profitable hospitals and one less profitable hospital in each governance category and conducted sit
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Contact: Sara LaJeunesse
SDL13@psu.edu
814-863-4325
Penn State
Source:Eurekalert

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