April 26, 2018 / 3:32 PM / a month ago

Trauma centers serving vulnerable patients on shaky financial ground

(Reuters Health) - The Affordable Care Act (ACA) has been good for the financial health of Level 1 trauma centers in hospitals that serve vulnerable patients, but these critical facilities remain at risk of future financial problems, U.S. researchers say.

So-called safety net hospitals in California benefited from having fewer uninsured patients after the state expanded Medicaid in response to the ACA, also known as Obamacare, the study team notes in Journal of the American College of Surgeons, but these hospitals continue to depend on federal and state funds and other external subsidies, which could be wiped out by policy shifts.

A hospital’s financial instability can hurt patients, lead author Dr. Lisa M. Knowlton of Stanford University in California said in an email. “It is certainly possible that patient care can be affected by lack of hospital financial stability and constrained resources. This warrants additional evaluation over time at the national level.”

Level 1 trauma centers play a “special role,” both in providing the highest level of trauma care and in training the next generation of trauma surgeons, the study team writes. These trauma centers are also often located in safety net hospitals.

According to the Institute of Medicine, safety net hospitals “organize and deliver a significant level of healthcare to the uninsured, Medicaid, and other vulnerable populations, or . . . by mission offer access to care regardless of a patient’s ability to pay.”

The researchers investigated the financial stability of all Level 1 trauma centers in California between 2010 and 2015, by examining their yearly operating margins - how much of revenue is leftover after operating expenses.

The analysis included 11 safety net hospitals and two non-safety net hospitals. About a third were county owned and the other two thirds were owned by non-profit organizations.

The researchers found that while the four safety net hospitals owned by counties were often in the red, non-profit safety net hospitals were more financially stable and more closely resembled non-safety net hospitals.

On average, county-owned safety net hospitals were operating at a 16.5 percent deficit, while the seven non-profit safety net hospitals ran at an average 8.4 percent surplus, compared with 9.5 percent for non-safety net hospitals.

Financial performance of all hospitals improved during the study period, with positive operating margins of about 7 percent for the county safety net hospitals, 10 percent for the non-profit safety net hospitals and 11 percent for the non-safety net hospitals by 2015.

While the study only looked at California, the situation is likely to be similar across the U.S., Knowlton said. Thirty-seven percent of level 1 trauma centers in California are in county safety net hospitals, similar to the national average, she noted. “These hospitals are similar in that they more likely to be dependent upon federal and state based reimbursements and subsidies for care of indigent populations.”

“The goal should be to ensure high quality trauma care for patients regardless of insurance status, and encourage programmatic development at our leading trauma training and research institutions; the health of our broader trauma ecosystem depends upon it,” the study authors conclude in their report.

Tracking the financial performance of trauma centers could help state and federal governments do a better job of getting funds to the safety net hospitals that are most in need, Knowlton added.

SOURCE: bit.ly/2HZkR24 Journal of the American College of Surgeons, online April 19, 2018.

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