What happens when safety net hospitals close?

The past couple of years have seen many safety net hospitals close. Nearly 70 rural hospitals have closed or converted to outpatient only in the past five years; many of these are the only hospitals for dozens of miles around.

But hospitals in urban areas that serve a disproportionate amount of uninsured or publicly insured patients are in trouble too. Here are just a few recent cases:

A recent article in Modern Healthcare explores the impact of urban safety net hospital closures on patients, workers, and other hospitals.

Impact on hospitals

When safety net hospitals close, other hospitals nearby may get inundated with new patients. In Atlanta for example, Grady Memorial Hospital has seen higher volumes and longer wait times both for emergency and elective procedures since Wellstar Atlanta closed. When Delaware County Memorial closed in Philadelphia, nearby MainLine system saw monthly emergency department visits at its hospitals rise by 14%.

“We have just been flooded with everybody who went to AMC. Other hospitals had to take on that burden,” said Dr. Robert Jansen, chief of staff and chief medical officer of Grady Health System, in Modern Healthcare.

Michael  Young, president and CEO of Temple University Health System in Philadelphia, echoed this sentiment. “These closures always affect the patients in the poorest health and with the fewest resources. The biggest effect is on access. Every hospital’s emergency room became jam-packed after Hahnemann closed,” he said.

More patients for hospitals usually means more money—but safety net hospitals care for more patients covered by Medicare and Medicaid, which reimburse hospitals less than private insurers do. Because of the way our two-tiered health system works, hospitals could have steady business and still lose money. Hospitals that previously had a financially beneficial “patient mix” (that is, more privately-insured patients) now may be taking on more publicly-insured patients, which squeezes them financially.

“We rely on our commercial insurance population to absorb the cost of Medicare and Medicaid. The more we change the payer mix, the more we compromise the margin,” said Dr. Ravi Thadhani, executive VP for health affairs at Emory University in Atlanta, in Modern Healthcare.

Impact on the community

However, if other hospitals can’t expand their capacity, or transportation is inadequate, patients will simply not get the care they need. In Philadelphia, the closure of Delaware County Memorial left some patients in the region essentially stranded, unable to access emergency care. “[The hospital closure] did hurt them, it’s going to continue to hurt them,” said Jim McCans, a paramedic in Delaware County, to CNN. “It’s gonna cost some of them their lives.”

Since St. Vincent Charity Medical Center in Cleveland closed their Emergency Department, communication with the public about this change has been a huge issue. In the five months after St. Vincent’s ED closed, ambulances were dispatched there 59 times to transfer patients who showed up in need of emergency care to other hospitals. In a community that faces high rates of firearm violence, these delays to treatment can be incredibly harmful.

“People who absolutely need care will get care most of the time. But at the margin, there will be people who need care who aren’t going to get it. Almost certainly there will be more pain and suffering, and maybe even deaths.”  

Dr. Vikas Saini, president of the Lown Institute, in Modern Healthcare

Patients aren’t the only ones that will be harmed. Hospitals are often the largest employers in the region, and provide hundreds of jobs—not just for clinicians but for administrative, janitorial, and cafeteria workers as well. When Wellstar Atlanta closed, most clinicians found jobs at other Wellstar hospitals, but “many non-clinicians lost their jobs, and some had to move because they couldn’t afford to live in the city anymore,” said Atlanta city councilmember Liliana Bakhtiari, in Modern Healthcare.

Why are so many safety nets closing?

Why are so many hospitals that serve a vital community purpose closing? Serving more publicly-insured patients—the very thing that makes these hospitals essential to communities—also makes them financially insecure, because privately-insured patients are where the real money is.

A recent study in JAMA Network Open shows how certain characteristics of safety net hospitals put them at risk of closure. Across more than 4,000 hospitals, hospitals with higher levels of uncompensated care, Medicaid patient share, and area socioeconomic disadvantage were associated with lower operating margin. Having a burn unit, inpatient psychiatry, or primary care (services for which hospitals don’t get compensated much but are essential to the community) were also associated with lower operating margin.

Because safety net hospitals are on thinner margins, this makes them vulnerable to closure—or at risk of being bought by private equity firms that suck them dry for profits and then close them. Even for hospitals that aren’t at risk of closure, having lower margins makes it more difficult for hospitals to invest in needed quality improvement changes, which perpetuates disparities in quality of care.

Safety net hospitals are in crisis. While provider relief funding during Covid-19 kept many hospitals afloat temporarily, hospitals that serve low-income communities are now at risk of closing, which has a profound impact on community health. If we want to maintain these healthcare lifelines in the long term, we need real system change—universal coverage, equal payment rates to hospitals regardless of the insurer, and additional investments in quality improvement for safety net hospitals.