The Health of Safety Net Hospitals following Massachusetts Health Care Reform: Changes in Volume, Revenue, Costs, and Operating Margins from 2006 to 2009

Abstract

Massachusetts health care reform, designed to expand coverage and access to care for vulnerable populations, serves as the model for national health reform in the United States that will be implemented in 2014. Yet, little is known about how the reform may have affected the demand for and the financial performance of safety net hospitals (SNH), the primary source of care for such populations before the reform. Using a quasi-experimental design that included all acute care hospitals in the state, we calculated changes in mean inpatient and outpatient volumes, revenue, and operating margins at SNH from the pre-reform (Fiscal Year 2006) to the post-reform (Fiscal Year 2009) period. We contrasted these changes with contemporaneous changes occurring among non-safety net hospitals (NSNH) using a difference-in-differences approach. We found that SNH in Massachusetts continue to play a disproportionately large role in caring for disadvantaged patients after reform, but that their financial performance has declined considerably compared with NSNH. Ongoing reform efforts in the United States should account for continued SNH demand among the most vulnerable patients and should be designed so as not to undermine the financial stability of SNH that meet this demand.