California's Hospital Safety Net: Participation as Adaptation to Social, Political, and Fiscal Constraint

Purpose: This study describes hospital revenue for direct participation in the safety net--treating the poor--from 2006 through 2008 and associations with environmental and organizational factors of theoretical interest. Background and Significance: During the past 40 years U.S. hospital care has decentralized and grown increasingly competitive. Vague or overly detailed hospital regulations provide no specific goals regarding care for the poor. Studies have documented concentration of hospital safety net care, and a need for new outcome measures. This study uses hospital safety net revenue to measure theoretically responsive behavior by hospitals to serve poor populations. Design and Analysis: This research includes secondary analysis of hospital safety net revenues from OSHPD's Hospital Annual Financial Report Data, 2004 through 2005, and 2006 through 2008. Safety net revenues were compared as organizational and market shares. Hospital isomorphism toward low shares prompted the use of logistic regression to test the effect of factors on the odds of participation above an equal distribution.Key Findings: The 70 hospitals with high safety-net revenue as both organizational and market shares accounted for $7.7 billion of $11.5 billion in total safety net revenue. These hospitals were positively associated with concentrated markets, clinical teaching, larger size, less medically complex patients, and city/county or nonprofit ownership. Hospitals with high safety net revenue as market share only earned $1.1 billion of total safety net revenue. These facilities were positively associated with location in a concentrated market, increased size, nonprofit ownership, and system affiliation. Hospitals with high safety net revenue as organizational share only earned $1 billion of total safety-net revenue. This group was more likely than the others to be located in a more competitive county, independently operated by investors or a public district, smaller and treating less medically complicated patients. Implications: Regulators should work to encourage hospital safety net participation and better distribute the burden of low margin hospital care. Additional research is needed on hospital ownership, access, and quality, especially regarding patient acuity