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AHRQ Report Finds Safety-Net Hospitals Struggling

The nation's safety-net hospitals suffered an average patient care margin loss of 3 percent compared with 1 percent for other hospitals in 2003, according to a new study by the Federal Agency for Healthcare Research and Quality. Patient revenue margin is the net revenue that a hospital collects from billings of insurers and patients divided by its operating costs.

Only one in 10 hospitals is a safety-net facility, but they account for almost one-third of all uninsured hospital stays in the United States. Between 9 percent and 50 percent of patient stays in safety-net hospitals are uninsured.

The study also found that after subsidies and government allocations were added to net patient revenue, safety-net facilities had a 20 percent lower total income margin than nonsafety-net hospitals — 2.4 percent compared with 3 percent. Total income margin is hospitals' net income divided by the total expenses.

More than one-third of safety-net hospitals ended the year with negative total income margins in 2003, compared with 28 percent for nonsafety-net hospitals.

Among safety-net hospitals, publicly owned facilities were the most financially vulnerable. They had an average patient revenue margin of nearly minus 7 percent, compared with a 0.8 percent margin for nonprofit safety-net hospitals.

The average total income margin of rural safety-net hospitals, regardless of type of ownership, was five times lower than that of urban safety-net hospitals, minus 0.5 percent compared to 2.5 percent. Rural facilities accounted for 56 percent of all safety-net hospitals. AHRQ also found that:

  • Two-thirds of all safety-net hospitals are in the South.
  • Over half of safety-net hospitals have fewer than 100 beds.
  • One in five safety-net hospitals is a teaching facility.
  • Safety-net hospitals admit larger proportions of patients for alcohol and mental health problems and smaller proportions for specialized surgery.

The report uses statistics from AHRQ's Healthcare Cost and Utilization Project's Nationwide Inpatient Sample, a database of hospital inpatient stays that is nationally representative of all short-term, non-Federal hospitals. HCUP is a Federal-State-Industry partnership to create a multi-State, national resource of health care data.

For other findings, go to Serving the Uninsured: Safety-Net Hospitals, 2003, at http://www.ahrq.gov/data/hcup/factbk8/.

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