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Lynne Fagnani, Vice President, National Association of Public Hospitals and Health System
Testimony at
“National Public Hospital Safety-Net in Crisis: D.C. General Hospital in Focus,”
A Congressional Hearing Sponsored by Rep. John Conyers
March 22, 2001

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Oral testimony Written testimony

NATIONAL ASSOCIATION of PUBLIC HOSPITALS and HEALTH SYSTEMS
1301 PENNSYLVANIA AVENUE, NW, SUITE 950. WASHINGTON DC 20004 202.585.0100 FAX 202.585.0101

Congressional Briefing on The National Public Hospital Safety Net in Crisis
March 22, 2001

Oral Statement by Lynne Fagnani, Vice President,
National Association of Public Hospitals and Health System

My name is Lynne Fagnani, Vice President of the National Association of Public Hospitals and Health Systems. NAPH represents over 100 of the nation's largest urban safety net hospitals and health systems, and advocates on their behalf on the federal level to assure organizational and financial strength and to safeguard their ability to provide health care: to all, regardless of ability to pay.

NAPH is here today to describe the situation of safety net hospitals such as D.C. General. and their critical role in delivering health care to low-income populations, the uninsured, and the community at large. Safety net hospitals, as defined by the Institute of Medicine, have an "open door" policy to serve all patients regardless of their ability to pay and provide substantial levels of care to Medicaid, uninsured, and other vulnerable patients. They provide specialty services needed by their entire communities, including emergency and trauma care, burn care, pediatric and neonatal intensive care, psychiatric care and HIV/AIDS care. These specialty services are high cost, tertiary services, not easily duplicated by or shifted to other providers in their communities. Safety net hospitals frequently train our nation's doctors, nurses, and other health professionals.

Last year, the prestigious Institute of Medicine released a report on the health care safety net describing it as "intact but endangered." A number of challenges are threatening the viability of safely net hospitals like DC General, including:

  • Increasing demand for services from uninsured and underinsured patients at safety net hospitals;
  • Shifting of care from inpatient to outpatient settings. where more care is uncompensated;
  • Competition for Medicaid patients from providers who previously avoided treating Medicaid patients - shifting scarce Medicaid DSH and other dollars away from traditional Medicaid providers;
  • Reductions in governmental support from federal and state governments at a time of unprecedented budget surpluses.

Safety net hospitals are meeting these challenges by re-orienting their delivery systems, reorganizing their relationships with local and state governments, and revitalizing their physical plants. Models exist for the District around the country.

Unfortunately, DC General has been hindered from meeting these challenges. They are one of the highest providers of uncompensated care in the country. Their level of support for uncompensated care from the District and its Medicaid program is one of the lowest in the country. No one could meet these responsibilities with the level of support that the District has been willing to provide. A solution for the District's health care safety net requires adequate financing, elimination of political interference, reorganization to limit the constraints of public governance. and adequate capital.

We need to find ways to strengthen the health care safety net in Washington so that its citizens are well served arid no one is turned away.

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NATIONAL ASSOCIATION of PUBLIC HOSPITALS and HEALTH SYSTEMS
1301 PENNSYLVANIA AVENUE. NW, SUITE 950, WASHINGTON DC 20004 202.585.0100, FAX 202.585.0101

Congressional Briefing on the National Public Hospital Safety Net in Crisis, March 22, 2001

Written Statement by Lynne Fagnani, Vice President,
National Association of Public Hospitals and Health Systems

My name is Lynne Fagnani, Vice President of the National Association of Public Hospitals and Health Systems. NAPH represents over 100 of the nation's largest urban safety net hospitals and health systems, and advocates on their behalf on the federal level to assure organizational and financial strength and to safeguard their ability to provide health care to all. regardless of ability to pay.

NAPH is here today to describe the situation of safety net hospitals such as D.C. General, and their critical role in delivering health care to low-income populations, the uninsured, and the community at large. NAPH member hospitals and health systems, along with community health centers, public health departments, and other community providers form the core health care safety net in this country - defined by the Institute of Medicine as providers who maintain an "open door" policy, treating all regardless of ability to pay, and who provide a substantial share of their patient care to uninsured, Medicaid, and other vulnerable populations. Let me share a few key facts about NAPH members that help define their safety net role.

  • NAPH member hospitals provide 82 percent of their services to low-income Medicaid (34 percent.), Medicare (21 percent) and uninsured patients (27 percent). This payer mix means that not only arc they important health care resources for low income communities, these hospitals are uniquely reliant on support from federal, state, and local governments to provide care. Policy at any of these levels of government has a profound impact on these hospitals.
  • They provide high levels of inpatient and outpatient care in their communities. In 1998, NAPH members provided an average of 15,639 admissions per hospital, almost 150 percent higher than the average for all hospitals in the country. They also provided 28 million outpatient visits in 1998, which is an average of over 300,000 visits per hospital, over three times the level provided by all hospitals in the country. Less than 20 percent of these visits were provided in the emergency room, with significant amounts of primary and specialty care provided in on- and off-site community settings.
  • Safety net hospitals are important providers of specialty services in their communities, including emergency and trauma care, burn care, pediatric and neonatal intensive care, psychiatric care, and HIV/AIDS care. In 1998, NAPH members represented only 17 percent of hospital beds in the communities where they arc located, but provided 42 percent of all Level I trauma care, 59 percent of all burn care, 29 percent of all pediatric intensive care, and 24 percent of all HIV/AIDS services in their communities. These services are vital to the entire community.
  • Safety net hospitals train our nation's physicians, nurses, and other health care professionals. In 1998, NAPH members trained 16 percent of all residents in the country, and nine percent of other allied health professionals.

What is happening to safety net hospitals? The prestigious Institute of Medicine released a report last year that described the health care safety net as "intact, but endangered." Safety net hospitals are facing a number of trends that jeopardize their viability:

  • The number of uninsured patients seeking care from them has been increasing. The percent of uncompensated care provided by all hospitals has been 6 percent of costs for the last two decades. For NAPH members, the amount of uncompensated care as a percent of total cost increased 21 percent between 1993 and 1998. Twenty-nine percent of costs were uncompensated among these hospitals in 1998. DC General has the dubious distinction of being one of the top ten highest providers of uncompensated care among safety net hospitals in the country.
  • Care is shifting from inpatient settings to outpatient settings. NAPH members experienced an 11 percent decline in inpatient care between 1993 and 1998, and an increase of 17 percent in outpatient care during this period. This trend is ominous for safety net hospitals because much more outpatient care is uncompensated than inpatient care. Forty-two percent of outpatient visits were to uninsured patients, as compared to 26 percent of inpatient discharges in 1998.
  • Safety net hospitals are experiencing the effects of competition in the health care marketplace from other providers. All hospitals have faced declining margins front commercially insured patients. As Medicaid reimbursement improved during the 1990's, particularly compared to other payers, hospitals that previously avoided treating Medicaid patients began competing with traditional providers of care for these individuals. NAPH members lost 24 percent of their share of Medicaid inpatients during the 1990's. Frequently these hospitals have been left with higher cost, and more difficult-to-treat Medicaid patients. In addition, as they have lost Medicaid patients, they have lost reimbursement from the Medicaid Disproportionate Share Hospital (DSH) program, which finances care to the uninsured and underinsured.
  • Reductions in governmental support from Medicare and Medicaid have had a significant impact on safety net hospitals. In particular, the Balanced Budget Act of 1998 reduced Medicaid and Medicare disproportionate share hospital (DSH) payments dramatically. In the BBA-relief bill signed into law last full, the Medicaid. DSH cuts were postponed for two years, however, they will go into effect in. 2003. Medicaid DSH finances 34 percent of unreimbursed care at NAPH hospitals, with state and local subsidies financing 39 percent of unreimbursed care.

Overall, many safety net hospitals around the country are facing serious challenges to their existence. DC General is facing the same challenges, however, its situation is exacerbated in a number of ways. As mentioned earlier, DC General is one of the highest providers of care to the uninsured and underinsured among NAPH members across the country. Unlike other safety net hospitals around the country however, DC General's reimbursement from Medicaid and local government falls far short of this level of need. Local subsidy and Medicaid DSH cover half the level of uncompensated costs borne by DC General as these sources of financing cover for NAPH member hospitals around the country. DC General provides one-third of all uncompensated care in the District, but receives only 14 percent of the District's Medicaid DSH funds (a funding allocation that is determined by the District's Medicaid program). It is unlikely that any other provider of care in this City would be able to meet these financial burdens with the level of resources that the District has provided DC General.

Many safety net hospitals are rising to the challenges they face by reorienting their delivery systems, reorganizing their relationships with local and state governments, and revitalizing their physical plants. Good models exist for the citizens of the District. Unfortunately, they require adequate financing, elimination of political interference, reorganization to limit the constraints and hindrances of "public" governance, and adequate capital.

We need to find ways to strengthen the health care safety net in Washington so that its citizens are well served and no one is turned away. NAPH stands ready to help in any way we can as the city, its leaders and its citizens work together to find the right solution.

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