Strengthening the Health Care Safety Net

IOM Report

Presenter: Patricia A. Gabow, M.D., Chief Executive Officer and Medical Director, Denver Health and Hospitals, Denver, CO.

This session presented the major findings and policy recommendations in the March 2000 Institute of Medicine (IOM) report, America's Safety Net: Intact but Endangered. Dr. Gabow was a member of the committee that worked on this report. She discussed the call to action for Federal, State, and local leaders and illustrated how Denver Health and Hospitals serves as a safety net system of care.

In 1997, the Department of Health and Human Services, in response to growing concern about the viability of the safety net, asked the IOM to establish a committee to evaluate the changing market, managed care, and the future viability of safety net providers (SNPs). The IOM committee's charge was:

"To examine the impact of Medicaid managed care and other changes in health care coverage on the future integrity and viability of safety net providers operating primarily in ambulatory and primary care settings."

A key task of the committee was to come to a consensus on a common definition of "health care safety net":

"Those providers that organize and deliver a significant level of health care and other related services to the uninsured, Medicaid, and other vulnerable patients."

The committee also identified characteristics of core SNPs as being those who:

• "Either by legal mandate or explicitly adopted mission . . . maintain an 'open door,' offering access to services for patients regardless of their ability to pay."
• Have a patient mix consisting of high uninsured, Medicaid, or other vulnerable patients.
• Have a narrow patient base (primarily Medicaid and uninsured).
• Have little or no ability to cost-shift.
• Provide enabling services, such as transportation and translation.

Major findings from the IOM report include:

• The shift to Medicaid managed care can have adverse effects on core SNPs, the uninsured, and other vulnerable populations that rely on them for care. These dynamics demand greater public policy attention and scrutiny at the Federal, State, and local levels.
• Managed care principles offer significant potential for improved health care for Medicaid patients, but implementation problems can undermine this potential.
• Medicaid managed care may turn out to be fundamentally different from commercial managed care.
• The financial viability of core SNPs is even more at risk today than in the past because of the combined effects of three major dynamics:
  1. The rising number of uninsured individuals.
  2. The full impact of mandated Medicaid managed care and a more competitive health care marketplace.
  3. The erosion and uncertainty of major direct and indirect subsidies that have helped support safety net functions.
• The patchwork organization and the patchwork funding of the safety net vary widely from community to community, and the availability of care for the uninsured and other vulnerable populations increasingly depends on where they live.
• The status of the core safety net system continues to change, and its impact on vulnerable populations remains uncertain and at risk.

In response to these findings, the IOM committee made the following recommendations:

• Federal and State policymakers should address the impact of changes in Medicaid policies on the viability of SNPs and the populations they serve.
• All Federal programs and policies targeted to support the safety net and the populations it serves should be reviewed for their effectiveness in meeting the needs of the uninsured.
• Concerted efforts should be directed to improving the Nation's ability to monitor the changing structure, capacity, and financial stability of the safety net to meet the health care needs of the uninsured and other vulnerable populations.
• A new targeted Federal initiative is needed to help support core safety net providers that care for a disproportionate number of uninsured and other vulnerable populations.
• Technical assistance programs and policies targeted to improving the operations and competitive position of SNPs should be enhanced and better coordinated.

Dr. Gabow identified four cross-cutting themes in the recommendations:

• Give SNPs the tools needed to compete and survive in the new environment.
• Strengthen local safety nets by motivating SNPs and government agencies at all levels to develop integrated safety net systems.
• Link support for these providers to their ability to effectively care for the uninsured and other vulnerable populations in their communities.
• Improve the quality of the data that policymakers rely on to make decisions related to the safety net.

Dr. Gabow also shared some of her experience as Chief Executive Officer and Medical Director of Denver Health and Hospitals (Denver Health). Denver Health is an integrated delivery system and a central, essential safety net provider. The system has strong local government support, with operational flexibility and independent governance, and integrates all available funding streams. Denver Health has a disproportionate share hospital and is affiliated with the University of Colorado School of Medicine.

When Dr. Gabow became chief executive officer in 1992, Denver Health was $39 million in debt. Today, the system has more than $70 million in the bank, despite the $171 million in uncompensated care. This turnaround was the result of multiple initiatives undertaken by the organization. They:

• Removed the debt through a variety of funding sources.
• Formalized a relationship with the medical school.
• Improved the infrastructure.
• Implemented a state-of-the-art information system.
• Developed competitive managed care products.
• Developed patient-focused care.
• Established provider networks.
• Became an independent authority.

Despite its success, there are several external issues that could have an impact on Denver Health's future, including:

• Decreasing public funds available for an increasing number of uninsured.
• An aging population.
• Increasing costs of new technologies and pharmaceuticals.
• Decreasing Medicare reimbursement.
• An increasing regulatory environment.

Dr. Gabow states that there are a number of criteria for success for a safety net institution. It must:

• Have excellent leadership.
• Have a demonstrated financial viability.
• Be performance-, patient-, and service-oriented.
• Have the capacity to be part of a competitive network.
• Have the ability to diversify funding streams and access capital for needed infrastructure and capacity development.

Denver Health's goals for the decade ahead include zero errors; zero waste; complete patient-focused care; 100 percent integrity and access; and zero disparities in treatment and outcomes for disease by gender and ethnicity.

Reference

Lewin ME, Altman S, editors. America's Health Care Safety Net: Intact but Endangered. Summary. Washington, DC: National Academy Press; 2000. Online at http://books.nap.edu/catalog/9612.html

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