Why are safety-net hospitals worse off financially?
A major payer of safety-net hospitals, Medical Assistance significantly underpays for hospital services. In Pennsylvania today, Medical Assistance payments generally cover less than 80 percent of the cost of providing inpatient care and only about 50 percent of the cost of outpatient services. This means that the more Medical Assistance patients a hospital serves, the more money it loses and Pennsylvania s safety-net hospitals provide far more care to Medical Assistance patients than other hospitals. When payments do not cover the costs of treatment for a significant portion of the patients that a hospital serves, that hospital is put in financial jeopardy. Because of where they are located, moreover, hospitals that care for especially large numbers and high proportions Medical Assistance patients also care for more uninsured patients yet another financial challenge these safety-net hospitals must overcome.
