Community Health Services

Most NAPH members maintain close ties with their local health departments, and a significant number are responsible for public health services in their communities. In several major cities across the country, including Cambridge, MA, Chicago, IL, Denver, CO, Los Angeles, San Francisco, and Martinez, CA, the public hospital is integrated with the local public health department.

NAPH members play a leading role in various efforts to improve the health status of the communities they serve. They have established programs to provide immunizations, address teen pregnancy and low birth-weight, prevent violence and injury, and provide mammography and other cancer screenings. Within their communities, NAPH members perform a significant amount of local adult and teen outreach, crisis prevention, reproductive health services and education, and dental care.

Trauma Care and Emergency Preparedness

Among the most important services that many NAPH members provide to their communities is trauma care – highly specialized treatment provided through facilities equipped to administer emergency and specialized intensive care to critically ill and injured patients. Level I trauma centers, the most highly specialized, are equipped to provide total care for every aspect of injury. They also play a leading role in trauma research and education. In 30 communities, including several major cities such as Albuquerque, Las Vegas, Memphis, New Orleans, Richmond, and San Francisco, NAPH members are either the only Level I trauma center or the only trauma center of any level. Because of their leading role as providers of emergency room, trauma, and burn care services, NAPH members have long been first receivers for catastrophes such as chemical spills, fires, disease outbreaks, and natural disasters.

As an extension of this role, public hospitals now play a key part in ensuring homeland security. Their responsibilities include working with local governments, health departments, and first responders like police, fire, and emergency services to coordinate communication and response efforts in the event of a terrorist attack or other type of disaster. Of the member hospitals that participated in a recent NAPH survey on emergency preparedness, about half were designated to receive patients through the National Disaster Medical System. Twenty-nine percent run or provide direction to the local 911 emergency response system. Additionally, the strong relationships that many NAPH members have with their local public health departments allow them to monitor disease trends and identify potential outbreaks or incidents of bioterrorism.

Financing Unreimbursed Care

“Unreimbursed care” refers to losses on care provided to all patients, excluding “mission-related” supplemental funding such as DSH and IME payments and state or local government subsidies. A large percentage of care provided by NAPH members is unreimbursed, meaning that base payments received for services provided do not cover the full costs of providing these services. Unreimbursed care costs add to the overall financial losses of public hospitals, which can be substantial. Without Medicaid DSH and other supplemental Medicaid payments, NAPH members would have lost $3 billion on care provided to Medicaid patients in 2004.

As the figure below indicates, state and local subsidies financed 35 percent of the unreimbursed care provided by NAPH members in 2004. Medicaid DSH also represented a critical funding source, financing almost one fifth of the unreimbursed care provided. Nine percent of funding came from other supplemental Medicaid payments. Medicare DSH and IME payments subsidized 9 percent of unreimbursed care, covering 5 percent and 4 percent respectively. Revenues unrelated to patient care, which can include interest and investment income, cafeteria and parking revenues, medical record fees, sales tax, tobacco settlement monies, and rental income, covered 26 percent of unreimbursed care costs. NAPH members financed the remaining 2 percent of their uncompensated care costs through cost shifting from commercial payers. These data suggest that NAPH members are dedicating their margins to finance care for the uninsured and underinsured. As a result, NAPH members lack adequate resources to invest in information technology and other capital improvements.

Sources of Financing for Unreimbursed Care at NAPH Hospitals, FY 2004

Role in Providing Low-Income Care

NAPH members serve patients with varying forms of insurance coverage. In 2004, patients with commercial insurance accounted for 20 percent of outpatient volume and 18 percent of inpatient volume at member hospitals. Nevertheless, the majority of patients served were uninsured or low-income; more than half of all discharges and outpatient visits were either for uninsured patients or for those covered by Medicaid (see Figure 11). Furthermore, 37 percent of ambulatory care services—compared to 23 percent of inpatient services—were provided to uninsured patients (see Tables 3 and 4 in Appendix C for data on individual NAPH members).

The extraordinary amount of ambulatory care NAPH members provide is poorly reimbursed, if it is reimbursed at all. This is due to reimbursement rates for outpatient services generally being lower than reimbursement rates for inpatient services, as well as a substantial amount of this care being provided to the uninsured. These factors have exacerbated the financial difficulties faced by NAPH members.

Training Physicians and Other Health Care Professionals

In addition to promoting high-quality, community-centered health care today, NAPH members ensure that this care will be available to patients in the future through the education and training of new health care providers. More than three-quarters (85 percent) of NAPH members are teaching institutions, as defined by the Accreditation Council for Graduate Medical Education (ACGME), and 51 percent are academic medical centers, as defined by the Council of Teaching Hospitals of the Association of American Medical Colleges (COTH). As such, public hospitals serve as the training ground for a large percentage of the country’s physicians, nurses, and other health care professionals.

In 2004, NAPH members trained medical and dental residents sufficient to fill more than 13,000 full-time equivalent (FTE) positions as well as allied health professionals translating into over 890 FTE positions. These future providers represented 18 percent of the doctors and more than 27 percent of the allied health professionals trained at acute care facilities that year. In their markets, public hospitals played an even larger teaching role, training 35 percent of the medical and dental residents and 55 percent of the allied health professionals in 2004.

Financial Performance

Public hospitals experience greater financial pressures than other hospitals nationally. In 2004, the average margin for NAPH members was 1.2 percent— 4 percentage points lower than the average margin of 5.2 percent for all hospitals in the U.S. According to industry analysts, margins of less than 2 percent are inadequate to finance working capital or reinvest in hospital infrastructure and technology. These scarce resources are often needed to support the special services that make public hospitals the core of our nation’s health care safety net.

NAPH members continued to struggle financially in 2004 and relied heavily on supplemental payments for financial viability. Even with DSH and other supplemental Medicaid payments (called upper payment limit or UPL payments), 58 percent of NAPH members had margins lower than 2 percent in 2004. Without the critical support of Medicaid DSH and UPL payments, overall NAPH member margins would drop to -10.5 percent. Clearly, public hospitals could not survive with such negative margins.

In 2004, NAPH members provided over $60 billion in total inpatient and outpatient services, averaging more than $682 million in gross charges per hospital or health system. Thirty percent of these services were provided to Medicaid patients and 24 percent to self-pay patients, the overwhelming majority of whom were uninsured or were covered by state and local indigent care programs. Twenty-three percent of services were provided to Medicare patients and another 23 percent to the commercially insured.

Net revenues for NAPH members amounted to $29 billion in 2004, an average of $328 million each. These providers continued to rely primarily on a combination of federal, state, and local funding sources to sustain their operations. In 2004, more than two-thirds of revenues for public hospitals came from federal, state, and local payment sources: 35 percent from Medicaid, 20 percent from Medicare, and 14 percent from state and local subsidies. An additional 24 percent of revenues came from commercially insured patients, while payments from self-pay patients accounted for 7 percent of net revenues.

Volume of Inpatient and Outpatient Care

NAPH members provided an extraordinary amount of ambulatory care, averaging more than 400,000 visits in 2004, a steady increase since 1998. On average, they delivered higher volumes of emergency and non-emergency outpatient care than other acute care hospitals across the country and in their markets. In addition to ambulatory care, NAPH members provided high volumes of inpatient services, averaging more than 18,000 discharges in 2004.