Topic

Safety Net Hospitals

May 6, 2011 - December 16, 2019
7 posts

Safety net hospitals are healthcare facilities that provide care to patients regardless of their ability to pay, often relying on public subsidies and supplemental government funding to cover the costs of serving low-income and uninsured populations. This page covers CBC’s work on New York City Health + Hospitals’ operating deficits, Medicaid supplemental payment programs, hospital efficiency benchmarks, the financial impact of uncompensated care, and strategies for sustainable public health system financing.

This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..

Latest Recommendations

From Medicaid Supplemental Payments (August 31, 2017)

  • The State should reconsider its priorities in distributing Medicaid supplemental payments to ensure a more equitable impact.
  • Pending cuts should not fall only on NYC Health + Hospitals, as this would disproportionately impact the public system.
  • The State should consider adjustments such as reduced payments to voluntary hospitals that have limited reliance on supplementary payments.

From Fiscal Challenges Facing the New York City Health and Hospitals Corporation (November 6, 2014)

  • Municipal leaders should develop more rational and stable guidelines for funding HHC in its efforts to meet its mandates.
  • City leaders should explore capitated payments for the uninsured that reflect the actuarially-based cost of providing care to them.
  • HHC leaders can advocate for conditioning available tax exemptions and funding sources on greater participation by all voluntary hospitals in sharing the burden of caring for the uninsured.
  • HHC will need to take steps to improve the quality of the MetroPlus plan to expand future enrollment.
  • HHC must ensure service delivery is made more efficient and unneeded hospital capacity is reduced.

Key Data

  • As of December 2019, H+H had an average operating deficit of nearly $3 billion between fiscal years 2015 and 2017, which amounted to 46 percent of its operating expenses.
    A New Approach to Funding New York City Health + Hospitals December 16, 2019
  • Writing in December 2019, the CBC noted that H+H is heavily dependent on Medicaid, which accounts for 55 percent of its revenue, yet it only recovers an estimated 53 percent of associated costs from this source, compared to 77 percent for safety net institutions.
    A New Approach to Funding New York City Health + Hospitals December 16, 2019
  • According to a December 2019 report, the Independent Budget Office estimated City support to H+H in fiscal year 2019 was $1.7 billion, up from $359 million in fiscal year 2009, and projected to reach $2.3 billion in fiscal year 2023.
    A New Approach to Funding New York City Health + Hospitals December 16, 2019
  • As of August 2017, four separate programs provided $5 billion in supplemental Medicaid payments annually to New York hospitals, with the Disproportionate Share Hospital (DSH) program accounting for $3.6 billion of that total.
    Medicaid Supplemental Payments August 31, 2017
  • In a November 2014 report, the CBC noted that HHC ran a deficit of $668 million in fiscal year 2013, with projections indicating budget gaps would grow from $702 million in fiscal year 2015 to $1.7 billion in fiscal year 2018.
    Fiscal Challenges Facing the New York City Health and Hospitals Corporation November 6, 2014

Publications that Discuss Safety Net Hospitals

From to
Report | December 16, 2019

A New Approach to Funding New York City Health + Hospitals

New York City Health + Hospitals faces a persistent operating deficit, averaging $3 billion annually, which is significantly higher than the 15 percent average deficit seen at voluntary safety net institutions. To address this, the City and State should implement performance-based budgeting and reform Medicaid supplemental payments to better align hospital financing with actual service costs and efficiency goals.

Recommendations related to Safety Net Hospitals

  • The City Office of Management and Budget (OMB) and H+H leadership should develop a new approach to financial planning and budgeting that sets multiyear goals for increasing efficiency and revenue based on benchmarks from safety net institutions.
  • Progress toward performance benchmarks should be publicly monitored, and H+H leadership should be held accountable through compensation incentives tied to meeting these targets.
  • The State should better target Medicaid supplemental payments to H+H and other facilities with the greatest need, financing the nonfederal portion with State revenues rather than local intergovernmental transfers.
  • The State should use more equitably the surplus operating revenue earned by large networks from commercial insurers to cross-subsidize indigent care on a system-wide basis.
  • The State should better align Medicaid hospital payment rates to reasonable unit costs of services, while funding these adjustments through more equitable allocation of commercial insurance payments and other broad-based sources.

Key Data

  • $3 billion — Average annual operating deficit for H+H in fiscal years 2015-2017.
  • 46 percent — H+H's average operating deficit as a share of operating expenses in fiscal years 2015-2017.
  • 15 percent — Average deficit as a share of operating expenses for voluntary safety net institutions.
  • 9 percent — Average surplus as a share of operating expenses for large hospital networks.
  • 53 percent — Share of associated costs H+H recovers from Medicaid.
  • 77 percent — Share of associated costs safety net institutions recover from Medicaid.
Report | August 31, 2017

Medicaid Supplemental Payments

New York's Medicaid supplemental payments provide $5 billion annually to sustain hospitals serving indigent populations, but looming federal and state funding reductions threaten the financial stability of municipal institutions like NYC Health + Hospitals. To ensure equitable support, the state should reevaluate its distribution priorities rather than allowing cuts to disproportionately impact public facilities.

Recommendations related to Safety Net Hospitals

  • The State should reconsider its priorities in distributing Medicaid supplemental payments to ensure a more equitable impact.
  • Pending cuts should not fall only on NYC Health + Hospitals, as this would disproportionately impact the public system.
  • The State should consider adjustments such as reduced payments to voluntary hospitals that have limited reliance on supplementary payments.

Key Data

  • $5 billion — Total annual supplemental payments provided through four separate programs.
  • $3.6 billion — Amount of DSH payments within the total $5 billion supplemental payment pool.
  • $811 million — Estimated annual UPL payments for 2016.
  • $535 million — Combined annual payments from VAPAP and VBP QIP for 2016.
  • $659 million — Projected impact on New York from federal DSH payment decreases.
  • $697 million — Total projected reduction in supplemental payments based on steady funding, a 5 percent UPL reduction, and a $659 million DSH cut.
Report | November 6, 2014

Fiscal Challenges Facing the New York City Health and Hospitals Corporation

The New York City Health and Hospitals Corporation faces a projected $3.2 billion cash shortfall by fiscal year 2018, driven by rising labor costs and declining supplemental federal Medicaid funds. To ensure long-term fiscal stability, the system must implement aggressive cost controls, improve the quality and enrollment of its MetroPlus insurance plan, and advocate for a more equitable distribution of the financial burden for caring for the uninsured among all city hospitals.

Recommendations related to Safety Net Hospitals

  • Municipal leaders should develop more rational and stable guidelines for funding HHC in its efforts to meet its mandates.
  • City leaders should explore capitated payments for the uninsured that reflect the actuarially-based cost of providing care to them.
  • HHC leaders can advocate for conditioning available tax exemptions and funding sources on greater participation by all voluntary hospitals in sharing the burden of caring for the uninsured.
  • HHC will need to take steps to improve the quality of the MetroPlus plan to expand future enrollment.
  • HHC must ensure service delivery is made more efficient and unneeded hospital capacity is reduced.

Key Data

  • $3.2 billion — Projected accumulated cash shortfall for HHC by fiscal year 2018.
  • $1.7 billion — Projected budget gap for HHC in fiscal year 2018.
  • 45 percent — Share of uninsured inpatients in New York City cared for by HHC.
  • 18 percent — Share of all hospital inpatients in New York City cared for by HHC.
  • $668 million — HHC deficit in fiscal year 2013.
  • 23.8 percent — Potentially preventable admission rate for HHC facilities compared to a 17.2 percent citywide average for non-HHC facilities.
Blog | September 22, 2014

Agency Focus: HHC

The New York City Health and Hospitals Corporation, which serves as the city's public health system, is the subject of a budget profile created in partnership with City & State. This profile directs readers to an external report for a detailed examination of the corporation's fiscal challenges.
Report | April 23, 2012

A Troubling Prognosis for HHC's Finances

The New York City Health and Hospitals Corporation faces significant financial instability due to rising expenses and the potential loss of critical Medicaid supplemental payments. Without identifying new funding sources or achieving greater operational efficiency, the system risks substantial operating deficits and potential reductions in services for low-income and uninsured residents.

Recommendations related to Safety Net Hospitals

  • The Health and Hospitals Corporation must redouble its efforts at delivering services more efficiently to avoid a dramatic reduction in services for needy residents.
  • The Health and Hospitals Corporation and the City must identify sources for funds to replace any lost supplemental Medicaid payments to address projected operating deficits.

Key Data

  • $1.6 billion — Annual revenues expected from special Medicaid supplementary payments that may be in jeopardy.
  • 2,500 — Number of full-time employees trimmed by the Health and Hospitals Corporation between 2009 and early 2012.
  • $218 million — Reduction in personal service expenditures achieved by the Health and Hospitals Corporation between 2009 and early 2012.
  • $1.7 billion — Capital commitments made by the City for the Health and Hospitals Corporation in fiscal years 2002 through 2011.
  • $911 million — Projected cash-defined operating deficit for the Health and Hospitals Corporation in fiscal year 2016 if unspecified gap-closing actions fail to materialize.

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