Study: IT is Vital for Future of Safety Net Hospitals

The business model of most safety net hospitals — the types of providers that serve a large amount of Medicare/Medicaid or other low-income patients — will soon experience various challenges as provisions of recent reimbursement cuts and other consequences of the healthcare act are flushed out, says a study released in April from New York consulting firm Alvarez & Marsal.

In addition to increased financial constraints, these hospitals also could face a shortage of patients as the healthcare act will offer more choices of providers for Medicare/Medicaid patients, according to the research, titled “Safety Net Hospitals at Risk: Re-Thinking the Business Model.” David Gruber, M.D., director of research for the firm’s healthcare industry group, authored the report.

The research describes the states of such hospitals nationwide as well as what steps they can take — including adding and improving various information technologies — to help them weather such new environments. It calls for safety net hospitals to become fully integrated with other hospitals and healthcare facilities, forming Federally Qualified Healthcare Centers or Patient Centered Medical Homes, which have been shown to increase care access while offering cost-effective delivery.

“A new business model is required (for safety net hospitals) to ensure sustainability,” the report says. “Integration would facilitate scale economies, operational efficiencies and information liquidity, and enhance clinical effectiveness.”

Even though the report says that safety net hospitals lag other providers in IT and capital infrastructure investment, it maintains they need to have the tools for information liquidity to successfully integrate with other providers. For example, a community-wide health information exchange can help them facilitate care coordination among various physicians or locations as well as reduce costs, while data analytics applications can enable them to better focus on evidence-based medicine, shared decision-making, performance measurement and population management.

The report also states that safety net hospitals could use other information technologies, including social networks and mobile applications to help increase consumer engagement while reducing care costs. It also calls for municipal, state and federal policymakers to alter the Medicaid managed care contracting process to support reimbursement of care supported by remote monitoring, telehealth and other wireless technologies related to patient self-care.