Funding for safety-net hospitals relies on definitions that vary significantly, leading to big differences in which facilities qualify for support and how resources are distributed, according to a recent study from the University of Pennsylvania’s Leonard Davis Institute of Health Economics.
Seven things to know:
1. Definitions vary widely. Researchers applied nine definitions of safety-net hospitals to data from more than 4,500 acute care hospitals. Depending on the definition used, anywhere from 992 to more than 1,300 hospitals qualified, capturing as few as 2% or as many as 69% of rural hospitals.
2. Some definitions overlap heavily. Many definitions identified the same hospitals, creating redundancies and inefficiencies. This overlap suggests policymakers could streamline data collection and evaluation by aligning on a single definition across payers, according to study authors.
3. “Share” vs. “absolute” approaches identify different hospitals. Definitions based on the “share” of care provided to low-income patients typically identified small, rural, public hospitals. On the other hand, “absolute” definitions — based on total volume of safety-net care — pointed to large, urban hospitals providing most safety-net services nationally.
4. Stability varies significantly. Some definitions were stable over time, selecting the same hospitals 60% to 83% of the time between 2014 and 2022. These included public ownership, teaching status and Medicare disproportionate share hospital index. Others, such as operating margin or uncompensated care, identified the same hospitals as little as 15% of the time.
5. Urban hospitals are increasingly poaching rural funds. A Health Affairs study published in August found that a growing number of urban hospitals are using a regulatory loophole to claim rural hospital funds. The number of “dually classified” hospitals jumped from three in 2017 to 425 in 2023, representing more than 162,000 beds. This shift allows major teaching hospitals to access rural-specific support — such as 340B discounts and graduate medical education slots — raising concerns that funding is being diverted away from truly rural hospitals struggling to survive.
6. Policy goals matter. Broad definitions may be best during emergencies, such as pandemics or natural disasters, to ensure hospitals can respond quickly. Narrower, more targeted definitions may be better for long-term strategies, such as uncompensated care financing. Researchers argued that policymakers must weigh tradeoffs and choose definitions aligned with their objectives.
7. Researchers call for transparency. Study authors said funders should be explicit about which definitions they use and why. They also suggested definitions that measure essential, unprofitable services — including burn, trauma, NICU or substance use care — may best capture the core mission of safety-net hospitals.
Click here to access the study in JAMA Network.
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