Chapter 9 Efficiency and Productivity Changes in Large Urban Hospitals 1994–2002: Ownership, Markets, and the Uninsured

Based on the Current Population Survey, 46.6 million Americans did not have health insurance in 2005 (Center on Budget and Policy Priorities, 2006). Lack of insurance is often associated with lower utilization rates, which may in turn adversely affect health status (Ayanian, Weissman, Schneider, Ginsburg, & Zaslavsky, 2000). Since universal health insurance is not provided for in the US, uninsured individuals must either self-pay or rely on charity care provided by hospitals and health clinics. The majority of charity care is produced in the public sector, either at the state, county, or local level (federal hospitals primarily serve a particular segment of the population – e.g., veterans in the case of Veterans Administration hospitals). Public hospital provision of “safety net” hospital services is particularly prevalent in large urban areas (Lipson & Naierman, 1996). These safety net hospitals are defined by the Institute of Medicine as having an “open door policy to serve all patients regardless of their ability to pay and provide substantial levels of care to Medicaid, the uninsured, and other vulnerable patients” (IOM, 2000). Private not-for-profit (NFP) hospitals also provide charity care but to a lesser extent than public providers, especially since the imposition of cost cutting measures both by Medicare and Medicaid (federal programs that fund health care for the elderly and indigent, respectively) and by managed care. Given that approximately 15% of US GDP is allocated to health care, cost cutting measures are laudable; however, care still needs to be provided for individuals who cannot afford it, and the burden of providing this care has to be borne somewhere in the health care system.