Chief Strategy Officer, University Medical Center El Paso

Dissertation Title

The Association Between Medicaid Expansion, Medicaid Disproportionate Share Payments, and the Financial Performance of Safety Net Hospitals

Dissertation Abstract

Safety Net Hospitals (SNHs) provide necessary emergency and acute care to all individuals, regardless of their ability to pay for health care. Medicaid Expansion and Disproportionate Share (DSH) payments are two Medicaid programs that may mitigate the financial vulnerability of SNH’s. Some assert that Medicaid Expansion, as part of the Patient and Affordable Care Act (ACA), may provide financial relief for SNHs. It offers payment mechanisms for millions of uninsured individuals. DSH expenditures per capita for each state vary widely. There is some likelihood that SNHs in some states may benefit greater than others. The study was framed within the context of the Research Dependency Theory.

Using data from 2010 to 2018, this study analyzed if there is an association between Medicaid Expansion, DSH, and the financial performance of safety-net hospitals. Data were collated from Centers for Medicare & Medicaid Cost Report Public Use Files, the American Hospital Association Annual Survey Database, the U.S. Census, the Kaiser Family Foundation website, and the Area Health Resource File. SNHs were identified using a definition that emphasized the uncompensated care provided by hospitals.

Hypotheses were tested using generalized estimating equations (GEE). Medicaid Expansion (β = 1.26, p = 0.01) was found to be correlated with the operating margins of SNHs. DSH per capita (β = –0.01, p = 0.38) was not determined to have a significant relationship with operating margins. Findings aligned with previous research that suggests that Medicaid Expansion positively affects the financial outcomes of hospitals. The lack of association between DSH per capita and SNH operating margins may be associated with the SNH definition utilized in this study. From a theoretical perspective, the findings suggest that Medicaid Expansion is a factor that contributes to the munificence of SNHs.