Hospital district viability and Medicaid /market changes

Hospital districts (HD) that serve the uninsured and the needy face new challenges with the implementation of Medicaid managed. The potential loss of Medicaid patients and revenues may affect the ability to cost-shift and subsequently decrease the ability of the HD to meet its legal obligation of providing care for the uninsured. ^ To investigate HD viability in the current market, the aims of this study were to: (1) describe HD's environment, (2) document the HDs strategic response, (3) document changes in the HD's performance (patient volume) and financial status, and (4) determine whether relationships or trends exist between HD strategy, performance and financial status. ^ To achieve these aims, three Texas HDs (Fort Worth, Lubbock, and San Antonio) were selected to be evaluated. For each HD four types of strategic responses were documented and evaluated for change. In addition, the ability of each HD to sustain operations was evaluated by documenting performance and financial status changes (patient volume and financial ratios). A pre-post case study design method was used in which the Medicaid managed care “rollout'” date, at each site, was the central date. First, a descriptive analysis was performed which documented the environment, strategy, financial status, and patient volume of each hospital district. Second, to compare hospital districts, each hospital district was: (i) classified by a risk index, (ii) classified by its strategic response profile, and (iii) given a performance score based upon pre-post changes in patient volume and financial indicators. ^ Results indicated that all three HDs operate in a high risk environment compared to the rest of the nation. Two HDs chose the “Status Quo” response whereas one HD chose the “Competitive Proactive” response. Medicaid patient volume decreased in two of three HDs whereas indigent patient volume increased in two of the three (an indication of increasing financial risk). Total patient revenues for all HDs increased over the study period; however, the rate of increase slowed for all three after the Medicaid rollout date. All HDs experienced a decline in financial status between pre-post periods with the greatest decline observed in the HD that saw the greatest increase in indigent patient volume. ^ The pre-post case study format used and the lack of control study sites do not allow for assignment of causality. However, the results suggest possible adverse effects of Medicaid managed care and the need for a larger study, based on a stronger evaluation research design. ^