From surviving to thriving in the era of health care reform: Emerging lessons and promising practices for safety-net hospital systems transformation

Great uncertainty surrounds the fate of safety-net hospitals following the Affordable Care Act (ACA)—will they merely survive or thrive in this new environment? While the ACA has created new opportunities and committed considerable dollars to help safety-net systems adapt to change, it has also introduced serious threats such as federal payment reductions and penalties. These threats, compounded by existing safety-net challenges, could create a significant rift between hospitals (the “haves” and “have-nots”) and potentially exacerbate health disparities. With support from the Blue Shield of California Foundation, we conducted a study of a subset of safety-net systems to identify their actions, experiences, and lessons in adapting to the uncertain health care environment. To inform and assure relevance of findings to California’s diverse safety-net settings, systems included in the study ranged in financial status while meeting two key criteria: (1) they were located in Medicaid expansion states; and (2) they served at least a 50% uninsured and Medicaid patient mix.  Through a review of the literature and semi-structured phone interviews conducted in Summer 2014 with CEOs and other executives from 13 safety-net systems across 11 states, we found that systems are generally undertaking four key transformations: shifting toward more value-based payment and delivery reforms, such as accountable care organizations; redesigning primary care with a focus on patients, care coordination, and behavioral health integration, especially building on and extending medical homes; responding to competition through collaborative and community-centered efforts that draw on both traditional and non-traditional health partners; and embracing change through strong leadership, staff transitions, and other strategic actions. We will present models, promising practices, and lessons for each of the four action areas. We will also discuss remaining challenges faced by systems, along with recommendations that stress systems transformation grounded in “whole person” care, cross-sector collaboration, and value-based incentives.