Survival strategies for Michigan's health care safety net providers

Health Services Research, June, 2005 by Peter D. Jacobson, Vanessa K. Dalton, Julie Berson-Grand, Carol S. Weisman

The U.S. health care safety net periodically comes under scrutiny because of concerns that the organizations comprising the safety net may not survive declining resources, political threats, or the increasing demand for services resulting from growth in the number of uninsured or underinsured individuals. Although many studies have addressed the financial viability of safety net organizations in specific geographic areas, none has addressed the strategic decisions these organizations confront in an increasingly difficult financial environment. We define the health care safety net as those organizations and programs, in both the public and private sectors, with a legal obligation or a commitment to provide direct health care services to uninsured and underinsured populations.

In this article, we report the results of a multiple-site case study of the strategic adaptations Michigan health care safety net organizations have considered in response to the current environment. We examine how changes in the health care environment influence these adaptations, and the implications for access to health care among the uninsured and other underserved groups. The specific research questions we address are: What are the current threats to safety net organizations' survival? What are the adaptive strategies these organizations have considered and implemented? What are the resulting internal organizational changes? Health care safety net organizations' ability to develop and implement coping strategies will determine whether the health care safety net infrastructure survives and what types of policy interventions are required for long-term sustainability. A better understanding of how safety net organizations select among alternative responses to environmental threats can provide policymakers with information needed to ensure that uninsured and underinsured Americans have access to basic health care services.

BACKGROUND

The United States lacks a central organizing apparatus for financing health care. Despite rising numbers of people without insurance, there is no national health insurance program providing access to care for uninsured and underinsured populations. Instead, an uncoordinated patchwork of public and private resources, including hospital emergency departments, community health centers (federally and privately funded), and limited state programs, attempts to fill the gap. By most accounts, the resulting health care safety net is inadequate to meet the need, and suffers from chronic underinvestment and periodic financial crises that threaten its survival (IOM 2000; Regenstein et al. 2004). Indeed, health care safety net organizations find it increasingly difficult to maintain their missions while protecting their fiscal margins (Hegner 2001). Recent studies show that the health care safety net has survived, but add that it remains in a weak position to meet the increasing demand (Baxter and Mechanic 1997; Grogan and Gusmano 1999; IOM 2000; Reed and Cunningham 2001; Waitzkin et al. 2002; Felt-Lisk, McHugh, and Howell 2002; Politzer et al. 2003; Felland et al. 2003; Regenstein et al. 2004). Potential responses include: redefining the organization's target population or service mix; forming partnerships with other safety net providers in the private or public sectors; and contracting with managed care plans (Baxter and Mechanic 1997; Wall 1998; Grogan and Gusmano 1999; Felland et al. 2003; Baxter 2004).

METHODS

We used a multiple-site case study approach to conduct qualitative interviews with key informants (Yin 1994). Case study methods are appropriate for studying the dynamics of system change, particularly when the viewpoints of multiple stakeholders in complex systems are required (Yin 1994; Sofaer 1999). Although the in-depth qualitative information obtained in a small number of case studies does not produce statistical generalizations from a sample to a larger population, case studies permit investigators to draw a series of descriptive inferences (Gerring 2004).

After constructing a map of all health care safety net providers in Michigan, we identified clusters of various organizational types within a geographical area. We then selected six service areas based on the following criteria: geographic diversity; diversity of organizational types; diversity of services provided; mix of affluent and non-affluent areas. In each service area, we selected four organizations for study: a community-based free clinic, Federally Qualified Health Center (FQHC), family planning clinic, and a local public health department (LHD). We excluded hospitals because others have already studied these institutions (Brennan, Gutterman, and Zuckerman 2001; Markus, Roby, and Rosenbaum 2002). For this study, the organization is the unit of analysis. Within most of the organizations, we interviewed the administrator, the medical or clinical director, the financial or marketing director, and a member of the governing board.

We define free clinics as privately funded organizations dedicated to providing free care to the uninsured population. These organizations do not accept health insurance (either public or private), but rely on donations and grants to provide free services. The free clinics in our study include a mix of secular, church-supported, and faith-based organizations. The distinction between church-supported and faith-based clinics is that the latter incorporate an evangelical mission along with the social mission of providing health care. FQHCs are primarily funded through section 330 of the Public Health Service Act and the Medicaid program. Federal regulations require FQHCs to serve all clients regardless of ability to pay and offer services on a sliding scale fee schedule. FQHCs must be located in an area deemed medically underserved, and the board of directors must reflect the demographic composition of the service area. Family planning organizations are defined as entities whose mission is to provide comprehensive contraceptive and family planning services to underserved populations. Funding is through the federal Title X Family Planning program, along with a mixture of private and other public sources.