Impact of performance-based budgeting on quality outcomes in U.S. military health care facilities.

BACKGROUND: Performance-based budgeting (PBB) is a variation of pay for performance that has been used in government hospitals but could be applicable to any integrated system. It works by increasing or decreasing funding based on preestablished performance thresholds, which incentivizes organizations to improve performance. In late 2006, the U.S. Army implemented a PBB program that tied hospital-level funding decisions to performance on key cost and quality-related metrics. PURPOSE: The aim of this study was to estimate the impact of PBB on quality improvement in U.S. Army health care facilities. APPROACH: This study used a retrospective difference-in-differences analysis of data from two Defense Health Agency data repositories. The merged data set encompassed administrative, demographic, and performance information about 428 military health care facilities. Facility-level performance data on quality indicators were compared between 187 Army PBB facilities and a comparison group of 241 non-PBB Navy and Air Force facilities before and after program implementation. RESULTS: The Army's PBB programs had a positive impact on quality performance. Relative to comparison facilities, facilities that participated in PBB programs increased performance for over half of the indicators under investigation. Furthermore, performance was either sustained or continued to improve over 5 years for five of the six performance indicators examined long term. CONCLUSION: Study findings indicate that PBB may be an effective policy mechanism for improving facility-level performance on quality indicators. PRACTICE IMPLICATIONS: This study adds to the extant literature on pay for performance by examining the specific case of PBB. It demonstrates that quality performance can be influenced internally through centralized budgeting processes. Though specific to military hospitals, the findings might have applicability to other public and private sector hospitals who wish to incentivize performance internally in their organizational subunits through centralized budgeting processes.

Hospital risk-based payments and physician employment: Impact on financial performance.

BACKGROUND: Hospital involvement in risk-based payment and employment of physicians can have a large impact on their profitability. Risk-based reimbursement approaches with third-party payers and provider-sponsored insurance products hold hospital organizations financially accountable for a range of patient services. Direct employment of physicians can add new revenue sources for the hospital but comes at the high cost of physician compensation packages. PURPOSE: Risk bearing and physician employment have multifaceted effects on hospital profitability. The objective of this study is to assess overall financial implications of these arrangements. METHODOLOGY: Fixed-effects estimation with American Hospital Association, Centers for Medicare & Medicaid Services, and Area Health Resource File data are used for the period 2012-2015. Key measures include indicators of hospital involvement in risk-based payments and the number of employed physicians by specialty. Hospital and market factors that could affect profitability are controlled in the analysis. RESULTS: Increases in employed hospitalists for hospitals with risk-based payment arrangements had a beneficial effect on their profitability. No significant association existed between profits and increased physician employment for hospitals lacking such payment arrangements and for increased nonhospitalist physician employment in hospitals with these arrangements. CONCLUSIONS: Hospitals that hold some degree of financial responsibility for patient care have learned how to deploy employed hospitalists to their financial advantage. The unique role of hospitalists in expediting and coordinating patient care may yield the cost control that hospitals need to succeed under risk-based payment arrangements. PRACTICE IMPLICATIONS: Hospitals are still on a learning curve in determining how to structure incentives for their nonhospitalist employed physicians. To the extent that employment of these nonhospitalist physicians has not yet had a detrimental effect on hospital profits, a window of opportunity exists for hospitals to develop enhanced approaches to align primary care and specialist physicians to achieve financial aims.

Effectiveness of shortened time interval to postpartum visit in improving postpartum attendance: Design and rationale for a randomized controlled trial.

BACKGROUND/AIMS: Recent evidence suggests that there are numerous benefits to scheduling postpartum visits as early as 3 weeks post-delivery. However, findings are not conclusive due to methodological limitations. This report discusses the unique aspects of a randomized controlled trial's (RCT) design, intervention, and strategies to maintain participant retention. METHODS: This study was a four-year, prospective, open-label RCT conducted at the Virginia Commonwealth University Medical Center. Women who recently delivered a healthy, full-term baby vaginally, were randomized to receive a 3-4 or 6-8 weeks postpartum appointment and were followed for 18 months. RESULTS: A total of 364 women participated in this study. A large proportion of women were retained in the study as demonstrated by the high completion rates at the 18-month follow-up interview (Total sample: 87.6%; 3-4 weeks group: 88.0%; 6-8 weeks group: 87.3%). Similarly, high adherence to the protocol-directed postpartum visit schedule was reported in the overall study sample (79.7%), as well as in the 3-4 (70.5%) and 6-8 (90.0%) week postpartum groups. CONCLUSION: The study design offered unique features which ensured excellent participant completion and adherence rates, despite the presence of hard-to-track women who typically do not return for their postpartum visits.

A taxonomy of hospitals participating in Medicare accountable care organizations.

BACKGROUND: Medicare was an early innovator of accountable care organizations (ACOs), establishing the Medicare Shared Savings Program (MSSP) and Pioneer programs in 2012-2013. Existing research has documented that ACOs bring together an array of health providers with hospitals serving as important participants. PURPOSE: Hospitals vary markedly in their service structure and organizational capabilities, and thus, one would expect hospital ACO participants to vary in these regards. Our research identifies hospital subgroups that share certain capabilities and competencies. Such research, in conjunction with existing ACO research, provides deeper understanding of the structure and operation of these organizations. Given that Medicare was an initiator of the ACO concept, our findings provide a baseline to track the evolution of ACO hospitals over time. METHODOLOGY/APPROACH: Hierarchical clustering methods are used in separate analyses of MSSP and Pioneer ACO hospitals. Hospitals participating in ACOs with 2012-2013 start dates are identified through multiple sources. Study data come from the Centers for Medicare and Medicaid Services, American Hospital Association, and Health Information and Management Systems Society. RESULTS: Five-cluster solutions were developed separately for the MSSP and Pioneer hospital samples. Both the MSSP and Pioneer taxonomies had several clusters with high levels of health information technology capabilities. Also distinct clusters with strong physician linkages were present. We examined Pioneer ACO hospitals that subsequently left the program and found that they commonly had low levels of ambulatory care services or health information technology. CONCLUSION: Distinct subgroups of hospitals exist in both the MSSP and Pioneer programs, suggesting that individual hospitals serve different roles within an ACO. Health information technology and physician linkages appear to be particularly important features in ACO hospitals. PRACTICE IMPLICATIONS: ACOs need to consider not only geographic and service mix when selecting hospital participants but also their vertical integration features and management competencies.

Preventable Hospital Admissions and 30-Day All-Cause Readmissions: Does Hospital Participation in Accountable Care Organizations Improve Quality of Care?

This study evaluates quality performance of hospitals participating in Medicare Shared Savings and Pioneer Accountable Care Organization (ACO) programs relative to nonparticipating hospitals. Overall, 198 ACO participating and 1210 propensity score matched, nonparticipating hospitals were examined in a difference-in-difference analysis, using data from 17 states in the years 2010-2013. The authors studied preventable hospitalizations for conditions sensitive to high-quality ambulatory care-chronic obstructive pulmonary disease (COPD) and asthma, chronic heart failure (CHF), complications of diabetes-and 30-day all-cause readmissions potentially influenced by hospital care. A decrease was found in preventable hospitalizations for COPD and asthma and for diabetes complications for ACO participating hospitals, but no significant differences for preventable CHF hospitalizations and 30-day readmissions. Mixed results may be attributable to insufficient incentives for ACO participating hospitals to decrease 30-day readmissions, whereas disease-focused initiatives may have a beneficial effect on preventable hospitalizations for COPD and asthma and complications of diabetes.

Factors associated with hospital participation in Centers for Medicare and Medicaid Services' Accountable Care Organization programs.

BACKGROUND: In 2012, the Centers for Medicare and Medicaid Services (CMS) initiated the Medicare Shared Savings Program (MSSP) and Pioneer Accountable Care Organization (ACO) programs. Organizations in the MSSP model shared cost savings they generated with CMS, and those in the Pioneer program shared both savings and losses. It is largely unknown what hospital and environmental characteristics are associated with the development of CMS ACOs with one- or two-sided risk models. PURPOSE: The aim of this study was to assess the organizational and environmental characteristics associated with hospital participation in the MSSP and Pioneer ACOs. METHODOLOGY: Hospitals participating in CMS ACO programs were identified using primary and secondary data. The ACO hospital sample was linked with the American Hospital Association, Health Information and Management System Society, and other data sets. Multinomial probit models were estimated that distinguished organizational and environmental factors associated with hospital participation in the MSSP and Pioneer ACOs. RESULTS: Hospital participation in both CMS ACO programs was associated with prior experience with risk-based payments and care management programs, advanced health information technology, and location in higher-income and more competitive areas. Whereas various health system types were associated with hospital participation in the MSSP, centralized health systems, higher numbers of physicians in tightly integrated physician-organizational arrangements, and location in areas with greater supply of primary care physicians were associated with Pioneer ACOs. Favorable hospital characteristics were, in the aggregate, more important than favorable environmental factors for MSSP participation. CONCLUSION: MSSP ACOs may look for broader organizational capabilities from participating hospitals that may be reflective of a wide range of providers participating in diverse markets. Pioneer ACOs may rely on specific hospital and environmental characteristics to achieve quality and spending targets set for two-sided contracts. PRACTICE IMPLICATIONS: Hospital and ACO leaders can use our results to identify hospitals with certain characteristics favorable to their participation in either one- or two-sided ACOs.

Hospital-Acquired Infections Under Pay-for-Performance Systems: an Administrative Perspective on Management and Change.

PURPOSE OF REVIEW: The purpose of this review is to explore the impact of hospital-acquired infection on payment under pay-for-performance systems, and provide perspective on the role of administrators in infection prevention. RECENT FINDINGS: Hospital-acquired infections continue to pose a serious threat to patient safety and to the fiscal viability of healthcare facilities under pay-for-performance systems. There is mixed evidence that use of pay-for-performance systems leads to prevention of hospital-acquired conditions. Use of evidence-based guidelines has been shown to reduce hospital-acquired infections. Increasing use of pay-for-performance (PFP) systems results in potential loss of reimbursement for healthcare organizations that fail to prevent hospital-acquired infections (HAI). Healthcare administrators must work with front-line providers and infection control staff to establish and maintain evidence-based infection prevention policy. Additionally, infection control policy should be regularly updated to reflect best practices, and proper change management techniques should be employed in order to mobilize and empower staff to increase their ability to prevent hospital-acquired infections.

Medicare Payment Penalties and Safety Net Hospital Profitability: Minimal Impact on These Vulnerable Hospitals.

OBJECTIVE: To examine relationships between penalties assessed by Medicare's Hospital Readmission Reduction Program and Value-Based Purchasing Program and hospital financial condition. DATA SOURCES/STUDY SETTING: Centers for Medicare and Medicaid Services, American Hospital Association, and Area Health Resource File data for 4,824 hospital-year observations. STUDY DESIGN: Bivariate and multivariate analysis of pooled cross-sectional data. PRINCIPAL FINDINGS: Safety net hospitals have significantly higher HRRP/VBP penalties, but, unlike nonsafety net hospitals, increases in their penalty rate did not significantly affect their total margins. CONCLUSIONS: Safety net hospitals appear to rely on nonpatient care revenues to offset higher penalties for the years studied. While reassuring, these funding streams are volatile and may not be able to compensate for cumulative losses over time.

Most Hospitals Received Annual Penalties For Excess Readmissions, But Some Fared Better Than Others.

The Hospital Readmissions Reduction Program (HRRP) initiated by the Affordable Care Act levies financial penalties against hospitals with excess thirty-day Medicare readmissions. We sought to understand the penalty burden over the program's first five years, focusing on characteristics of hospitals that received penalties during all five years, how penalties changed over time, and the relationship between baseline and subsequent performance. More than half of participating hospitals were penalized by the Centers for Medicare and Medicaid Services in all five years of the program. From fiscal years 2013 to 2017, the growth in average penalties was modest, doubling from 0.29 percent to 0.60 percent, despite increasing opportunities for penalization. The penalty burden was greater in hospitals that were urban, major teaching, large, or for-profit and that treated larger shares of Medicare or socioeconomically disadvantaged patients. Surprisingly, hospitals treating greater proportions of medically complex Medicare patients had a lower cumulative penalty burden compared to those treating fewer proportions of these patients. Lastly, we found that hospitals with high baseline penalties in the first year continued to receive significantly higher penalties in subsequent years. For many hospitals, the HRRP leads to persistent penalization and limited capacity to reduce penalty burden. Alternative structures might avoid persistent penalization, while still motivating reductions in hospital readmissions.

Integrated Case Management: Does It Reduce Health Service Disparities Across African American and White Medicaid Beneficiaries?

Evidence of persistent racial and ethnic disparities in health service use is substantial. Even among Medicaid beneficiaries, minority individuals may have lower use of specific health services relative to Whites due to varying degrees of trust in the health system, beliefs about the usefulness of medical treatment, provider stereotyping, or geographic service availability. Prior research demonstrated that a Florida Medicaid disease management program led to reductions in service disparities between Whites and African Americans. We study a Medicaid Integrated Case Management program implemented in Virginia, which shares disease management program objectives but can be applied to a broader range of patients. Two versions of the program are assessed, the latter of which incorporated more patient-focused and targeted approaches in identifying client needs and structuring patient interaction. Both versions of the program were associated with reductions in disparities, especially for physician services and when more targeted, patient-centered approaches were adopted.

Reliability of 30-Day Readmission Measures Used in the Hospital Readmission Reduction Program.

OBJECTIVE: To assess the reliability of risk-standardized readmission rates (RSRRs) for medical conditions and surgical procedures used in the Hospital Readmission Reduction Program (HRRP). DATA SOURCES: State Inpatient Databases for six states from 2011 to 2013 were used to identify patient cohorts for the six conditions used in the HRRP, which was augmented with hospital characteristic and HRRP penalty data. STUDY DESIGN: Hierarchical logistic regression models estimated hospital-level RSRRs for each condition, the reliability of each RSRR, and the extent to which socioeconomic and hospital factors further explain RSRR variation. We used publicly available data to estimate payments for excess readmissions in hospitals with reliable and unreliable RSRRs. PRINCIPAL FINDINGS: Only RSRRs for surgical procedures exceeded the reliability benchmark for most hospitals, whereas RSRRs for medical conditions were typically below the benchmark. Additional adjustment for socioeconomic and hospital factors modestly explained variation in RSRRs. Approximately 25 percent of payments for excess readmissions were tied to unreliable RSRRs. CONCLUSIONS: Many of the RSRRs employed by the HRRP are unreliable, and one quarter of payments for excess readmissions are associated with unreliable RSRRs. Unreliable measures blur the connection between hospital performance and incentives, and threaten the success of the HRRP.

The Impact of Integrated Case Management on Health Services Use and Spending Among Nonelderly Adult Medicaid Enrollees.

BACKGROUND: Medicaid plans, whose patients often have complex medical, social, and behavioral needs, seek tools to effectively manage enrollees and improve access to quality care while containing costs. OBJECTIVES: The aim of this study is to examine the effects of an integrated case management (ICM) program operated by a Medicaid managed care plan on health service use and spending for nonelderly, nonpregnant adults. RESEARCH DESIGN: We estimate the relationship between intensity of ICM program involvement and changes in utilization and spending for patients who participated in ICM. We examine whether effects differ between high-risk and lower-risk individuals and between the early and late stages of the program, given that the latter relied on more targeted and patient-centered approaches. Specifically, we estimate linear regressions modeling changes in utilization and spending outcomes as a function of number of program contacts, conditional on number of days over which contacts occurred, as well as individual-level covariates and case manager fixed effects. RESULTS: In the late ICM program period, we observe significant decreases in outpatient utilization associated with program involvement intensity among high-risk ICM participants. We also observe decreases in spending associated with program involvement intensity among the lower-risk group in the late period, although there is no significant impact on spending among high-risk enrollees. CONCLUSIONS: ICM can be a successful strategy for impacting health services use and spending. Our findings suggest that careful program targeting, well-structured client engagement, and direct one-on-one contact are vitally important for achieving program objectives.

Effects of Expanded California Health Coverage on Hospitals: Implications for ACA Medicaid Expansions.

OBJECTIVE: To assess the effects on hospitals of early California actions to expand insurance coverage for low-income uninsured adults after passage of the Affordable Care Act. DATA SOURCES/STUDY SETTING: Data from the California Office of Statewide Health Planning and Development and the California Department of Health were merged with U.S. census data for 294 short-term general hospitals during the period 2009-2012. STUDY DESIGN: A difference-in-difference analysis was conducted with hospitals in counties that did not implement insurance expansions used as a comparison group. Variables examined included payer mix, costs of unreimbursed care, and hospital operating margin. Sensitivity analyses were conducted as well as a triple difference analysis. Effects were estimated for hospitals overall and by ownership type. PRINCIPAL FINDINGS: California insurance expansions primarily benefited for-profit hospitals, with these facilities experiencing significant decreases in self-pay patients, increases in county-covered patients, and reductions in charity care. Most models yielded no significant change in payer mix and conflicting changes in unreimbursed care for nonprofit hospitals. CONCLUSIONS: California hospitals that treated the most uninsured prior to insurance expansions did not as a group experience substantial benefit in terms of reduced uninsured burden or better financial performance after program expansions occurred.

The influence of institutional pressures on hospital electronic health record presence.

Electronic health records (EHR) are a promising form of health information technology that could help US hospitals improve on their quality of care and costs. During the study period explored (2005-2009), high expectations for EHR diffused across institutional stakeholders in the healthcare environment, which may have pressured hospitals to have EHR capabilities even in the presence of weak technical rationale for the technology. Using an extensive set of organizational theory-specific predictors, this study explored whether five factors - cause, constituents, content, context, and control - that reflect the nature of institutional pressures for EHR capabilities motivated hospitals to comply with these pressures. Using information from several national data bases, an ordered probit regression model was estimated. The resulting predicted probabilities of EHR capabilities from the empirical model's estimates were used to test the study's five hypotheses, of which three were supported. When the underlying cause, dependence on constituents, or influence of control were high and potential countervailing forces were low, hospitals were more likely to employ strategic responses that were compliant with the institutional pressures for EHR capabilities. In light of these pressures, hospitals may have acquiesced, by having comprehensive EHR capabilities, or compromised, by having intermediate EHR capabilities, in order to maintain legitimacy in their environment. The study underscores the importance of our assessment for theory and policy development, and provides suggestions for future research.

Effect of Medicare's nonpayment for Hospital-Acquired Conditions: lessons for future policy.

IMPORTANCE: In 2008, Medicare implemented the Hospital-Acquired Conditions (HACs) Initiative, a policy denying incremental payment for 8 complications of hospital care, also known as never events. The regulation's effect on these events has not been well studied. OBJECTIVE: To measure the association between Medicare's nonpayment policy and 4 outcomes addressed by the HACs Initiative: central line-associated bloodstream infections (CLABSIs), catheter-associated urinary tract infections (CAUTIs), hospital-acquired pressure ulcers (HAPUs), and injurious inpatient falls. DESIGN, SETTING, AND PARTICIPANTS: Quasi-experimental study of adult nursing units from 1381 US hospitals participating in the National Database of Nursing Quality Indicators (NDNQI), a program of the American Nurses Association. The NDNQI data were combined with American Hospital Association, Medicare Cost Report, and local market data to examine adjusted outcomes. Multilevel models were used to evaluate the effect of Medicare's nonpayment policy on never events. EXPOSURES: United States hospitals providing treatment for Medicare patients were subject to the new payment policy beginning in October 2008. MAIN OUTCOMES AND MEASURES: Changes in unit-level rates of HAPUs, injurious falls, CLABSIs, and CAUTIs after initiation of the policy. RESULTS: Medicare's nonpayment policy was associated with an 11% reduction in the rate of change in CLABSIs (incidence rate ratio [IRR], 0.89; 95% CI, 0.83-0.95) and a 10% reduction in the rate of change in CAUTIs (IRR, 0.90; 95% CI, 0.85-0.95), but was not associated with a significant change in injurious falls (IRR, 0.99; 95% CI, 0.99-1.00) or HAPUs (odds ratio, 0.98; 95% CI, 0.96-1.01). Consideration of unit-, hospital-, and market-level factors did not significantly alter our findings. CONCLUSIONS AND RELEVANCE: The HACs Initiative was associated with improvements in CLABSI and CAUTI trends, conditions for which there is strong evidence that better hospital processes yield better outcomes. However, the HACs Initiative was not associated with improvements in HAPU or injurious fall trends, conditions for which there is less evidence that changing hospital processes leads to significantly better outcomes.

Delivery system characteristics and their association with quality and costs of care: implications for accountable care organizations.

BACKGROUND: Implementation of accountable care organizations (ACOs) is currently underway, but there is limited empirical evidence on the merits of the ACO model. PURPOSE: The aim was to study the associations between delivery system characteristics and ACO competencies, including centralization strategies to manage organizations, hospital integration with physicians and outpatient facilities, health information technology, infrastructure to monitor community health and report quality, and risk-adjusted 30-day all-cause mortality and case-mixed-adjusted inpatient costs for the Medicare population. METHODOLOGY: Panel data (2006-2009) were assembled from Florida and multiple sources: inpatient hospital discharge, vital statistics, the American Hospital Association, the Healthcare Information and Management Systems Society, and other databases. We applied a panel study design, controlling for hospital and market characteristics. PRINCIPAL FINDINGS: Hospitals that were in centralized health systems or became more centralized over the study period had significantly larger reductions in mortality compared with hospitals that remained freestanding. Surprisingly, tightly integrated hospital-physician arrangements were associated with increased mortality; as such, hospitals may wish to proceed cautiously when developing specific types of alignment with local physician organizations. We observed no statistically significant differences in the growth rate of costs across hospitals in any of the health systems studied relative to freestanding hospitals. Although we observed quality improvement in some organizational types, these outcome improvements were not coupled with the additional desired objective of lower cost growth. This implies that additional changes not present during our study period, potentially changes in provider payment approaches, are essential for achieving the ACO objectives of higher quality of care at lower costs. PRACTICE IMPLICATIONS: Provider organizations implementing ACOs should consider centralizing service delivery as a viable strategy to improve quality of care, although the strategy did not result in lower cost growth.

Hospital financial performance in the recent recession and implications for institutions that remain financially weak.

The recent recession had a profound effect on all sectors of the US economy, including health care. We examined how private hospitals fared through the recession and considered how changes in their financial health may affect their ability to respond to future industry challenges. We categorized 2,971 private short-term general medical or surgical hospitals (both nonprofit and for-profit) according to their pre-recession financial health and safety-net status, and we examined their operational status changes and operating and total financial margins during 2006-11. We found that hospitals that were financially weak before the recession remained so during and after the recession. The total margins of nonprofit hospitals (both safety-net and other institutions) declined in 2008 but returned to their pre-recession levels by 2011. The recession did not create additional fiscal pressure on hospitals that were previously financially weak or in safety-net roles. However, both groups continue to have notable financial deficiencies that could limit their abilities to meet the growing demands on the industry.

Did budget cuts in Medicaid disproportionate share hospital payment affect hospital quality of care?

BACKGROUND: Medicaid Disproportionate Share Hospital (DSH) payments are one of the major sources of financial support for hospitals providing care to low-income patients. However, Medicaid DSH payments will be redirected from hospitals to subsidize individual health insurance purchase through US national health reform. OBJECTIVES: The purpose of this study is to examine the association between Medicaid DSH payment reductions and nursing-sensitive and birth-related quality of care among Medicaid/uninsured and privately insured patients. METHODS: Economic theory of hospital behavior was used as a conceptual framework, and longitudinal data for California hospitals from 1996 to 2003 were examined. Hospital-fixed effects regression models were estimated. The unit of analysis is at the hospital level, examining 2 aggregated measures based on the payer category of discharged patients (ie, Medicaid/uninsured and privately insured). PRINCIPAL FINDINGS: The overall study findings provide at best weak evidence of an association between net Medicaid DSH payments and hospital quality of care for either Medicaid/uninsured or the privately insured patients. The magnitudes of the effects are small and only a few have significant DSH effects. CONCLUSIONS: Although this study does not find evidence suggesting that reducing Medicaid DSH payments had a strong negative impact on hospital quality of care for Medicaid/uninsured or privately insured patients, the results are not necessarily predictive of the impact national health care reform will have. Research is necessary to monitor hospital quality of care as this reform is implemented.

The experiences of Massachusetts hospitals as statewide health insurance reform was implemented.

Hospitals treat many uninsured patients and shoulder substantial amounts of uncompensated care. Health reform as implemented in Massachusetts, then, would be expected to bode well for hospitals as many people obtain coverage from private and public programs. We examined changes in Massachusetts hospital payer mix, unreimbursed costs of care for the uninsured and those in means-tested public programs, and overall financial condition for the period 2004 to 2010. Despite increases in coverage, unreimbursed costs for the uninsured and those in means-tested government programs did not decrease appreciably for Massachusetts hospitals over the study period. Major safety-net hospitals, which play a substantial role in serving the uninsured and Medicaid, had some initial easing of this burden but their financial situation weakened through 2010. The U.S. economic recession and Massachusetts budget pressures, which in part resulted from reform implementation, likely offset advantages hospitals experienced from reductions in the uninsured. Our analysis suggests that state actions in Massachusetts to change payment programs that the two major safety net hospitals relied on to support indigent care contributed to their financial difficulties.