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

Gloria J. Bazzoli, Michael P. Thompson, Teresa M. Waters

Research output: Contribution to journalArticlepeer-review

22 Scopus citations


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.

Original languageEnglish
Pages (from-to)3495-3506
Number of pages12
JournalHealth Services Research
Issue number5
StatePublished - Oct 2018

Bibliographical note

Funding Information:
Joint Acknowledgment/Disclosure Statement: This research was supported by a grant from the Agency for Healthcare Research and Quality R01 HS023783, Teresa M. Waters, Principal Investigator, and Gloria J. Bazzoli and Michael P. Thompson, co-investigators. No other disclosures. Disclosures: None. Disclaimer: None.

Publisher Copyright:
© Health Research and Educational Trust


  • Hospitals
  • financial performance
  • payment policy

ASJC Scopus subject areas

  • Health Policy


Dive into the research topics of 'Medicare Payment Penalties and Safety Net Hospital Profitability: Minimal Impact on These Vulnerable Hospitals'. Together they form a unique fingerprint.

Cite this