Safety-Net Activities and Hospital Contracting with Managed Care Organizations

Abstract

This article studies factors of safety-net hospitals that affect contracting with managed-care organizations. Web-based data were used to identify the hospital networks of managed-care plans in 71 metropolitan statistical areas. We collected lists of hospitals from a national sample of managed-care plans. After combining these data with hospital, managed-care, and area characteristics, multivariate logistic regressions with random effects were estimated to determine hospital characteristics that influence the probability of a contract between the plan and hospital. Hospital characteristics included size, ownership, whether it was part of a system, teaching status, and safety-net activities. Managed-care plan characteristics included type of plan and ownership. Certain safety-net hospital measures and a cluster of related hospital characteristics are associated with a lower probability of contract. Hospitals accounting for a disproportionate share of safety-net activities are less likely to belong to managed-care networks, which may place them at a competitive disadvantage.