UCLA Report Warns Of DSH Shortfall

Pending payment cuts to the so-called disproportionate share hospitals (DSH) could deprive them of more than $1.5 billion before the decade is out, according to a new report by the UCLA Center for Health Policy Research.

The cuts are part of the federal Affordable Care Act, which mandated reductions in DSH payments to safety hospitals because the presumption is that the law would insure millions of more Americans through Medicaid or via the state health insurance exchanges.

However, UCLA researchers have concluded that as many as 4 million Californians will still lack insurance by 2019. By that time, DSH payments to hospitals will have been cut to below $1 billion a year. 

The DSH program in California is very tightly targeted, focused on 21 hospitals. Those facilities operate half of the state's trauma centers and a quarter of its burn centers, both of which are costly to operate. And most of those facilities do not have a large insured patient base. At some facilities, such as Los Angeles County-USC Medical Center, half the patients are uninsured.

"Hospitals that can least afford a cut are the most at risk," said Dylan Roby, director of the UCLA center’s health economics and evaluation research program. "Policymakers should ensure that the impending shift in federal funding does not destabilize institutions that are the backbone of public health in California."