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Ambulatory Care for the Urban Poor

Structure, Financing, and System Stability

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Document date: June 01, 2001
Released online: June 01, 2001

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: This report is available in its entirety in the Portable Document Format (PDF).


About the Series

Assessing the New Federalism is a multiyear Urban Institute project designed to analyze the devolution of responsibility for social programs from the federal government to the states, focusing primarily on health care, income security, employment and training programs, and social services. Researchers monitor program changes and fiscal developments. In collaboration with Child Trends, the project studies changes in family well-being. The project aims to provide timely, nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively.

Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute’s Web site (http://www.urban.org). This paper is one in a series of occasional papers analyzing information from these and other sources.


Executive Summary

Ambulatory care providers are becoming an increasingly important part of the U.S. health care system. Technological progress has made many treatments previously offered only in the hospital now possible in an ambulatory setting. This shift to ambulatory care, while generally recognized as a positive move toward a less expensive and more appropriate health care setting, has often left providers scrambling to adjust to rapidly changing technology and new, complex reimbursement systems. Safety net providers, in particular, have difficulty keeping abreast of a rapidly changing health care system because they serve low-income, uninsured patients and face constraints imposed by their funding sources.

This study examines the organization and financing of ambulatory care for the poor in three urban communities—Houston, Denver, and Los Angeles—and the challenges posed to these systems by ongoing changes in the health care sector. Specifically, this study describes each community's ambulatory care safety net, the challenges each community faces and their responses to these challenges, and the possible determinants of the level of success each has achieved in meeting the ambulatory care needs of their vulnerable populations. In addition, each system is examined from the perspective of long-term stability.

This report is based on case studies conducted in the three study communities between October 1999 and February 2000. The authors interviewed local health officials, public and private clinic administrators, health department staff, and community advocates using a standard set of questions developed for each category of interviewee. A separate team gathered information on hospitals and their interactions with the ambulatory care system; these findings are presented in a separate study.

While ambulatory care generally refers to any care not provided in an inpatient setting and may even include specialty care at a hospital outpatient department, it is important to note that this report focuses on non-hospital-based primary and preventive care provided in a clinic setting. Specialty care provided at a hospital specialty clinic or physician's office is treated as a complement to clinic-based primary and preventive care.

A distinctive ambulatory care system has developed in each community, reflecting the particular constraints and history of each of the safety net systems. These systems differ in the extent to which they rely on publicly provided services for the uninsured population as opposed to public financing of privately provided services. They also differ in the level, reliability, and source of the financial contribution available in support of safety net services. The communities also differ in the strength of their commitment to ambulatory care and in the efforts they have made to encourage ambulatory care over hospital-based care where appropriate. In addition, the broader health care market conditions within which each system operates are quite different across the three communities.

Specifically, findings show that the ambulatory safety net in Denver ranks highly on several system characteristics critical to success. It is well funded, well organized, and well led. Furthermore, it enjoys substantial local support, both political and financial, and has been given substantial independence. It has implemented a systemwide information system that links ambulatory care sites with complementary specialty and inpatient services, facilitating both referrals for nonambulatory services and referrals to ambulatory sites for follow-up care. As a system, Denver's safety net operates as an equal player in a highly competitive market; within the system, the status of ambulatory care service is equal to that of other services, including inpatient care. The community of Denver has used these assets to put together a successful integrated system to serve a defined population. Los Angeles has some of these assets; Houston has fewer.

Our case studies point to eligibility as another factor that strongly influences system success. For reasons of history, the Denver public safety net is able to strictly define the population eligible for its services and to enforce its eligibility standards. It is able to limit eligibility to residents of the city and county of Denver because a large part of its operating budget is funded by these localities and because an alternative source of care is available to those excluded from the Denver public system. By thus limiting the number of people it serves, Denver's safety net is able to improve the quality of the services it provides, if only by reducing the queue.

Denver County encompasses a small and fairly homogenous population as compared with the much larger populations in Los Angeles County and Harris County (where Houston is located). Like Denver, Houston limits eligibility for its services to Harris County residents and so it has some control over demand for its services. However, the Harris County Hospital District, from which the bulk of the safety net's funds are derived, serves a substantially larger and more diverse population and so experiences substantially higher demand for its services. Los Angeles does not impose a residency requirement at all and therefore faces nearly limitless demand.

Finally, the success of the ambulatory care safety net is linked to the degree of flexibility the public system has to direct resources toward ambulatory care. Denver receives substantial local funding for ambulatory care services as well as federal grant funding for community and public health. Los Angeles has funding under a Section 1115 waiver that is targeted toward ambulatory care. Houston's safety net, in contrast, is more dependent on disproportionate share hospital funding and graduate medical education payments, which are based on inpatient volume. As a result, it has less flexibility to direct funds toward the ambulatory sector.

Given the varying degree of success seen in the three systems, the question arises as to which of these components or combination of components is critical to the success and long-term stability of the ambulatory care safety net in these communities. Could the Denver public safety net maintain its level of accomplishment if its leadership changed? Would expanding its service area lead to an unsustainable level of demand for its services? Might changes in the local political landscape lead to a reduction in its critical local financial support? The problems faced by the systems in Los Angeles and Houston suggest these questions but provide few answers. Nevertheless, a comparison of the three systems suggests that the characteristics of a successful safety net system are similar to those of a successful private system. The degree to which financial and organizational flexibility and managerial agility can be combined with the mission of public service under the constraints of public financing appears to be key to the successful operation of a public safety net. A strong ambulatory care system within the safety net is then the result of decisions based on the interests of both patient care and long-term institutional survival.

Note: This report is available in its entirety in the Portable Document Format (PDF).



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