Denver Health: a model for the integration of a public hospital and community health centers.

Two components of the United States' safety net system are urban public hospitals (UPHs) and community health centers (CHCs). They share a mission of caring for the uninsured and vulnerable populations. However, these safety net components are separate in most communities, partially because of their separate origins and funding streams and different governance, government oversight, and missions. Medicaid managed care has provided a stimulus for integration of these safety net providers to facilitate the delivery of primary, specialty, outpatient, and inpatient care. Denver Health is an example of a long-standing and highly integrated urban safety net system (Figure 1), which can serve as a model for other safety net providers. Figure 1. Organizational components of Denver Health and Hospital Authority. Public Hospitals and Community Health Centers History Public hospitals in the United States grew out of almshouses and were constructed in the late 1800s in major U.S. cities (1). Funding for public hospitals was primarily provided by charitable donations, including physician time, and by city and county revenue sources. Over the next 150 years, UPHs broadened their scope by establishing outpatient dispensaries and inpatient services. More recently, UPHs expanded their care to a broad range of special populations, including immigrants, patients with AIDS, and victims of violence, and to the special needs of whole populations with services such as emergency (911) service; trauma, burn, and poison centers; and neonatal intensive care units. As the continuity of care became more important and medical specialization occurred, UPHs developed large outpatient centers, and, over time, outpatient volume exceeded inpatient volume (Table 1). Ambulatory care was often delivered on the hospital campus, embedded within hospital processes. In 1997, UPHs, on average, employed about 2700 individuals, had a bed size of 405, had 16 600 inpatient discharges, and had 333 700 outpatient visits per year (Table 1). Thus, UPHs became large, complex institutions. Table 1. Characteristics of Urban Public Hospitals and Urban Community Health Centers Community health centers are younger than UPHs (4). They began in 1965 as demonstration projects with grants from the Office of Economic Opportunity to medical schools, hospitals, and health departments to plan and administer neighborhood health centers in low-income areas (5, 6). By 1968, more than 50 centers had been funded; by the end of 1971, when the program was moved from the Office of Economic Opportunity to the U.S. Public Health Service, there were 100 funded centers (5). Currently, the Bureau of Primary Health Care of the Health Services and Resources Administration administers the community health center grant program. By 1998, 8.4 million people and more than 34 million visits were served by urban, rural, and migrant health centers; more than half of the people and visits were served by urban CHCs (Table 1). This paper compares CHCs located in urban areas to UPHs and, therefore, excludes data on rural and migrant community health centers. Community health centers complemented the new Medicaid program by providing primary care access for both the uninsured and those newly insured by Medicaid. These centers emphasized community outreach and neighborhood-based primary care for the disadvantaged. As primary care patients needed specialty services, CHCs developed relationships with local specialists and hospitals. They also offered many enabling services, such as nutrition services, social services, and transportation. The average number of outpatient visits per urban CHC grantee was just over 50 000 per year in 1998, while the average UPH had 333 700 outpatient visits (Table 1). In part, this discrepancy in size and complexity between UPHs and CHCs may have contributed to concern regarding integration on the part of CHCs. Mission, Governance, and Funding The UPHs' mission to care for the poor and uninsured is unchanged. Self-pay uninsured patients represent more than 40% of UPHs' outpatient visits, and more than 30% of the visits are for Medicaid patients (Figure 2). Self-pay uninsured patients represent more than 25% of UPH inpatient discharges, and Medicaid patients represent more than 40% (Figure 2). Although UPHs represent less than 2% of all acute care hospitals, they provide almost 25% of the uncompensated care in the United States (7). Urban CHCs serve a similar outpatient population. Self-pay patients represent more than 44% of urban CHC outpatient visits, and Medicaid patients represent 36% (Figure 2). Figure 2. Users by source of payer: urban public hospitals (1997) and urban community health centers ( CHCs Although UPHs and CHCs have a common mission of serving the uninsured, UPHs have two additional core missions: education and research. In 1996, 88% of UPHs offered graduate medical education, with an average of 304 residents per hospital; in contrast, few CHCs have residents as an integral part of their delivery model. Research, particularly focused on vulnerable populations, is an important component of these teaching hospitals. Few freestanding (that is, not part of an integrated system) CHCs perform patient care research. This differing emphasis on teaching and research has also kept UPHs and CHCs separate. The governance of UPHs and CHCs substantially differs. Until recently, UPHs were usually part of city or county government. During the 1990s, many UPHs changed their governance to independent hospital districts, authorities, public benefit corporations, or nonprofit organizations. By 1996, fewer than one third of UPHs remained under city or county government ownership (8). The need for operational flexibility in an era of hospital competition and managed care prompted these governance changes. Despite the change, funding streams often kept state and local governments involved in UPHs' operations. In contrast, CHCs are governed by community boards, most of whom must, by law, be health center patients (9). Since the federal government created CHCs and CHCs rely heavily on federal grant funding, CHCs have substantial federal oversight but have minimal state or local government oversight. The funding streams, particularly those supporting the uninsured care, differ between UPHs and CHCs (Figure 3). Although self-pay patients account for about 28% of UPHs' gross charges, they account for only 7% of net revenue (Figure 3). Funding for UPHs' uncompensated care comes largely from local subsidies (47%) and Medicaid and Medicare disproportionate share (30%); the latter is a federal program that provides an additional payment to hospitals that treat a high percentage of low-income patients. Figure 3. Net revenues of urban community health centers ( white bars gray bars In 1980, Medicaid constituted only 14% of CHCs' revenue, but by 1998 it represented more than 35%, which is similar to UPHs' revenue profile (Figure 3). Much of the increase in Medicaid revenues reflected coverage expansion for pregnant women and children in the late 1980s and early 1990s. Funding for urban CHC uncompensated care comes largely by way of public health service grants (PHS 330 and 340 grants), which accounted for about 25% of urban CHC revenue in 1998 (Figure 3). In addition, beginning in 1989 CHCs that received these federal grants became federally qualified health centers. This designation provides CHCs with cost-based reimbursement for Medicaid and Medicare patients. While this does not directly cover care for the uninsured, the reimbursement covers much of the fixed operating cost. Of note, UPHs receive two and a half times more revenue from private patients than CHCs and three times more revenue from Medicare patients. This can be attributed to inpatient services, such as trauma care. Thus, despite similar commitment to the underserved, CHCs and UPHs have incomplete overlap of missions, different focuses in the types of care delivered, different governance and government oversight, and different funding streams. All these factors have separated these institutions. This is not the case at Denver Health. Denver Health History and Organizational Structure Denver Health was established in 1860 when Denver, Colorado, was a new mining camp. The first steps in system integration began in 1916 with the consolidation of the hospital and health department commission under city and county administration. In 1950, the Department of Health and Hospitals was created by a merger of the public health department, a visiting nurse service, and the hospital. In 1966, the Department of Health and Hospitals began implementing its model primary care system, the Neighborhood Health Program, when it was awarded the Office of Economic Opportunity's second grant. With additional Office of Economic Opportunity funds, the Neighborhood Health Program network expanded to include two large CHCs and six smaller satellite CHCs. Over the next 30 years, the system grew to 10 CHCs and 13 school-based clinics located in Denver's medically underserved neighborhoods and became increasingly integrated with the other major Department of Health and Hospitals' components (Figure 1). In 1997 Denver Health became an independent authority governed by a 9-member board appointed by the mayor and confirmed by the council. A separate mayor-appointed, 13-member board (including one member of the Denver Health board) governs the Neighborhood Health Program. Fulfilling the federal grant requirement, this board is composed of 51% of Denver Health patients. Denver Health is co-applicant with the Neighborhood Health Program board on the federal community health center grant. While having two governing boards is complex, this co-applicant status has permitted integration of Denver Health CHCs and the other components of the Denver Health system. There was organizational integration between the CHCs and the hospital in the early 1990s, but functiona