Hospitals with more Black patients get paid less, reflecting ‘structural racism’: Study

Hospitals with a higher concentration of Black patients get lower payments for caring for patients.

That’s the key finding of a recent study in the Journal of Greater Internal Medicine examining reimbursement rates of hospitals. It’s significant because a relatively small number of hospitals care for a substantial portion of Black Americans.

The differences in funding could be contributing to disparities in health outcomes, the authors wrote in the study.

“These ongoing funding disparities reinforce inequities in resources inherited from the past, and may undermine the quality of care at Black-serving hospitals,” the authors stated. “Black-serving hospitals score lower on some quality indicators, have lower nurse staffing ratios, and often lack important services.”

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The authors say the heart of the disparities point to structural racism, which is actually reflected in the title of the study (“Hospitals That Serve Many Black Patients Have Lower Revenues and Profits: Structural Racism in Hospital Financing”).

“Our findings do not speak to the intentions of present-day policy and health care leaders,” the authors wrote. “However, we find evidence of disparate impact, indicating that the current system of hospital financing is a form of structural racism.”

Researchers examined 574 “Black-serving” hospitals and 5,166 other hospitals. In the 574 Black-serving hospitals, an average of 43.7% of Medicare inpatients were Black. At the other hospitals, 5.2% of those Medicare patients were identified as Black. The study examined Medicare participating hospitals between 2016 and 2018.

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The study found that Black-serving hospitals have smaller profits or surpluses than hospitals with a smaller number of Black patients, but the differences are not as dramatic. Black-serving hospitals appear to have “have a leaner cost structure,” the authors wrote.

But the gap in payments was noticeable.

The reimbursements for patient care per day were 21.6% lower at Black-serving hospitals, the study found. Black-serving hospitals were reimbursed an average of $1,736 per day, while other hospitals received $2,213 per day. The study included payments by insurers and patients in tallying reimbursements.

“Hospital financing effectively assigns a lower dollar value to the care of Black patients,” the authors wrote.

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To bring parity in reimbursement levels, America’s Black-serving hospitals would have had to receive $14 billion in additional payments in 2018, or about $26 million per Black-serving hospital.

To address the disparities in both financing and patient care, the authors also called for greater investment in hospitals serving a large percentage of Black patients.

“Health financing reforms should assure that hospital payment reflects patients’ care needs rather than their race, and repair the damage of past policies by preferentially directing new capital funds to resource-starved facilities that have long served Black communities,” the authors wrote.

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Black-serving hospitals face greater financial pressures, which have caused some to close their doors. The authors noted the closure of Hahnemann University Hospital in Philadelphia, where more than half the patients were Black. The hospital closed in 2019, and it is sorely missed by residents in the community, particularly after the COVID-19 pandemic emerged, The Philadelphia Inquirer reported.

The authors were Gracie Himmelstein of the University of California Los Angeles; Joniqua Ceasar of The Johns Hopkins Hospital; and Kathryn Himmelstein of Massachusetts General Hospital.