Safety net hospitals are a crucial part of the country's health care system. A safety net hospital is a hospital that serves substantially more uninsured patients and patients enrolled in Medicaid and Medicare than other hospitals. Often the term is used interchangeably with the term public hospital, an acute care hospital owned by a governmental entity, usually the county in which it's situated. However, according to the Agency for Healthcare Research and Quality (AHRQ), only about half of all safety net hospitals are public hospitals, and most of the rest are operated by private non-profit organizations.

Safety net hospitals account for a third of all hospital stays of the uninsured. A higher proportion of their patients are from racial and ethnic minority populations. Many safety net hospitals have negative or uncommonly low profit margins because reimbursement from Medicare and Medicaid doesn't usually cover the actual costs of care.

The balance is made up through local government subsidies and payments from the Medicaid and Medicare Disproportionate Share Hospital (DHS) program (federal funds paid to hospitals that serve a high percentage of low-income patients.) Twenty percent of safety net hospitals are affiliated with a medical school. Medicaid is the largest single source of funding for both safety net hospitals and public hospitals, which is why they are acutely vulnerable to cuts to Medicaid funding. Updated March 2010