Safety-net hospitals (SNHs) provide health care services to individuals regardless of their ability to pay. These hospitals serve Medicaid recipients, the uninsured, and people with limited access to health care due to their socioeconomic status, race, or ethnicity. In addition to providing health care to the most vulnerable, SNHs are crucial in training the next generation of clinicians. Hospitals serving Medicaid patients and the uninsured have low operating margins because of a dated State Medicaid financial model, and as a result, many now face closure. This review provides historical context for the financial challenges facing SNHs in Brooklyn, New York. In addition, it examines how New York State's Medicaid reimbursement methodology threatens the viability of hospitals that serve low-income communities. Finally, the article suggests a solution to the health care crisis in Brooklyn, capitalizing on structural payment reform successes in other states.