Wealthy US hospitals tap into COVID relief funds to cover costs

After amassing billions of dollars in the USA coronavirus assist, lots of the nation’s wealthiest nonprofit hospitals at the moment are tapping into catastrophe aid funds that critics say they don’t want.

The cash from the Federal Emergency Administration Company (FEMA) goes to some giant well being techniques which have billions of dollars in money reserves and investments, in response to authorities data reviewed by Reuters information company.

FEMA has obtained almost 2,200 assist requests from hospitals and to this point has accepted about 15 % of them, for a complete of $894m, the company informed Reuters information. Hospitals can request more cash as US infections surge, and FEMA officers count on complete assist awards to rise considerably.

Some well being coverage specialists say that enormous and well-capitalised nonprofit techniques – which generally pay no taxes – don’t want the extra aid cash. Among the many assist candidates are among the nation’s best-known well being techniques, together with the Cleveland Clinic, Windfall and Stanford Well being Care.

“These are very financially profitable hospitals which have already obtained an enormous quantity of taxpayer cash to assist with COVID-19,” stated Eileen Appelbaum, co-director of the Middle for Financial and Coverage Analysis in Washington. “This seems like greed for them to go to FEMA for much more cash.”

Some nonprofit hospitals stated federal assist hasn’t coated all the misplaced income and better bills attributable to the pandemic. The FEMA program, they stated, recognises their main investments in workers and tools to deal with the disaster.

“The COVID-19 pandemic has drastically impacted hospitals and well being techniques across the nation, together with ours,” stated Angela Smith, spokeswoman for the Cleveland Clinic.

FEMA funds are sometimes dispersed after hurricanes, floods or different pure disasters in a selected area. Nonprofit hospitals nationwide can apply now as a result of US President Donald Trump declared the pandemic a nationwide emergency in March.

For-profit hospitals, which have confronted comparable challenges from the pandemic, can’t faucet the FEMA cash as a result of federal regulation governing catastrophe aid excludes for-profit companies.

An ambulance crew waits with a affected person outdoors the Coast Plaza Hospital emergency room throughout a surge of coronavirus circumstances in Los Angeles in the USA [File: David Swanson/Reuters]

FEMA is reimbursing nonprofit hospitals for cash spent on private protecting tools, ventilators, worker additional time, non permanent employees, testing provides and different bills coated as “emergency protecting measures.” The company reimburses hospitals for 75 % of their eligible prices.

“The dollars might be very massive for hospitals. FEMA funds are uncapped,” stated Brad Gair, a former FEMA official and now senior managing director at consulting agency Witt O’Brien’s.

This system doesn’t contemplate whether or not candidates want the cash, Gair stated.

“If a well-off hospital has eligible bills, it will get cash,” Gair stated. “There’s all the time a query in regards to the equity of that, however FEMA doesn’t have a look at the hospital’s backside line.”

Nonprofit hospitals account for about 60 % of hospitals nationwide, and years of mergers have created well being giants with immense market energy and huge sources.

These hospitals get tax exemptions on the situation that they supply charity care and different neighborhood advantages.

Some legislators and economists, nevertheless, more and more criticise giant nonprofit hospitals for not doing sufficient to assist low-income sufferers and their communities whereas spending surplus money on lavish constructing tasks, excessive govt pay and costly advertising and marketing, equivalent to naming rights on skilled sports activities amenities.

Some critics say they’re typically indistinguishable from their for-profit friends.

Main nonprofit well being techniques counter that they collectively present billions of dollars in charity care yearly and that the neighborhood profit they supply outweighs the worth of their tax exemptions.

Keith Turi, an assistant FEMA administrator, stated the company runs an “eligibility-based program” with no cap, which implies smaller hospitals usually are not competing for restricted funds with giant and rich well being techniques.

An ambulance crew leaves the Kaiser Permanente Hospital emergency room throughout a surge of coronavirus circumstances in Los Angeles [File: David Swanson/Reuters]

Even so, handing out assist to hospitals that don’t want it’s a waste, stated Tim Egan, chief govt of Roseland Neighborhood Hospital, a nonprofit, 134-bed facility serving low-income sufferers in Chicago.

Egan stated his facility has struggled financially as its payroll shot up by $5m this yr to cowl coronavirus care. However massive nonprofit hospitals, he stated, are swimming in cash by comparability.

“These FEMA dollars needs to be earmarked for safety-net hospitals which can be actually underwater,” Egan stated. “We could also be in the identical storm, however we aren’t in the identical boat. Whereas they’re pulling their multimillion-dollar yacht as much as the dock, our boat is leaking.”

Huge money reserves

This yr, hospitals and different medical suppliers have already obtained about $145bn in federal grants below the Coronavirus Assist, Aid and Financial Safety (CARES) Act. As well as, Medicare has offered almost $80bn in low-interest loans and elevated reimbursements for sufferers hospitalized with COVID-19 by 20 %, which can yield one other $3bn for hospitals.

After massive CARES Act payouts earlier this yr attracted scrutiny from advocates and legislators, some hospital chains returned the cash. Nonprofit well being system Kaiser Permanente and for-profit chain HCA Inc acknowledged they didn’t want the help and returned it.

Among the hospital techniques making use of for FEMA assist have huge monetary reserves which have offered a cushion in opposition to pandemic-related losses and bills.

Windfall, based mostly in Renton, Washington, runs 51 hospitals and almost 1,000 clinics. It reported an working lack of $214m for the primary 9 months of this yr as bills rose four % and affected person quantity dropped by 10 %.

Surge tents for COVID-19 sufferers are seen outdoors the College of California, Irvine Medical Middle in Orange, California [File: Bing Guan/Reuters]

However the well being system’s reserve of money and investments ballooned to $14.5bn by September 30 – a rise of $2.2bn from 9 months earlier. A spokesman stated that was due largely to $1.6bn in coronavirus loans from Medicare that have to be repaid. Windfall additionally bought $682m in CARES Act grants and $9m initially from FEMA. The hospital chain stated it plans to file extra requests with FEMA for an undetermined quantity.

Windfall stated it should observe all federal guidelines in searching for catastrophe assist. FEMA officers have reminded candidates to not search funding for work or bills coated by the CARES Act or different sources.

“We’re being diligent in our effort to keep away from double-dipping,” Windfall stated in a press release.

Windfall stated it wants the cash to offset coronavirus-related prices because the pandemic “enters what seems to be its most harmful part.”

Cleveland Clinic has skilled the same shortfall as surgical procedures had been cancelled and emergency-room visits plummeted.

The well being system, which runs 18 hospitals, stated that affected person income was $890m decrease than anticipated through the first 9 months of this yr and that it spent greater than $190m on pandemic-related bills. It reported an working lack of $108m by September.

However the system’s internet earnings – together with sturdy funding good points – tripled to $604m in the newest quarter, in contrast with a yr in the past. Cleveland Clinic has $11.8bn in money reserves and investments.

The system has additionally benefitted from $423m in CARES Act grants and a $849m mortgage from Medicare, which it has paid again. Final month, FEMA awarded Cleveland Clinic $46m to assist with the prices of a facility enlargement for COVID-19 sufferers and the acquisition of ventilators and different provides.

The system stated in a press release that it plans to file for added FEMA funds because it incurs extra pandemic-related prices.

Two of the most important assist requests in FEMA data reviewed by Reuters got here from two different hospital techniques with billions of dollars in monetary reserves: NewYork-Presbyterian Hospital, which sought $259m, and Stanford Well being Care, which requested $127m.

A spokeswoman for the New York hospital system stated it plans to hunt more cash to cowl its main bills in workers and tools. A Stanford Well being spokeswoman stated federal grants solely offset “a small portion of the prices that our hospital has incurred.”

Paramedics escort a affected person from the ambulance entrance to the emergency room at LAC + USC Medical Middle in Los Angeles, California [File: Bing Guan/Reuters]

Dan Skinner, an affiliate professor of well being coverage at Ohio College, stated the “concept that a few of these establishments require catastrophe funding is laughable” given the scale of their funding portfolios and rainy-day funds.

He stated the talk over coronavirus assist tends to lump collectively all hospitals and obscures the huge disparities in monetary want between small, neighborhood hospitals and deep-pocketed well being care chains.

Moody’s Investor Service wrote earlier this month that smaller hospitals combating coronavirus prices could should merge with bigger well being techniques.

“There’s a lot public goodwill towards hospitals through the pandemic,” Skinner stated. “I really feel a few of these hospitals are manipulating that.”

Hospital income down solely barely

US hospitals misplaced appreciable income through the early days of the pandemic, in March and April, as many Individuals postponed routine care.

Surging infections additionally compelled hospitals to delay elective procedures – a key income supply – to dedicate extra workers and sources to the pandemic.

Since then, enterprise has rebounded and hospital income was solely off by 1.7 % by the primary 9 months of 2020 in contrast with the identical interval final yr, in response to the Peterson-Kaiser Household Basis Well being System Tracker.

“Hospitals had bounced again to monetary stability, however now there could also be one other hit” as coronavirus hospitalisations surge once more, stated Venson Wallin, an business guide and managing director on the BDO Middle for Healthcare Excellence & Innovation. “We’re on a curler coaster.”

Banner Well being, a Phoenix-based nonprofit which runs 29 hospitals in six states, holds $5.4bn in money and investments, in response to an April report by Fitch Scores.

Banner has filed functions with FEMA, for quantities not but decided, after receiving about $1bn in federal grants and loans this yr.

Its most up-to-date federal tax return, for 2018, exhibits that Banner’s chief govt, Peter Effective, made $10.3m in 2018. He obtained $25.5m the yr earlier, boosted by a one-time retirement plan cost.

A spokesman stated Banner could search FEMA assist if CARES Act funds “don’t cowl all eligible bills incurred on account of the pandemic.”