Hospitals may run out of money before they can access federal coronavirus relief

Tribune Content Agency

WASHINGTON — Hospitals under financial strain from the coronavirus pandemic are laying off and furloughing employees as they await guidance from Washington on how to access billions of dollars in a federal relief fund.

In Kentucky, Appalachian Regional Healthcare let 500 workers go last week after experiencing a 30% decrease in business since the outset of the pandemic.

Prisma Health — one of South Carolina’s largest health care providers and employers — announced on Friday a round of furloughs that would affect all 32,000 workers at a company that is critical to the state’s coronavirus response.

In eastern Missouri, a rural hospital with $1.7 million cash on hand said it has six weeks before it runs out of money.

And in Miami-Dade County, Florida, one of the major hospital systems asked its 11,000 employees to voluntarily take leave in the coming weeks due to the “unbelievable strain” on its finances caused by COVID-19, the disease caused by the novel coronavirus.

The hospitals are facing the same challenges: a steep decline in revenue from a drop in elective medical procedures, compounded by a sharp increase in expenses as they protect their personnel and prepare for a surge of coronavirus patients.

It is a consequence of guidance to hospitals from local officials, governors and the Trump administration to cancel all elective surgeries — meant to shield the vulnerable and free up beds, equipment and health care workers for coronavirus patients. That policy has had the unintended effect of gutting the primary revenue source for hospitals just as they approach the peak of the nation’s worst public health crisis in a century.

A landmark economic relief package passed by Congress and signed into law last week by President Donald Trump, called the CARES Act, is meant to provide emergency relief to these facilities that will offset the costs associated with COVID-19.

But hospitals have not yet received guidance on how to access those funds.

An official with the Department of Health and Human Services, which was granted authority to provide the $100 billion in relief to hospitals, told McClatchy that it is working to “take quick and decisive action” to deliver the funding. The official declined to offer details.

Asked to provide a timeframe for when hospitals can apply for emergency relief, how quickly those applications will be processed, and when they can expect to receive relief funding after that, the HHS official said: “We will keep you updated.”

“The Trump administration is continuing to take quick and decisive action to combat COVID-19 and protect Americans,” the official said.

Members of Congress are growing impatient.

“Congress has acted and now the administration must quickly and effectively get these emergency resources to health care workers on the frontlines,” Senate Minority Leader Chuck Schumer, D-N.Y., said in a statement to McClatchy. “Every day this funding does not go out is another day our health system remains without the resources it needs.”

Experts, too, are concerned that hospitals already struggling financially may not survive long enough to secure federal aid.

The relief package “didn’t lay out a game plan for the actual distribution of the money,” Chip Kahn, president and chief executive officer of the Federation of American Hospitals, told McClatchy. “Many hospitals in the middle of the country that maybe haven’t seen COVID yet can’t wait.”

In early March, when the scope of the coronavirus outbreak became apparent, hospital groups asked the U.S. surgeon general not to issue blanket guidance against elective procedures that had been promoted at the White House podium by Trump’s coronavirus task force coordinator, Deborah Birx, and Vice President Mike Pence.

The administration proceeded with the guidance, as did state and local government officials from both parties. But Trump officials recognized the blow such a move would inflict on hospital finances and vowed they would move quickly to mitigate the damage.

On Monday, Seema Verma, administrator of the Centers for Medicare & Medicaid Services, said that Trump had directed her agency to begin offering advance payments for health care providers experiencing cash-flow problems.

“We know that many providers are complying with our recommendations to delay nonessential elective surgeries, and they shouldn’t be penalized for doing the right thing,” Verma said.

But while Kahn, whose organization represents over 20% of hospital beds nationwide, said that Medicare’s advance payments would make a difference, he warned they would be dwarfed by the costs associated with the crisis.

Hospitals are now losing 40% to 50% of their revenue while shouldering unprecedented costs preparing for waves of COVID-19 patients that are expected to hit different parts of the country at different times.

“There are parts of the country that are hotspots, and are either being overwhelmed or on the verge, and they clearly need resources and support,” said Tannaz Rasouli, senior director for government relations at the Association of American Medical Colleges. “But it gets lost sometimes that those places that aren’t yet experiencing a surge are still preparing in anticipation of a surge, and it’s really important to be forward looking and look at those communities that have the potential.”

Hospitals are also facing a series of unanticipated expenses due to the coronavirus outbreak.

Among them are the costs per COVID-19 patient, who typically stays in the hospital double or triple the amount of time as a patient battling the seasonal flu.

“It’s really a triple whammy,” Kahn said in a phone interview. “They’ve lost the services that provide the resources to run the hospital, then they have to prepare for the surge, and then when the surge comes, many of them are elderly or on Medicare — the payments are not going to be sufficient.”

Some hospitals are booking hotel rooms for health care providers working directly with COVID-19 patients to prevent them from exposing family members to the virus, according to Len Marquez, senior director for public policy and strategic outreach at the Association of American Medical Colleges.

Marquez and Rasouli, in a phone interview with McClatchy, said that many hospitals are covering the costs of childcare for essential health care workers as schools and daycares close around the country to slow the pandemic’s spread.

Other hospitals are paying for new facilities to accommodate patients who have no place to go to recover from other illnesses or procedures — homeless individuals, for example, who need somewhere safe to rest but who can’t be accommodated in hospitals where beds for COVID-19 patients are in short supply.

“We have heard from some of our hospitals that they are looking at $2 million a day in lost revenue,” Marquez said. “These dollars are not going to be made up in six months. These are permanent losses they are going to experience.”

The CARES Act offered hospitals three different ways of receiving emergency relief.

The smallest private hospitals, without any affiliations with large groups and with fewer than 500 employees, could apply for loans through the Small Business Administration that they will not have to pay back if they retain all their employees at current pay levels. That provision is only expected to apply to 700 hospitals out of more than 6,000 nationwide.

The law also provides a payroll tax delay that essentially serves as an interest-free loan for hospitals until the end of the year.

But the greatest source of hospital relief from the new law is in a $100 billion emergency fund housed at HHS.

The department was given the authority to grant that money to providers for coronavirus-related expenses, or for lost revenue attributable to the pandemic. Applications would be accepted on a rolling basis and based on hospitals proving their losses could be tied to the outbreak.

Congress did not provide a structure for giving out the money — and HHS has yet to outline one.

HHS is required to provide Congress with an update on the fund within 60 days — a timeframe that could serve as a soft deadline for the department to begin providing grants. Strata Decision Technology, a health care technology company that builds financial planning tools, estimates that the average American hospital will face a cash crunch within 60 to 90 days.

While Marquez said that the $100 billion HHS fund was significant, he conceded there remains “a strong possibility” that hospitals will need more money to stay viable enough to provide patients with the care they need, now and in the future. Kahn said the fund would cover roughly 60% of revenue losses when stretched across the entire hospital system.

Lawmakers are preparing to take action if the resources are insufficient — or if HHS doesn’t act quickly. Experts are concerned the department lacks the capacity to run the massive payment program.

Rep. Richard Neal, D-Mass., the chairman of the House Ways and Means Committee, is monitoring the administration’s progress in disbursing the new funding and is prepared to fight for implementation of new policies to provide hospitals with “a quick infusion of cash” if necessary, according to a Democratic committee aide.

Rep. Rosa DeLauro, D-Conn., the chairwoman of the House Appropriations subcommittee with jurisdiction over HHS, said in a statement to McClatchy she was aware the HHS fund might not be enough.

“That could end up falling short in the weeks and months ahead given the scope of this pandemic,” she said. “The federal government’s response is not over until [hospitals] have what they need.”


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