After gathering billions of {dollars} in the US coronavirus help, lots of the nation’s wealthiest nonprofit hospitals are actually tapping into catastrophe reduction 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 accordance with authorities data reviewed by Reuters information company.
FEMA has obtained almost 2,200 help requests from hospitals and so far has permitted about 15 p.c of them, for a complete of $894m, the company instructed Reuters information. Hospitals can request more cash as US infections surge, and FEMA officers anticipate complete help awards to rise considerably.
Some well being coverage specialists say that enormous and well-capitalised nonprofit techniques – which usually pay no taxes – don’t want the extra reduction cash. Among the many help 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 help hasn’t lined all the misplaced income and better bills brought on by 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 vastly 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 particular 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 reduction excludes for-profit companies.
FEMA is reimbursing nonprofit hospitals for cash spent on private protecting tools, ventilators, worker extra time, momentary employees, testing provides and different bills lined as “emergency protecting measures.” The company reimburses hospitals for 75 p.c of their eligible prices.
“The {dollars} may very well be very huge 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 may be at all times 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 p.c of hospitals nationwide, and years of mergers have created well being giants with immense market energy and huge assets.
These hospitals get tax exemptions on the situation that they supply charity care and different group advantages.
Some legislators and economists, nonetheless, 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 government pay and costly advertising and marketing, equivalent to naming rights on skilled sports activities services.
Some critics say they’re usually 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 group 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 suggests smaller hospitals aren’t competing for restricted funds with giant and rich well being techniques.
Even so, handing out help to hospitals that don’t want it’s a waste, stated Tim Egan, chief government of Roseland Group 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 12 months to cowl coronavirus care. However huge nonprofit hospitals, he stated, are swimming in cash by comparability.
“These FEMA {dollars} ought to be earmarked for safety-net hospitals which might be actually underwater,” Egan stated. “We could also be in the identical storm, however we’re not 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 12 months, hospitals and different medical suppliers have already obtained about $145bn in federal grants below the Coronavirus Support, Reduction 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 p.c, which can yield one other $3bn for hospitals.
After huge CARES Act payouts earlier this 12 months 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.
A number of the hospital techniques making use of for FEMA help have huge monetary reserves which have offered a cushion towards 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 12 months as bills rose 4 p.c and affected person quantity dropped by 10 p.c.
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 received $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 would comply with all federal guidelines in in search of catastrophe help. FEMA officers have reminded candidates to not search funding for work or bills lined by the CARES Act or different sources.
“We’re being diligent in our effort to keep away from double-dipping,” Windfall stated in an announcement.
Windfall stated it wants the cash to offset coronavirus-related prices because the pandemic “enters what seems to be its most harmful section.”
Cleveland Clinic has skilled an analogous shortfall as surgical procedures have 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 12 months and that it spent greater than $190m on pandemic-related bills. It reported an working lack of $108m by means of September.
However the system’s internet earnings – together with sturdy funding positive factors – tripled to $604m in the latest quarter, in contrast with a 12 months 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 growth for COVID-19 sufferers and the acquisition of ventilators and different provides.
The system stated in an announcement that it plans to file for extra FEMA funds because it incurs extra pandemic-related prices.
Two of the biggest help 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.”
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 dimensions of their funding portfolios and rainy-day funds.
He stated the controversy over coronavirus help tends to lump collectively all hospitals and obscures the large disparities in monetary want between small, group hospitals and deep-pocketed well being care chains.
Moody’s Investor Service wrote earlier this month that smaller hospitals combating coronavirus prices could need to merge with bigger well being techniques.
“There may be 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 pressured hospitals to delay elective procedures – a key income supply – to dedicate extra workers and assets to the pandemic.
Since then, enterprise has rebounded and hospital income was solely off by 1.7 p.c by means of the primary 9 months of 2020 in contrast with the identical interval final 12 months, in accordance with 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 marketing consultant 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 accordance with an April report by Fitch Rankings.
Banner has filed functions with FEMA, for quantities not but decided, after receiving about $1bn in federal grants and loans this 12 months.
Its most up-to-date federal tax return, for 2018, reveals that Banner’s chief government, Peter Superb, made $10.3m in 2018. He obtained $25.5m the 12 months earlier, boosted by a one-time retirement plan fee.
A spokesman stated Banner could search FEMA help if CARES Act funds “don’t cowl all eligible bills incurred on account of the pandemic.”