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After the CARES Act passed, hospital industry lobbyists reached out to senior Health and Human Services officials, including Secretary Alex M. Azar II, to discuss how the money would be distributed.Credit…Samuel Corum for The New York Times
One formula based allotments on how much money a hospital collected from Medicare last year. Another was based on a hospital’s revenue. While Health and Human Services also created separate pots of funding for rural hospitals and those hit especially hard by the coronavirus, the department did not take into account each hospital’s existing financial resources.
“This simple formula used the data we had on hand at that time to get relief funds to the largest number of health care facilities and providers as quickly as possible,” said Caitlin B. Oakley, a spokeswoman for the department. “While other approaches were considered, these would have taken much longer to implement.”
Hospitals that serve a greater proportion of wealthier, privately insured patients got twice as much relief as those focused on low-income patients with Medicaid or no coverage at all, according to a study this month by the Kaiser Family Foundation.
“If you ever hear a hospital complaining they don’t have enough money, see if they have a venture fund,” said Niall Brennan, president of the nonprofit Health Care Cost Institute and a former senior Medicare official. “If you’ve got play money, you’re fine.”
In a letter this month to the Department of Health and Human Services, two House committee chairmen said the Trump administration appeared to be disregarding Congress’s intent in how it was distributing the aid.
“The level of funding appears to be completely disconnected from need,” wrote the two Democrats, Representatives Frank Pallone Jr. of New Jersey and Richard E. Neal of Massachusetts.
It is the latest instance in which enormous and hastily enacted federal bailout programs have benefited those who don’t appear to need the money. A package of $170 billion in federal tax breaks, for example, will go overwhelmingly to many of the country’s richest people and biggest companies. A program to rescue small businesses initially directed hundreds of millions of dollars in loans to publicly traded companies while many smaller firms were frozen out
That pattern is repeating in the hospital rescue program.
For example, HCA Healthcare and Tenet Healthcare — publicly traded chains with billions of dollars in reserves and large credit lines from banks — together received more than $1.5 billion in federal funds.
An HCA spokesman said the aid didn’t cover the expected lost revenue and higher expenses caused by the coronavirus, while a Tenet spokeswoman said the pandemic had suppressed the company’s profits.
The Cleveland Clinic, sitting on $7 billion of cash, received $199 million in bailout funds.
The Cleveland Clinic, sitting on $7 billion of cash, received $199 million in bailout funds.Credit…Dustin Franz for The New York Times
The Cleveland Clinic got $199 million. Last year it had so much money on hand — its $7 billion in cash helped generate $1.2 billion in investment profits — that it paid investment advisers $28 million to manage the fortune.
Angela Kiska, a Cleveland Clinic spokeswoman, said the federal grants had “helped to partially offset the significant losses in operating revenue due to Covid-19, while we continue to provide care to patients in our communities.” The Cleveland Clinic sent caregivers to hospitals in Detroit and New York as they were flooded with coronavirus patients, she added.
The St. Louis-based Ascension Health, which operates 150 hospitals nationwide, has received at least $211 million from Health and Human Services. The company, with $15.5 billion in cash, operates a venture capital fund and an investment advisory firm that helps other companies manage their money.
Even if Ascension stopped generating any revenue whatsoever — a doomsday scenario — it would have enough cash to fully operate for nearly eight months.
Nick Ragone, a spokesman for Ascension, said the federal funds “facilitated our ability to serve our communities during this unprecedented time.” He said Ascension had not furloughed or laid off any workers and wouldn’t do so for “as long as possible.”
Critics argue that hospitals with vast financial resources should not be getting federal funds. “If you accumulated $18 billion and you are a not-for-profit hospital system, what’s it for if other than a reserve for an emergency?” said Dr. Robert Berenson, a physician and a health policy analyst for the Urban Institute, a Washington research group.
Hospitals that serve poorer patients typically have thinner reserves to draw on.
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