Hospitals Stung Financially by Covid-19 Pandemic Seek Remainder of Relief Fund Payouts

By Stephanie Armour and Melanie Evans

Hospitals are pressing the Biden administration to pay out the remaining relief funds that Congress granted last year to cover financial losses from the Covid-19 pandemic, saying it has been more than three months since the government's last announcement of a large disbursement.

Congress last year approved $178 billion to create a relief fund for health providers. The last announcement about payouts from the Department of Health and Human Services, which oversees the disbursements, was Dec. 17, when the department said it would send about $24.5 billion to 70,000 health organizations.

Hospital groups worry that they haven't had any communication about further disbursements since the Biden administration took office.

Of the original $178 billion fund, $24 billion, or 14%, was yet to be allocated, HHS said Thursday. Legislation enacted this month adds another $8.5 billion for rural hospitals.

The Biden administration has focused on ongoing distributions to cover the cost of treating uninsured patients and is reviewing the program to ensure that guidelines for the additional funds comply with federal statutes, an HHS spokeswoman said.

The pandemic has weighed heavily on hospital finances. Expenses for staffing, drugs, supplies and services such as sterilization have risen, while revenue from elective procedures has declined. While the year-end surge in Covid-19 cases may have subsided, hospitals' operating costs have remained high with increased infection-control measures. Moreover, the case count has plateaued at a large number and infection rates are rising in some states

Losses in revenue for 2021 are projected to be anywhere from $53 billion to $122 billion, down 4% to 10% from pre-pandemic levels, according to an analysis by consulting firm Kaufman Hall for the American Hospital Association, a trade group representing nearly 5,000 hospitals and providers.

Many hospitals have said the relief allocated by Congress wasn't enough to cover the financial hit from the pandemic, with Moody's Investors Service analysts projecting the weak economy and lingering fear of contracting the virus will leave some patients unable to pay or keep some patients from seeking care this year, dragging down hospital revenues.

Hospital groups said the lack of a secretary in charge of HHS may have added to delays in payments. The Senate only confirmed California Attorney General Xavier Becerra as secretary on Thursday, in the face of strong opposition from Republican lawmakers.

Hospitals are eager to work with HHS on plans for the rest of the funding, said Tom Nickels, executive vice president for government relations at the AHA.

"Congress fortunately provided us a sizable amount of funding for hospitals and providers last year. However, the need continues," he said. "There are places where we have surges of Covid patients, and hospitals experiencing lost revenue."

At the nonprofit Billings Clinic in Montana, payouts from the relief fund have totaled $19.7 million, less than half the roughly $43 million loss that the three-hospital system has seen, said Scott Ellner, the clinic's chief executive officer.

Expenses soared with high demand for temporary nurses as the pandemic surged between September and December, he said. At the peak of the surge, Billings increased its capacity by 20%, adding new beds in its flagship hospital and renting additional space for patients.

The last federal payment, early this year, was $275,000, Dr. Ellner said. "It's been difficult to maintain normal operations through this pandemic," he added.

The HHS spokeswoman said the department is aware of healthcare providers' concerns about roughly $10 billion of the Provider Relief Fund being disbursed to Operation Warp Speed during the Trump administration. She said that transfer was an authorized use of the money and that restoring it in some way wasn't an option, but that the department was working to send the providers funds from the remaining and newly allocated money.

Chip Kahn, president and CEO of the Federation of American Hospitals, said hospitals are worried that they won't get that $10 billion paid out.

The $8.5 billion funding for rural hospitals in the American Rescue Plan Act is less than the $35 billion that groups including the AHA, the Children's Hospital Association and America's Essential Hospitals had sought.

House Energy and Commerce Committee Chairman Frank Pallone (D., N.J.) and some Democrats balked at a Republican amendment to add more money, saying hospitals had already received significant funding.

Republican Rep. Brett Guthrie of Kentucky unsuccessfully introduced a bill to provide $35 billion to the fund. "I'm disappointed it was rejected by Democrats," Mr. Guthrie said in a Feb. 12 tweet. He said the amendment "included specific aid for rural and Medicaid providers."

Some Democrats had criticized the funding for providers last year. In some cases, money went to facilities that were closed or to some well-off nonprofit health systems.

HCA Healthcare Inc., one of the nation's largest hospital systems, repaid $6 billion in direct relief and loans and ended 2020 with profits up, despite fewer patients. Kaiser Permanente, a nonprofit health system, returned more than $500 million in grants in 2020 that it had received from the Covid-19 relief legislation.

House Democrats also launched a probe into whether the relief funds went to hospitals facing criminal or civil fraud investigations.

Unlike some other hospitals, Holy Cross Medical Center in Taos, N.M., doesn't need federal officials to rush out remaining funds, said CEO Bill Patten. What it needs instead is clarity about how it can spend money it already received.

Mr. Patten said he is nervous about spending about $4.4 million of the $5.5 million Holy Cross Medical Center already received from the Provider Relief Fund. HHS awarded relief in several batches to target funds narrowly or hand out money widely.

Holy Cross received the $4.4 million under broadly distributed payments aiming to offset lost revenue and higher expenses. But federal officials have changed terms for how to calculate those figures, Mr. Patten said, and he fears spending the money only to be told later it must be repaid.

"That's what we would ask," Mr. Patten said, "get it figured out."

The 25-bed hospital had an overall operating loss of $416,000 in the first eight months of its fiscal year, which ends May 30, Mr. Patten said. The pandemic so far has cost Holy Cross $6.2 million in lost revenue and higher expenses, which it has offset with other relief programs, he said.

Billings Clinic, meanwhile, isn't waiting for federal money to balance its budget, Dr. Ellner said. The clinic has moved to tighten expenses, carefully reviewing which open jobs to fill for non-healthcare staff and stockpiling supplies to avoid buying goods last-minute at high prices, he said.

Dr. Ellner added that he would welcome more relief: "It certainly would help us to offset some of that economic hardship."

Write to Stephanie Armour at [e-mail] and Melanie Evans at [e-mail]

Corrections & Amplifications

This article was corrected on March 25, 2021 to reflect that a spokeswoman for the Department of Health and Human Services said a roughly $10 billion transfer from the Provider Relief Fund to Operation Warp Speed during the Trump administration was authorized and couldn't be restored. The original version said based on incorrect information from HHS that the department is exploring whether it can restore the $10 billion.

(END) Dow Jones Newswires

03-23-21 0914ET