Apr 9, 2020 - Health

Hospitals are starting to get their coronavirus cash infusion

Illustration of a red cross spinning to reveal money
Illustration: Rebecca Zisser/Axios

The federal government is sending $64 billion to hospitals, post-acute facilities and other medical providers to help cope with the coronavirus fallout.

Yes, but: Even though more funding is coming, safety net and rural hospitals fear they are getting a raw deal from the way some of the money is being distributed.

The big picture: Hospitals and other providers requested funding to offset higher labor and supply costs as well as lost revenue from elective surgeries and procedures that had to be halted. Those federal funds, part of the most recent stimulus package, are now flowing.

Where it stands: The federal government is doling out $30 billion in no-strings-attached bailouts, out of the $100 billion that was authorized, but some facilities that treat vulnerable patients are worried about the way that money is being distributed.

  • The government's funding mechanism is "going to widen the disparities" between safety-net providers and large hospital systems that already have large cash reserves, said Beth Feldpush, a top executive at America's Essential Hospitals.
  • Hospitals' and other providers' share of that $30 billion will be based on their historical Medicare revenue. That's a good deal for hospices, home health companies and dialysis facilities, which primarily treat Medicare patients, according to an analysis from Spencer Perlman, an analyst at Veda Partners.
  • But safety net and rural hospitals, some of which are in coronavirus hotspots right now, typically treat a lot of uninsured and Medicaid patients and worry they won't be getting paid proportionally.

"Rural hospitals are going to close this year," Alan Morgan, CEO of the National Rural Health Association, said of the initial funding distribution. "There will be a lot of blame to go around."

Hospitals have also tapped a separate $34 billion pot, which will be administered as "advance payments" from Medicare — essentially loans. Hospitals can request up to six months of advance payments, and have to repay it within a year before interest starts to accrue.

  • Those loans will immediately give providers cash t0 cover payroll and other expenses, but the loans will be easier for big systems to repay.
  • NewYork-Presbyterian, a tax-exempt hospital system in New York City that has recorded $1.7 billion of cumulative profit in the past three years, requested $700 million in advance Medicare payments, CEO Steven Corwin told Axios.
  • Publicly traded Tenet Healthcare expects $1.5 billion from this program.

What's next: There will be more money coming hospitals' way — and they also have more requests.

Go deeper