May 5, 2020 - Health

The coronavirus is further dividing rich and poor hospitals

Illustration of a short stack of money with a doctor on top reaching up next to a tall stack of money with a doctor out of frame
Illustration: Sarah Grillo/Axios

Many hospitals may not make it out of the coronavirus pandemic.

The big picture: The most vulnerable organizations — especially those that treat more old, poor and non-white patients — are teetering on the edge of existence and have to compete with larger, affluent hospitals for federal aid.

Where it stands: Wealthy hospital systems are sitting on billions of dollars in cash and investments, and they "are strongly positioned to take full advantage of whatever method the government sets for distributing the remainder of the bailout funds," Jordan Rau of Kaiser Health News recently reported.

  • Smaller, independent facilities have long lived in the shadows of bigger systems. The coronavirus is more clearly exposing inequality in the industry, as some hospitals get large bailout sums and additional aid from financiers while others literally fall apart.

The buzz: Bailout funds are rolling in, and they have been a lifeline for hospitals that had to postpone non-urgent procedures and for those treating large numbers of coronavirus patients.

  • But many economists and health policy experts have been shocked by the federal government's disbursement.
  • The feds initially sent money out based on Medicare billing, and then pivoted to allocating the entire first $50 billion of bailout funding based on a hospital's share of net patient revenue.
  • "That is a direct reward to those hospitals that have more market power and have been able therefore to negotiate higher rates from the private insurance companies," said Paul Levy, the former CEO of Beth Israel Deaconess Medical Center in Boston.

What we're watching: The most politically connected hospital groups, which have large hospitals as core members, are already attempting to shape the next bailout package.

  • The American Hospital Association is asking for more taxpayer funding, with no limitations on which hospitals can receive money, and is demanding Congress not pay for uninsured care at Medicare rates.
  • The Greater New York Hospital Association, one of the most influential state-level lobbying groups, similarly is asking for policies that would cater to larger institutions, according to a letter sent to congressional aides that was obtained by Axios.

The bottom line: "We’re helping the rich get richer and the poor stay poorer," Levy said.

Go deeper: The corporatization of hospital systems

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