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HHS sends $10 billion in CARES Act Funding to hospitals

by Valerie Dimond, Contributing Reporter | July 22, 2020
Business Affairs
The Department of Health and Human Services (HHS) is distributing a second round of financial help to hospitals with escalating numbers of COVID-19 patients.

Starting July 20, Coronavirus Aid, Relief, and Economic Security (CARES) Act funding will go to hospitals in need, which, according to reports, are many. The money comes as the healthcare industry braces for a drop in growth from 5.3% to 0.6% in 2020, with revenues remaining below the $2 trillion mark, according to a recent Frost & Sullivan analysis.

Yet another recent report conducted by Kaufman, Hall & Associates for the American Hospital Association (AHA) asserts that without further government support, margins could sink to -7% in the second half of 2020, with half of all hospitals operating in the red. Nonetheless, the outlook would have been much worse had there been no funding at all (-15% in the second quarter of 2020).

HHS says the second round of funding was based on a formula for hospitals with over 161 COVID-19 admissions between January 1 and June 10, 2020, or one admission per day, or that experienced a disproportionate intensity of COVID admissions (exceeding the average ratio of COVID admissions/beds). Hospitals will be paid $50,000 per eligible admission.

HHS said the funding will provide relief to more than 1,000 hospitals, of which 969 are designated COVID-19 high-impact facilities. A combined 210 hospitals in New York, New Jersey, and Illinois are getting the most funding, totaling more than $2.1 billion.

The virus is here, said President Trump in late March, as he signed H.R.748, the CARES Act, in the Oval Office. “We didn’t ask for it. We didn’t invite it. We didn’t choose it. But we are going to defeat it together because we’re going to work together, and this is the first start of it. The hospitals will get money — the money they need.”

The president also sat down the following month with a group of healthcare leaders at the White House, including executives from Intermountain Healthcare, the AHA, Ascension, LifePoint Health, and others. “I think you people have been having a hard time,” Trump said. “From what I’m understanding, you’re having a hard time and I understand that very well. A significant amount of this money will go to the hospitals and hotspots, while a portion of it will reimburse hospitals for the cost of treating uninsured patients and for the coronavirus.”

Rick Pollack, AHA president and CEO, said many systems will continue to spend more than they earn with the majority of expenses going toward labor and supply and equipment costs. Total projected losses to hospitals and health systems in 2020 so far total $323.1 billion, according to an AHA analysis. Even a slow and steady decrease in COVID-19 cases going forward would still put median margins in the red in the fourth quarter, at around -1%.

However, according to the Centers for Disease Control and Prevention, cases continue to climb, with confirmed numbers edging closer to 4 million.

“This pandemic is the greatest financial threat in history for hospitals and health systems and is a serious obstacle to keeping the doors open for many,” Pollack said in a news release. “While we appreciate the support from the Administration and Congress, we need further help to stay afloat to continue our mission of caring for patients and communities.”

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