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US Healthcare
An appalling system

Wealthiest Hospitals Got Billions in Bailout for Struggling Health Providers ... Twenty large chains received more than $5 billion in federal grants even while sitting on more than $100 billion in cash.

Burgess COMMENTARY

Peter Burgess
Wealthiest Hospitals Got Billions in Bailout for Struggling Health Providers ... Twenty large chains received more than $5 billion in federal grants even while sitting on more than $100 billion in cash. Providence Health System runs two venture capital funds from an office in downtown Seattle.Credit...Ruth Fremson/The New York Times A multibillion-dollar institution in the Seattle area invests in hedge funds, runs a pair of venture capital funds and works with elite private equity firms like the Carlyle Group. But it is not just another deep-pocketed investor hunting for high returns. It is the Providence Health System, one of the country’s largest and richest hospital chains. It is sitting on nearly $12 billion in cash, which it invests, Wall Street-style, in a good year generating more than $1 billion in profits. And this spring, Providence received at least $509 million in government funds, one of many wealthy beneficiaries of a federal program that is supposed to prevent health care providers from capsizing during the coronavirus pandemic. With states restricting hospitals from performing elective surgery and other nonessential services, their revenue has shriveled. The Department of Health and Human Services has disbursed $72 billion in grants since April to hospitals and other health care providers through the bailout program, which was part of the CARES Act economic stimulus package. The department plans to eventually distribute more than $100 billion more. So far, the riches are flowing in large part to hospitals that had already built up deep financial reserves to help them withstand an economic storm. Smaller, poorer hospitals are receiving tiny amounts of federal aid by comparison. Twenty large recipients, including Providence, have received a total of more than $5 billion in recent weeks, according to an analysis of federal data by Good Jobs First, a research group. Those hospital chains were already sitting on more than $108 billion in cash, according to regulatory filings and the bond-rating firms S&P Global and Fitch. A Providence spokeswoman said the grants helped make up for losses from the coronavirus. Those cash piles come from a mix of sources: no-strings-attached private donations, income from investments with hedge funds and private equity firms, and any profits from treating patients. Some chains, like Providence, also run their own venture-capital firms to invest their cash in cutting-edge start-ups. The investment portfolios often generate billions of dollars in annual profits, dwarfing what the hospitals earn from serving patients. Many of these hospital groups, including Providence, are set up as nonprofits, which generally don’t have to pay federal taxes on their billions of dollars of income. By contrast, hospitals that serve low-income patients often have only enough cash on hand to finance a few weeks of their operations. After the CARES Act was passed in March, hospital industry lobbyists reached out to senior Health and Human Services officials to discuss how the money would be distributed. Representatives of the American Hospital Association, a lobbying group for the country’s largest hospitals, communicated with Alex M. Azar II, the department secretary, and Eric Hargan, the deputy secretary overseeing the funds, said Tom Nickels, a lobbyist for the group. Chip Kahn, president of the Federation of American Hospitals, which lobbies on behalf of for-profit hospitals, said he, too, had frequent discussions with the agency. The department then devised formulas to quickly dispense tens of billions of dollars to thousands of hospitals — and those formulas favored large, wealthy institutions. ImageAfter 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. 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. Image 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. The Coronavirus Outbreak Frequently Asked Questions and Advice Updated June 5, 2020 How does blood type influence coronavirus? A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. How many people have lost their jobs due to coronavirus in the U.S.? The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. Will protests set off a second viral wave of coronavirus? Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. How do we start exercising again without hurting ourselves after months of lockdown? Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home. My state is reopening. Is it safe to go out? States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. What’s the risk of catching coronavirus from a surface? Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. What are the symptoms of coronavirus? Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. How can I protect myself while flying? If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) How do I take my temperature? Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. Should I wear a mask? The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. What should I do if I feel sick? If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. How do I get tested? If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. 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. Even before the coronavirus, roughly 400 hospitals in rural America were at risk of closing, said Alan Morgan, the chief executive of the National Rural Hospital Association. On average, the country’s 2,000 rural hospitals had enough cash to keep their doors open for 30 days. ADVERTISEMENT Continue reading the main story Many hospitals that primarily serve low-income people have received federal grants that their executives say may not be enough to see them through the current crisis. At St. Claire HealthCare, the largest rural hospital system in eastern Kentucky, the number of surgeries dropped 88 percent during the pandemic — depriving the hospital of a crucial revenue source. Looking to stanch the financial damage, it furloughed employees and canceled some vendor contracts. The $3 million the hospital received from the federal government in April will cover two weeks of payroll, said Donald H. Lloyd II, the health system’s chief executive. “This is just a Band-Aid,” Mr. Lloyd said. The Harris Health System, which operates two hospitals in Houston, treats mostly uninsured patients. In a good year, it has a 1 percent profit margin, said Dr. Esmaeil Porsa, its chief executive. The system has lost about $43 million in patient revenue during the pandemic, Dr. Porsa said. So far, it has received about a quarter of that in federal grants. It is unclear how it will make up the shortfall. “I know there are hospitals out there that have some God-awful amount of money in reserve,” Dr. Porsa said. “We are not that, and we will never be that. Whatever cash we have we’re going to pour into services.” That is not how things work at the Providence Health System, which in some ways resembles a Silicon Valley powerhouse as much as a health care company. Providence owns 51 hospitals, including Swedish Medical Center in Seattle, and 1,100 clinics in California, Texas and others states. Even with the federal grants, Providence lost $179 million in April, said Melissa Tizon, a company spokeswoman. She said the bailout money has helped the company avoid laying off staff or reducing their pay, although Providence has furloughed workers and told some staff to expect pay cuts beginning in July. ADVERTISEMENT Continue reading the main story “Remember, the pandemic isn’t over,” Ms. Tizon said. “We need to be financially stable for the next possible wave.” But Providence’s financial stability does not appear to be in jeopardy. The hospital network has nearly $12 billion in cash reserves. It has invested that money in hedge funds, private equity firms and real estate ventures. It also oversees two venture capital funds that manage about $300 million on behalf of the health care chain. The venture funds do deals alongside some of the country’s highest-profile investment firms, including Kleiner Perkins and Carlyle. Last year, Providence’s portfolio of investments generated about $1.3 billion in profits, far exceeding the profits from its hospital operations. Like other nonprofits, Providence generally does not owe federal taxes on its earnings. In 2018, Providence paid its chief executive, Dr. Rod Hochman, more than $10 million. That would be enough to finance about a month of operations at the St. Claire hospitals in Kentucky. Kitty Bennett contributed research. Jesse Drucker is an investigative reporter for the Business desk. He previously worked for The Wall Street Journal and Bloomberg News where he won a pair of awards in 2011 for investigative and explanatory reporting from the Society of American Business Editors and Writers for a series on how U.S. multinationals shift profits into tax havens. @JesseDrucker Jessica Silver-Greenberg is an investigative reporter on the business desk. She was previously a finance reporter at the Wall Street Journal. @jbsgreenberg • Facebook Sarah Kliff is an investigative reporter for The New York Times. Her reporting focuses on the American health care system and how it works for patients. A version of this article appears in print on May 26, 2020, Section A, Page 1 of the New York edition with the headline: How Wealthiest Hospitals Reaped Billions in Bailout. Order Reprints | Today’s Paper | Subscribe The Coronavirus Outbreak At New Lab, a technology hub in Brooklyn, workers will undergo temperature checks and have the choice of wearing a device that buzzes whenever colleagues get too close to each other. New York City Begins Reopening After 3 Months of Outbreak and Hardship June 7 People play craps at a table with transparent partitions after the reopening of the Bellagio Hotel & Casino Thursday in Las Vegas. ‘Cruise Ships on Land’: As Las Vegas Reopens, a Huge Test for Casinos 6h Ago When will life return to normal? This is the answer of epidemiologists, as embroidered by one of them, Melissa Sharp. When 511 Epidemiologists Expect to Fly, Hug and Do 18 Other Everyday Activities Again 18m Latest Updates: Economy Updated 41m ago BP plans to cut about 15 percent of its work force. Wall Street’s rally continues, with the S&P 500 close to a break-even for the year. Here’s the business news to watch this week. See more updates More live coverage: Global
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