Projected to lose $1.5B, Conn. hospitals await more federal aid
WASHINGTON — In April, the federal government sent $260 million to support Connecticut hospitals battered by coronavirus, and more federal dollars are expected to flow to hospitals in virus “hot spots” this week.
Armed with $175 billion to aid hospitals and health centers, the U.S. Department of Health and Human Services has quickly distributed at least $50 billion of the funds in a process that hospitals and lawmakers have criticized as confusing and opaque.
Unable to get answers about who’s getting the money and how its being distributed, Rep. Rosa DeLauro, D-3, who oversees the Department’s budget, said Monday she’s likely to call oversight hearings to question HHS officials about it.
Plunged in the red by coronavirus, hospitals in Connecticut said they are waiting for more federal aid to arrive, uncertain when it will come or how much. And even before the money heads out the door, hospitals said they think it won’t be enough.
“So far the help from the federal government has been very inadequate,” said Kathleen Silard, CEO of Stamford Health, in an interview. “We will weather the storm, but we need to get relief.”
Stamford Health — which operates Stamford hospital and doctors’ offices — furloughed 375 employees on Tuesday, after forecasting $27 million in revenue losses for the month of April, following $10 million in revenue losses in March, Silard said. Meanwhile, the not-for-profit health organization saw operations costs increase by $11 million in March.
Day Kimball Healthcare in Putnam, Conn. was also forced to furlough employees in April.
“I have hospitals telling me they are in serious danger of going bankrupt,” DeLauro said.
Connecticut hospitals have predicted they will spend $250 million collectively in preparing for the coronavirus surge and caring for patients during the surge, said Mark Schaefer, vice president of System Innovation and Financing for the Connecticut Hospital Association, based on hospital reports to the association. They’ve had to buy expensive personal protective equipment, expand their hospital capacity, shift staffing and provide acute care to patients, driving up costs.
Meanwhile, elective procedures and office visits have been canceled, while emergency department visits are down. As a result, hospitals and health systems in Connecticut are projected to lose $1.5 billion this fiscal year alone, Schaefer said.
“That’s a little more than 10 percent of their net patient revenue,” Schaefer said. “It’s a big hit to their margins. These are major losses at the same time they’re incurring this sudden expense profile.”
Recognizing the problem, Congress approved $100 billion in hospital relief in the
$2.2 trillion stimulus bill signed into law March 27. That
$100 billion is not yet fully spent, but Congress already followed up with another $75 billion in hospital aid last week.
The U.S. Department of Health and Human Services (HHS) was given broad leeway over how to distribute the money and for a government bureaucracy, it moved relatively quickly to hand out about $50 billion to hospitals and health centers in the month of April, Schaefer said.
“For words have informed us here: fast, fair, simple and transparent,” said Deputy HHS Secretary Eric Hargan in an interview Monday. “A bunch of life lines have been given to the industry so far.”
In the month of April, HHS paid a total $458 million to Connecticut hospital and health centers, Hargan said. Of those funds, $260 million went just to hospitals, according to the Connecticut Hospital Association. The most recent payments were paid to hospitals and health centers on Friday.
More than 4,254 Connecticut health providers have received HHS coronavirusrelated payments so far, data from HHS shows.
These first payments were not based on hospitals’ coronavirus-related needs, however. HHS paid out the money to hospitals based on their share of total Medicare fee-forservice reimbursements in
2019 — in other words, how much the government paid the hospitals for care of seniors on Medicare insurance. In this formula, children’s hospitals and health centers that don’t care for seniors got nothing.
For a second round of payments, HHS revised the formula to account for this issue and adjusted the level of funding hospitals and health providers received.
Stamford Health received a
$9.4 million in the first payment round and $4.3 million in the second, totaling $13.7 million to date, said Michael Veillette, chief financial officer of Stamford Health. That’s just over one-third of the health organizations’ lost revenue from April and March.
Throughout this process, hospitals and health centers have not known what formula would be used or how much money would be arriving in their accounts until the money came in.
“They didn’t reveal the detail of the formula until the money was out the door,” said Schaefer of HHS. “I remain concerned very much that speed may be at the expense of fairness.”
For the new pot of $10 billion for coronavirus “hot spots,” HHS collected information from hospitals including their number of
COVID-19 admissions from Jan. 1 to April 10, 2020 and their number of intensive care unit beds. But hospitals said they don’t know how this information will be used to calculate what hospitals get.
The hot spot money is expected to flow this week, but on Monday, Hargan did not know when the money might arrive in hospital accounts or how many hospitals would receive the funds.
“[We] are doing some calculations on that to get the money out,” said Hargan. “I think we still see that we are on target on for this week, a distribution this week of that $10 billion.”
Schaefer said he worried that hospitals with later coronavirus surges — after April 10 — would not get enough support from this tranche of funding. He said he hoped HHS would do another round of “hot spot” funding.
Another $10 billion of the funding will be paid out to rural hospitals and $400 million to tribal facilities in the coming weeks, Hargan said. HHS has also set aside billions in funding to reimburse hospitals for the care of uninsured
COVID-19 patients. Schaefer said these payments were unlikely to make hospitals whole for the amount they spent on care of coronavirus patients — who sometimes require expensive acute care, including specialized therapists, ventilators and medications — because Medicare reimbursements typically do not cover the real costs of care.