CARES Act funds disproportionately favored well-funded hospitals

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There is wide variation in the funding distributed to hospitals through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, according to an analysis of 952 hospital-level entities published in JAMA Health Forum. Research was conducted by Rand Corp.
The analysis found hospitals with higher pre–COVID-19 assets  those in a stronger financial situation prior to the pandemic received more funding. Rural hospitals and critical access hospitals received less financial assistance.
While relief disproportionately went to more resource-rich hospitals, the study also indicated funding reached hospitals with a larger proportion of patients infected by COVID-19.
Hospitals with larger endowments and cumulative assets, as well as academic-affiliated hospitals, also received higher levels of funding, the study found.
Congress has doled out more than $65 billion in funds since May 31, 2020, the study noted, distributed in two rounds. Hospitals received an average of $22.1 million in the first round and $11.5 million in the second round.
The report said as the pandemic evolves, further studies should examine the outcomes of differential CARES Act funding on hospital investments, technologies and behavior.
“While it is known what the funding allocation formulas are, it is unclear how these funds were targeted to hospitals in relation to their pre–COVID-19 finances, which is an important policy question to inform future resource allocations,” the report said.

Hospitals have endured a massive financial shock due to the pandemic as many patients avoided receiving care and elective surgeries, resulting in sharply lower revenues. In response to this, the Centers for Medicare and Medicaid Services provided financial assistance to hospitals through the CARES Act.
“This disparity in funding may be of particular interest because many critical access and rural hospitals faced financial pressures even before the COVID-19 pandemic,” the study said. “Policymakers should continue to ensure that these types of hospitals are sufficiently funded, potentially with additional rounds of funding.”

The pandemic continues to strain hospital finances as they face higher costs, lower revenues and staff burnout. Meanwhile, supply chain disruptions and shortages have driven up prices and forced a return to the costs of carrying larger inventories, according to Kaufman Hall’s 2021 Healthcare Performance Improvement Report.
The pandemic has also resulted in higher expenditures for necessities such as personal protective equipment. Hospitals have spent more than $3 billion securing PPE, according to data released earlier this month by Premier.
Hospitals are projected to lose $54 billion in net income this year, according to a September Kaufman Hall analysis released by the American Hospital Association.
“The average payment for providers in medically underserved areas was over $20,000 higher than those in resource-rich environments,” the report said. “Not only does this data indicate that those areas in the greatest need received more payments, but they also received higher valued payments.”

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