Monday, August 03, 2020

Hospitals seeking more help in next relief bill; rural hospitals fear lack of aid will lead to another round of closures

"U.S. hospitals are on the hook starting this week to pay back billions in federal loans that helped tide them over when they had to scale back services amid the pandemic’s initial surge in the spring," Paige Winfield Cunningham reports for The Washington Post. "But hospitals say the repayments, which are to be docked from their regular Medicare payments until they're fully paid back, could put rural and low-income-serving facilities underwater — particularly in areas where the coronavirus continues to surge." So they're seeking a fix in the next coronavirus relief bill.

Part of their ammunition is a report prepared for the American Hospital Association, predicting that half the nation's hospitals will be losing money by the end of the year unless Congress gives them more relief money, and that could bring another round of rural-hospital closures.

Overall, hospitals usually have an operating margin of 3.5 percent, but that is expected to be minus 3% for the second quarter of this year, once the figures are compiled, and could sink to minus 7% in the third and fourth quarters -- and half of all hospitals are likely to operate with a negative margin, said the report by Kaufman Hall, a health-care consulting firm.

AHA organized a call with reporters and hospital executives, including Sheila Currans, CEO of Harrison Memorial Hospital in Cynthiana, Ky. She said the hospital tries to get an 0.6% operating margin in a good year, but “We are at a negative 25 percent margin.”

Cunningham reports, "Congress probably won’t entirely forgive their loans, which span tens of billions of dollars. But there’s a good chance it will delay when hospitals have to start repaying them, spread out the repayments over a longer time, reduce the loan interest rate — or some combination thereof."

House Democrats' $3 trillion relief bill "would recoup the loans with just 25 percent of hospitals’ Medicare payments instead of 100 percent, thus spreading out repayments over a longer time," while delaying repayment for a year and cutting the interest rate to 1% from 10%, Cunningham notes. Senate Republicans' $1 trillion bill "doesn’t spread out the payments, but would delay the repayment period by five months and delay the start of interest accruing by six months. . . . A measure from Sens. Jeanne Shaheen (D-N.H.) and Michael Bennet (D-Colo.), which is backed by the American Federation of Hospitals, would go further than either of those by allowing the government to forgive balanced owed by hospitals in cases of financial hardship."

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