Help save America’s independent hospitals

The thousands of independent hospitals serving communities across America now face an existential threat. The COVID-19 pandemic and flawed federal attempts to aid these hospitals have left them financially devastated.  

Unless Washington takes the right steps to help in the near future, many independent hospitals may be absorbed by larger health systems or close their doors for good. As a result, millions of Americans could face significantly higher health care costs and gaping holes in the health care system.  

Independent hospitals serve areas ranging from the extremely rural to inner-city communities that multi-hospital systems often do not. We also provide an alternative to the widespread consolidation of the hospital industry of recent years which, studies show, raises costs to consumers and the entire health care system.    

I see how important the role of independent hospitals is for the communities we serve. When COVID-19 hit our area, our deep relationships with local health care partners allowed us to respond early, nimbly and effectively. Our deeply committed, and local board helped us collect donations of money, food, and PPE. We were also able to integrate easily with U.S. military personnel who helped provide care to our patients. 

Fortunately, my hospital entered this crisis in a strong position and with great support from our community. Although the pandemic has been financially hard on us, we believe we will emerge from this crisis on a solid footing. But other independent hospitals are not so lucky. 

Even before the pandemic hit, many of the more than 2,000 independent hospitals in America — hospitals that are not owned by larger multi-hospital systems — were financially weak. According to Modern Healthcare data, half of the nation’s stand-alone hospitals lost money on an operating basis for each of the last five years. Rural stand-alone hospitals were in worse shape: 60 percent experienced losses in each of the last five years.

Then came COVID-19. All hospitals suffered when states restricted elective surgeries and other non-essential services which are critical to hospitals’ bottom lines. The American Hospital Association estimates that the nation’s hospitals and health systems are now collectively losing more than $50 billion a month. 

Next came the federal government’s attempts to stem some of those losses as part of the CARES Act economic stimulus package. To date, the Department of Health and Human Services has distributed more than $70 billion in grants to hospitals. But that money has flowed disproportionately to bigger hospital systems. Smaller, independent hospitals with little access to capital are receiving tiny amounts of federal aid by comparison.

As Congress considers a new round of aid and stimulus to the economy, what can the federal government do differently that might blunt the impact of the pandemic on small and independent hospitals?

For one thing, with providers across this country losing $50 billion a month collectively, we need more funding for providing relief. Current allocations are simply not enough to cover our losses and save independent facilities. 

In addition, Washington has to do a better job of distributing money from previous relief bills. That means it must be distributed equitably to independent hospitals as well as large hospital systems. It must be distributed to those hospitals that need it most: those whose communities have been most seriously affected by the pandemic. And it needs to go out more quickly —not even half has been distributed. For hospitals, even a one-month delay can cause cash flow problems.

Equally important to help independent hospitals, Medicare offered hospitals a lump-sum advanced payment early in the COVID-19 crisis, critical support to help the cash flow of hospitals like ours. But repayment begins 120 days after the loan was issued and it carries a 10.25 percent rate of interest. During a crisis like this, those terms are onerous for small and independent hospitals. Congress should convert these advance payments into a grant or provide much better, and delayed, repayment terms.

Finally, we must support states with critical funding as they absorb new costs and lower revenues. States are vital sources of grant and reimbursement funding for hospitals, and any cuts to these revenue streams would inevitably flow down to cuts to us. State funding also supports teachers, police, firefighters, and other essential workers — all key partners with us throughout the pandemic. 

Independent hospitals are local pillars, trusted care providers, and nimble operators. These characteristics make us essential through this pandemic, and essential every day beyond it, throughout rural, urban, and suburban America. We cannot keep communities healthy if we are not healthy ourselves. 

Kathleen Silard is the president and chief executive officer of Stamford Health, which operates Stamford Hospital and ambulatory health centers in Fairfield County, Connecticut. 

Tags 340B Drug Pricing Program America's Essential Hospitals Articles Medicare Publicly funded health care

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