Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made Millions
ARI SHAPIRO, HOST:
Safety-net hospitals care for millions of poor Americans. They take the patients other hospitals don't want, patients without insurance. Those hospitals are chronically underfunded and overburdened. Now after a year of COVID, many are in financial trouble. The PBS show "Frontline" and NPR's Laura Sullivan bring us this report on the growing disparity between the hospital haves and the hospital have-nots.
LAURA SULLIVAN, BYLINE: LA County USC Medical Center is one of the largest safety-net hospitals in the country.
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SULLIVAN: But anyone who's watched soap operas in the last 50 years knows that this hospital is "General Hospital." For decades, its original building graced the soap opera's opening credits.
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SULLIVAN: Inside, though, there's no love story between Luke and Laura. The reality here is a daily financial struggle to care for every patient who walks through its doors - patients who can only pay a little, patients who can't pay at all, patients other hospitals try to avoid.
UNIDENTIFIED PERSON #1: We're going to start the hard-to-place meeting.
SULLIVAN: You can hear it on the weekly hard-to-place meeting, where doctors and staff try to figure out what to do with the current roster of problematic cases.
UNIDENTIFIED PERSON #2: The patient I would like to present today is a 36-year-old male.
SULLIVAN: The cases are complicated. The problems are varied.
UNIDENTIFIED PERSON #2: He walked into the ED, reported coming to the hospital to, quote, unquote, "rest and eat."
SULLIVAN: The hospital must take all of them, and few, if any, have private insurance.
UNIDENTIFIED PERSON #3: A 56-year-old found covered in feces on the street after eloping from a skilled nursing facility.
UNIDENTIFIED PERSON #4: Sixty-four-year-old male. He was brought in by ambulance after he was found sitting on the street.
UNIDENTIFIED PERSON #5: Today is an unidentified male. Patient may have a neurocognitive disability such as dementia.
UNIDENTIFIED PERSON #6: For a little over a year, he's been in a shelter. And again, he's 81-years-old.
UNIDENTIFIED PERSON #7: Two months ago, his backpack was stolen, which had his meds.
UNIDENTIFIED PERSON #8: Sister reported that she's not able to care for the patient.
UNIDENTIFIED PERSON #7: Has an adult child, but that adult child lives in Belgium.
UNIDENTIFIED PERSON #9: No insurance, no family or next of kin.
UNIDENTIFIED PERSON #10: Verbally abusive to staff - spitting, throwing objects.
SULLIVAN: If and when these patients get better, the hospital has to place them somewhere. Brad Spellberg is the chief medical officer at the hospital.
How long have you seen a patient stay?
BRAD SPELLBERG: We've had over three years in my tenure.
SULLIVAN: You had a patient stay in the hospital for three years?
SPELLBERG: Multiple, yeah.
SULLIVAN: Because they're sick and they needed to be there for three years or because there's nowhere for them to go?
SPELLBERG: Correct. The last thing you said, yeah.
SULLIVAN: It would be hard to find many for-profit hospitals in this country that would care for a patient for three years that had no private insurance. But LA County USC and more than 300 other safety-net hospitals around the country do, however many patients there are, however long it takes. And taxpayers cover most of the costs - in this case, LA County taxpayers, as well as state taxpayers and, through Medicaid and Medicare, federal taxpayers. None of this money, though, adds up to anything close to what private insurance pays for people's care. It's a disparity in pay that has been growing for the past two decades. And then this past year, a whole new world of problems came to the safety-net's doors.
UNIDENTIFIED PERSON #4: She was found to be COVID-positive.
UNIDENTIFIED PERSON #5: He was found to be COVID-positive.
UNIDENTIFIED PERSON #11: COVID-positive.
UNIDENTIFIED PERSON #12: COVID.
UNIDENTIFIED PERSON #13: COVID.
SULLIVAN: COVID disproportionately affected low-income and disadvantaged communities, people of color and the working poor. Spellberg says that's all the people safety-net hospitals are most likely to serve.
SPELLBERG: Our costs went way up, and then revenue went down. Now, unlike a private hospital, we don't make money from our ORs. Medicaid and Medicare do not reimburse at a level at which you can say, if I do more things, I'm going to make more money.
SULLIVAN: It's just simple math. A 2018 study by the RAND Corporation found that for every dollar Medicare pays hospitals for a service, private insurance gives them almost 250 for the exact same service. Medicaid pays even less, and those government dollars don't cover the hospital's actual costs. The 250, on the other hand, covers things quite well. The result is that over the past 20 years, for-profit and even some nonprofit hospitals have leveraged the 250 into some of the largest profits the industry has ever seen. The average safety-net hospital has wound up in the red or barely making ends meet.
BRUCE SIEGEL: I think we're on the precipice.
SULLIVAN: Bruce Siegel leads a group representing the country's safety-net hospitals called America's Essential Hospitals.
SIEGEL: Even before the pandemic, many of these hospitals were losing money. The pandemic is only going to make that worse. It's been a terrible year.
SULLIVAN: In the first half of 2020, all hospitals were in a panic. There was a nationwide crush to secure PPE and staff for COVID wards. Elective surgeries, long a moneymaker for hospitals, were shut down across the country. But then something curious started to happen. Some wealthy hospitals didn't seem to be faring so badly. For one thing, the federal government decided to send out the first $46 billion in relief money based on how much revenue a hospital was losing, which had the result of sending lots of federal money to wealthy hospitals. Wealthy hospitals also had a lot of financial options at their disposal. Ge Bai is an associate professor of accounting at Johns Hopkins Carey Business School.
GE BAI: They had taken proactive action before COVID hit. These hospitals started to suspend their cash dividend payouts. At the same time, they started several lines of credit.
SULLIVAN: By July, some for-profit hospitals were actually showing a profit. HCA, the country's largest for-profit hospital system, was up 38% from the previous year, leading to an almost bizarre moment on the company's July investor call when an analyst asked the company's chief financial officer, Bill Rutherford, is COVID good for business?
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UNIDENTIFIED PERSON #14: Is it actually a profitable business when you bring it in?
SULLIVAN: Rutherford responded that it was too soon to tell. But by the end of the year, HCA had posted a $3.8 billion profit, more than it had made in 2019. The company was doing so well it gave its government relief money back. And it wasn't alone. Tenet Healthcare, another large chain, made almost 400 million in profit. University of Pittsburgh Medical Center and the Mayo Clinic also posted hundreds of millions in profit, but not many safety nets. In October, Moody's warned urban counties that operating a public safety-net hospital during COVID was financially risky. Analysts found several safety-net hospital systems, such as those in Chicago, Miami and Los Angeles, were down to less than two months cash on hand compared to the usual six or seven.
BAI: COVID expands the financial disparity.
SULLIVAN: Ge Bai says COVID made an already growing trend worse.
BAI: For the past 15 years, the financial disparity across hospitals is expanding. So the richer ones become richer, and the poorer ones become poorer.
SULLIVAN: Safety nets made it through the past year with some federal relief money and local help. But Brad Spellberg at LA County USC says it will take years before safety-net hospitals' budgets balance out.
SPELLBERG: It is a little unfathomable to me how a hospital system could be making a huge profit in the middle of a COVID pandemic. But honestly, nothing surprises me anymore. Nobody ever sat down and mapped out how health care should be delivered. And so you have winners and you have losers.
SULLIVAN: Industry experts expect some safety-nets will close in coming years or perhaps be sold to private investors looking to turn them into for-profit moneymakers. And they can be as long as somewhere nearby there is another safety-net hospital willing to take all the patients they don't want.
Laura Sullivan, NPR News.
SHAPIRO: And you can watch the "Frontline" film, "The Healthcare Divide," at pbs.org.
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