New York Times says federal aid helped wealthy hospitals grow market share; AHA disagrees

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Billions of dollars in COVID-19 relief aid helped offset financial losses at some of the larger hospital chains and the same money helped them sustain merger and acquisition activity, according to The New York Times

This consolidation by several major hospital systems, which scooped up weakened competitors and physician practices, enhanced these larger chains' "market prowess in many regions of the United States, even as rural hospitals and underserved communities were overwhelmed with Covid patients and struggled to stay afloat," the Times reported. 

The Times reported that the pandemic barely dented the financial outlook for most major hospital networks and that buying sprees continued in the industry as these wealthier hospital chains were buoyed by federal COVID-19 aid. 

"The big well-resourced hospitals had, frankly, a banner year, and they are now in a position to swallow up these smaller, more vulnerable groups," Elizabeth Mitchell, chief executive of the Purchaser Business Group on Health, which represents large employers, like Boeing, Microsoft and Walmart, that provide health benefits for their workers, told the Times. 

However, hospitals say the COVID-19 federal relief aid didn't play a role in the M&A deals, many of which were in the works before the pandemic. 

In a response to the May 21 Times article, the American Hospital Association released a statement saying the article tells a "misleading story about COVID-19 funding for hospitals and health systems."

The AHA argues that at the beginning of the pandemic Congress rightly directed the relief aid to hospitals and other providers to keep hospital doors open and that "the hospital field did not choose the formula."

"The first priority in the initial distribution was to get funding out quickly; the hospital field did not choose the formula. Subsequent allocations were more targeted, and these funds were especially crucial for smaller, standalone hospitals that were not able to benefit from the resources of a larger system," the AHA argues. 

The AHA added that providers will be held accountable for every penny of the funds and there will be an audit after the pandemic ends. "Funding that goes beyond the uses Congress specified will be returned," the AHA said. 

 

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