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Flush with government stimulus cash and payments for caring for COVID patients, major hospital chains are snapping up smaller rivals, independent hospitals, and physicians’ practices left weak by the coronavirus onslaught.
The $178-billion federal Provider Relief Fund channeled government aid to hospitals during the crisis. However, the bulk of the aid went to the largest and richest hospital chains, put no caps on the funds’ use for mergers and acquisitions, and left rural and small-town hospitals to sink or swim, critics have noted.
Many of the chains are stronger financially now than before 2020’s economic crisis and have billions of dollars in cash on hand, The New York Times reported.
About $25 billion of the fund remains to be allocated, and some chains are asking for more time to spend the money they have, according to the NYT.
“Regulators should really be looking at the transactions occurring,” Yale health care economist Zack Cooper told the NYT, warning that the money has made large hospital companies even more powerful.
Representative Katie Porter has called on the Federal Trade Commission to review the extent to which the funds were spent to care for patients and maintain facilities and whether some portion, and how much, was devoted to building healthcare empires.
CommonSpirit Health, one of the largest U.S. chains with 140 hospitals in 21 states, received $1 billion from the federal fund to offset unplanned COVID costs and the loss of lucrative elective surgeries canceled or postponed during the crisis.
This year, it has taken over smaller hospital networks in Seattle and Arizona and started a data firm serving 40 states.
“We have continued to prioritize growth,” CommonSpirit CEO Lloyd Dean said at an investors conference earlier this year, the NYT reported.
New York City’s NYU Langone Health hospital group, which took $500 million in government aid, has said it is “exploring a relationship” with Long Island Community Hospital, the island’s last independent hospital.
Banner Health, a 30-hospital network based in Phoenix, pocketed $400 million in public support, according to Good Jobs First, and in October bought the Wyoming Medical Center, the state’s largest hospital.
Dallas-based Tenet Healthcare received more than $500 million from the aid program and bought 45 ambulatory surgery centers in December.
As with the Paycheck Protection Program for businesses, large chains had an easier time applying for and receiving federal relief than smaller hospitals, which not only lacked the staff to devote to the paperwork but had a harder time qualifying for payments because of the way the program was structured.
Often, the chains receiving the most aid and spending the most to expand their businesses charge the most for their services, often twice or more what Medicare will pay for the same procedures, according to a RAND Corp. study.
CommonSpirit, born of a 2019 merger between Dignity Health and Catholic Medical Services, is among the priciest chains, RAND reported, saying Dignity routinely charged three times the Medicare rate when it merged with the Catholic group.
Last July, the Los Angeles-based Cedars-Sinai hospital network bought Huntington Hospital in Pasadena. According to RAND, the chain was already charging triple the Medicare rate for common procedures when it received $200 million from the Provider Relief Fund and millions in other emergency grants to care for COVID patients.
Huntington’s prices could rise by as much as 32 percent if the merger took place, state regulators said, based on Huntington’s new parent.
Cedars-Sinai and Huntington have sued the state’s attorney general to prevent the state from capping Huntington’s prices; the hospital decried the state’s “unprecedented overreach.”
Congress was warned of the dangers early on.
Major employers cautioned that the relief money would worsen consolidation if the funds’ uses were not closely directed and supervised; health care experts feared the money would lead to fewer companies controlling health care, pushing up prices for employers and insurance companies.
“The big, well-resourced hospitals had a banner year [financially] and now they’re in a position to swallow up smaller, more vulnerable groups,” Elizabeth Mitchell, CEO of the private Purchaser Business Group on Health, said to the NYT.
The group represents Boeing, Microsoft, and other large businesses offering health insurance to employees.
TREND FORECAST: The trend we had long forecast of the Bigs getting bigger and the smalls being pushed out of business continues to escalate. And, with interest rates low and money cheap, the trend will continue. However, when the “Greatest Depression” hits, there will be strong political movements targeting the 1 percent and calls for breaking up conglomerates, multinationals, and hi-tech monopolies.
Thus, we maintain our trend forecast that as conglomerates gobble up more and more, and more people are pushed into low living standards, new political movements, with radical communist/socialist leanings that demand government support for the working class will accelerate… as will “Off With Their Heads 2.0” movements.