Michigan health systems raise more than $ 4.4 billion in COVID-19 relief funding

Bret Jackson, president of the Economic Alliance for Michigan, said he was concerned hospitals would use lost revenue from COVID-19 to pass higher costs on to employers. Another concern is that the money hospitals received from the CARES Act will be used to buy ailing doctor’s offices or expand health care operations.

“It was important for Congress to support these institutions and medical groups that did not have the right to care for patients,” Jackson said. “What worries me is how they will cover the lost earnings and that one way or another the employer community will be the target of hyper-inflation in prices.”

Executives at Beaumont, Henry Ford and Trinity Health told Crain’s that none of the funds received by federal or state sources will be used to buy ailing doctor’s offices, hospitals or otherwise to increase market share in the areas. hospitalization or outpatient consultation. The CARES Act did not directly prohibit such business travel.

But it is questioned whether the systems should lay off or fire as many employees and healthcare workers as they have. More than 10,000 healthcare workers, including doctors and nurses, were laid off or laid off in Southeast Michigan, according to an analysis by Crain shortly after federal funding bills were approved. .

Officials at Beaumont, Henry Ford and Trinity Health said they made the right calls to employees and staff on leave as many healthcare services have been cut dramatically and patient care has been cut by more than half. They said they needed to cut spending as relief bill funding was weeks away from reaching their bank accounts.

“Even though our revenues have fallen by 50% in the state of Michigan, we have only put 10% of our workforce on leave (out of 28,000 employees at the start of April). So we haven’t matched dollar for dollar at all, ”said Rob Casalou, president of the Michigan, Georgia and Florida markets with Trinity Health, a system of 93 hospitals based in Livonia.

Health care experts interviewed by Crain’s also say lobbying efforts by the National Hospital Association are underway to ask Congress to forgive the $ 2.4 billion in advance Medicare payments to the 10 health systems. from Michigan. Overall, Michigan hospitals received about $ 2.94 billion out of a total of $ 78.4 billion nationally, CMS said.

Casalou said he was in favor of either fully canceling the loan or another round of financial grants for hospitals.

“We have paid the price for this pandemic and for medical costs,” Casalou said. “We did it by abandoning all of our other jobs and ended up losing hundreds of billions of dollars in the process. We are looking to the government for help in this regard and the bills they have passed so far. our in our opinion. “

Casalou said it would be easier for Congress to simply forgive Medicare advance payments already received by health systems since the funding was distributed. He said he was also concerned about a second wave of COVID-19 this fall.

“If they just forgive them, they don’t have to generate another bill with another installment and then figure out how to distribute it,” he said. “It would absolutely put us in a much stronger shape in terms of the ability to resist and be able to get out of it.”

So far, Casalou said Trinity Health Michigan has received grants of up to $ 132 million. Federal data shows Trinity Michigan will receive $ 165 million and the state of Michigan will provide an additional $ 2.7 million in relief funds. The Catholic system also received $ 219.5 in Medicare prepayments.

“We did not use it for any other purpose than to pay the expenses that we had to incur as well as to compensate for the loss of income,” said Casalou. “We halted all of our capital spending to save money.”

Casalou said Trinity Michigan also received an additional amount of funds because Congress postponed a 2% reduction in Medicare related to sequestration and a 20% top-up in reimbursement for Medicare patients who had COVID-19. “It’s useful, although I guess it’s temporary,” he said.

Henry Ford has received a total of $ 39 million from Medicare for other COVID-19 relief funding, including sequestration cuts and Medicare payment increases, Damschroder said.

In the first two months of the pandemic, Trinity Health Michigan saw a 50% drop in patient activity, leading to an operating loss of $ 50 million in March and a loss of $ 84 million in April. .

As of mid-June, hospitals in Trinity Michigan treated 1,986 patients with 428 deaths, far fewer than Beaumont, which treated 8,049 patients with 906 deaths.

In May, Trinity Michigan lost an additional $ 53 million, including money saved with workers on leave. By June 30, the end of Trinity’s fiscal year 2020, the system expects to lose an additional $ 20 million, even as patients start to return for a four-month loss of $ 207 million in operations.

“We had $ 75 million upfront (in the third quarter ending March 30), but we lost it all. Without (the federal grant and loan money) we would be in the red,” he said. Casalou said, adding that he expects Trinity Michigan to post a net loss for fiscal 2020.

But Casalou said Trinity expects to break even in the three-month period ending September 30 and for the first six months of fiscal 2021 by December 31 to be in the dark.

“We will try to recoup as much of our volume as possible and with some restructuring and monitoring our spending we expect to be in the dark for fiscal 2021,” Casalou said. “From next January until June (2021), we hope to be closer to our normal.… If they cancel our loans, that would definitely put us in the dark.”

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