It wasn't just Wall Street titans and national retail chains that accepted federal pandemic money meant for smaller, more vulnerable economic players. Wealthy hospitals did it, too, snatching funds intended for struggling medical facilities while sitting on billions of dollars in reserves, according to a recent New York Times report. Congress should claw that money back and rewrite the rules in the program that allowed it to happen.
As America's economy shut down earlier this year to contain the coronavirus, Congress approved a series of programs to provide emergency funding to struggling segments of the economy. Among them was a program that was supposed to provide a financial-aid lifeline to small businesses. But it saw hundreds of millions of dollars funneled instead to national chains and publicly traded companies because the program was approved hurriedly, with lax rules. Public outrage was so intense that some companies ended up returning the money.
The public should be at least as outraged at a parallel controversy unfolding in the hospital industry. Congress approved a separate program of about $175 billion to help hospitals stay on solid fiscal ground, some $72 million of which has already been disbursed. Hospitals around the country had to ramp up their pandemic responses while at the same time halting the elective procedures that bring in much of their revenue. For hospitals that were already struggling, generally in rural or inner-city areas, the federal pandemic aid has been crucial.
But as the Times reported, about $5 billion of that money so far has gone to about 20 large hospital chains that, between them, are sitting on more than $100 billion in cash and investments. In some cases, the newspaper reported, the wealthy hospital chains run their own capital-venture firms, invest in hedge funds and realize dividends that dwarf what they get from providing hospital services.
For example, one of them, Providence Health System, one of America's largest and richest hospital chains, has a $12 billion portfolio that brings in some $1 billion annually. Yet the taxpayers kicked in $509 million in pandemic relief funds to Providence, even as poorer hospitals fight to keep basic bills paid.
Defenders of the program point out that speed was of the essence, and making the process slow and cumbersome for truly needy hospitals to get the money would have been worse than allowing some of it to go where it wasn't needed. But at a bare minimum, a hospital's financial holdings and cash reserves should have been taken into account when deciding who got the money.
It isn't too late to update the program to close that loophole. And it isn't too soon to start demanding that hospital chains that didn't need this taxpayers' infusion during a national emergency give it back, so it can be routed where it's needed.
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