Between the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Paycheck Protection Program (PPP) and Health Care Enhancement Act, Congress has approved $175 billion in grants to support hospitals and other health care providers with additional expenses and lost revenue caused by the COVID-19 pandemic. On May 1, the US Department of Health and Human Services (DHHS) distributed $12 billion in high-impact funding to 395 hospitals nationwide that had admitted at least 100 or more COVID-19 patients between January 1 and April 10, 2020. Qualifying hospitals received a fixed amount ($76,975) per COVID-19 inpatient admission.

The distribution of these high impact funds was controversial. Although hospitals receiving the grants were undoubtedly on the frontlines in the early days of the pandemic, there were concerns the arbitrary April 10 cutoff and the 100-inpatient caseload requirement disadvantaged smaller hospitals and those in areas of the country hit harder by the coronavirus somewhat later. In addition, the first $50 billion in general relief grant payments, which were distributed based on a provider’s patient revenue from a previous year, not its COVID-19 caseload, also favored larger hospitals that were financially better off. The DHHS addressed some of these early concerns by targeting allocations to specific types of providers and distributing a second round of $10 billion in high-impact funds for hospitals based on COVID-19 admissions through June 10, 2020.

In a new analysis, we compared characteristics of hospitals that received and did not receive the first round of high-impact payments to examine how well the DHHS targeted the $12 billion to hospitals in early hot spots. Our findings could have implications for future relief allocations.

The first round of high-impact payments was mostly concentrated in the Northeast

Consistent with the onset of the COVID-19 pandemic in the United States, the peaks in the figure below show the first round of high-impact payments was concentrated among hospitals in the Northeast, especially among New York State hospitals. Overall, 41 percent of dollars ($4.9 billion) went to 73 hospitals in New York State.

Relief funds were particularly concentrated in the Bronx and Manhattan, the two hospital referral regions (HRRs) associated with New York City, where $2.8 billion was distributed among 30 hospitals. Other early HRR hot spots that received more than $150 million in payments include Atlanta, Illinois (Chicago and Blue Island), Indianapolis, Los Angeles, Michigan (Detroit, Ann Arbor, and Royal Oak), and New Orleans.

Payments generally, but not always, correlated with the prevalence of COVID-19 rates

Hospital payment levels across HRRs also varied widely, ranging from $8.9 million for one hospital in Little Rock, Arkansas, to $2.1 billion for 23 hospitals in Manhattan. As intended, high-impact payments were generally targeted to HRRs with high COVID-19 cases per 100,000 residents as of April 10, as displayed by the dark grey scale in the figure.

The figure also shows that some HRRs with relatively high COVID-19 prevalence rates did not receive any high-impact funds. For example, Shreveport, Louisiana, had 218 cases per 100,000 residents; Grand Junction, Colorado, had 133; Boise, Idaho, had 123; and Iowa City, Iowa, had 110. Nearly three-quarters (72.7 percent) of hospitals in these areas have fewer than 100 beds, potentially making it difficult for a facility to achieve the 100-caseload eligibility criterion. 

The table below compares characteristics of hospitals that received payments to those that did not. The 370 hospitals in our analysis sample received an average of $32.3 million in high-impact payments. These hospitals were located in counties with 36.3 confirmed COVID-19 cases per 10,000 between January 1 and April 10, nearly seven times higher than the prevalence rate (5.3 per 10,000) in counties where no hospital received high-impact payments.

Larger hospitals in racially diverse metropolitan areas with higher levels of income tended to get more relief funds

Hospitals that received payments were larger (446.9 beds, on average) compared with hospitals that did not receive payments (140.9 total beds). They were also less likely to be part of a system but more likely to be nonprofit, be located in a metropolitan area, and have any teaching status affiliation.

The surrounding county population of hospitals receiving payments was also more racially diverse, which is consistent with nearly all payments being made to hospitals located in metro areas. And on average, hospitals that received payments were located in counties with higher levels of income and educational attainment and lower rates of uninsurance and poverty.

In line with having lower uninsurance rates, hospitals that received high-impact payments had lower uncompensated care costs and higher levels of Medicaid revenue compared with those that did not receive any payments. In contrast, hospitals that received high-impact payments had similar operating margins in 2018, on average, to their counterparts. Importantly, average operating margins were negative regardless of category.

How could more hospitals treating COVID-19 patients get relief?

The first round of COVID-19 hot-spot payments generally aligned with areas with high COVID-19 cases per 100,000. However, some HRRs with high COVID-19 case numbers did not receive any payments because no individual hospital met the 100-inpatient COVID-19 caseload requirement. Why could this be?

• These HRRs had smaller hospitals, making it difficult for an individual facility to reach the 100-caseload mark.
• COVID-19 inpatient cases in the HRR may have been spread across multiple hospitals.
• The area may have had fewer COVID-19 hospitalizations despite a high COVID-19 prevalence.

One way to provide relief funds to more hospitals treating COVID-19 patients would be to base COVID-19 impact bailout funds on a provider’s actual cost of providing care to COVID-19 patients or an estimate of the average costs of COVID-19 admissions in the area.

The DHHS announced a second round of COVID-19 hot-spot payments on July 17 that was based on a modified formula for hospitals with “over 161 COVID-19 admissions between January 1 and June 10, 2020, or one admission per day, or that experienced a disproportionate intensity of COVID-19 admissions (exceeding the average ratio of COVID-19 admissions/bed).” Given the persistence of the pandemic and potential gaps in this payment formula, the new infusion of funds could help, but it might not be enough. It could be that hospitals with cash reserves may need to dip into these funds to weather the pandemic so federal relief dollars can support hospitals that are financially less well-off.

We can’t overstate the importance of keeping the country’s hospitals prepared to care for patients with COVID-19 and other health care needs. It will be critical to track and examine whether subsequent distributions of high-impact and other relief funds are reaching providers and communities with the greatest need.  

The authors are grateful to Anthony Gray for his help with data preparation for this analysis.