Member Insights

Member Insights: Healthcare Economic Stimulus

April 1st, 2020

Member Insights by Center for International Career Advancement

The Coronavirus (COVID-19) stimulus package provides $150 billion in emergency funding to bolster the healthcare system, of which, $100 billion will provide relief for hospitals related to COVID-19 expenses and lost revenue due primarily to temporary suspension of elective surgical procedures. The funds are also available for building temporary structures, retrofitting facilities, leasing of properties, medical and testing supplies and equipment, including personal protective equipment, increased staffing, and surge capacity. The legislation will create an emergency fund grant program to reimburse hospitals.

The remaining $50 billion will support other public health needs including Community Health Centers, Veterans’ health care, CDC programs, treatments and vaccines, expanding telehealth access, medicine, and supplies including building up the National Strategic Stockpile.

In addition to the $100 billion, hospitals will benefit from the following provisions projected by AHA to generate another $17 billion in new funding:

  • 20% in additional reimbursement for treating COVID-19 inpatients,
  • Temporary elimination of the 2% Medicare sequester from May through December 2020,
  • Delays in Medicaid Disproportionate-Share Hospital payment cuts. The delay amounts to $4 billion in each
    year of 2020 and 2021, and
  • Expands the existing option to receive accelerated Medicare payments during the emergency period.

As with other employers, payroll taxes will be reduced by 50% until January 2021. Additionally, hospitals with less than 500 employees may be eligible for small business loans with the potential of those loans being forgiven if certain conditions are met.

These are important and positive provisions to financially support hospitals during this crisis situation. On the downside, however, Moody’s Investor Services recently downgraded both nonprofit and for-profit hospitals from a stable to negative outlook due to increased staffing and supply expenses related to Covid-19 and lost revenues from cancelling profitable elective surgeries. The downgrade appears to be based on uncertainties as a result of the pandemic. Moody’s also stated most hospitals should be able to weather the storm, but multi-hospital systems are more likely to better manage the crisis than smaller hospitals.

America has the best healthcare system in the world. Our caregivers, scientists, researchers, and so many others drive the innovation, ingenuity, and genius of our healthcare system. Without a doubt, this great country and the American people will collectively prevail.