Early CARES funding was unevenly distributed to academic, well-off hospitals, study says

A new RAND Corporation analysis suggests some early CARES Act funding for hospitals disproportionately favored academic-affiliated hospitals and those with greater reported assets prior to the onset of the COVID-19 pandemic.

But although the researchers saw a lower proportion of assistance delivered to critical access hospitals, they noted that much of the money did reach hospitals that treated the broader share of COVID-19 patients.

“High-Impact Distribution CARES Act funds may have disproportionately gone to hospitals that were in a stronger financial situation prior to the pandemic compared with those that were not, but funds also went disproportionately to those that eventually had the most cases,” the researchers wrote in JAMA Health Forum.

Across a sample of 952 hospitals that accounted for 92% of disbursed CARES Act support as of Oct. 22, organizations had received a mean $33.6 million from the fund across two rounds of payments.

While the largest share of hospitals (26.3%) received somewhere between $10 million and $20 million, nearly twice as many received between $5 million and $10 million (22.1%) or less than $5 million (23.6%). Skewing the distribution was the small proportion of hospitals that received $30 million to $40 million (4.6%), $40 million to $50 million (4.3%) and more than $50 million (7.8%) of relief funding.

RELATED: COVID-19 relief fund distribution fell short for hospitals treating Hispanic, underinsured communities

Analyses of the hospitals’ characteristics found a significant association between a hospital’s assets, endowment size and COVID-19 cases to the amount of CARES Act funding they received, the researchers wrote.

Further, teaching hospitals received 42% more CARES Act funding than their peers while critical access hospitals received 40% less, according to the study. Nonprofit hospitals saw 13% more funding, although this increase was not statistically significant.

Although much of the government’s funds appear to have reached hospitals hit by COVID-19 patients, the RAND researchers wrote that future policy could do more to ensure support reaches organizations in greater danger of financial instability.

“This disparity in funding may be of particular interest because many critical access and rural hospitals faced financial pressures even before the COVID-19 pandemic,” they wrote. “Policymakers should continue to ensure that these types of hospitals are sufficiently funded, potentially with additional rounds of funding.”

The researchers conducted their analysis by pairing 2018 hospital-level data from the Healthcare Cost Report Information System, CARES Act Provider Relief Fund payment records and Centers for Disease Control and Prevention data on suspected COVID-19 hospitalizations.

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They noted that the study’s findings only characterize the opening stages of the pandemic and do not assess the billions in CARES Act funding provided to rural and safety net facilities.

The RAND study comes shortly after a broader Harvard University analysis of 2,709 hospitals found limited relief for hospitals serving communities with a high share of Hispanic residents or a low share of patients with employer-sponsored insurance.

On the other hand, that investigation also found “meaningfully increased” federal relief funding for healthcare facilities serving areas with high shares of Black residents, those with a high number of nursing home beds in their community or those reporting a high ratio of Medicaid revenue to beds.

The hit and miss results were largely driven by the formulas used to determine hospital relief, which the Harvard health policy researchers said prioritizing net patient revenue to determine capacity.

“All else being equal, hospitals serving more uninsured people will tend to have lower net patient revenue, as this measure does not count uncompensated care,” they wrote in September’s Health Affairs. “Future approaches to extraordinary relief should integrate measures of community need from outside Medicare data.”