For not-for-profit hospitals that do see significant influxes of COVID-19 patients, reimbursement is available through states via the Federal Emergency Management Agency. The CARES Act bolstered FEMA’s Disaster Relief Fund by $45 billion. But the funds will move much more slowly than the grants and Medicare advances, and are limited to use for healthcare-related expenses.
“They’re really opposite approaches. The CARES funds were just based on HHS depositing money and providers being asked about compliance and documentation, and FEMA is reimbursing expenses,” said Robert Reeves, partner at EY.
Stamford (Conn.) Health had treated nearly 600 COVID-19 patients as of late May, and the hospital is tracking funds for FEMA reimbursement. In preparing for its surge, Stamford incurred expenses to transform hospital space into additional intensive-care units, recommission an old hospital building, screen employees for COVID-19 and house quarantined employees as well as to buy personal protective equipment.
“We are tracking costs right now. It’s an ongoing process, but nothing beyond what we are capable of pulling together,” said Stamford CFO Michael Veillette.
Nick Diamond, a consultant at Avalere, said even though FEMA extended the deadline to apply for funds, it makes sense for providers to quickly give states notice that they plan to request funding. Requests can be updated later if needs change. The COVID-19 pandemic is a different disaster than the floods and hurricanes FEMA typically responds to, and the pandemic’s severity can vary over time in different locations.
“The current situation is unique. FEMA has a decent amount of discretion in the prescribed funding bucket to make use of disaster relief,” Diamond said.
Small hospitals that didn’t see a surge in COVID-19 patients but saw revenue nosedive due to a reduction in elective procedures had the option to apply for small-business assistance provided in the CARES Act. Rural hospitals successfully lobbied to allow community-owned hospitals to get grant funds when the forgivable small-business loan program was refilled in April.
Paycheck Protection Program loans can be forgiven if the hospitals use at least 75% of the money for payroll costs, including retaining or quickly rehiring employees and maintaining salary levels. The rest can be used to pay mortgages, rent and utilities.
Jones said Magnolia Regional worked with a local bank to get a small-business loan in April. The forgivable loan allowed Jones to bring back employees from furlough, and doubled the hospital’s cash on hand. “Our ability to sleep at night improved tremendously,” Jones said.
Neosho said that as of early May it was still working through the PPP application process and gathering data, as the hospital did not qualify for the program before regulators tweaked the rules to allow some rural hospitals to apply.
But only very small hospitals qualified for the program. Pullman Regional Hospital, which has 25 total beds, narrowly failed to qualify for the PPP loan because primary- care and specialty practices owned by the hospital boosted Pullman’s employee count above the 500-employee threshold.