A recent study suggesting public health emergency funds overpaid hospitals during the COVID-19 pandemic paints an incomplete picture, the American Hospital Association alleged in a July 20 statement.
The study, published in JAMA Health Forum July 14, examined national RAND data and American Community Survey data between 2017 and 2021 to evaluate hospitals' financial performance during the first two years of the COVID-19 public health emergency. It found that 80 percent of hospitals received PHE funds between 2020 and 2021, and 75 percent saw a positive net operating income during this time period.
Sixteen percent of hospitals, particularly those with a high volume of Hispanic patients, experienced new financial distress.
The study's co-authors — Cheryl Damberg, PhD, director of the RAND Center of Excellence on Health System Performance, and Risha Gidwani, DrPH, a senior policy researcher at RAND — suggested that PHE funds were misallocated as some hospitals came out financially ahead.
"That COVID-19 relief funding aided in operating margins reaching all-time highs indicates funding amounts may have been larger than was necessary for many hospitals," they wrote in their conclusion.
This paints an "extremely narrow definition of financial distress," according to the AHA. Based on the study's methodology, a hospital that saw a large drop in operating margins during the pandemic but that was still at or slightly above breakeven would not be considered "in distress."
The AHA also took issue with the study's exclusion of 2022 — the worst financial year of the pandemic, with the highest patient volumes yet no new relief funds — and the low number of Medicare disproportionate share hospitals considered by the authors.
"Implicit in the study seems to be an assumption that the policy goal of pandemic relief should have been widespread negative operating margins across all hospitals," the AHA statement said. "The fact that hospitals were buoyed by relief funds in 2020 and 2021, especially before the depths of extreme financial pressures in 2022, should be seen as a policy success."
"Incomplete analyses like this are not reflective of the many immense struggles and challenges the hospital field has faced and continues to face, including a workforce shortage crisis, along with skyrocketing input costs for supplies, equipment, drugs and labor, and persistent inflation. It is in everyone’s interest to keep hospitals strong and our patients healthy," the AHA continued.
Read the full statement here.