Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made Millions

Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made Millions The financial gap between wealthy hospitals and safety-net hospitals, which take everyone who walks through their doors, has widened during the pandemic, an NPR and PBS Frontline investigation found. NPR.org

This past year, the nation's more than 300 safety-net hospitals found themselves on the front lines of the coronavirus pandemic, which disproportionately affected the communities that safety-net hospitals are most likely to serve. They took on a greater share of the patient burden, even as other hospitals emerged from the pandemic with huge profits, an investigation by NPR and the PBS series Frontline has found, further widening the gap between wealthy hospitals and hospitals like LAC + USC.

"Our costs went way up, and revenue went down," says Brad Spellberg, chief medical officer at LAC + USC. "Unlike a private hospital, we don't make money from our [operating rooms]. Medicaid and Medicare do not reimburse at a level where if you say, if we do more things, I'm going to make more money."

Safety-net hospitals are funded in large part by taxpayers: In this case, LA County taxpayers, state taxpayers in California and federal taxpayers, who pay for Medicaid and Medicare.

But that tax money doesn't pay hospitals nearly as much as private insurance does.

It's just simple math. A decade and a half ago, private insurance paid about $1.50 for every $1 Medicare paid — for the same hospital services, according to a study by the medical journal Health Affairs. Medicaid paid even less. By 2018, studies showed private insurance was paying almost $2.50 for every $1 that Medicare paid for services. And researchers say that every time the government does shell out a dollar, it's underpaying for what the services actually cost. The $2.50, on the other hand, is covering things quite well.

The result is that over the past 20 years, for-profit and even some nonprofit hospitals have leveraged the $2.50 into some of the largest profits and revenue the industry has ever seen. Many safety-net hospitals have wound up in the red or are barely making ends meet.

It's a disparity that has been growing for the past two decades, as medical costs have gone up and the political will to pay for health care for the poor has not kept pace. ...

ALSO SEE EARLIER STORY: One of America's largest hospital chains has been suing thousands of patients during the pandemic