NCHA Statement on Health Systems Receiving Provider Relief Fund Assistance

Cary, NC – June 22, 2022 – All of North Carolina’s hospitals and health systems, regardless of size, location and ownership type have provided essential and lifesaving care to their patients and communities during the pandemic. Congress recognized the critical role hospitals play as the backbone of our health care system and early in the pandemic provided relief funds to ensure hospitals would remain resilient. Hospitals used these funds to prevent, prepare for, and respond to COVID-19, including setting up alternative care sites, procuring personal protective equipment and testing, administering mass vaccination events and outreach, supporting their workforce, and expanding telehealth capabilities, to name a few examples.

The report released today falsely demonizes health systems for applying for and using Provider Relief Funds (PRF) to respond to the COVID-19 crisis. The board-governed systems mentioned represent more than 80 hospitals across the state — small, rural and urban — treating citizens in more than half of North Carolina’s counties. As with other politically motivated statements by the Treasurer, the report conveniently forgets the reality on the ground of what hospitals were facing. In early 2020, our hospitals were dealing with an unknown virus. Normal clinical operations screeched to a halt while hospitals across the world scrambled to find and procure N95 surgical masks, gowns, temperature monitoring devices, cleaning agents, ventilators, improved filtration systems for infection control and more.  The truth is that NC hospitals drastically changed their operations and way of doing business based on the request of the Governor and other State officials.  Although these changes allowed the state to avert a pandemic disaster, they were taxing on all hospitals.

The federal government created multiple formulas to allocate Provider Relief Funds (PRF) to all types of hospitals and appropriately worked to get this critical relief out quickly during the crisis. These funds, which providers are held accountable for under law, have allowed hospitals to continue to serve all who need care. Hospitals are held accountable for these funds through a reporting and auditing process. Once the pandemic ends, any unused funding will be returned to the government.

Further, under the current PRF allocation, hospitals and health systems did not receive any funds for expenses and lost revenue from the massive delta and omicron surges that spiked COVID-19 cases and hospitalizations to record high levels. In fact, more than half of all COVID-19 hospitalizations occurred during these two surges, putting an incredible strain on hospitals and health systems, their caregivers, and other essential workers.

While we appreciate the funds from PRF, along with other support from Congress that has been a lifeline to many hospitals, our field is not out of the woods yet. More than a third of hospitals nationwide had negative operating margins as of April, according to Kaufman Hall’s National Hospital Flash Report in April, and more than 60% of North Carolina’s hospitals have a negative operating income. The combined loss for all North Carolina hospitals in 2022 is expected to be $2 billion. Without the PRF funds, these losses would be significantly higher.

Cherry-picking financial data, and then spinning it, is not reflective of the many immense struggles and challenges facing the hospital field, including a workforce shortage crisis, along with skyrocketing costs for supplies, equipment, drugs and labor, and near-historic levels of inflation. These surges in input costs, along with ongoing challenges from the COVID-19 pandemic and Medicare payment cuts, have continued to strain the resources the hospital field needs to care for their patients and communities.

As we’ve noted repeatedly, hospitals’ charity care spending and community benefit investment activity is transparent and accountable. Through federal oversight by the Internal Revenue Service, it is regulated, reported, and audited. Enforcement is the responsibility of the Secretary of the United States Treasury. Our hospitals also provide transparent financial assistance policies, cost calculators, and meet federal requirements for providing negotiable rates and a “shoppable services” price list. Any statement or insinuation on the contrary is not just wrong, it’s a political stunt not addressing the problems with the rising cost of health care.

About NCHA

Founded in 1918, North Carolina Healthcare Association (NCHA) is the united voice of the North Carolina healthcare community. Representing more than 130 hospitals, health systems, physician groups and other healthcare organizations, NCHA works with our members to improve the health of North Carolina communities by advocating for sound public policies and collaborative partnerships and by providing insights, services, support and education to expand access to high quality, efficient, affordable and integrated health care for all North Carolinians.