Federal Provider Relief Fund Benefited Richer Hospitals, Study Shows


A new analysis underscores concerns about how federal aid was allocated to health care institutions under the Provider Relief Fund, a $175-billion program that has drawn sharp criticism for giving so much money to the wealthiest U.S. hospitals.

The study, published Friday in JAMA Health Forum, shows that more money flowed to hospitals that were in a strong financial position before the pandemic than went to hospitals with weaker balance sheets and smaller endowments.

Small rural hospitals, called critical access hospitals, received lower levels of funding, according to the study, by researchers at the RAND Corporation, a nonprofit group. Those rural facilities often operate under extremely tight budget constraints, and some have closed or been acquired over the course of the pandemic.

More aid also flowed to those hospitals caring for the greatest number of Covid patients, many of which were large academic medical centers and big hospitals.

“There were large differences in how much each hospital got in funding,” Christopher M. Whaley, one of the study’s authors, said in an interview.

The analysis of 952 hospitals found that 24 percent received less than $5 million, while 8 percent got more than $50 million. Overall, the small rural hospitals received 40 percent less funding than their larger and more prosperous counterparts.

The researchers did not take into account $24 billion that was specifically targeted to rural and safety-net hospitals in underserved areas, which may have helped these organizations.

Congress authorized the aid to cushion losses sustained by hospitals during the pandemic, as patients stayed away and facilities could not perform lucrative surgeries and procedures.

But some of the hospitals that received hundreds of millions of dollars in federal funds went on buying sprees during the Covid crisis, gobbling up weaker hospitals and physician groups. A few large chains, including HCA Healthcare and the Mayo Clinic, chose to return at least some of the money.

The havoc caused by the Delta variant has further strained many hospitals, overwhelming intensive care units and forcing some to renew delays in elective treatments.

A September report commissioned by the American Hospital Association predicted a third of will have operating losses in 2021. Hospitals say they are treating sicker patients, many of whom delayed care earlier in the pandemic, and are paying more for staff, supplies and drugs.

Dr. Whaley said the larger flow of money to hospitals in strong financial shape calls into question “the purpose of having these financial resources,” noting some institutions have massive endowments and sizable assets. In contrast, rural hospitals receiving the least aid were already under financial strain when the pandemic hit.

“Policymakers should continue to ensure that these types of hospitals are sufficiently funded, potentially with additional rounds of funding,” the researchers wrote.

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