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Bay Area’s wealthiest hospitals get biggest coronavirus grants

The region’s wealthiest health care providers are pulling in hundreds of millions of dollars in coronavirus emergency funds from the federal government while struggling hospitals are getting just a fraction of the relief.

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Stanford Health Care — which had net operating revenue of more than $447 million in 2018 — received more than $102.4 million from the U.S. Department of Health and Human Services, the most in the Bay Area, in the agency’s initial round of distributions. Just up the Peninsula, safety-net hospital Seton Medical Center — in the hole when it comes to net operating revenue — got a comparatively paltry $4.35 million.

The disparity is revealed in a Bay Area News Group analysis of data compiled by Good Jobs First, a Washington, D.C.-based government accountability nonprofit organization.

The Daly City hospital has been on the brink of closure since its owner, Verity Health, declared bankruptcy in 2018, which local officials have said would be dire for the low-income community it serves. And while the state said in March it would spend millions to lease beds at the hospital to prepare for an influx in coronavirus patients, that surge never happened and officials said they would end their Seton lease by the end of June.

Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy coalition, doesn’t think the division of funds has been fair. The same criticism is playing out across the country over the division of billions of dollars in federal emergency funds.

“The help has not been well-targeted, to say the least,” Wright said.

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Stanford declined to respond to specific questions about how much revenue it has lost and how it plans to spend the millions in grant money, instead saying in a statement, “The federal relief funds Stanford Health Care received in April covered only a portion of our losses, but help ensure that we can continue providing quality care to the patients we serve given the financial losses caused by the pandemic.”

Seton President Tony Armada said loss of revenue there has swelled far beyond the roughly $4 million it received.

The distribution, he said, “really disadvantages organizations like Seton, which is in bankruptcy protection, because the volume [of patients] is normally low, and you’re struggling to begin with in terms of trying to keep yourself afloat.”

A sale of the beleaguered hospital by Verity to AHMC Healthcare has been approved by a bankruptcy court and could be complete by July. The hospital, Armada said, will continue to operate and serve both coronavirus and non-coronavirus patients.

Across the Bay Area, 82 companies received roughly $487.6 million in aid in the first round. After Stanford, Sutter Bay Hospitals ($87.6 million) and the Santa Clara Valley Medical Center ($34.4 million) got the largest amounts. Eleven entities, including the counties of San Francisco and Santa Clara, along with John Muir Health in the East Bay and El Camino Hospital on the Peninsula, got at least $10 million each.

The way the government distributed the funds is the result of complicated formulas that take Medicare revenue, whether a hospital is in a hotspot and other factors into account, regardless of a hospital’s financial situation before the pandemic hit.

According to a Kaiser Family Foundation study, the distribution unfairly favored hospitals that serve wealthier patients with private insurance and left hospitals that treat uninsured or low-income patients at a disadvantage.

U.S. Congresswoman Anna Eshoo, a Democrat who represents the Bay Area and chairs the House Subcommittee on Health, said she was disappointed with the Trump administration’s distribution of the money, in part because HHS has divided the $175 billion approved by Congress to help health care providers and hospitals into several segments instead of sending it all out at once.

“Put the money out,” Eshoo said. “That’s why we appropriated it.”

But the longtime congresswoman supported the decision to award Stanford Health Care, which sits in her district, significant funds.

“I think people don’t realize how expensive these operations are,” Eshoo said.

Still, unions are blasting major health care providers for imposing cuts as they rake in huge sums in federal aid.

“It seems like it’s never enough for Stanford Health Care – they want to get their hands on every dollar they can, even if some of those dollars come from our hands, the people who can least afford it,” Sarah Jane Von Wettberg, a cook, said in a statement put out by the SEIU. “Instead of taking the COVID-19 federal money and using it to keep employees working full time taking care of patients in a pandemic, they are using it to build up their bottom line. They should be ashamed.”

Health care advocacy groups say that regardless of who is getting the federal money, it’s just a portion of what’s needed to offset revenue losses brought on by the pandemic and maintain services. Even as they treated COVID-19 patients, hospitals canceled lucrative surgeries and other procedures and clinics that provided mostly nonemergency care scaled back significantly.

According to the California Hospital Association, short-term losses for health care providers in the state are at least $10 billion.

John Muir, based in Walnut Creek, said it lost $57 million in March and April. The health system received roughly $33 million to date from the government, a spokesman said.

Wright, of Health Access, is concerned that if funding isn’t targeted to less wealthy providers in the future, it could force some out of business altogether.

“This is not,” he said, “just about somebody getting more money.”

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