Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made


Los Angeles County + USC Medical Center is one of the largest safety-net hospitals in the United States.

Bing Guan/Bloomberg via Getty Images

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Bing Guan/Bloomberg via Getty Images

Los Angeles County + USC Medical Center is one of the largest safety-net hospitals in the United States.


Bing Guan/Bloomberg via Getty Images

Anyone who has watched soap operas in the last 50 years knows Los Angeles County + USC Medical Center as General Hospital. For decades, its original building graced the soap opera’s opening credits.

Inside, though, there’s no love story between Luke and Laura.

LAC + USC is what’s known as a safety-net hospital — one of the largest in the United States. And that makes the reality inside a daily financial struggle to care for every patient who walks through its doors, patients other hospitals often try to avoid.

One recent week brought a man who said he came to the hospital to “sleep and eat,” a man with dementia whom staff couldn’t identify and a woman found on the street covered in feces after walking out of a skilled nursing facility. Patients who can only pay a little. Patients who can’t pay at all. Patients with difficult problems.

Few of these patients, if any, have private insurance. And because the hospital must also find a place for many of them to go when their health improves, doctors say some patients have stayed as long as three years.

NPR and Frontline

This story is part of a joint investigation with the PBS series Frontline that includes the documentary The Healthcare Divide, premiering Tuesday, May 18, on PBS at 10/9c.

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, which 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 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.

A hospital staff member attends to a patient in a COVID-19 intensive care unit on Jan. 6, 2021, at a hospital in Los Angeles.

Patrick T. Fallon/AFP via Getty Images

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Patrick T. Fallon/AFP via Getty Images

A hospital staff member attends to a patient in a COVID-19 intensive care unit on Jan. 6, 2021, at a hospital in Los Angeles.


Patrick T. Fallon/AFP via Getty Images

The result is that over the past 20 years, for-profit and even some non-profit 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.

“I think we are on a precipice,” says Bruce Siegel, president of America’s Essential Hospitals, a trade group that represents safety-net hospitals. “Even before the pandemic many of these hospitals were losing money. These hospitals did not get enough federal support, and I think all these trends we’ve seen of Medicaid not paying enough, the pandemic is only going to make that worse. It’s been a terrible year.”

Profits amid a pandemic

In the first half of 2020, all hospitals were in a panic. There was a nationwide crush to secure personal protective equipment and medical staff for COVID-19 wards. Elective surgeries, long a moneymaker for hospitals, were shut down across the country.

But then something curious started to happen. Some wealthy hospitals seemed to be faring pretty well.

For one thing, the federal government decided to send out the first $46 billion in relief money based on how much revenue a hospital had in 2019. This had the result of initially sending lots of federal money to hospitals that had lots of revenue — or wealthy hospitals.

Ge Bai, an associate professor of accounting at Johns Hopkins Carey Business School, says wealthier hospitals had financial options at their disposal to help them get through the pandemic.

Ge Bai

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Ge Bai

Ge Bai, an associate professor of accounting at Johns Hopkins Carey Business School, says wealthier hospitals had financial options at their disposal to help them get through the pandemic.


Ge Bai

Wealthy hospitals also had a lot of financial options at their disposal, says Ge Bai, an associate professor of accounting at Johns Hopkins Carey Business School.

“They had taken proactive action before COVID hit,” Bai says. “These hospitals started to suspend their cash dividend payouts, suspend their mergers and acquisitions. At the same time they started several lines of credit.”

Most safety-net hospitals didn’t have cash dividends to suspend or lines of credit to easily draw from, even as a tsunami of COVID-19 cases headed their way.

But by last July, some other hospitals were showing a profit. Profit at HCA Healthcare, the country’s largest for-profit hospital system, was up 38% from the previous year, leading to a moment during the company’s July investor call in which an…



Read More:Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made

Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made


Los Angeles County + USC Medical Center is one of the largest safety-net hospitals in the United States.

Bing Guan/Bloomberg via Getty Images

hide caption

toggle caption


Bing Guan/Bloomberg via Getty Images

Los Angeles County + USC Medical Center is one of the largest safety-net hospitals in the United States.


Bing Guan/Bloomberg via Getty Images

Anyone who has watched soap operas in the last 50 years knows Los Angeles County + USC Medical Center as General Hospital. For decades, its original building graced the soap opera’s opening credits.

Inside, though, there’s no love story between Luke and Laura.

LAC + USC is what’s known as a safety-net hospital — one of the largest in the United States. And that makes the reality inside a daily financial struggle to care for every patient who walks through its doors, patients other hospitals often try to avoid.

One recent week brought a man who said he came to the hospital to “sleep and eat,” a man with dementia whom staff couldn’t identify and a woman found on the street covered in feces after walking out of a skilled nursing facility. Patients who can only pay a little. Patients who can’t pay at all. Patients with difficult problems.

Few of these patients, if any, have private insurance. And because the hospital must also find a place for many of them to go when their health improves, doctors say some patients have stayed as long as three years.

NPR and Frontline

This story is part of a joint investigation with the PBS series Frontline that includes the documentary The Healthcare Divide, premiering Tuesday, May 18, on PBS at 10/9c.

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, which 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 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.

A hospital staff member attends to a patient in a COVID-19 intensive care unit on Jan. 6, 2021, at a hospital in Los Angeles.

Patrick T. Fallon/AFP via Getty Images

hide caption

toggle caption


Patrick T. Fallon/AFP via Getty Images

A hospital staff member attends to a patient in a COVID-19 intensive care unit on Jan. 6, 2021, at a hospital in Los Angeles.


Patrick T. Fallon/AFP via Getty Images

The result is that over the past 20 years, for-profit and even some non-profit 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.

“I think we are on a precipice,” says Bruce Siegel, president of America’s Essential Hospitals, a trade group that represents safety-net hospitals. “Even before the pandemic many of these hospitals were losing money. These hospitals did not get enough federal support, and I think all these trends we’ve seen of Medicaid not paying enough, the pandemic is only going to make that worse. It’s been a terrible year.”

Profits amid a pandemic

In the first half of 2020, all hospitals were in a panic. There was a nationwide crush to secure personal protective equipment and medical staff for COVID-19 wards. Elective surgeries, long a moneymaker for hospitals, were shut down across the country.

But then something curious started to happen. Some wealthy hospitals seemed to be faring pretty well.

For one thing, the federal government decided to send out the first $46 billion in relief money based on how much revenue a hospital had in 2019. This had the result of initially sending lots of federal money to hospitals that had lots of revenue — or wealthy hospitals.

Ge Bai, an associate professor of accounting at Johns Hopkins Carey Business School, says wealthier hospitals had financial options at their disposal to help them get through the pandemic.

Ge Bai

hide caption

toggle caption


Ge Bai

Ge Bai, an associate professor of accounting at Johns Hopkins Carey Business School, says wealthier hospitals had financial options at their disposal to help them get through the pandemic.


Ge Bai

Wealthy hospitals also had a lot of financial options at their disposal, says Ge Bai, an associate professor of accounting at Johns Hopkins Carey Business School.

“They had taken proactive action before COVID hit,” Bai says. “These hospitals started to suspend their cash dividend payouts, suspend their mergers and acquisitions. At the same time they started several lines of credit.”

Most safety-net hospitals didn’t have cash dividends to suspend or lines of credit to easily draw from, even as a tsunami of COVID-19 cases headed their way.

But by last July, some other hospitals were showing a profit. Profit at HCA Healthcare, the country’s largest for-profit hospital system, was up 38% from the previous year, leading to a moment during the company’s July investor call in which an…



Read More:Hospitals Serving The Poor Struggled During COVID. Wealthy Hospitals Made