The COVID-19 pandemic has torn open America’s already gaping disparities in health outcomes. Non-Hispanic Blacks have been infected at five times the rates of non-Hispanic whites. Urban hospitals that serve majority-minority communities are also seeing the beginnings of a second public health crisis, as fear dissuades people from getting non-COVID related emergency care. As our country considers how we address these and other legacies of structural racism brought to a boiling point by George Floyd’s death, our path forward must include a federally backed capital investment plan for our safety-net hospitals and clinics.
Urban safety-net hospitals bore the brunt of the virus’ surge in America’s initial hot spots, and will likely continue to do so in the densely populated areas they serve. In fact, safety nets in states that are now surging will be hit with multiple financial shocks. Those hospitals already had to stop elective surgeries in early spring—a major financial hit—and now many of them have to stop them again as cases increase.
In addition to lost revenue, this pandemic also has required hospitals to spend significantly to expand capacity on a moment’s notice in order to take care of our communities and save lives. This included both small projects to expand hospital beds within existing, acute-care infrastructures and larger projects supported by federal programs, such as the Army Corps of Engineers and the Federal Emergency Management Agency. This was a patchwork of responses at the state and federal levels that proceeded without an upfront funding plan.
These recent financial impacts are piled on top of safety-net hospitals’ already-strained financial state in the years leading up to this pandemic.
In a striking example of market failure, many faced closure as demand for their services remained level or grew, which coincided with rising numbers of uninsured and underinsured.
Now, as hospitals adapt to the “new normal,” they will need to redesign their campuses to accommodate social distancing in patient and family waiting areas, expand the number of single rooms for isolation, increase the number of negative-pressure rooms, and other projects that will require significant capital expenditures. Safety-net hospitals do not face these challenges alone, but are operating against much smaller capital reserves for such projects.
The pandemic also devastated federally qualified health centers economically; FQHCs are often the only primary-care option available to vulnerable communities. Many have already furloughed or laid off employees, arguably at a time when they are needed most. It will also not be as easy for these centers to move to telehealth visits in lieu of in-person encounters. Telehealth visits require not only technology investments, but are also reimbursed at lower rates, if at all, for licensed institutional providers.
To prepare for a second surge during the next respiratory virus season, as well as more permanent changes needed to accommodate increased infection control requirements, Washington should offer a grant-based pool of capital for America’s safety-net hospitals and FQHCs on a competitive basis for specific projects. Criteria for qualifying providers could include metrics that reflect the population served (payer mix, poverty levels, etc.), and projects should be prioritized based on how they address longer-term challenges related to the pandemic. Notably, this would be different from the Medicaid-based allocation that already occurred under the CARES act, which was for cash-flow support in the face of lost revenue or rising expenses during the COVID-19 surge.
Supporting America’s safety-net providers is both a moral imperative and a drive toward equity. It also meets a need that does not vanish, but rather, is distributed across other hospitals if safety-net providers have to close. With healthcare access, social justice and economic incentives aligned, and safety-net providers playing an outsize role in America’s response, Washington should support safety-net providers’ post-COVID capital needs without delay.