Provider Relief Funds And Hospital Profits/Reply

• Published in: Health affairs (Millwood, Va.) Va.), 2023-12, Vol.42 (12), p.1772-1772A
• Main Authors: Gidwani, Risha, Damberg, Cheryl L, Gangopadhyaya, Anuj, Blavin, Fredric, Coughlin, Teresa A
• Format: Article
• Language: English
• Subjects: Accounting procedures; Costs; COVID-19; Data; Derivation; Economics; Financial support; Hospitals; Medicaid; Medicare; Nonprofit hospitals; Outliers (statistics); Pandemics; Profitability; Profits; Revenue
• ISSN: 0278-2715; 1544-5208
• DOI: 10.1377/hlthaff.2023.01118

Anuj Gangopadhyaya and colleagues (August 2023) asserted that COVID-19 financial support distributed by the Provider Relief Fund (PRF) did not unduly increase recipient hospitals' profits. We urge caution in drawing conclusions from this study due to three critical concerns. First, the authors used a nonrepresentative sample of fewer than 15 percent of US hospitals. Results from large, representative samples of hospitals look significantly different and suggest that COVID-19 relief helped the average hospital experience peak profitability.1,2Second, the data and their handling raise concerns. Kaufman Hall data are industry data and have little information released regarding their derivation or accounting methods. However, it is known that they are a combination of actual and estimated data.3 In contrast, other studies use observed financial data that are attested to and submitted to the Centers for Medicare and Medicaid Services. 46 In addition, using month as the unit of analysis is problematic: Expenses incurred (care provided) in month 0 do not have revenues (reimbursement) realized until months 1-n. As such, most analyses use yearly or across-year financial data. Given that Kaufman Hall excluded outliers on a monthly basis, important observations were likely dropped as a result of the mismatch between the timing of expenses versus revenue. This is a significant methods flaw.