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Turn off the Spigot for Hospitals’ Covid-19 Relief Funding

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Public Advisor
Ge Bai, PhD, CPA, is a Professor of Accounting at the Johns Hopkins Carey Business School and Professor of Health Policy & Management at the Johns Hopkins Bloomberg School of Public Health. In 2022, she became a Visiting Scholar at the Congressional Budget Office.

Hospitals are calling on Congress for more Covid-19 relief even though they had higher profit margins during the pandemic than before it. Congress would be wise to reject these pleas.

To be sure, during the height of the pandemic, hospitals needed support from taxpayers to deal with the cost of treating Covid-19 patients and the loss of revenue from elective procedures as people avoided care. But the government’s response was more than what hospitals needed. Congress should turn off the spigot for them, particularly given the large federal deficits and growing inflationary pressures in the economy that new hospital spending would exacerbate.

During the pre-pandemic period, U.S. hospitals with July-June fiscal years generated about 5% average annual profit margins. From July 2020 to June 2021, their average annual profit margins more than doubled, increasing to 11%, as one of us (G.B.) and colleagues report today in JAMA Health Forum.

As concerns about Covid-19 infections grew in early 2020, health system operations were significantly affected. Many people deferred elective procedures and appointments that weren’t urgent, and many hospitals had to restructure their facilities to treat an influx of patients with Covid-19.

The full article can be found in STAT.

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