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Children’s hospitals face financial setbacks during coronavirus pandemic

Would serve as ‘backups’ to traditional facilities

Bernard J. Wolfson Kaiser Health News | 5/22/2020, midnight

Holloran and others say children’s hospitals typically benefit from strong philanthropic and public support, and their specialization in complex acute cases results in higher prices while often affording them a commanding pediatric market share.

In 2018, California voters approved $1.5 billion in state bonds to help children’s hospitals with capital expenses including equipment, construction and seismic retrofitting. That means they can save some of the dollars they would have spent on such projects.

So far, however, just 9 percent of that money — $142.1 million — has been distributed, and to only three hospitals, according to Frank Moore, executive director of the California Health Facilities Financing Authority.

Children’s facilities received virtually none of the first $30 billion in federal relief money intended for hospitals and other providers, though they have received some of a subsequent $20 billion tranche.

Children’s hospitals that are part of larger health systems may also benefit from the aid received by affiliated adult hospitals. And belonging to a hospital chain can allow for greater operational flexibility, industry executives say.

Even though children’s hospitals have begun to resume nonemergency surgeries, they will likely continue to face financial challenges.

“If we enter into a recession, and particularly if it is prolonged, that will have an effect on hospitals, including children’s hospitals, because people won’t have jobs and may be uninsured, or more may be on Medicaid, which doesn’t pay as well,” said Lisa Martin, a senior vice president on the not-for-profit health care ratings team at Moody’s Investors Service.

In California, nearly 60 percent of children’s hospital charges are tied to Medicaid, more than double the proportion for adult hospitals, according to OSHPD data. At some pediatric facilities in the U.S., that figure is well above 70 percent.

After spending staggering sums to mitigate the consequences of the pandemic, Congress will be looking for programs to prune, said Knight, of the Children’s Hospital Association. “One with a target on its back is Medicaid.”

Kaiser Health News senior correspondent Jordan Rau contributed to this report.