The silver (and gold) lining of COVID-19

COVID-19 isn’t necessarily bad. From the NYT:

Lenox Hill, one of the city’s oldest and best-known hospitals, repeatedly billed patients more than $3,000 for the routine nasal swab test, about 30 times the test’s typical cost.

“It was shocking to see a number like that, when I’ve gotten tested before for about $135,” said Ana Roa, who was billed $3,358 for a test at Lenox Hill last month.

Ms. Roa’s coronavirus test bill is among 16 that The New York Times reviewed from the site. They show that Lenox Hill arrives at its unusually high prices by charging a large fee for the test itself — about six times the typical charge — and by billing the encounter as a “moderately complex” emergency room visit.

In one case, a family accrued $39,314 in charges for 12 tests this winter, all taken to fulfill requirements for returning to work or school. In another, an asymptomatic patient walked in because she saw the banner outside and wanted a test after traveling. Her insurance was charged $2,963.

Patient bills show that at least one additional hospital owned by Lenox Hill’s parent group, Northwell Health, has charged emergency room fees to patients at a mass testing site.

Overall, a system in which a river of cash flows from Washington, D.C. favors those already big enough to hire the smartest people to navigate the system. “Some of America’s wealthiest hospital systems ended up even richer, thanks to federal bailouts” (Washington Post):

As the crisis crushed smaller providers, some of the nation’s richest health systems thrived, reporting hundreds of millions of dollars in surpluses after accepting huge grants for pandemic relief

Last May, Baylor Scott & White Health, the largest nonprofit hospital system in Texas, laid off 1,200 employees and furloughed others as it braced for the then-novel coronavirus to spread. The cancellation of lucrative elective procedures as the hospital pivoted to treat a new and less profitable infectious disease presaged financial distress, if not ruin. The federal government rushed $454 million in relief funds to help shore up its operations.

But Baylor not only weathered the crisis, it thrived. By the end of 2020, Baylor had accumulated an $815 million surplus, $20 million more than it had in 2019, creating a 7.5 percent operating margin that would be higher than most hospitals’ profits in the flushest of eras, a KHN examination of financial statements shows.

Like Baylor, some of the nation’s richest hospitals and health systems recorded hundreds of millions of dollars in surpluses after accepting a substantial share of the federal health-care bailout grants, their records show. Those included the Mayo Clinic, Pittsburgh’s UPMC and NYU Langone Health. But poorer hospitals — many serving rural and minority populations — got a tinier slice of the pie and limped through the year with deficits, downgrades of their bond ratings and bleak fiscal futures.

Wealthy hospitals also benefited because HHS used a broad definition of lost revenue. If a hospital earned less than in the year before, or simply less revenue than it had budgeted for, it could chalk up that difference to the pandemic and apply the relief funds to it.

When government gets bigger, only the big can thrive? If so, that’s a good argument for buying the S&P 500. If Congress adopts all of Presidents Biden and Harris’s proposals, government is on track to consume more than 50 percent of GDP. A big publicly traded company is going to be able to tap into the new veins of taxpayer gold much more effectively than a small business. Even if the U.S. economy stagnates, the big companies can thrive as they get a larger share of the fixed or shrinking pie.

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