WASHINGTON — For frontline health care workers at hospitals, the Covid-19 pandemic has been a punishing slog, punctuated by overflowing morgues, patient beds in gift shops, and dire equipment shortages. But for their lobbyists in Washington, the picture couldn’t be rosier.
The hospital business is booming on Capitol Hill like never before. Lawmakers showered the industry with more than $275 billion last year, and handed hospitals wins even on seemingly unrelated issues. And Democrats’ agenda will almost certainly be better for their bottom lines.
The Covid-19 pandemic has transformed the industry’s image in Washington, where large health care systems have long been vilified as corporate profit mongers instead of community caregivers. Now, more than two dozen lobbyists and consultants told STAT that they are keenly aware of just how much power the industry has accrued — and are prepared to seize the moment.
“There is a time to ask for things you wouldn’t usually ask for,” one health care lobbyist said, requesting anonymity because the individual was not authorized by clients to speak with reporters. “If you get straight A’s, it might be the time to ask your parents for a new iPhone. This is the time not to be shy. You’re kind of the golden children, but it’s not going to last forever.”
The one possible obstacle in hospitals’ glide path is President Biden. He has spoken fondly of Walter Reed National Military Medical Center, where he was treated for brain aneurysms; where his son Beau fought brain cancer; and where, as vice president, he made regular Christmas visits to injured troops. He supports a number of policies hospitals love, such as expanding Medicaid and making it cheaper for people to get insurance through Affordable Care Act exchanges.
But glaringly, Biden left hospitals completely out of his proposal for Covid-19 relief, even as he lavished some $1.9 trillion on other priorities. Some of his campaign advisers were rankled by the health care industry’s seven-figure ad blitz against the public option, which ran during the Democratic primary season.
The hospital industry is also preparing for a health secretary who has made no secret of his feelings about it. Xavier Becerra, who Biden tapped for the job, built a reputation as a formidable enemy of hospital consolidation by extracting a half-billion-dollar antitrust settlement from a health system in California.
If hospitals are today’s “golden children,” it comes after an enormously challenging run for the industry in Washington.
Republicans have for years questioned whether nonprofit health systems’ charity care levels live up to the tax breaks they receive. Reporters unearthed instance after instance of health systems aggressively suing low-income patients, even bankrupting families. Outrage over devastating surprise medical bills reached a fever pitch, and Congress was looking to crack down.
Lawmakers had, for the most part, stopped taking seriously the threat that any pay cuts could lead to hospital closures and layoffs, according to Julius Hobson, senior policy adviser at Polsinelli.
The Trump administration leveraged that distaste for the industry to slash hospitals’ payment advantages in Medicare and to eliminate some of the discounts they enjoy on prescription drugs. The Trump team also championed a transparency initiative that forced hospitals to be more open about their prices. The American Hospital Association sued to stop the policies, but lost repeatedly in court.
Hospitals serving low-income people fared especially badly in the Trump years.
When Sister Mary Haddad came to the nation’s capital in 2019 to take over as the new leader of the Catholic Health Association, she brought a starry-eyed optimism and excitement to get to work on behalf of more than 600 hospitals in her membership. She quickly realized that instead of advocating to bolster the social safety net, she was going to be on the defensive.
“The Trump administration had a path and we were not going to have a part in helping shape it,” Haddad said.
Former Medicare and Medicaid chief Seema Verma had strained relationships with plenty of health care stakeholders, but particularly with safety-net hospitals.
“The Trump years were less about tinkering around the edges, and more about blunt payment cuts to essential hospitals. There was a lack of focus on our hospitals and the communities they serve,” said Beth Feldpush, the senior vice president of policy and advocacy at the safety-net hospital lobby America’s Essential Hospitals.
The pandemic changed everything. As hospitals nationwide were overwhelmed or forced to suddenly stop elective procedures, some struggling facilities were truly put in dire financial straits.
Republicans could sympathize with hospitals that took losses because they were forced to shut down by government mandates, a lobbyist who works with hospitals said.
Hospitals enjoyed higher approval ratings for their handling of the Covid-19 pandemic than officials at every level of government, and it’s not close. In late summer, 88% of adults surveyed thought their local hospitals and medical centers were doing a good job responding to the pandemic, and there was only a 3-point spread between Republicans and Democrats, a Pew Research Center survey found. The Centers for Disease Control and Prevention was the next-best, with a 63% approval rating.
The finding was mirrored in internal polling by the Greater New York Hospital Association, a lobbying force that spent big on behalf of Democrats last election cycle.
“The fact that hospitals are being better appreciated for their contributions and sacrifice goes a long way when that translates from the electorate to the electeds,” GNYHA President and CEO Kenneth Raske said.
Lawmakers responded in a big way. The two largest pots of money funneled $278 billion in grants and interest-free loans to health care providers. For context, the airline industry received $74 billion, according to the Committee for a Responsible Federal Budget’s Covid Money Tracker database.
That total for health care providers doesn’t count a host of other Medicare pay boosts and telehealth policy changes worth billions. Hospitals also successfully lobbied Congress to overrule the Trump administration when it suggested limiting providers’ profitability. Small hospitals could access small-business loans, and nonprofit hospitals could tap into FEMA funds to pay for their pandemic-related costs.
Beyond Covid-19, hospitals also got their way at the last minute in Congress’ surprise billing reform in December, even though insurers’ and consumer advocates’ preferred approach had dominated the policy conversation for years.
“It was a perfect storm, and justifiably we had the ear of policymakers,” Federation of American Hospitals President and CEO Chip Kahn said.
The dynamics of the new Congress look even better for hospitals now than last term. The new Senate majority leader, Chuck Schumer (D-N.Y.), is a longtime hospital industry ally who has a close relationship with New York hospitals in particular. Schumer was a driving force behind the inclusion of funds for health care providers in prior stimulus packages, and he has known GNYHA’s lead lobbyist for decades.
Because both the Senate and House are so closely politically divided, Democrats will have to rely on a streamlined budget process to pass their most ambitious policies. One of the most important committees in that process is the House tax-writing committee, which is chaired by Rep. Richard Neal (D-Mass.), an unabashed advocate for hospitals’ interests.
Neal virtually single-handedly forced Congress’ surprise billing reform in a more provider-friendly direction, and the American Hospital Association backed Neal when he faced a progressive primary challenge.
Democrats’ Senate takeover also resulted in newfound power for Sen. Joe Manchin (D-W.Va.), who will be a must-get vote for Senate Democrats on major policy initiatives. Manchin has championed funding for hospitals, especially in rural areas.
Hospitals that serve low-income individuals face much better prospects in a Biden administration. Biden will almost certainly end the Trump administration’s attacks on the Medicaid program, and hospitals averted the prospect of more drastic health care reform under one of Biden’s Democratic primary opponents.
Rural hospitals are encouraged by the new administration’s focus on health inequities, and are hopeful that rural health care will be included in that effort, said the National Rural Health Association’s top lobbyist Carrie Cochran-McClain. Marcella Nunez-Smith, who leads Biden’s health equity task force, has included geographic disparities as one of her areas of focus.
Large, nonprofit systems are on guard, however. As California’s attorney general, Becerra, Biden’s health secretary pick, pursued an aggressive antitrust case against the Northern California health system Sutter Health and extracted a $575 million settlement.
Becerra would have primarily regulatory tools instead of legal ones as health secretary, but he could still go on the offensive against consolidation. He could use the secretary’s position as a bully pulpit to rail against consolidation, commission studies, and leverage payment policies to drive change in the market.
“Becerra is an enemy of the big nonprofit health system,” one lobbyist said. “He’s a vigilant overseer.”
Lobbyists realize the hospital industry’s goodwill will not last forever, even if Becerra doesn’t pursue aggressive reforms.
Republicans are rediscovering their concerns about deficit spending. The Medicare program is facing dire funding issues. And several high-profile health systems aren’t helping the industry’s case for more Covid-19 relief money, as the Mayo Clinic sent back almost half of its federal grant funds, and the nation’s largest for-profit system, HCA Healthcare, returned $6 billion in loans and grant funds.
While hospitals scored several wins in the December Covid-19 relief package, they suffered a big loss that could signal the limits of their influence.
When a bipartisan group of senators laid out a framework for a bipartisan relief bill in early December, it included $35 billion in additional grants for health care providers. When leadership released the final bill, the amount for providers was cut to $3 billion, and the money was shifted to public health priorities such as testing, tracing and vaccine distribution.
Kahn, the FAH lobbyist, said the change was made because lawmakers were trying to realign funding with what was considered more essential at the time, and working within the constraints of a set topline number.
As attention shifts away from Covid-19 eventually, it’s unclear whether hospitals’ goodwill will translate to influence on other initiatives, like an impending lobbying battle over surprise billing regulations and a separate policy hospitals detest that stops Medicare from paying more for services at physicians’ offices owned by health systems.
“In Washington, everyone wants to ride some issue that will paint them in a better light. Will it get phone calls returned more promptly? Maybe. Will lawmakers flip positions on longstanding issues because of goodwill? … I’m not sure about that,” one lobbyist who represents hospitals said.
Eventually, hospitals will face a reckoning over how they spent the money they got from Congress. The Trump administration dragged its feet on accountability, but hospitals are facing audits and government watchdog inquiries on how they spent their funds in the coming months. Paul Keckley, a health care industry analyst, said hospitals could face liability depending on how they categorized Covid-19 diagnoses early on when tests were scarce.
“There will be a lot of residual questions that will hit the hospital sector when the dust settles,” Keckley said.
The first test of hospitals’ clout has already begun. In Biden’s first major legislative push, he asked Congress for more than $400 billion to address the Covid-19 pandemic. He didn’t allot a cent for hospitals. Biden has surrounded himself with a cadre of public health experts, and they weren’t sympathetic to hospitals’ asks.
“We are little concerned in the current process, that for some reason in the development of the $1.9 trillion proposal, help for those providing care to patients seems to have been left on the cutting room floor,” Kahn said.
Hospitals are hoping to fare better as the process transitions to Congress, a body composed of lawmakers who universally have to contend with hospitals as major employers and political forces in their home states. Sen. Susan Collins (R-Maine) has already blasted Biden for leaving it out.
“Given the indispensable nature of their services and how vital they are to the economic prosperity of their communities, I was astonished that the administration’s $1.9 trillion health and economic recovery proposal did not provide additional relief for rural hospitals,” Collins said in a written statement.
Lobbyists will be trying to argue that hospitals are still on the frontlines as the pandemic rages. As of Feb. 1, nearly 98,000 people were hospitalized with Covid-19 per federal data, occupying about 14% of the United States’ total bed capacity.
Tom Nickels, the AHA’s top lobbyist, said the fact that some large systems have fared well financially is a sign that Congress’ assistance was effective, but more funds may be needed, especially for facilities in rural areas and Covid-19 hotspots.
One lobbyist with decades of Washington experience said hospitals would likely retain some goodwill because the pandemic continues to be an acute public health challenge, but that the sympathy may not last.
“I have been around long enough to know that memories are short,” the lobbyist said. “Once we get beyond the pandemic, I fear it will be back to business as usual.”
Lev Facher contributed reporting.