CCMH explains CARES act funds

Cedar County Memorial Hospital recently received funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress and signed into law by President Trump on March 27, 2020.

The intent of the CARES Act was to provide fast and direct economic assistance for American workers, families, businesses and industries.  Two trillion dollars in total economic relief was authorized through the CARES Act to fund multiple programs.

Cedar County Memorial Hospital was eligible and received funds under the Provider Relief Fund and the Paycheck Protection Program as described below.  A portion of the CARES Act funds were distributed to hospitals through what is known as the Provider Relief Fund.  More information on the CARES Act Provider Relief Fund can be found at https://www.hhs.gov/coronavirus/cares-act-provider-relief-fund/index.html.

What is most important to note is that CARES Act Provider Relief funds have to be used to prevent, prepare for, and respond to coronavirus such as for health care related expenses or lost revenues that are attributable to coronavirus. These funds are not a blank check to be used as a hospital wants or needs and require careful documentation of their use.

Coronavirus continues to have a negative impact on hospital finances across the nation, with hospitals seeing huge revenue declines due to declining patient volumes.  For example, Cedar County Memorial Hospital’s total gross operating revenue was down $699,222 for the first quarter of fiscal year 2021.   

Cedar County Memorial Hospital (CCMH) has now received the three payments from the Cares Act Provider Relief fund for which it qualified.  These total $3,672, 014. The majority of these funds were received under the “rural distribution”, payments made to hospitals and rural health clinics operating on thin margins prior to COVID-19 and hit particularly hard by the pandemic as healthy patients delay care and cancel elective services.

It is also important to understand how the Provider Relief Fund works.  The U.S. Department of Health and Human Services (HHS) automatically sent these funds for deposit to the accounts of qualifying health care providers.  Funding amounts are based on a specific formula developed by HHS.  Hospitals, including CCMH, did not have to request these funds; the payments were electronically deposited by HHS.   

CARES Act Provider Relief funds (1) must be used for specific purposes and cannot be used as general revenue; (2) based on information currently available, these are one-time payments; and (3) may have to be paid back.  The COVID-19 effects on CCMH, and hospitals in general, is an entirely separate issue than the funding needs for which the CCMH levy increase was sought, needs that existed long before coronavirus and cannot be addressed with CARES Act funds.

Cedar County Memorial Hospital also received assistance under the Paycheck Protection Program (“PPP”).  PPP authorized up to $349 billion in forgivable loans to small businesses (500 or fewer employees unless additional standards are met) to pay their employees during the COVID-19 crisis. The loan amounts will be forgiven as long as:  (1) The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and (2) Employee and compensation levels are maintained.  Not more than 25% of the forgiven amount may be for non-payroll costs.  PPP was established by section 1102 of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).  While established under the CARES Act, PPP is not a part of the CARES Act Provider Relief Fund.   PPP and the Provider Relief Fund are two separate programs—PPP requires an application but Provider Relief Funds are automatic payments.

The Paycheck Protection Program (PPP) is not a long-term program, and Cedar County Memorial Hospital cannot rely on the PPP for continued funding.  For the Hospital, these funds are supporting payroll, which is to say Hospital employees.  These are our neighbors here in Cedar County and the individuals who spend money in the community to support their families.

While established under the CARES Act, PPP is not a part of the CARES Act Provider Relief Fund.   PPP and the Provider Relief Fund are two separate programs—PPP requires an application but Provider Relief Funds are automatic payments.

The PPP funds are available to a wide range of businesses, so it is likely many Cedar County businesses have used the program. Cedar County Memorial Hospital applied for and received $875,000 from the PPP.  These funds will be used to cover 8 weeks of payroll and a portion of utilities as permitted in the program.  Current program information stipulates that this is a one-time payment due to the COVID-19 crisis with the intent of helping businesses keep employees and avoid furloughs.  PPP funds do not have to be repaid as long as they are used for the purposes previously described.  Cedar County Memorial Hospital intends to use PPP funds for these program allowable purposes.

Information about the PPP from the U.S. Department of Treasury is available here: https://home.treasury.gov/system/files/136/PPP–Fact-Sheet.pdf.

Cedar County Memorial Hospital, like many other hospitals and businesses across the country, is thankful for receipt of funding through the CARES Act but wants to assure it is understood these are temporary programs with specific spending guidelines.  They are not intended to support long-term operations.