Many of the small rural hospitals that are the first line of defense are being pushed to the brink, and federal dollars are not getting through to help, WSJ Pro Bankruptcy reported. Chronically under pressure, those small hospitals have been hit hard as preparations for the pandemic have forced them to cut back the outpatient services that account for more than three-fourths of their revenues. Rural hospitals have, on average, operating margins of less than 1 percent, according to the Chartis Center for Rural Health, a Chicago health analytics company. “Now you are looking at 79% of your business going away. I don’t think it takes much math to understand how precarious that situation is,” said Michael Topchik, a Chartis national leader. But the Small Business Administration’s Paycheck Protection Program, the federal government’s premier remedy for small businesses trying to stay on their feet in the pandemic, doesn’t work for more than half of the nation’s small hospitals, hospital advisers say. SBA regulations say Paycheck Protection Program funds can be used to cover payroll, rent, and utilities for businesses with fewer than 500 employees. It is money that, spent within the guidelines, doesn’t have to be paid back. But Paycheck Protection loans are out of reach for many small hospitals because of measures they had taken to stay alive in the pre-pandemic days. Some resorted to bankruptcy protection to gain breathing room to right themselves financially. Others forged strategic alliances with larger health care systems that offered clinical, managerial and sometimes financial lifelines. Bankruptcy and these alliances would disqualify these hospitals from getting the small business loans.
