What Previous Federal Stimulus Packages Can Teach Providers Navigating This Pandemic


The aviation and finance industries' past experiences accessing federal programs mirror providers' current experiences.

Ashley Smith and Minoo Javanmardian, PhD

9 min read

Editor’s Note: The following article is part of an ongoing series offering our strategic advice and expertise on what healthcare industry stakeholders should do in response to the rapidly evolving novel coronavirus (COVID-19) pandemic.

The Coronavirus Aid, Relief, and Economic Stimulus (CARES) bill has many moving parts. At over $2.2 trillion, it will have a wide-ranging impact on aviation, municipalities, providers, and individuals to name a few.

To help those affected by the CARES bill make sense of what comes next, here are practical lessons aviation and financial services companies have learned from accessing federal programs during past crises. These programs include the post 9/11 Air Transportation Safety and System Stabilization Act (ATSB) and 2008’s Troubled Asset Relief Program (TARP).

Below, we present an overview of major grant and loan programs in CARES for providers requiring immediate applications. (Note that several other facilities – like the $34 billion payments to-date in advanced Medicare payments – also exist to aid provider liquidity.)

Six Considerations for Providers

1. Weigh the need for federal funds carefully.

ATSB and TARP funds came with scrutiny with a long shelf-life that wasn’t initially fully transparent. Taking federal stimulus only makes the government a silent partner. It’s unclear if they will stay silent, however.

Future political motives for The U.S. Department of Health and Human Services (HHS) and Congressional review committees are uncertain. Even if hospitals are heroes today, assume an oversight committee will be appointed to identify misuse. Assume your application(s) could potentially go public at some point. And decide how to use financial statements, receipts, compensation, and other sensitive financials to demonstrate your need accordingly.

While many providers are not-for-profit and have fewer liquidity levers versus publicly traded airlines and banks previously did, provider Chief Financial Officers (CFOs) should still carefully weigh the relative stimulus amount against other cash flow levers first. Consider creative levers – like if you own equipment or facilities (in a sell to lease back move).

Mid-sized and smaller providers won’t likely face the same scrutiny after-the-fact. These providers must remain disciplined about having their spending plan and COVID-19 receipts organized. In the meantime, they shouldn’t wait to complete lots of analysis before applying for funds.  

2. Keep your application(s) clear and simple.

Consider establishing an application review committee. Hold practice sessions to pressure test each statement. Then, do an examination post-analysis regarding uses. Consider what headlines could be generated and what social issues to wade into, even if you follow the rules (such as the risk for fraud and overpayment in your supply chain or politically charged procedures like family planning). It’s difficult to predict what you may be criticized for after the fact.

3. Designate a point person.

Identify one application lead. The HHS and the US Treasury continue to publish guidance daily. Having one individual on point for ensuring rule adherence and keeping up-to-date on guidance will help ensure you are adhering to the latest guidelines and that you limit application processing delays.

4. Avoid industry jargon.

Keep wording simple. HHS and lenders especially are inundated. Brief, easy to understand applications will get processed. Those that are confusing may go to the bottom of the pile.

5. Design for traceability.  

Create separate accounts for each type of fund you receive (for example, if you are receiving grants and loans). Many banks forced to take stimulus in 2008 initially treated it like petty cash and didn’t account for the level of detail required after-the-fact. Don’t be fooled by the relative fungibility of uses and set-up governance and accounting mechanisms to provide stringent oversight and inflow/outflow traceability. Expect twice the effort on getting loan forgiveness if you can seek it. Working upfront on strong governance and traceability will pay-off.

Include convincing proof that you have the above robust financial governance mechanisms in place in your application(s). Previous Small Business Administration (SBA) disaster programs had up to double digits rates of fraud. While the government is buying loans, lenders will have an easier time approving applications that show discipline in this area.  

6. Don’t lose the opportunity for longer-term repositioning.

Once we are beyond the first 15 to 30 days of COVID-19 with business continuity achieved, CFOs should turn to stabilization, and construct a robust plan to transform the organization’s cost position in the next one to three years. The Main Street loan program especially limits flexibility over medium-term to address critical cost and restructuring levers. We encourage CFOs to consider preserving this flexibility if possible.

 A plan to reposition for long-term should consider ongoing uncertainties and scenarios (for example, payer mix shift, timing and volume for returning elective and non-emergent procedures), addressing structural shifts (for example, shifting medical and surgical beds to intensive care unit beds), accelerating new front doors, (such as telehealth and ambulatory sites of care), and tackling tough issues (such as treating operating model and cost as burning platforms, including automation, and service line rationalization).

Make Your Case

Building a new long-term plan will take time. In the near-term, showing your initial steps for stabilizing the business, and ultimately pivoting back to financial viability will help make a stronger case to HHS and the Treasury to access stimulus funds, and to local lenders for other cash flow levers like lines of credit and bonds that will remain tight amidst any upcoming recession.

Next week, we will share guidance for provider CFOs on how to create a robust liquidity strategy, and lessons learned from other industries on restructuring and bankruptcy.

This article does not represent legal, medical, accounting, safety, or other specialized advice. Any such advice should be sought and obtained from a qualified professional. Specifically, we encourage providers considering applying for stimulus to consult legal counsel prior to such application.