SIOUX FALLS, S.D. — Sanford Health took in tens of millions of dollars from a federal bailout package meant to help companies struggling with pandemic-related financial woes.
The Sioux Falls-based health system was granted $71.9 million through a special fund for health care and social services providers funded by federal legislation known as the CARES Act. Sanford's Fargo medical center alone took in $23.8 million, with its other large medical centers taking in lesser amounts.
Sanford Health has nearly 49,000 employees and 44 hospitals, with major medical centers in Fargo and Bismarck in North Dakota, Bemidji, Minn., and Sioux Falls.
While the federal pandemic response legislation may be better known for providing money for individuals and small businesses, it also offered financial assistance to large companies, including billions of dollars for health care providers across the nation. The millions received by Sanford Health was paid out from the $175 billion Public Health and Social Services Emergency Fund created under the Coronavirus Aid, Relief, and Economic Security Act,
The bailout money, awarded May 14, was documented by Good Jobs First, a nonprofit group focused on accountability in economic development, on its COVID Stimulus Watch database.
Health systems were particularly hard hit by the effects of the pandemic, as personal spending on health care crashed this year. Health care spending plummeted in the first three months of the year, dropping 17% from the same time period the previous year, according to the Department of Commerce. That drop was the single-biggest contributor to the nation's gross domestic product, crashing 5% in the first three months of the year.
Many health systems, including to some extent Sanford Health, turned away or limited intake of new patients, including those seeking lucrative elective procedures, as medical providers braced for a surge of COVID-19 cases. Meanwhile, many people decided on their own to postpone medical care.
JoAnn Kunkel, chief financial officer at Sanford Health, said the CARES Act bailout covers only a fraction of the health system's losses related to COVID-19. Sanford has benefited from years of solid financial performance and recent measures to reduce expenses.
"Like many health care systems and hospitals nationwide, Sanford received federal relief to offset the tremendous financial impact of the pandemic, including lost revenue due to steep declines in patient volumes and the cost of protective equipment, testing supplies and other urgent needs," Kunkel said.
Some health systems in the region, most notably Duluth, Minn.-based Essentia Health and to a lesser extent, Sioux Falls-based Avera Health, laid off or furloughed employees because of limits on new patients and procedures that cut deep into health systems' revenue. Essentia Health Virginia LLC received $7.2 million. Avera Health was awarded $34.7 million.
Julie Norton, Avera's chief financial officer, said the pandemic caused a "sudden and significant drop" in the health systems revenues totalling millions of dollars each day, leading to the furloughs. The amount of money available and the rules for its use are still under development, she said, and Avera is closely studying how it can use the funds.
“The federal dollars allotted to us through the CARES Act will certainly help to recoup some of these losses, and we are grateful," she said. "Employees will be brought back incrementally, as supported by our patient volumes."
While Sanford never announced layoffs, it also never fully stopped conducting elective surgeries that are valuable money makers. But it also launched an aid effort in April dubbed the Sanford Family Stability Plan, which provided a one-time cash bonus of up to $300 for many employees and paid for several months of insurance premiums.
"Every health care system is facing hard decisions relative to people. We have chosen to prioritize our team members and remain committed to avoiding widespread staff reductions," Kunkel said.
Sanford's CARES Act bailout included $20.1 million for its Sioux Falls medical center, $11.2 million for its Bismarck medical center, $5.9 million for Sanford Health of Northern Minnesota, $5.7 million for the Sanford Health Network, $2.1 million for Sanford Health Network North, $1.1 million for Sanford Clinic North and $968,898 for the Sanford Good Samaritan Community Health Services LLC.
North Dakota top 5 hospital bailouts
- Trinity Hospitals: $23 million
- Altru Health System: $10.7 million
- Innovis Health LLC: $7.7 million
- St. Alexius Medical Center: $5.9 million
- West River Health Services: $4.4 million
Minnesota top 5 hospital bailouts
- Mayo Clinic: $169.9 million
- Fairview Health Services: $117 million
- Allina Health System: $64.1 million
- Hennepin Healthcare System Inc.: $19 million
- St. Cloud Hospital: $17.8 million
South Dakota top 5 hospital bailouts
- Sanford Health: $71.9 million
- Avera Health: $34.7 million
- Rapid City Regional Hospital Inc.: $13.2 million
- Sacred Heart Services: $12 million
- Huron Regional Medical Center Inc.: $4.7 million
Date source: COVID Stimulus Watch