Category Archives: Hospital

Despite turbulence in H1, no avalanche of health systems downgrades

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“It’s new territory, which is why we’re taking that measured approach on rating actions,” Suzie Desai, senior director at S&P, said.

The healthcare sector has been bruised from the novel coronavirus and the effects are likely to linger for years, but the first half of 2020 has not resulted in an avalanche of hospital and health system downgrades.

At the outset of the pandemic, some hospitals warned of dire financial pressures as they burned through cash while revenue plunged. In response, the federal government unleashed $175 billion in bailout funds to help prop up the sector as providers battled the effects of the virus.

Still, across all of public finance — which includes hospitals — the second quarter saw downgrades outpacing upgrades for the first time since the second quarter of 2017.

S&P characterized the second quarter as a “historic low” for upgrades across its entire portfolio of public finance credits.

“While only partially driven by the coronavirus, the second quarter was the first since Q2 2017 with the number of downgrades surpassing upgrades and by the largest margin since Q3 2014,” according to a recent Moody’s Investors Service report.

Through the first six months of this year, Moody’s has recorded 164 downgrades throughout public finance and, more specifically, 27 downgrades among the nonprofit healthcare entities it rates.

By comparison, Fitch Ratings has recorded 14 nonprofit hospital and health system downgrades through July and just two upgrades, both of which occurred before COVID-19 hit.

“Is this a massive amount of rating changes? By no means,” Kevin Holloran, senior director of U.S. Public Finance for Fitch, said of the first half of 2020 for healthcare.

Also through July, S&P Global recorded 22 downgrades among nonprofit acute care hospitals and health systems, significantly outpacing the six healthcare upgrades recorded over the same period.

“It’s new territory, which is why we’re taking that measured approach on rating actions,” Suzie Desai, senior director at S&P, said.

Still, other parts of the economy lead healthcare in terms of downgrades. State and local governments and the housing sector are outpacing the healthcare sector in terms of downgrades, according to S&P.

Virus has not ‘wiped out the healthcare sector’

Earlier this year when the pandemic hit the U.S., some made dire predictions about the novel coronavirus and its potential effect on the healthcare sector.

Reports from the ratings agencies warned of the potential for rising covenant violations and an outlook for the second quarter that would result in the “worst on record,“ one Fitch analyst said during a webinar in May.

That was likely “too broad of a brushstroke,” Holloran said. “It has not come in and wiped out the healthcare sector,” he said. He attributes that in part to the billions in financial aid that the federal government earmarked for providers.

Though, what it has revealed is the gaps between the strongest and weakest systems, and that the disparities are only likely to widen, S&P analysts said during a recent webinar.

The nonprofit hospitals and health systems pegged with a downgrade have tended to be smaller in size in terms of scale, lower-rated already and light on cash, Holloran said.

Still, some of the larger health systems were downgraded in the first half of the year by either one of the three rating agencies, including Sutter Health, Bon Secours Mercy Health, Geisinger, University of Pittsburgh Medical Center and Care New England.

“This is something that individual management of a hospital couldn’t control,” said Rick Gundling, senior vice president of Healthcare Financial Management Association, which has members from small and large organizations. “It wasn’t a bad strategy — that goes into a downgrade. This happened to everybody.”

Deteriorating payer mix

Looking forward, some analysts say they’re more concerned about the long-term effects for hospitals and health systems that were brought on by the downturn in the economy and the virus.

One major concern is the potential shift in payer mix for providers.

As millions of people lose their job they risk losing their employer-sponsored health insurance. They may transition to another private insurer, Medicaid or go uninsured.

For providers, commercial coverage typically reimburses at higher rates than government-sponsored coverage such as Medicare and Medicaid. Treating a greater share of privately insured patients is highly prized.

If providers experience a decline in the share of their privately insured patients and see a growth in patients covered with government-sponsored plans, it’s likely to put a squeeze on margins.

The shift also poses a serious strain for states, and ultimately providers. States are facing a potential influx of Medicaid members at the same time state budgets are under tremendous financial pressure. It raises concerns about whether states will cut rates to their Medicaid programs, which ultimately affects providers.

Some states have already started to re-examine and slash rates, including Ohio.

 

 

 

 

Employers face liability under payroll tax deferral guidance

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The onus to collect and pay back deferred payroll taxes, under guidance the IRS has released on President Trump’s executive order, falls on employers.

Trump signed the order last month after Congress failed to agree on extending COVD-19-related stimulus benefits. It directs participating employers not to withhold the 6.2% payroll tax that employees owe each pay period to cover their portion of Social Security taxes.

The absence of withholding gives employees a bigger paycheck, although they still must repay the deferred withholdings next year, unless Congress waives the liability. 

The benefit applies to employees earning less than $4,000 every two weeks, or about $104,000 a year. It’s in effect for paychecks issued between September 1 and the end of the year.

Effectiveness in doubt

Under the IRS guidance, liability for paying back the uncollected taxes could ultimately fall on employers; there’s no language explaining how deferred taxes will be returned to the Treasury if an employee quits between now and the end of the year or otherwise can’t pay the deferred taxes.

“You could give [the tax deferral] to the employee, but then a year from now you might be on the hook for the money,” University of Chicago law professor Daniel Hemel told CNBC.

“Liability is going to stick to the employer like flies to flypaper,” Marianna Dyson, a lawyer at Washington firm Covington & Burling, told The Wall Street Journal.

Low participation

Many employers may choose not to participate, which would dampen the stimulus impact.

“Many [employers could] decline putting the extra money in workers’ paychecks — blunting any potential economic or political boost Trump had hoped to reap,” an Accounting Today/Bloomberg News analysis said.

The last-minute revamping of systems to administer the change could also deter participation.

“The programming changes are substantial in scope,” the National Payroll Reporting Consortium said in an August 20 statement. 

The deferral is also not a clear win for employees, who could face double withholdings when taxes must be repaid early next year.

“It’s not clear employees will want to take it, even if they qualify.” Pete Isberg, vice president of payroll processing company ADP, told the Washington Post.

 

 

 

 

Hospital revenue at risk in CMS’ proposal to move joint replacement to outpatient care

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Hospital revenue at risk in CMS' proposal to move joint replacement to outpatient care | Healthcare Finance News

The Centers for Medicare and Medicaid Services’ push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021.

CMS’s continued push to the outpatient setting has been going on for some time, but the agency has found its sea legs in the recent hospital outpatient prospective payment system proposed rule, according to Stuart Clark, a managing director for The Advisory Board Company, in an August 27 presentation on payment updates.

CMS is slowly phasing out the inpatient only list over the next three years and is adding more services to the ambulatory surgical center list. There’s around 1,400 total codes on the list right now which are expected to be phased out by 2024.

AUG 29MORE ON REIMBURSEMENT

Hospital revenue at risk in CMS’ proposal to move joint replacement to outpatient care

At stake is $3.2 billion in revenue for a one-day length of stay as 80% of revenue for all services is in joint replacement.

Susan Morse, Managing Editor

 

The Centers for Medicare and Medicaid Services’ push to move procedures from inpatient to less expensive outpatient care continues, with revenue at risk for lucrative joint replacement starting in 2021.

CMS’s continued push to the outpatient setting has been going on for some time, but the agency has found its sea legs in the recent hospital outpatient prospective payment system proposed rule, according to Stuart Clark, a managing director for The Advisory Board Company, in an August 27 presentation on payment updates.

CMS is slowly phasing out the inpatient only list over the next three years and is adding more services to the ambulatory surgical center list.

There’s around 1,400 total codes on the list right now which are expected to be phased out by 2024.

For 2021, CMS has added 11 new procedures to the ASC list, including musculoskeletal services and total hip replacement.

WHY THIS MATTERS 

Eighty percent of hospital revenue for all services is in joint replacement. At stake is $3.2 billion in revenue for a one-day length of stay.

Per hospital, 12-15 procedures may shift from a one-day stay to outpatient, according to Clark and Shay Pratt, vice president of Strategy and Service Line Research for the Advisory Board.

Hospitals may not see a huge amount of revenue at risk if they can continue to keep the services in-house, but in an outpatient setting.

However, there is less revenue to be made from the move to a lower cost care setting. And an estimated 83% of ambulatory surgical centers are physician-owned.

There is still debate on the efficacy of total hip replacement done as an outpatient service. Commercial payers say ASCs can provide total hip replacement, while opponents say they are not equipped for the service, according to the Advisory Board.

The comment period for the proposed rule is set to close on October 5.

Next year, CMS is expected to add cardiovascular services to the outpatient list, but the volume and revenue is not on as large a scale as joint replacement.

THE LARGER TREND IN TELEHEALTH

In telehealth, CMS is implementing incremental change as its use has increased dramatically during the coronavirus pandemic.

For Medicare reimbursement, 22 services have been added to the telehealth list. Of these, nine codes have been added permanently and 13 are approved through the end of the year in which the public health emergency ends.

Audio-only services are eligible under the public health emergency, but CMS is inviting input on how long they should remain eligible. The agency has said it’s uncertain about the value of an audio-only visit.

 

 

 

 

Massachusetts health system lays off 118 furloughed workers, extends exec pay cuts

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Cape Cod Hospital - Office of Student Affairs at UMass Medical School

Citing financial hardships due to the COVID-19 pandemic, Barnstable, Mass.-based Cape Cod Healthcare will lay off 118 employees and extend salary reductions for executives, according to The Cape Cod Times.

In May, Cape Cod Healthcare furloughed 595 employees due to low patient volume and revenue declines amid the pandemic. Of the workers furloughed, 477 have returned to work, and 118 will be laid off. 

Employees affected by the layoffs include eight vice presidents, a nurse, lab workers, environmental service workers and dietary employees.

In addition to the personnel reduction, Cape Cod Healthcare is extending a 10 percent salary cut for its senior executives, according to the report. 

Cape Cod Healthcare CEO Michael Lauf told the Times that the layoffs were “an extremely difficult decision to make, as Cape Cod Healthcare values each and every one of our employees.”

Read the full report here. 

 

 

Northwell records $329M loss in first half of 2020

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Northwell Health pairs with Israel Innovation Authority to develop new medical innovations | MobiHealthNews

Northwell Health, a 19-hospital system based in New Hyde Park, N.Y., ended the first half of 2020 with an operating loss despite a revenue increase year-over-year, according to recently released financial documents. 

In the six months ended June 30, the health system recorded revenue of $6.3 billion, up from $6.1 billion reported in the same period in 2019.

The health system saw its patient revenue drop 9.7 percent in the first half of the year to $5.1 billion, compared to the same period in 2019. The patient revenue drop was attributed to the COVID-19 pandemic.

Northwell’s expenses climbed in the first six months of this year to $6.6 billion, an increase of about 9.5 percent from the same period in 2019.

The health system recorded an operating loss of $249.6 million.

After accounting for nonoperating gains and losses, the system ended the first half of 2020 with a $329 million net loss. This compares to a net income of $393 million in the first half of 2019.

Northwell Health estimated that the negative financial hit from the COVID-19 pandemic in the six months ended June 30 was about $1.2 billion and attributed most of the financial impact to lower patient volume.

Through Aug. 28, Northwell has received $1.2 billion in grants from the Coronavirus Aid Relief and Economic Security Act. In the six months ended June 30, the health system recorded $754 million of this relief aid as “other operating revenue.”

“While the financial impact estimates noted above have been made using the best available information at the time, the ultimate net impact of the pandemic to Northwell and its financial condition is uncertain,” Northwell Health stated.

 

 

 

 

Cleveland Clinic posts $201.8M operating loss in Q2

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Find a Doctor | Cleveland Clinic

Cleveland Clinic ended the second quarter of this year with an operating loss, which the system attributed to financial damage tied to the COVID-19 pandemic. 

The 18-hospital system’s revenue declined to $2.3 billion in the second quarter of this year, down from $2.7 billion in the same period a year earlier, according to unaudited financial documents. In the first six months of this year, the health system experienced net patient service revenue shortfalls of more than $830 million, compared to plan, and incurred more than $165 million in COVID-19 preparedness costs. 

Cleveland Clinic reported operating expenses of $2.36 billion in the second quarter of this year, up from $2.34 billion in the same period last year.

The hospital system ended the most recent quarter with an operating loss of $201.8 million, compared to operating income of $116.2 million in the second quarter of 2019. Looking at the first six months of this year, Cleveland Clinic reported an operating loss of $241.7 million, compared to operating income of $152.4 million a year earlier. 

To help offset financial damage tied to the pandemic in the first six months of this year, Cleveland Clinic recognized $324 million in federal grants made available under the Coronavirus Aid, Relief and Economic Security Act. The health system also applied for and received $849 million in Medicare advance payments, which must be repaid. 

After factoring in investment gains of $477.5 million and other nonoperating items, Cleveland Clinic closed out the second quarter of this year with net income of $276.1 million. In the same period a year earlier, the health system posted net income of $256.4 million.

 

 

CMS to require positive COVID-19 test results for Medicare pay boost

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CMS to Pay For Hospital COVID-19 Care Furnished in Other Settings

CMS recently released guidance that includes a new requirement for hospitals to get a Medicare payment boost for caring for patients diagnosed with COVID-19. 

The Coronavirus Aid, Relief and Economic Security Act provided a 20 percent add-on payment to the inpatient prospective payment system diagnosis-related group rate for treating patients diagnosed with COVID-19. Until now, a physician’s documentation that a patient has COVID-19 was sufficient to receive the add-on payment. However, recent guidance from CMS adds the requirement to have a positive COVID-19 laboratory test documented in the patient’s medical record for the claim to be eligible for the add-on payment. The new requirement applies to admissions occurring on or after Sept. 1.

To receive the payment boost under the new guidance, the COVID-19 test must be taken within 14 days of the hospital admission. Only the results of viral testing that are consistent with CDC guidelines can be used. Tests performed by an entity other than the hospital, such as a local government-run testing center, can be manually entered into the patient’s medical record, CMS said.

Meeting the new requirement for the add-on payment could be difficult for hospitals, Ronald Hirsch, MD, vice president of the regulations and education group at R1 Physician Advisory Services, told Becker’s Hospital Review. 

“There is no way to indicate on a claim for a hospital patient that a test was positive or negative,” he said. “First, the hospital will manually need to go into every record for a patient with U07.1 as a diagnosis and look for a positive test in their own lab system. If one is not found, they will need to search the notes to see if the patient had a test in the 14 days prior to admission and if that test was positive. If there is a note the patient self-reported that they had a positive test, the hospital must decide if they must go through due diligence and attempt to get that actual test result for their records.”

In cases where there isn’t a positive test noted in the medical record, hospitals would need to notify the Medicare audit contractor that they are submitting a claim for a COVID-19 diagnosis that was made clinically, Dr. Hirsch said. The MAC would need to make the appropriate adjustment to ensure the 20 percent add-on payment is not made.

The “undue burden” that the new requirement will place on hospitals was one of the concerns the American Hospital Association highlighted in an Aug. 26 letter to CMS Administrator Seema Verma. The group is also concerned that requiring a positive COVID-19 test will lead to unnecessary additional testing.

“Basing the COVID-19 diagnosis code on clinical judgment alone — in line with coding rules — continues to be an important approach given that test accuracy may not be reliable, re-testing is unnecessarily onerous, and some communities face persistent testing shortages.” 

The AHA is urging CMS to drop the new requirement and allow provider documentation of a COVID-19 diagnosis to be sufficient for the add-on payment if the test result is unavailable. 

 

 

 

 

UPMC’s revenue tops $11B in first half of year

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UPMC tops $11B in revenue in 1st half of 2020 | TribLIVE.com

UPMC reported higher revenue in the first half of this year than in the same period of 2019, but the Pittsburgh-based health system’s operating income declined year over year, according to unaudited financial documents.

UPMC reported revenue of $11.1 billion in the first six months of this year, up nearly $1 billion from the same period of 2019. A year-over-year decline in net patient service revenue attributed to volume declines linked to the COVID-19 pandemic was offset by gains in insurance enrollment revenue. Enrollment in UPMC’s health plans grew to 3.9 million members as of June 30.

Expenses also increased year over year. UPMC reported operating expenses of $11.1 billion in the first half of this year, up from $10.1 billion a year earlier. Operating income for the first two quarters of 2020 totaled $59 million, down $20 million from the same period last year.

The health system ended the first half of this year with a net loss of $165 million, compared to net income of $372 million a year earlier. The net loss was attributed to a $423 million loss on investments from January through July. 

Though UPMC continues to experience some disruption to operations as a result of the COVID-19 pandemic, the system’s interim CFO Edward Karlovich said it’s on solid financial footing.

“We’re positioned with an organization of great financial strength to deal with what comes at us,” Mr. Karlovich said during a news conference Aug. 26, according to TRIBLive. 

 

 

 

 

Hospitals face closure as $100B in Medicare loans come due

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HCA posts a billion-dollar profit, bolstered by CARES Act funds - MedCity News

CMS accelerated payments to hospitals and other healthcare providers at the beginning of the COVID-19 pandemic to help temporarily relieve financial strain. It’s time to begin repaying the Medicare loans but that isn’t possible for some rural hospitals, according to NPR. 

CMS expanded the Accelerated and Advance Payment Program in late March to help offset financial damage caused by the COVID-19 pandemic. CMS announced April 26 that it was reevaluating pending and new applications for advance payments due to the availability of funds under the Coronavirus Aid, Relief and Economic Security Act. As of May, CMS had paid out $100 billion in advance payments, the bulk of which went to hospitals. 

Hospitals and other healthcare providers are required to start repaying the Medicare loans this month. Most hospitals will have one year from the date the first loan payment was made to repay the loans, according to Kaiser Family Foundation.

Ozarks Community Hospital, 25-bed critical access hospital in Gravette, Ark., is one of the hospitals that applied for and accepted the Medicare loans. The hospital also received grants made available under the CARES Act, which do not have to be repaid.

CEO Paul Taylor said Ozarks Community Hospital’s revenue is still constrained, and he doesn’t know how it will pay back its $8 million Medicare loan. Payments for new Medicare claims will be offset to repay the loans, but losing those payments could force the hospital to close, Mr. Taylor told NPR.

“If I get no relief and they take the money … we won’t still be open,” he said.

Ozarks Community Hospital is one of more than 850 critical access hospitals in rural areas that received Medicare loans, according to NPR. Given the shaky financial footing of many rural hospitals before the pandemic, the strain of having Medicare payments withheld could be enough to force others to shut down. 

Before the pandemic, more than 600 rural hospitals across the U.S. were vulnerable to closure, according to an estimate from iVantage Health Analytics, a firm that compiles a hospital strength index based on data about financial stability, patients and quality indicators.

If the financial pressures tied to the pandemic force any of those hospitals to shut down, they’ll join the list of 131 rural hospitals that have closed over the past decade, according to the Cecil G. Sheps Center for Health Services Research.

 

 

 

 

Billions in Hospital Virus Aid Rested on Compliance With Private Vendor

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Billions in Hospital Virus Aid Rested on Compliance With Private ...

The Department of Health and Human Services told hospitals in April that reporting to the vendor, TeleTracking Technologies, was a “prerequisite to payment.”

The Trump administration tied billions of dollars in badly needed coronavirus medical funding this spring to hospitals’ cooperation with a private vendor collecting data for a new Covid-19 database that bypassed the Centers for Disease Control and Prevention.

The highly unusual demand, aimed at hospitals in coronavirus hot spots using funds passed by Congress with no preconditions, alarmed some hospital administrators and even some federal health officials.

The office of the health secretary, Alex M. Azar II, laid out the requirement in an April 21 email obtained by The New York Times that instructed hospitals to make a one-time report of their Covid-19 admissions and intensive care unit beds to TeleTracking Technologies, a company in Pittsburgh whose $10.2 million, five-month government contract has drawn scrutiny on Capitol Hill.

“Please be aware that submitting this data will inform the decision-making on targeted Relief Fund payments and is a prerequisite to payment,” the message read.

The financial condition, which has not been previously reported, applied to money from a $100 billion “coronavirus provider relief fund” established by Congress as part of the $2.2 trillion Coronavirus Aid, Relief and Economic Security Act, or CARES Act, signed by President Trump on March 27. Two days later, the administration instructed hospitals to make daily reports to the C.D.C., only to change course.

“Another data reporting ask,” a regional official in the health department informed colleagues in an email exchange obtained by The Times, adding: “It comes with $$ incentive. We really need a consolidated message on the reporting/data requests, this is past ridiculous.”

A colleague replied, “Another wrinkle. What a mess.”

The disclosure of the demand in April is the most striking example to surface of the department’s efforts to expand the role of private companies in health data collection, a practice that critics say infringes on what has long been a central mission of the C.D.C. Last month, the federal health department moved beyond financial incentives and abruptly ordered hospitals to send daily coronavirus reports to TeleTracking, not the C.D.C., raising concerns about transparency and reliability of the data.

Officials at the Department of Health and Human Services say that the moves were necessary to improve and streamline data collection in a crisis, and that the one-time reports collected in April by TeleTracking were not available from any other source.

“The national health system has not been challenged in this way in any time in recent history,” Caitlin Oakley, a department spokeswoman, said in a statement, adding that TeleTracking offered a “standardized national hospital capacity tracking system which provided more real-time, better informed data to make decisions from.”

But critics remain alarmed.

“In the middle of a pandemic, the Trump administration is using funds meant to support hospitals as a tool to coerce them to use an unproven, untrusted and deeply flawed system that sidelines public health experts,” Senator Patty Murray of Washington, the ranking Democrat on the Senate Health Committee, said in a statement.

In a statement, TeleTracking said it has three decades of experience providing health care systems “with actionable data and unprecedented visibility to make better, faster decisions.”

Still, public health experts and hospital executives are puzzled as to why the health agency chose such a difficult time to employ an untested private vendor rather than improve the C.D.C.’s National Healthcare Safety Network, a decades-old disease tracking system that was deeply familiar to hospitals and state health departments.

The N.H.S.N., as it is known, had built up trust over decades of working with hospitals and state health departments. Administrators were reluctant to make the switch.

“People — especially in public health and clinical health — are very protective of their data, so that trust factor is certainly an issue,” said Patina Zarcone, the director of informatics for the Association of Public Health Laboratories. “The fear of having their data leaked or misused or used for a purpose that they weren’t aware of or agreed to — I think that’s the biggest rub.”

Ms. Oakley said the C.D.C.’s system was “not designed for use in a disaster response” and could not adapt quickly in a crisis. Allies of the C.D.C. say withholding taxpayer dollars from the CARES Act in lieu of cooperation was an inappropriate effort to push hospitals into a system they were reluctant to use.

“It’s an absolutely enormous lever,” said William Schaffner, an infectious disease expert at Vanderbilt University. “It’s a compulsion to oblige institutions to report to this TeleTracking system because they knew if it weren’t tied to money, it wouldn’t happen.”

The Pittsburgh company has no obvious ties to the Trump administration. Rather, the push appears to be part of a broader privatization. The Health and Human Services Department has also asked the Minnesota-based manufacturer 3M “to create, and continuously update, a nationwide clinical data set on Covid-19 treatment,” according to documents obtained by The Times.

The effort is separate from the TeleTracking data collection. Tim Post, a company spokesman, said that because 3M already operates hospital information systems, it is “uniquely positioned,” with the permission of its clients, to submit information to the health department to help officials study disease patterns and recommend treatment options.

Some experts say this kind of cooperation with the private sector is long overdue. But the push also appears to be driven at least in part by an intensifying rift between the C.D.C., based in Atlanta, and officials at the White House and Department of Health and Human Services, the parent agency of the disease control centers.

Dr. Deborah L. Birx, the White House coronavirus response coordinator, and Mark Meadows, the president’s chief of staff, have taken a dim view of the C.D.C. and believe its reporting systems were inadequate. In a recent interview, Michael Caputo, the spokesman for Mr. Azar, accused the C.D.C. of having “a tantrum.”

Accurate hospital data — including information about coronavirus caseloads, deaths, bed capacity and personal protective equipment — is essential to tracking the pandemic and guiding government decisions about how to distribute scarce resources, like ventilators and the drug remdesivir, the only approved treatment for hospitalized Covid-19 patients.

The health agency has set up a new database, H.H.S. Protect, to collect and analyze Covid-19 data from a range of sources. TeleTracking feeds hospital data to that system.

But the public rollout of H.H.S. Protect has been rocky. The nonpartisan Covid Tracking Project identified big disparities between hospital data reported by states and the federal government and deemed the federal data “unreliable.”

The tension dates to March, when the novel coronavirus was making its first surge in the United States

On March 29, Vice President Mike Pence, charged by Mr. Trump with overseeing the federal response, informed hospital administrators that the C.D.C. was setting up a “Covid-19 Module,” and asked them to file daily reports which, he said, were “necessary in monitoring the spread of severe Covid-19 illness and death as well as the impact to hospitals.”

But around that time, TeleTracking submitted a proposal for data collection to the Trump administration, through an initiative, ASPR Next, created to promote innovation. On April 10, TeleTracking was awarded its contract.

The health department’s spokeswoman said the intent was to complement the C.D.C., not compete with it. Like the C.D.C.’s network, TeleTracking’s system requires manual reporting on a daily basis. But in June, Ms. Murray demanded the administration provide more information about what she called a “multimillion-dollar contract” for a “duplicative health data system.”

Some hospital officials also objected to the change.

“We have been directing our hospitals to N.H.S.N.,” Jackie Gatz, a vice president of the Missouri Hospital Association, wrote to a regional health and human services official in an email obtained by The Times, “and now this email with a much greater carrot — CARES Act distributions — is routing them to TeleTracking.”

When the order was delivered, flaws had already emerged in the new system.

“H.H.S. has acknowledged long wait times for those calling for technical support, and indicated that TeleTracking recently added 100 staff to respond to call center requests,” the American Hospital Association wrote to its members in a “special bulletin” on April 23. “They also are directing hospitals to leave a message if they are unable to reach someone live.”

At the time, hospitals had the option of making their daily coronavirus reports to TeleTracking or the C.D.C. Few were using the new database.

In June, the administration again used a stick to demand that hospitals report to TeleTracking, this time in order to obtain remdesivir. By July, with Dr. Birx pushing to bolster hospital compliance, the administration instructed hospitals to stop filing daily reports to the C.D.C. and to send them to TeleTracking instead.

One official at a major academic hospital, who spoke on the condition of anonymity for fear of angering officials in Washington, said the switch left her “unable to sleep at night.”

“Ethically, it felt like they had taken a very trusted institution in the C.D.C. and all of that trust built up with many public health people,” she said, then “moved it onto a politically and financially motivated portion of this response.”

Health and human services officials say the government now has a much more complete picture of hospital bed capacity, with more than 90 percent of hospitals reporting. But Dr. Janis M. Orlowski, the chief health officer for the Association of American Medical Colleges, who worked with Dr. Birx and the administration to bolster hospital reporting, said that she was “stunned” by the switch and that the increase in reporting came because of efforts by her group and others, not the TeleTracking system.

Dr. Orlowski said the data and maps now published on the administration’s H.H.S. Protect data hub are “just not as sophisticated as the C.D.C.”

The switch also generated pushback inside the C.D.C., where officials have refused to analyze and publish TeleTracking data, saying they could not be assured of its quality and had continuing questions about its accuracy, according to a senior federal health official.

Administration officials say the C.D.C. is working with a little-known office in the executive branch — the United States Digital Service — to build a “modernized automation process” in which data will continue to flow directly to the Department of Health and Human Services. But the project is in its infancy, one senior federal health official said.

Critics say that if the department believed the C.D.C.’s health network had problems, those should have been fixed.

“We have a public health system that depends upon communication from hospitals to state health departments to the C.D.C.,” said Dr. Schaffner, the Vanderbilt University infectious disease expert. “It’s very well established. Can it be improved? Of course. But to cut out the public health infrastructure and report to a private firm essential public health data is misguided in the extreme.”