McKinsey helps oversee recovery payouts to former clients

The $175 billion Provider Relief Fund is already under close scrutiny from lawmakers. House Democrats are investigating complaints that the taxpayer dollars were rushed out the door without proper oversight and disproportionately benefited large, well-funded hospitals like the Cleveland Clinic, one of the nation’s wealthiest hospital chains, which received more than $150 million in provider relief funds.

Cleveland Clinic charted its expansion into a booming hospital chain in the late 1980s by relying on advice from McKinsey — though a company spokesman did not answer questions about whether the firm continues to work for the hospital.

POLITICO identified 10 hospitals and chains that have had contracts with McKinsey in recent years and received federal relief funds. But the actual number of hospitals that have worked with the firm and are receiving the federal money could be much larger, because hospitals only have to list a small group of top contractors on public tax filings.

The Provider Relief Fund contract is one of at least three federal contracts awarded to McKinsey in recent weeks related to coronavirus. Ultimately, the three contracts will be worth between $13.5 million and $34 million, records show.

One hospital chain that has paid millions of dollars to McKinsey is California-based Dignity Health and its parent company CommonSpirit Health, which have collectively received at least $211 million from HHS.

Dignity and its parent company — now the second-largest nonprofit chain of hospitals in the U.S. — have hired McKinsey for multiple projects in recent years. In 2016 as Dignity and Catholic Health Initiatives explored a merger, McKinsey advised on “strategic, cultural, financial, legal, operational, and structural” issues, according to a 2018 report from the California Attorney General. (In 2015, CHI paid McKinsey $17 million in consulting services, according to an IRS 990 tax filing.)

CommonSpirit Health then paid McKinsey more than $26 million in 2017 in management and consulting services, according to a 990 form. This year, McKinsey featured CommonSpirit Health’s CEO in a report on how African-Americans have been hit hard during the Covid-19 pandemic. CommonSpirit didn’t respond to requests for comment on whether they still work with McKinsey.

Another provider that received HHS money and used to work with McKinsey is Intermountain Healthcare, the largest healthcare provider in Utah, which has in the past used McKinsey to work on its supply chain. Intermountain received more than $98 million in provider relief funds. McKinsey also featured Intermountain president and CEO Marc Harrison in a 2017 report on the future of healthcare. An Intermountain spokesperson said McKinsey no longer does any work for the company.

SSM Healthcare, a not-for-profit health care system which operates in the Midwest, received almost $118 million from the coronavirus bailout fund and has paid McKinsey more than $8 million since 2013, tax records show. SSM would not comment to POLITICO about its contracts with McKinsey. But a 2017 presentation by a regional SSM president said McKinsey helped the company with “revenue cycle, labor management and supply chain” issues.

And the Pennsylvania-based Geisinger hospitals received $60 million in relief money, while their parent company hired McKinsey in 2016 to help boost the hospital’s margins while increasing its care — part of what the hospital called a “next-generation operating model” in a 2017 public bond offering. Geisinger paid more than $21 million to McKinsey in 2017, according to tax filings.