DOGE freezes healthcare grants for extra review

Typically, when an organization has been awarded a federal healthcare grant, it does not receive the funding upfront. Instead, the money is kept in a secure account that's managed by the federal government, and an organization requests "drawdowns" of funds throughout the year to cover any expenses like salaries or research costs.

However, under DOGE's Defend the Spend initiative, organizations must now include a justification for each requested drawdown. Federal officials must also manually review and approve each request before a payment can be made. The initiative is currently being rolled out across different parts of HHS, including NIH and the Administration for Children and Families.

According to DOGE, the new initiative will push government officials and grantees to justify their spending and create transparency. "Thanks to the great work by @HHSGov, for the first time ever, the American people will be able to see line-by-line payment descriptions & justifications — coming soon to the DOGE website," the group posted on X.

In a separate statement, HHS said the initiative was meant to identify areas of fraud and abuse and would not threaten "support for critical programs."

"The era of rubber stamping is over," HHS added.

'No one is getting any money right now'

According to the Washington Post, DOGE's initiative has halted grant awards to tens of thousands of organizations, leaving many confused and uncertain about their funding.

"Instead of cutting red tape, they are strangling grantees with it," said Robert Gordon, who served as the HHS assistant secretary of financial resources during the Biden administration.

For example, some officials were told that only Trump political appointees could approve requests to disburse funds even if another government official had already approved it. Two employees in separate agencies also reported that organizations must include an explanation on how funds will be used to advance Trump administration priorities in their requests for funds.

Sherilynn Quist, a senior director at Optum Advisory*, said, "hospitals and clinics that rely on grant funding are already struggling for resources. Delayed payments could force these entities to make difficult decisions affecting staffing, potentially leading to layoffs or reduced hours for healthcare workers. Unfortunately, these decisions often affect the quality and availability of patient care."

"While some healthcare providers have seen margin recovery over the last 12+ months, that success varies by organization size and market. As many organizations are still struggling with overall margin performance, any further challenges to cash flow, such as delayed or reduced grant funding, may further stymy financial success," added Samantha Wyld, a senior director at Optum Advisory.

"Providers are being put in an uncomfortable position, and are racing to put contingency plans in place," said Derek Kazahaya, a senior director at Optum Advisory.

Funding delays could also negatively impact the supply chain, delaying shipments, straining relationships with suppliers, and worsening patient care. "If things get worse, we might also face cancellations of supplies or services, which would make the situation even tougher and further disrupt patient care," Kazahaya said. "This is especially challenging given the recent tariffs that are already causing chaos."

*Advisory Board is a subsidiary of Optum. All Advisory Board research, expert perspectives, and recommendations remain independent.