Close Your Practice Temporarily...or Longer? Your Decision During COVID-19

Leigh Page

March 30, 2020

Editor's note: Find the latest COVID-19 news and guidance in Medscape's Coronavirus Resource Center.

On March 19, Gene Dorio, MD, a geriatrician at a two-physician practice in Santa Clarita, California, called his staff together to decide whether to stay open in the face of the COVID-19 pandemic.

"We have seven people, and I did not want to put any of them at risk," he said. "We don't want to put patients at risk, either." The practice had been operating successfully for many years.

The practice's finances were being threatened by an abrupt and very significant decline in patient visits. "People have been canceling all the time," he said. "They're canceling out of fear. I saw five patients today, and I usually see 10 to 14 patients a day."

After much discussion, "we decided to stay open," he said. "That's the most important thing we can do for our patients and this community."

The staff will meet again in a few weeks to reassess their future. "This is a fluid situation," Dorio said. If things do not improve financially, he does not rule out the possibility of having to close.

At medical practices across the country, the COVID-19 pandemic is threatening not only the lives of staff and patients but also the economic well-being of the practices themselves, and many are contemplating closing.

Many patients are not showing up for appointments. In addition, practices such as Dorio's are advising older patients, who are at higher risk for mortality, not to come in, and they are canceling nonurgent visits. "Financially speaking, we are shooting ourselves in the foot," Dorio said.

In addition, many hospitals are canceling elective procedures, which are an important source of income for a wide array of specialists, including gastroenterologists, orthopedic surgeons, and cardiologists. The thinking is that elective surgeries would take away important resources from COVID-19 patients and that elective-surgery patients would be put at risk of getting the virus.

The financial pain for practices came abruptly, says Steve Messinger, president of ECG Management Consultants in Washington, DC. "The first half of March was somewhat normal for practices," he said. "In the second half of March, things escalated dramatically."

In the past few weeks, "there has been a significant dropoff in the number of claims at health insurers," Messinger said. "This loss of volume is reminiscent of what we saw during the Great Recession of 2008 to 2009."

Hoping to Stay Open: Here's What to Try First

"Most doctors are hoping that this will be a temporary slowdown of their practices," said A. Michael La Penna, a practice management advisor in Grand Rapids, Michigan. "It's human nature to assume that relative normalcy will return fairly soon, so just hang in there."

Some physicians who are putting off closing may be hoping for some kind of financial rescue. On March 19, the American Medical Association (AMA) and several other major physician groups asked Congressional leaders to take several actions, including providing "dedicated financial support to all physicians and their practices who are experiencing adverse economic impact on their practices from suspending elective visits and procedures."

Practices that have decided to stay open are radically changing their operations.

Phil Boucher, MD, a pediatrician in Lincoln, Nebraska, is trying to keep his office open by strategically reorganizing the way he schedules patient visits and by seeing patients via telemedicine.

Practices have also been separating well patients from sick ones. Boucher has started conducting well visits, such as seeing babies who are brought in for vaccination, in the morning and sick visits in the afternoon.

Boucher also says he has postponed physical examinations for the next school year until the summer, so that children are not put at risk for exposure at the practice. "Usually we like to space out the physicals so we won't get overwhelmed in the summer, but we have no choice," he said.

"The concern is that you don't want a lot of patients in your office at any one time," said Gregory Mertz, a physician practice manager in Virginia Beach, Virginia.

A group of urologists in Fredericksburg, Virginia, who are Mertz's clients have limited their practice to urgent visits, and patients are screened before coming in for an appointment. "When patients call, someone talks to the patient over the phone and determine whether they should come in," said Mertz.

Telemedicine Can Help Doctors Keep Seeing Patients

Many practices have started using telemedicine as a way to distance staff from patients and avoid transmission of the virus. Medicare payment restrictions have been temporarily waived so that telemedicine can be provided throughout the country and can originate in patients' homes.

Medicare is also temporarily allowing telemedicine visits via patients' smartphones if they have a video connection such as Skype or Apple FaceTime, and they must ensure patient privacy. In addition, Medicare has allowed practices to waive collecting copays for telemedicine. Reportedly, some private insurers have followed suit.

Boucher, the pediatrician, just started using telemedicine. "A couple of weeks ago I would have told you I could only use telemedicine on 5% of my patients, but now I think it's more like 30% to 40%," he said. "It works for patients on medications, children with rashes, and parents with some sick children. You can eyeball the patient and say, 'Let's wait and see how things go.' "

But Dorio, the California geriatrician, finds it less useful. "It would be nice if all the patients knew how to use FaceTime or Skype, but many seniors do not," he said.

The Sad Decision to Cut Staff

Now that practices are seeing fewer patients, they are forced to consider reducing staff. "Staff is largest expense other than real estate, so practices have to closely manage their staffing," Mertz said. "On a weekly or even daily basis, the practice has to match staffing to patient demand."

Some staff may seek time off to take care of children who are now released from school. Others may be quarantined if they are suspected of having been infected by the virus. And some staff may be repurposed for other work, such as phone triaging or wiping down surfaces.

"The practice may decide, 'I don't need you this month,' " Mertz said. "Then the staff member can get unemployment as long are they have exhausted the paid leave they had coming to them."

Many doctors want to keep all their staff on board. "In that case, the practice could impose shorter work weeks for existing staff," said Elizabeth Woodcock, a practice management consultant in Atlanta, Georgia. "Many people might have to work on a temporary basis," she said.

Trying to Make the Closure Temporary

Most practices are still receiving income from past billing, since the reduction in volume started recently, so they have a few weeks or longer to decide what to do next, La Penna says. He suggests that they use the time to plan for the future.

"You need to have a plan for what you will do if this situation continues. When the risk is unknown, as is the case with this pandemic, people tend to plan for the best and fear the worst," he said. "But it makes more sense to plan for the worst and hope for the best."

La Penna advises practices to thoroughly analyze their operations. That analysis should include defining ongoing expenses and deciding how to handle them, developing a time-off policy for employees, and holding off on new hires and purchases.

He advises being transparent about your plans. "Be very public and forthcoming about the measures the practice is taking to avoid a complete shutdown, but keep your options open," he said. "Communicate with referral sources at every stage so that they stay in the loop."

Procedure-oriented practices should follow the rules on elective procedures, La Penna says. "Conform to your association's national guidelines on performing elective surgery or procedures," he said. "If you do not follow those guidelines, you may be liable if your patient develops the virus."

The AMA has compiled a list of actions to help keep your practice open. Here are some highlights:

  • Determine the minimal cash flow you'd need. Develop a contingency plan based on estimates of minimum cash flow to stay afloat.

  • Track your losses and expenses. You'll need a record to make a claim through your business insurance policy. The policy may or may not cover COVID-19-related liabilities. Contact your broker to find out.

  • Keep track of impending defaults. Review existing loan documents and financial covenants to determine whether a slow-down of business or collections could trigger a default.

  • Negotiate with lenders. Contact vendors, landlords, and creditors to discuss reasonable accommodations for cash flow disruptions. Consider asking them for forbearance, forgiveness, or a standstill, and agree to establish a process for keeping them informed over time.

  • Get a low-interest loan. The US Small Business Administration has begun to administer low-interest loans funded by numerous states, counties, and municipalities.

  • Keep up with policy changes. State, local, and federal laws and regulations that affect practices are changing rapidly. Assign a staff member to follow these changes in the news and on government websites.

Closing Your Office May Be the Only Option

Still, many practices may have to close ― hopefully, most closures will be temporary, but some could end up being permanent.

"If you want to close your practice temporarily, you can get a short-term loan, try to defer payments, and wait for circumstances to improve," La Penna said. "You'll need to spend a few weeks winding down your practice, and you'll want to make sure employees and patients don't drift off."

However, many practices may have no choice but to go permanently out of business, La Penna says.

The problem for many practices is that they typically distribute income among partners and have not retained earnings to cushion them from a financial disaster, Messinger says. "Some higher performing practices have a cash surplus of perhaps 2 months, if that," he said. "They could take out loans and use lines of credit, but some of them already have outstanding loans for equipment or accounts receivables."

Older physicians who were planning retirement may decide to retire early. "Anecdotally, there are a number of doctors who are ready to call it quits," said Louis Weinstein, MD, chair of the AMA Senior Physicians Section. "This virus is the last straw. Their thought is, 'Get out before you get sick.' One colleague was going to close in a year from now but decided to speed it up."

To find the specific steps needed to shut down a practice, check with physician organizations, practice managers, and healthcare attorneys. For example, the American Association of Family Physicians provides a Closing Your Practice Checklist, which specifies what you should do 60 to 90 days and 30 to 60 days before closing.

Employed Physicians' Concerns

While private practices wrestle with staying open, there are potentially some grim or unhappy prospects for employed physicians too.

Many hospitals are in difficult economic straits and may not be able to afford paying doctors who aren't working. But some experts are more optimistic.

"In many cases, I think the hospital will pay their salary even though their volume is down," Mertz said. And Messinger said: "Hospitals may put employed physicians with low volume on an 'RVU [relative value unit] holiday' for a while. They don't want to have a destabilized workforce."

"When employed surgeons can't do elective procedures, suddenly they can't meet their productivity targets to get bonuses," La Penna said. Productivity measures are typically based on RVUs. La Penna says he is working with a 100-physician practice where RVU payments that had been projected for the remainder of the year are expected to fall by half.

Some employed physicians have a guaranteed base pay that is not affected by RVUs, but in many cases, pay is based purely on productivity, says Andrew Hajde, assistant director of association content at the Medical Group Management Association. "If their volume goes down, they are in danger of not getting paid," he said.

Leigh Page is a freelance writer in Chicago, Illinois.

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