With More Fed COVID Aid in Doubt, Practices Struggle to Survive

Ken Terry

August 19, 2020

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

As government assistance programs expire or wind down, physician practices across the country are struggling to stay afloat, and some offices have begun to close. Despite a rebound in face-to-face office visits since May, the cumulative effect of all the lost business is dragging down many practices, reports from a variety of sources reveal.

In a national survey conducted from July 24 to 27 by the Primary Care Collaborative (PCC) and the Larry Green Center, just 80% of primary care physicians said they expected to have enough staff, billable work, and cash on hand to stay open for 4 more weeks. The other respondents — 1 in 5 doctors — were uncertain about that.

In verbatim comments at the end of a June 26 – 29 PCC report, one Massachusetts physician said her office was being closed "due to the impact of coronavirus on the financial picture."

An Oregon doctor said he was retiring because he could not deal with the situation anymore. "I give up trying to navigate all of this, and follow all regulatory demands, and use an EMR, and risk spreading disease to my family," he said.

Doctors in several states said they were either closing or near to closing their offices. "We are in danger of having to make drastic cuts, selling out to the local hospitals, or worse, going out of business," one New Mexico physician said.

"Clinicians in primary care feel they have only a few roads right now — especially independent primary care practices that are physician-owned," said Sanjay Basu, MD, director of research and population health at Collective Health, San Francisco, and a faculty member of the Center for Primary Care at Harvard Medical School, in an interview with Medscape Medical News.

"They feel they could be acquired or merge into a larger entity, they could retire, or they could cobble together some additional funding beyond what has kept them afloat so far, and the latter is highly uncertain at this point," he said.

Incoming CMA President Resigns

Despite the restoration of some elective surgery, specialists are also facing obstacles to survival, Basu noted. "There's no doubt that under the fee-for-service system, everybody who is providing services has been scrambling, with a tremendous amount of overhead and not enough revenue."

One specialist facing this challenge is Lee T. Snook, Jr, MD, a pain medicine specialist in Sacramento, California, who was until recently the incoming president of the California Medical Association (CMA). He recently resigned the post, and according to a statement sent to Medscape Medical News about the decision, CMA spokesman Anthony York said Snook "cited the need to focus on his practice, which had been struggling financially since the pandemic."

Snook did not respond to our request for comment. But York said, "We know that thousands of physicians across the state are facing financial struggles as many people avoid healthcare and physicians struggle to get the PPE they need to remain open.

"This is a priority for CMA, and we are doing everything we can to ensure federal and state lawmakers take action so that physicians like Dr Snook get the financial relief they need to keep their practices open and provide care to their patients."

Most practices across the country are still viable, Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA), told Medscape Medical News. In fact, average practice volume and revenue have increased substantially since April, when a large part of the country was locked down.

At the end of June, MGMA statistics show, revenues for MGMA members were 76% of what they were in June 2019, and patient volume was 78% of that in the prior-year period.

"It's a lot [of loss], but not necessarily enough to close doors," Gilberg noted. "Many doctors have reduced their own pay to compensate." They've also furloughed staff, closed some locations, or cut practice hours in many cases, he said. "Practices are not necessarily healthy. They're just on life support and trying to get through this as we go into the fall."

Another national survey, by the Commonwealth Fund and Phreesia, shows that by the week of June 14, outpatient visits had declined only 11%, on average, from the prepandemic baseline — a big rebound from the 60% drop that occurred in March and early April.

The researchers noted, however, that visits were still down up to 20% in many areas of the country. Even more concerning, the cumulative visit deficit from March 15 to June 20 was 37%, they said.

Government Programs Expire

Government assistance has largely sustained physician practices during the pandemic, Gilberg observed. Ninety percent of respondents to MGMA's latest survey said their practices had obtained forgivable loans from the Payment Protection Program (PPP).

Sixty-nine percent said they'd received Provider Relief Fund (PRF) money. And 32% had received loans under Medicare's Advance Payment Program, which was canceled a few months ago.

The PPP expired on August 8. The PRF, originally funded at $175 billion for all healthcare providers, including hospitals, still has money to allocate. Providers have until August 28 to apply for the funds.

The Small Business Administration (SBA) announced on July 11 that it would no longer make grants under the Economic Injury Disaster Loan (EIDL) program. However, the SBA is still processing applications for EIDL loans.

In a July 22 letter to Senators Mitch McConnell (R-KY) and Charles Schumer (D-NY), the MGMA asked them to include at least $100 billion more in the next COVID-19 relief package to help struggling practices get through the fall and winter.

In addition, Gilberg noted, the association wants the Centers for Medicare & Medicaid Services (CMS) to defer paybacks on Medicare advance payments made last spring. When these loans come due for many practices in the near future, CMS will start reducing Medicare reimbursement by the amount of the loan payments, which would severely hurt the practices' cash flow.

Unless Congress passes and President Trump signs a COVID-19 rescue package that includes money to bolster practices, Gilberg said, a vicious cycle of declining revenues and staff shortages could eventually put many physicians out of business.

Grim Scenarios

The July 24 – 27 report from the PCC and the Green Center conveys a grim message about the current state of primary care.

"Four plus months into the pandemic, the lack of substantial policy response by public or private sector leaders and a persistent dire 'new normal' pose a credible threat to potential collapse of US primary care and of independent practice," the authors stated. "Failure to act has already caused a contraction of the US primary care system with justifiable concern that it will retrench further."

In the survey, which included 450 physicians, 26% of respondents said they were delivering healthcare in a "physically and emotionally damaging work environment." Nineteen percent said they were critically understaffed because of staff furloughs and absences. Four in five respondents reported the strain on their practice was worse than it had been in March.

Nineteen percent of the doctors said they'd had to limit the number of patients that they could see because of physical distancing needs and reduced staff. Along with decreased payments and increased costs of care, this was contributing to their financial losses.

Face-to-face patient volume for the survey respondents was still down 30% to 50% from prepandemic levels. The use of telehealth, which had been crucial to survival earlier in the pandemic, was declining because of limited financial support. About a fifth of respondents said they'd been informed that one or more of their private insurers were planning to reduce telehealth payments within a month.

The comments of some respondents suggested that physicians were being pushed to the limit of their work capacity and stress tolerance. And not all of them were in independent practices.

One Texas doctor who worked for a health system said he was dealing with "lower salary for more work, risk of serious illness every day, doing my staff's jobs because they're afraid to touch and be in the room with patients, spending my own money (30K) on PPE for the entire clinic despite working for a huge hospital system."

A Colorado physician summed up the situation like this: "Insecurity, exhaustion, moral outrage, despair, grief, rage, despondency. Seriously questioning whether to continue to stay and serve a society that doesn't seem to value me, my loved ones, or what we do. Currently working around 120hrs/wk providing unfunded care at my own personal expense to gravely ill persons.... I have maxed out my own resources and reserves."

In a July COVID survey by the California Academy of Family Physicians, a doctor in the Castro Valley region stated, "For a small practice like mine, the effects of the pandemic on staff members, their family, exposure risks, childcare, etc have been very difficult, making it difficult to fully staff our office and keep things running properly to meet patient needs.

"We can't run at full capacity like this and could have to close or partly close at any time due to potential exposures — and that would have even greater financial impact on the practice. Patients are too scared to come to the doctor."

All in all, Basu concluded, the near-term outlook for physician practices is worrisome. "Over the next few months, it's going to be a dicey time and a very uncertain time," he said. "There's no doubt about it."

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