Doctors’ Practices Face Cash Crunch as Pandemic Halts Economy

(Bloomberg) -- As the coronavirus swept across the U.S. in the past two weeks, small businesses turned away customers, and hospitals braced for a surge of patients. Doctors’ offices have been doing both.

Physicians have deferred nonessential care or seen wary patients cancel en masse. Some have staff quarantined because of potential exposure, while others are rushing to switch as many appointments as possible to virtual visits. The result is a painful squeeze for a crucial front line of the American health-care system.

In many respects, medical practices resemble other small businesses that have suffered from the economic ripple effects caused by the coronavirus. Demand for some of their most fundamental and lucrative services has withered, replaced by a rolling crisis that’s upended the lives of workers and customers, and caused acute pain that could throw their long-term financial health into doubt. Primary-care doctors are counseling patients who may have Covid-19 while trying to treat those with more familiar ailments through online visits that pay much less than routine in-person appointments.

“I’m virtually very busy,” said Sarah Mullins, one of four physicians at Stoney Batter Family Medicine in Wilmington, Delaware, which has seen much of its routine business move online. “The phones are ringing, the messages are coming in. Everybody needs something, everybody wants something, but there’s no one here.”

The 30-employee practice has cut most workers’ hours by half to conserve cash and is relying on a line of credit to make payroll.

“When patients don’t come in,” Mullins said, “we can’t pay our staff.”

Additional Stress

The increasing financial burden faced by primary-care doctors could compound stress on the broader health-care system caused by the new coronavirus. If doctors shut their doors because of staffing shortfalls or a cash crunch, sick patients could seek emergency care at hospitals strained by the pandemic. Many practices are telling patients to stay home to avoid exposure for both themselves and health-care workers alike.

“It’s the right thing to do,” said Farzad Mostashari, chief executive officer of Aledade. The company supports about 550 physician practices, including Mullins’s, that care for a total of 2 million patients. “The very things that the practices are doing to protect the community and to protect their patients are financial ruination for them.”

When virtual visits are reimbursed by health-care plans or government programs, Mostashari said, they often pay 30% less than in-person consults.

Doctors are pushing lawmakers to increase reimbursements for online care as part of a broader measures to address economic pain caused by the outbreak. A group of medical societies urged congressional leaders on March 20 to require phone visits to be paid at the same rate as in-person care and to provide direct financial support to clinicians and their practices.

A Senate bill now being debated doesn’t do enough to put telehealth payments on par with office visits, said Robert McLean, president of the American College of Physicians.

“Phone visits were given out for free for years, so why are insurance companies going to start paying doctors for something that they know we're going to do for free?” said McLean, who is an internist and rheumatologist with Northeast Medical Group of Yale New Haven Health in Connecticut. The difference is that calls used to supplement higher-paying face-to-face care, not replace it.

Chronic Care

Taking care of people with conditions such as hypertension and diabetes is essential to protecting hospitals’ capacity to treat Covid-19 patients.

At Tryon Medical Partners in Charlotte, North Carolina, in-person patient visits have declined as much as 30% since March 14, with revenue down about as much. The 92-doctor practice set up Covid-19 testing sites and eight patients have tested positive. Many of the group’s 130,000 patients need ongoing treatment to manage chronic conditions, said CEO Dale Owen, a cardiologist.

“We have to keep these patients out of the hospital to allow the hospitals to do their job,” Owen said. “They’re doing a heroic job. We have to do a heroic job to keep people out of the hospital.”

Owen said the state’s Blue Cross Blue Shield plan and UnitedHealthcare are paying for virtual care on par with in-person visits, but other large insurers are not. A spokesman for CVS Health’s Aetna unit said telemedicine is reimbursed at the same rate as in-person visits. Humana Inc. said Tuesday that it would temporarily pay providers the same for telehealth as office visits. Cigna Corp. didn’t respond to requests for comment.

The pandemic arrives as American doctors already report high levels of burnout. Tensions between clinicians, hospital administrators and insurers run high in normal times. Some doctors are afraid they’ll be left out of relief plans.

“Everybody’s afraid they’re going to say, ‘Well, doctors make a lot of money. We’re not going to bail them out in this situation,’” said Nisha Mehta, a radiologist in North Carolina who runs online networking groups for physicians.

Doctors are disheartened as lawmakers discuss aid for hospitals and other industries like airlines and casinos, she said. Physicians will step up to treat a surge of Covid-19 patients, and want to make sure their regular practices are intact when the pandemic ebbs, she said.

“You want to put us on the front lines, and then you don’t want to bail us out if our practices fail,” Mehta said.

©2020 Bloomberg L.P.