Pandemic Paradox: Coronavirus forcing doctors to sell their practices or shutter down for good
The novel coronavirus has severely crippled the businesses of independent doctors, with several facing the prospect of shutting down operations.
The most severe cash crunches are being faced by small and independent groups that eventually may be forced to either sell their practice or close their doors once and for all.
This could have some serious ramifications, including further consolidating the industry and thereby exposing patients to unaffordable treatments.
According to Axios, some practices are trying to stay afloat via loans and bailout money. And while the federal government and insurance companies are doing their best to pay doctors for telehealth visits, it doesn't seem to make up for the lost revenue by a huge margin.
Some medical professionals have complained that revenue is at a free fall, ranging anywhere from 50% to 90%. This is because hospital care for COVID-19 and social distancing measures have taken priority over non-urgent services such as primary care check-ups, endoscopies, etc.
The federal government is doing everything they can to disburse loans and grants designated for medical providers. However, the small business funding program has run out of funds and is being described as an administrative nightmare for several doctors who applied for the same. Furthermore, congressional deadlocks in passing emergency funding bills have also contributed to the quagmire.
According to a new survey of doctors conducted by Axios, at least 20% of primary care practices fear they will have no choice but to temporarily close within the next month.
Bob Doherty, an executive at the American College of Physicians told the outlet that the "economic pressures on physicians, especially small practices, are so severe right now that their survivability is in question."
"Unless the financial situation improves, within the next several months, many are going to have to shutter or sell out," he added.
Meanwhile, hospitals, insurance companies, as well as private equity firms are viewing financially distressed practices as a golden opportunity for investment. In fact, they have been rapidly buying out physician practices with almost no antitrust reviews, even before the pandemic broke out.
Torrey McClary, a lawyer at King and Spalding who works with hospitals on acquisitions, told the outlet that hospitals have a huge advantage if they have built "relationships and goodwill" with physicians in their markets.
But several studies have shown that prices skyrocket when independent physician practices are acquired, many a time due to more aggressive billing tendencies or by adding hospital "facility fees."
"That's always the fear: The fewer players that you have, the more costs go up because now you're making choices that are void of concerns for competition," Amber Walsh, a health care lawyer at McGuireWoods, told the outlet.
Amid the ongoing crisis, physicians have had no choice but to defer nonessential care. Some practices are short-staffed due to potential exposure to the contagion, and others are switching most of their appointments to virtual visits that pay much less than routine in-person meetings.
The increasing financial burden faced by standalone practices could also result in excessive stress on the broader health-care systems that are currently focusing on coronavirus cases. Sick patients will have no choice but to seek emergency care at hospitals that are already strained by the pandemic if doctors shutter down their practices owing to a cash crunch or lack of staff. In fact, several practices have advised their patients to stay at home so they don't expose themselves or healthcare workers to the deadly virus.
According to Farzad Mostashari, CEO of Aledade, virtual visits that are reimbursed by healthcare plans or federal programs often pay 30% lesser than in-person appointments.
“The very things that the practices are doing to protect the community and to protect their patients are financial ruination for them," Mostashari told Bloomberg.
The COVID-19 outbreak comes at a time when American doctors are already reporting high levels of burnout and tensions between clinicians, administrators, and insurance companies. What's more? Some doctors fear they will be left out of federal 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,’” Nisha Mehta, a radiologist in North Carolina told the outlet.
“You want to put us on the front lines, and then you don’t want to bail us out if our practices fail,” she added.