Practice closures and staff layoffs resulting from pandemic

May 22, 2020
Christine Blank

Nearly 58,000 primary care practices projected to close by end of June.

Several new studies paint a sobering picture for physician practices as the nation nears the end of the third month of the COVID-19 pandemic. Around 58,000 primary care practices may close by the end of June, according to the American Academy of Family Physicians, while many others have laid off and furloughed stuff.

Via its HealthLandscape interactive web-based tool, AAFP projects that physician practice wages and salaries will plummet by more than $64 billion by the end of June and practice job losses-including physicians-will be slashed by 784,133.

By the end of May, AAFP projects that 38,693 practices will close, 522,756 job losses will occur, and wages and salaries will be reduced by more than $43 billion.

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In more bad news, only 47 percent of primary care practices said they had enough cash on hand to stay open for four more weeks, according to an April Primary Care Collaborative survey, and 42 percent are furloughing or laying off staff.

More than 500 primary care practices surveyed by Primary Care Collaborative in early May said their practice has temporarily closed, while 18 said their practice has permanently closed-and that was just one week worth of data. “Fifty-seven percent note that payments are less than enough to cover care delivered,” PCC noted.

 

California practices suffering

Physicians practices in California have been particularly hard hit, as the state was the first to issue a statewide shelter-in-place order. Since the beginning of March, physician practice revenue in California has dropped by 64 percent, the California Medical Association (CMA) found in a recent survey. Three-quarters of respondents report a revenue decline of 50 percent or greater.

Practices also said they have had a whopping 68 percent decrease in office visits. Ninety-five percent of respondents said they are worried about their practice’s financial health-nearly 47 percent are “extremely worried”, while nearly 30 percent are “very worried.”

In order to remain open, 49 percent of California physician practices have had to lay off or furlough physicians/staff. Sixty-five percent have had to reduce physician/staff hours, 34 percent have cut salaries, and 11 percent closed their practices temporarily. 

Nearly half of small practices had to lay off or furlough staff compared to two percent of large practices. Eighty percent of small practices experienced a revenue decline of 50 percent or more, CMA found.

“The fallout from this crisis threatens to fundamentally alter California’s health care delivery system, not just during the COVID-19 outbreak, but for years to come. If policymakers do not take quick, decisive action to help medical practices, it will be more difficult for all practices, particularly small and medium-sized practices, to survive, thus bringing on a new wave of consolidation that increases health care costs and decreases patient access to care,” one survey respondent wrote.

Another respondent said their practice is “failing before my eye. I fear the financial implications in two to three months when no money is coming in and I have been extremely disappointed in the guidance of both my personal financial institution as well as the government.”

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According to the CMA survey, 56 percent of practices applied for a loan through the federal CARES Act, but many said the process was difficult, challenging, and that they were still waiting to hear if their application was accepted.

Surprisingly the PCC survey found that 34 percent of primary care practices received a Paycheck Protection Program loan in the past four weeks, while another third were ineligible to apply or chose not to. Fourteen percent said they received a Small Business Administration Loan. “Just over a fifth say that they received support from the federal Provider Relief Fund over the least four weeks, though the survey did not address the size of that support,” PCC said.

Less than a fifth of clinicians report receiving prospective payments from private insurers, PCC found. Thirty-six percent of practices had received prospective payments from the Centers for Medicare and Medicaid Services.

And, despite encouraging steps towards telephonic payment parity, only 42 percent of primary care practices had received payment for most of their phone-based visits, PCC said.