In this episode, we are joined by Anders Gilberg, Senior VP of Government Affairs for MGMA, to discuss their study on the financial impact of COVID-19 on medical practices.
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Highlights of this episode include:
- Background on MGMA’s survey of medical practices, 75% of which were independent practices with less than 50 physicians.
- How patient volume and revenue have been impacted by the COVID-19 pandemic.
- How practices are facing the unfortunate situation of furloughs and lay-offs of staff members.
- A review of MGMA resources that are available to medical practices to help cope with the pandemic.
- And more…
Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast®. The Medical Group Management Association recently conducted a survey of medical group practices to gauge the impact that the COVID-19 pandemic is having on them. To discuss the results of that survey, I’m joined by Anders Gilberg, Senior Vice President of Government Affairs at MGMA. Anders, welcome to the show.
Anders: Thanks, Michael. I appreciate being here today.
Mike: So, Anders, could you start out by telling us a bit about the practices you surveyed and what you asked them?
Anders: At MGMA, we have about 15,000 member medical practices, and they spend the entirety of specialty, size, geographic location as well. So we get a pretty good diverse sample when we do surveys like this. And obviously, we’re really concerned as the implications of the COVID-19 crisis became apparent in terms of our membership and the rest of the healthcare community in terms of the immediate impact of the pandemic itself. But also the ancillary impact, which has been a significant drop in revenue, and I know we’ll talk about that more. And so in terms of this survey, since we have so many practices, a lot of our smaller practices are still independent, but we have larger practices as well. In this particular survey, about 75% of the respondents are part of independent practices, and also about 75% are in practices of less than 50 physicians. And it’s not that we don’t have data from larger or hospital owned practices, but in a case like this, we do get a lot of feedback from smaller practices who are kind of living day-to-day in terms of their cash flow in a crisis like this. And again, what we wanted to look at is to survey our membership on their practice revenue, their patient volume to understand what’s going on if they’re taking any steps to reduce costs and to address any issues that they have control over during this crisis.
Mike: Anders, let’s walk through the results. First, it looks like almost no practices have gone financially unscathed by this pandemic. What did you find out there?
Anders: Yeah, that’s definitely what we found. I think it was around 97% of the practices we surveyed said that they were having financial difficulty as a result of the COVID-19 crisis, and it’s been abundantly clear that regardless of specialty size, location or patient population that they’ve either felt the direct or indirect impact of this crisis. Yeah, and we’re clearly dealing with the frontlines where you have a need for new personal protective equipment. And now, we’re trying to get more tests out there. So there’s some additional expenses. But I would say the vast majority of practices are not necessarily on the front lines, but because of the situation and the concerns about either patients coming into a practice, or we’ve had a number of state governments shut down all sorts of non-essential procedures for ambulatory surgical centers and the like. And so we found that practices are really hurting as a result of the current environment and so we wanted to quantify that and find out a little more.
Mike: What did respondents report in terms of the impact on patient volume and revenue?
Anders: So on average what we found was about a 60% decrease in patient volume and about a 55% decrease in revenue and again cash flow is a significant issue with medical practices. It’s clearly an issue with hospitals as well as medical groups but especially if you think about how independent practices tend to not carry over if any reserves from year to year to prevent double taxation so there isn’t a lot of cushion for these practices. Even in 2008/2009 where we certainly had a deep economic crisis and there was an economic hit for medical practices, we just didn’t see this. We didn’t see this immediate and sharp interruption in cash flow and so it’s a completely new environment that we’ve just never dealt with before. And the obvious again patients are foregoing– we’re worried now too because patients are foregoing necessary preventive care and even acute care for fear of exposure and the environment is such where we’re hearing some positive– maybe this week I would say is that we’re hearing a bit of a shift where especially in those states where we’re hearing that the governors are potentially opening up certain services that maybe we’re turning the corner but I talked to a group of members that have a bit of a focus group each week that I talked to and volumes are significantly down and we’re definitely trying to keep up with all the changes from state by state but it’s going to be critical for example that there’s sufficient testing to make sure that the patient’s that– when procedures resume that patients are not COVID positive and that we can protect both the physicians in the practice, the staff in the practice as well as the patients.
Mike: Unfortunately, lay-offs and furloughs are taking place as a result of this decline. What has happened so far and what is projected as we head into May?
Anders: So many clinical administrative staff have taken pay cuts and they’re deferring salaries. Physicians are often paid last in the structure of a medical group practice as well whereas they pay expenses. They pay overhead. They pay staff salaries and then at the very end, they take a salary. So physician salaries are significantly cut but in terms of lay-offs and furloughs in addition to that 22% of practices have laid off staff at this point. 48% have furloughed staff. So furlough is more of a temporary situation but what we asked them too is if these conditions persist through May what situation would you be in and ask the same question 30 days from now, ask them to predict, and so the numbers bump up pretty quickly because of the interruption in cash flow and we found that 36% of practices report that they would have to lay off staff and 60% said they would be furloughing staff if conditions persist. So obviously, we’re really concerned about the implications – the financial implications as well as the clinical implications the patients face with respect to the crisis, but we haven’t turned a corner yet and if anything we’re kind of in the middle of it still.
Mike: Anders, the other side of these practices are also experiencing increased expenses. What can you tell us about that?
Anders: Yeah. We’ve seen some price inflation with PPE, personal protective equipment. Especially, initially, practices were scrambling to get masks and gowns and to set up for in-person visits. But what we quickly found is that not a lot of patients want to come into the practice. It’s also highly dependent on specialty. And in terms of increased expenses, the key shift that’s taken place, and this has been a massive one over just the past month, is some practices doing no telehealth but now, they’re scrambling to get up and running with new telehealth services. Which you may be aware that because of significant waivers that have been put in place by the Medicare program as well as certain private payers, now in some cases, almost all office visits are being done virtually as a result of the crisis. And so there are different types of telehealth that can be delivered. The more formal programs that are vendor-specific and that are integrated into an EHR and potentially, practice management system, those are significantly more costly. I mean, we do have some practices simply using Zoom or using FaceTime, but it’s a little less structured and it’s a little more difficult. So in terms of telehealth, implementing that new technology while at the same time, in some cases, receiving lower reimbursement, that’s really been a difficult contributor to the problem here. And so you see that reflected in those reduced revenues.
Mike: My next question is going to be predicated probably on a lot of things that none of us truly know at this point, but I’ll ask you anyway. What do you think physician practices can expect over the next few months as this pandemic unfolds?
Anders: Well, again, we’re hearing from them about what they perceive as either a hidden or a known backlog of cases that are starting to accumulate behind the scenes here. Because as I mentioned, patients are either not coming in for their preventive care or they’re not coming in to get care for things that they should be seen by a physician in person. And so that pent-up demand is a cause for concern. While at the same time, practices will be dealing with the implications of COVID-19, they’re trying to open up to deal with that pent-up demand. I think our main concern at this point, is that we’re going to– if practices have to continue to furlough or lay off staff, then they’re going to be hobbled to some degree and they aren’t going to be able to get up and running as quick as they would like to deal with sort of a second wave of access issues that are going to occur when people start returning to go to the physician– to see their physician. And especially, too, if you had a small procedure that was going to be done on an outpatient setting. In some states, my understanding is North Carolina, perhaps Texas, they are looking at allowing some of these non-emergency procedures to be to begin again soon and so practices are looking at how do we address that in this environment. And there are two key things that I think that they need in order to open up and to effectively protect patients. And one is obviously the PPE that has been redirected to more important front line type of situations where patients with COVID-19 are receiving care more likely in a hospital setting and the other is testing. And what we’re seeing at least being planned over the next few months is that practices are looking to kind of split their practice even from a physical location and having one area where you might have patients with COVID-19 or suspected COVID-19 but for the other aspects or areas of the practice work for smaller procedures that will need to be done over the next six months. And every patient has to be tested before that procedure is undertaken and so the limitations on things like tests and PPE to the extent that they continue, they’re going to also contribute to those access problems because we won’t be able to do those office procedures unless we have the ability to protect the staff, the patients and the physicians who are delivering the care.
Mike: MGMA have several resources available to help medical practices cope with this crisis. Where can people go to get them?
Anders: Yeah. As soon as this came out, as the crisis became very clear to us, we created an action center and so you can go to mgma.com/covid. And at first, what we were doing is kind of cataloging all of the activity that was going on with the government and to some extent private payers because that was coming fast and furious. But we’ve also kind of as we’ve learned what practices are asking for and they’re really asking for what financial resources are available from the government through the Paycheck Protection Program or potentially low-interest loans or there are some direct monies for both hospitals as wells as physician practices that HHS is distributing. And so we have a couple of guides up there on that COVID action center. One, dealing with the type of financial help that a practice can receive in the current environment and also because of all of the changes to telehealth, we created a number of documents to try to help practices get up and running with telehealth so that they can take care of patients to the best of their ability. And at the same time, work with different insurers and payers so that those services are covered and that they can start to mitigate the reduction in revenue that was reported in the survey that they responded to for MGMA.
Mike: We certainly appreciate all of the insights and the resources that you have available. Anders Gilberg, thank you so much for joining us today on the Hospital Finance Podcast.
Anders: Thank you.
COVID-19, better known as Coronavirus, has spread throughout the world. Symptoms of this respiratory disease may include fever, cough, and shortness of breath. These symptoms may show up 2 to 14 days after exposure. If you are experiencing these symptoms and have come into contact or are in an area with an ongoing outbreak, please call a hotline and/or consult with a physician. Clean and disinfect high-touch surfaces. For more information, please visit cdc.gov/covid19. Thank you.