A team of researchers has published an “ahead of print” article online in Health Affairs, one whose analysis confirms other analyses and data so far available, which have found that the COVID-19 pandemic has had a massive financial impact on primary care practices in the United States, with anticipated average 2020 calendar-year losses of $67,774 in gross revenue per full-time physician, and, even with only a relatively moderate impact on primary care physician practices, a nationwide overall loss of at least $15 billion to primary care practices in 2020.
The researcher article, entitled “Primary Care Practice Finances In The United States Amid The COVID-19 Pandemic,” was written by Sanjay Basu, Russell S. Phillips, Robert Phillips, Lars E. Peterson, and Bruce E. Landon, and made available online on June 25.
They write that, “Due to the novel coronavirus disease (COVID-19), virtually all in-person outpatient visits were cancelled in many parts of the country between February and May 2020. We sought to estimate the potential impact of COVID-19 on operating expenses and revenues of primary care practices. Using a microsimulation model incorporating national data on primary care utilization, staffing, expenditures, and reimbursements, including telemedicine visits, we estimated that primary care practices over the course of calendar year 2020 would be expected to lose $67,774 in gross revenue per full time physician (the difference between 2020 gross revenue with COVID-19 and the anticipated gross revenue if COVID-19 had not occurred, interquartile range: –$80,557, –$54,990). We further estimated that the cost would be $15.1 billion at a national level to neutralize the revenue losses caused by COVID-19 among primary care practices. This could more than double if COVID-19 telemedicine payment policies are not sustained.”
Sanjay Basu is director of research and population health at Collective Health, in San Francisco, California, and a faculty member at the Center for Primary Care, Harvard Medical School, in Boston, Massachusetts. Russell S. Phillips is director of the Center for Primary Care and the William Applebaum Professor of Medicine and professor of global health and social medicine, Harvard Medical School. Robert Phillips is the executive director of the Center for Professionalism and Value in Health Care, American Board of Family Medicine, in Lexington, Kentucky. Lars E. Peterson is vice president of research at the American Board of Family Medicine. Bruce E. Landon is a professor of health care policy, Department of Health Care Policy, Harvard Medical School, and a professor of medicine and practicing internist at Beth Israel Deaconess Medical Center, in Boston.
There is considerable complexity in the data involved in the analysis. As the researchers write, “The SARS-CoV-2 coronavirus infection leading to novel coronavirus disease (COVID-19) has had a significant impact on the US health care system, as virtually all elective procedures and the majority of in-person outpatient visits were cancelled in many parts of the country between February and May 2020. Despite substantial benefits of preventing sick and healthy patients from congregating at hospitals and outpatient physician offices, particularly given concerns of capacity and inadequate supplies of personal protective equipment, the financial impact of these strategies has been devastating to both hospitals and physician practices.2 Lost in the din of hospitals and health systems seeking relief, however, has been the plight of primary care practices and, in particular, independent community-based primary care practices.”
Importantly, the authors note, “Although the health system generally and primary care practices specifically have rapidly pivoted to providing virtual care, including by telephone and video visits, the extent to which such visits are able to replace the revenue of in-person visits and support the existing staff of primary care practices is not known. Regulations and policies governing the conduct of and reimbursement for these types of remote visits are fast evolving, producing considerable uncertainty for practices. Many primary care practices have not invested in telemedicine capabilities and may lack the knowledge or know how to implement a telemedicine system in the near term. Consequently, many practices are using telephone visits without certainty about reimbursement, though some private insurers are now reimbursing remote visits at standard evaluation and management (E+M) visit rates, and Medicare recently agreed to pay for telephone visits retroactive to March 20th.7–9 More importantly, many patients prefer in-person visits and not all visits and complaints are appropriate to be conducted remotely. Consequently, even in settings that have developed remote capabilities, their uptake is likely to be only a percentage of their prior in-person visit volume. A serial survey of primary care physicians in 48 states, Puerto Rico and the Virgin Islands in late March, 2020 found that 87% of respondents reported limiting in-person visits, and 60% were still unable to do any video visits.:
In fact, they note, “Primary care among other specialties is particularly vulnerable since almost all primary care revenue is derived from in-person E+M visits.” And, “Although substantial numbers of primary care physicians are employed by hospitals or health systems, over half of the roughly 220,000 primary care physicians nationally continue to operate within the community as full or part owners of independent small practices. In contrast to hospitals or health systems, these practices lack ready access to capital or sufficient financial reserves that would be required to provide a base of support in the absence of ongoing revenue. In addition, according to data from the Medical Group Management Association, the average primary care practice supports four support staff (including clinical and office staff) at a cost of well over $200,000 per year and other operating costs of similar magnitude per full time equivalent physician, and the ability of practices to support such operations in the current environment is unclear.” And, they note, “Finally, over 25% of practicing primary care physicians are age 60 and older and disruptions such as we are seeing in current practice could lead to higher rates of retirement, which would compound already existing shortages of primary care.13 Primary care practice closures may compromise access to care.”
Importantly, the researchers worked out a five different alternative scenarios in their data analysis, including estimating the impact of a second shelter-in-place during November and December 2020; what capitated level in terms of per member per month global payment, would be required to help medical practices make up their net revenue loss in 2020; what would happen if telemedicine payments were to revert back to pre-COVID-19 levels beginning on October 1; with outcomes recomputed based on the re-stratification of practices by independent ownership versus hospital ownership; and the re-computation of outcomes re-stratified based on practice size. Based on their computations, the researchers anticipate “a net loss to primary care of nearly $15 billion in current dollars under relatively optimistic assumptions, even if we are not hit with a second serious wave of COVID-19 and associated shelter-in-place restrictions in coming months. We also note,” they write, “that this loss would balloon substantially if telemedicine payment rates revert back to pre-COVID-19 levels towards the end of the year. Independent and smaller practices were found to be particularly hard-hit in our sensitivity analyses, and it is notable that hospital systems and therefore hospital-owned practices experienced greater relief following recent legislation. Our results imply that federal subsidies (under the CARES Act and subsequent legislation) are unlikely to be sufficient to ensure the financial viability of primary care practices.” In conclusion, they write, “We anticipate large, meaningful reductions in revenue for primary care practices as a result of COVID-19, which may result in sufficient financial adversity as to threaten practice viability should practices be unable to secure sufficient funding through either fee-for-service or capitated payment mechanisms.”