Doctors worried about survival of their medical practices: 'This could be the death blow,' says physician

Medicine Money
The coronavirus pandemic has created a cash crunch for many physician practices. (Getty/utah778)

Almost 22 years ago, Sumana Reddy, M.D., and two other doctors set up a family medicine practice in the rural area of Salinas, California. Now she worries the coronavirus could be the death of it.

Like many other physician practices across the country, Reddy is worried if her practice can survive the cash crunch caused by the pandemic.

The Acacia Family Medical Group is not what a well-heeled practice, with more than 50% of its patients bilingual, agricultural workers, Reddy says.

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“Like every other small private practice, and more so because we are all very focused on the quality of our care, we have always been very touch and go in terms of finances. At any point I would not be able to sustain the practice for longer than one to two months without a continuous cash infusion,” said Reddy in a recent interview.

Photo of doctor
Sumana Reddy, M.D. (Reddy)

But since the coronavirus outbreak began, the medical practice has seen patient visits drop to 20% of its regular workload. While the practice is transitioning to value-based care as an accountable care organization, it is currently dependent entirely on fee-for-service payments.

“This is something on a business level that will be extremely, extremely difficult to ride out,” said Reddy, who was talking to an accountant about applying for a Small Business Administration loan to stay afloat.

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Asked if she was looking at closing her doors, Reddy said she had not reached that point yet. “My husband suggested he would ask friends for loans. If I didn’t get revenues back up, to be financially sensible, I would have to close my door in two months,” she says.

Focused on maintaining the quality of her practice, Reddy says she still has not fully paid off loans she originally took out to open the office, but she has managed to maintain her practice. “This is really a labor of love. But this could be the death blow,” she worries.

Like many physicians, she is now turning to telehealth visits. In a bid to help support practices, the Centers for Medicare & Medicaid Services (CMS) last month agreed to pay for virtual visits at the same rate as in-person visits while the coronavirus emergency remains in effect.

And on Monday, CMS agreed to pay physicians for patient visits that take place by telephone to help practices stay open by providing them with needed revenue.

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As a result of the coronavirus outbreak, a large number of insurers are also paying for telemedicine visits and more are doing so. Doctors hope commercial insurance companies will also agree to pay for telephone visits.

Reddy, whose practice had not been set up for telehealth visits, said she did one of her first virtual visits with an 89- and 90-year-old couple, whose nurse caregiver had the technology and was able to get them on the call.

Reddy isn’t alone in her struggles brought on by the coronavirus crisis, which threatens to shutter doctors’ offices across the country.

Most practices are still driven primarily by fee-for-service payment, dependent on patients walking through the door, says Dan Bowles, senior vice president at Aledade, a company that works with Reddy’s practice and about 550 other independent primary care practices across the country helping them transition to value-based care.

Many practices saw patient visits drop by 30%-40% as the coronavirus outbreak spread, Bowles says.

RELATED: CMS provides regulatory relief on staffing, paperwork as COVID-19 cases surge

“Of course, these are practices that are also small businesses with plenty of staff and other fixed expenses. That presents a pretty good cash flow crunch for them,” says Bowles.

In addition, many are also struggling to get access to personal protective equipment, such as masks and gloves, and other medical supplies, he says.

“These are the folks who are on the front lines and unfortunately they are getting pretty hard hit by this,” he says.

The coronavirus pandemic has created an operational crisis for the country’s primary care practices, agrees Kyna Fong, CEO and co-founder of Elation Health, a company that works with practices and offers an electronic health records system.

“It’s definitely having a really big impact on frontline physician practices,” says Fong. “They are getting slammed on all sides.”

Across the country, practices experienced overall about a 25% drop in patient visits, she says. But that varies depending on where practices are located.

In New York and California, which were among the first epicenters for the outbreak, physicians reported an 80% drop in visits as patients are told to stay home unless a visit is absolutely necessary, she says.

Both Bowles and Fong say it is critical for practices to set up their telehealth capabilities so they can keep boost revenues and make up the losses they have suffered as in-office patient visits have dropped significantly.

Reddy says her practice is doing that and working to keep patients well and out of the hospital emergency room. Her practice cares for more than 6,000 to 7,000 patients and employs 17 staff members, including four physicians and a physician assistant.

While in-office visits have dropped, staff are busier than ever answering patient questions over the phone. With the threat of coronavirus, it’s critical to keep patients with chronic conditions, such as diabetes and asthma, out of the emergency room, where they could be exposed to the virus.

If it’s safe, Reddy is seeing patients in the practice, but doctors are also making home visits. She’s gearing up to do drive-by visits for babies who need their scheduled vaccinations.

She says she has never seen anything like the situation created by coronavirus. “I guess we all do what we need to do. It’s a pressure cooker. But I’m in it for the long haul,” she says, hoping to keep her practice afloat until the situation stabilizes.

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