As visits plummet because of the coronavirus, small physician practices are struggling to survive.
Autumn Road in Little Rock, Ark., is the type of doctor’s practice that has been around long enough to be treating the grandchildren of its eldest patients.
For 50 years, the group has been seeing families like Kelli Rutledge’s. A technician for a nearby ophthalmology practice, she has been going to Autumn Road for two decades.
The group’s four doctors and two nurse practitioners quickly adapted to the coronavirus pandemic, sharply cutting back clinic hours and switching to virtual visits to keep patients and staff safe.
When Kelli, 54, and her husband, Travis, 56, developed symptoms of Covid-19, the couple drove to the group’s office and spoke to the nurse practitioner over the phone. “She documented all of our symptoms,” Ms. Rutledge said. They were swabbed from their car.
While the practice was never a big moneymaker, its revenues have plummeted. The number of patients seen daily by providers has dropped to half its average of 120. The practice’s payments from March and April are down about $150,000, or roughly 40 percent.
“That won’t pay the light bill or the rent,” said Tabitha Childers, the administrator of the practice, which recently laid off 12 people.
While there are no hard numbers, there are signs that many small groups are barely hanging on. Across the country, only half of primary care doctor practices say they have enough cash to stay open for the next four weeks, according to one study, and many are already laying off or furloughing workers.
“The situation facing front-line physicians is dire,” three physician associations representing more than 260,000 doctors, wrote to the secretary of health and human services, Alex M. Azar II, at the end of April. “Obstetrician-gynecologists, pediatricians, and family physicians are facing dramatic financial challenges leading to substantial layoffs and even practice closures.”
By another estimate, as many as 60,000 physicians in family medicine may no longer be working in their practices by June because of the pandemic.
The faltering doctors’ groups reflect part of a broader decline in health care alongside the nation’s economic downturn. As people put off medical appointments and everything from hip replacements to routine mammograms, health spending dropped an annualized rate of 18 percent in the first three months of the year, according to recent federal data.
While Congress has rushed to send tens of billions of dollars to the hospitals reporting large losses and passed legislation to send even more, small physician practices in medicine’s least profitable fields like primary care and pediatrics are struggling to stay afloat. “They don’t have any wiggle room,” said Dr. Lisa Bielamowicz, a co-founder of Gist Healthcare, a consulting firm.
None of the money allocated by lawmakers has been specifically targeted to the nation’s doctors, although the latest bill set aside funds for community health centers. Some funds were also set aside for small businesses, which would include many doctors’ practices, but many have faced the same frustration as other owners in finding themselves shut out of much of the funding available.
Federal officials have taken some steps to help small practices, including advancing Medicare payments and reimbursing doctors for virtual visits. But most of the relief has gone to the big hospital and physician groups. “We have to pay special attention to these independent primary care practices, and we’re not paying special attention to them,” said Dr. Farzad Mostashari, a former health official in the Obama administration, whose company, Aledade, works with practices like Autumn Road.
“The hospitals are getting massive bailouts,” said Dr. Christopher Crow, the president of Catalyst Health Network in Texas. “They’ve really left out primary care, really all the independent physicians,” he said.
“Here’s the scary thing — as these practices start to break down and go bankrupt, we could have more consolidation among the health care systems,” Dr. Crow said. That concerns health economists, who say the steady rise in costs is linked to the clout these big hospital networks wield with private insurers to charge high prices.
While the pandemic has wreaked widespread havoc across the economy, shuttering restaurants and department stores and throwing tens of millions of Americans out of work, doctors play an essential role in the health of the public. In addition to treating coronavirus patients who would otherwise show up at the hospital, they are caring for people with chronic diseases like diabetes and asthma.
Keeping these practices open is not about protecting the doctors’ livelihoods, said Michael Chernew, a health policy professor at Harvard Medical School. “I worry about how well these practices will be able to shoulder the financial burden to be able to meet the health care needs people have,” he said.
“If practices close down, you lose access to a point of care,” said Dr. Chernew, who was one of the authors of a new analysis published by the Commonwealth Fund that found doctor’s visits dropped by about 60 percent from mid-March to mid-April. The researchers used visit data from clients of a technology firm, Phreesia.
Nearly 30 percent of the visits were virtual as doctors rushed to offer telemedicine as the safest alternative for their staff and patients. “It’s remarkable how quickly it was embraced,” said Dr. Ateev Mehrotra, a hospitalist and associate professor of health policy at Harvard Medical School, who was also involved in the study. But even with virtual visits, patient interaction was significantly lower.
Almost half of primary care practices have laid off or furloughed employees, said Rebecca Etz, an associate professor of family medicine at Virginia Commonwealth University and co-director of the Larry A. Green Center, which is surveying doctors with the Primary Care Collaborative, a nonprofit group. Many practices said they did not know if they had enough cash to stay open for the next month.
Pediatricians, which are among the lowest paid of the medical specialties, could be among the hardest hit. Federal officials used last year’s payments under the Medicare program to determine which groups should get the initial $30 billion in funds. Because pediatricians don’t generally treat Medicare patients, they were not compensated for the decline in visits as parents chose not to take their children to the doctor and skipped their regular checkups.
“This virus has the potential to essentially put pediatricians out of business across the country,” said Dr. Susan Sirota, a pediatrician in Chicago who leads a network of a dozen pediatric practices in the area. “Our waiting rooms are like ghost towns,” she said.
Pediatricians have also ordered tens of thousands of dollars on vaccines for their patients at a time when vaccine rates have plunged because of the pandemic, and they are now working with the manufacturers to delay payments for at least a time. “We don’t have the cash flow to pay them,” said Dr. Susan Kressly, a pediatrician in Warrington, Pa.
Even those practices that quickly ramped up their use of telemedicine are troubled. In Albany, Ga., a community that was an unexpected hot spot for the virus, Dr. Charles Gebhardt, a doctor who is treating some infected patients, rapidly converted his practice to doing nearly everything virtually. Dr. Gebhardt also works with Aledade to care for Medicare patients.
But the telemedicine visits are about twice as long as a typical office visit, Dr. Gebhardt said. Instead of seeing 25 patients a day, he may see eight. “We will quickly go broke at this rate,” he said.
Although he said the small-business loans and advance Medicare payments are “a Godsend, and they will help us survive the next few months,” he also said practices like his need to go back to seeing patients in person if they are to remain viable. Medicare will no longer be advancing payments to providers, and many of the small-business funding represents a short-term fix.
While Medicare and some private insurers are covering virtual visits, which would include telephone calls, doctors say the payments do not make up for the lost revenue from tests and procedures that help them stay in business. “Telehealth is not the panacea and does not make up for all the financial losses,” said Dr. Patrice Harris, the president of the American Medical Association.
To keep the practices open, Dr. Mostashari and others propose doctors who treat Medicare and Medicaid patients receive a flat fee per person.
Even more worrisome, doctors’ groups may not be delivering care to those who need it, said Dr. Mehrotra, the Harvard researcher, because the practices are relying on patients to get in touch rather than reaching out.
Some doctors are already voicing concerns about patients who do not have access to a cellphone or computer or may not be adept at working with telemedicine apps. “Not every family has access to the technology to connect with us the right way,” said Dr. Kressly, who said the transition to virtual care “is making disparities worse.”
Some patients may also still prefer traditional office visits. While the Rutledges appreciated the need for virtual visits, Kelli said there was less time to “talk about other things.”
“Telehealth is more inclined to be about strictly what you are there for,” she said.
Private equity firms and large hospital systems are already eying many of these practices in hopes of buying them, said Paul D. Vanchiere, a consultant who advises pediatric practices.
“The vultures are circling here,” he said. “They know these practices are going to have financial hardship.”
The deal is still on the table and the two are working on finalizing a path forward, Summa Health told Healthcare Dive.
“That said, the immediate priority is for both Summa and Beaumont to focus first and foremost on caring for our patients, employees, physicians and communities as we are impacted by the COVID-19 pandemic,” a spokesperson said.
The marriage between the two health systems is supposed to give Beaumont Health a foothold in Northeast Ohio, putting it in closer competition with Cleveland Clinic. In addition to its four hospitals, Summa also operates its own health plan, SummaCare, which provides coverage to 46,000 people.
Beaumont operates eight hospitals with 145 outpatient sites and has 38,000 employees.
Earlier this year, the two signed a definitive agreement and, together, Beaumont and Summa, are expected to create a $6.1 billion system in terms of total annual revenue with $4.7 billion from Beaumont and $1.4 billion from Summa.
However, the fallout from COVID-19 is likely to hamper those figures.
Beaumont reported a net loss of about $278 million during the first quarter of 2020, compared to about $408 million during the prior-year period. The system reported the virus only started affecting it in the last two weeks of March.
Aon is proposing to buy Willis Towers Watson in an all-stock transaction that would combine the second- and third-largest insurance brokerages, Bob writes.
Why it matters: Employers hire Aon and Willis Towers Watson to help them choose health plans and pharmacy benefit managers for their workers, but the major consultants don’t always steer companies toward the best deals.
What’s next: The two companies don’t expect to close the deal until the first half of 2021, indicating they know antitrust regulators will be closely scrutinizing this.
The aggressive push among insurers to purchase physician practices—one that mirrors the vertical integration strategies pursued by hospital systems over the past few years—has some asking what the end game looks like for health plans.
A recent investigative piece from Kaiser Health News shows where this payer-physician integration might lead. Focused on the activities of UnitedHealth Group in the New Jersey Medicaid market, the article describes a move by the company’s insurance subsidiary, UnitedHealthcare, to shift the Medicaid beneficiaries it covers in its Medicaid managed care plan into physician practices owned by its sister subsidiary, Optum.
That effort is the target of a lawsuit brought by some physician practices in the state, who allege they are losing patients as a result of an attempt by UnitedHealthcare to “narrow” its physician networks by terminating their contracts. It’s an obvious, and clever, strategy on the part of the insurer, which likely hopes to capture savings and generate greater revenue by integrating insurance and provision of care.
But as the piece describes, it’s proving significantly disruptive to the care of many patients, who are losing access to physicians with whom they’ve built relationships with over time. Insurers have pursued these strategies less aggressively in their commercial and Medicare businesses, turning instead to referral management tactics like specialist steerage, mandatory pre-authorizations, and discounted rates instead of shifting primary care patients care.
But, as in many other aspects of care, it may be easier to implement such aggressive “management” techniques in the low-income population, because patients have so few alternatives to care. As vertical integration strategies play out on both the hospital and insurer sides of the industry, it’s worth paying attention to how “grand strategy” of the sort depicted in our map above plays out on the ground, in the lives of individual patients.
FTC Commissioner Christine Wilson has pledged to be tougher on hospital deals in 2020, including reviewing previously closed deals to see if they’ve delivered on promised cost and quality metrics. The last time the FTC questioned a major hospital merger was in 2016, when it urged Virginia and Tennessee not to approve the union of large operators Mountain States Health Alliance and Wellmont. The push was unsuccessful, and the two coalesced into rural system Ballad Health.
The deal, first announced in March 2018, has stagnated over the past two years as it was scrutinized by regulators at the FTC and Pennsylvania Attorney General Josh Shapiro.
“This merger would eliminate the competitive pressure that has driven quality improvements and lowered rates,” Ian Conner, Director of the FTC’s Bureau of Competition, said in a statement. The rivalry between the two nonprofit players for market dominance has resulted in upgraded medical facilities and technological investments, but that progress could stall if Jefferson and Albert Einstein combined, FTC said.
Jefferson and Einstein boast a combined roughly $5.9 billion in annual revenue, along with 18 hospitals, more than 50 outpatient and urgent care centers and a handful of rehab and post-acute facilities. Jefferson, the bigger player, has 14 hospitals across South Jersey and Philadelphia, Montgomery and Bucks counties.
The regulators said they will soon file a formal complaint in the U.S. District Court for the Eastern District of Pennsylvania.
The complaint alleges that as a result of the merger, Jefferson and Einstein would control at least 60% of the inpatient general acute care services market in North Philadelphia, and 45% in Montgomery. That includes services like medical or surgical diagnostics and treatments requiring an overnight stay.
Jefferson and Einstein manage six of the eight inpatient rehab facilities for recovering from serious, acute conditions in the Philadelphia region, and would control at least 70% of that market if combined.
The hospitals said their marriage represents a “creative effort” to increase access at a time when safety net hospitals are struggling.
“We believe we have presented a strong and comprehensive case as to how the merger would benefit the patients we serve and advance our academic mission without reducing competition for healthcare services,” the systems, which have had an academic partnership for more than two decades, said.
Several studies have debunked theories that bigger is better in terms of quality of care when it comes to health systems.
FTC plans to seek a temporary restraining order and preliminary injunction to prevent Jefferson and Albert Einstein from consummating the merger pending an administrative trial scheduled to being in September this year.
‘Medicare for all’ debate sidesteps cost of current system.
The projected multitrillion-dollar cost of “Medicare for All” has pitted Democratic presidential candidates against each other as they argue about the feasibility of single-payer health care.
But the reality is the current health system may cost trillions more in the long run and be less effective in saving lives.
Spending on Medicare, Medicaid, private health insurance and out-of-pocket expenses is projected to hit $6 trillion a year — and $52 trillion over the next decade. At the same time, the number of people with insurance is dropping and Americans are dying younger.
Sen. Bernie Sanders and other single-payer advocates say Medicare for All would cost the government far less — between $20 trillion and $36 trillion over a decade — by slashing overhead, eliminating out-of-pocket costs and empowering federal officials to bargain directly with hospitals and drugmakers. But the streamlined system would have to care for millions of currently uninsured people at a significant cost to taxpayers, and experts disagree whether it would actually save money in the long run.
Centrist Democrats are pushing narrower plans that would, among other things, expand tax credits for people just above the Obamacare subsidy threshold. Virtually no one is arguing for maintaining the status quo, but that’s precisely what could happen given that congressional gridlock has stymied even popular, and bipartisan, causes like halting surprise medical bills.
“It’s really hard to see anything breaking through, especially when the industry interests and the money they’re willing to spend on lobbying and campaign contributions is just mind-boggling,” said Sabrina Corlette, a researcher at Georgetown University’s Center on Health Insurance Reforms. “And, without question, we are on an unsustainable trajectory.”
With Medicare for All and its price tag likely to come up in the next Democratic debate Jan. 14 in Iowa, here are five of the costliest consequences of inaction:
The Centers for Medicare and Medicaid Services estimates that nationwide health spending will hit $6 trillion a year by 2027 absent any changes in law. That would be nearly a fifth of the economy. In total, the United States is slated to spend about $52 trillion over the coming decade.
The cost drivers include hospitals, physician and clinical services and prescription drugs. Some local health systems have become monopolies that can largely set prices as they please — leading to higher premiums and more out-of-pocket spending for consumers.
“Even the biggest insurance plans are not big enough to bargain down the cost of services, and they don’t have an incentive to,” said Wendell Potter, a former Cigna executive-turned whistleblower and single-payer advocate.
An aging population is driving up Medicare spending, but the rising cost of private insurance is the biggest factor. A recent Kaiser Family Foundation analysis found per capita spending for private insurance grew by nearly 53 percent over the last decade, or more than double the hike in per capita Medicare spending.
The Census Bureau reported in September that the number of Americans without insurance grew by 2 million people since 2017 — the first increase in nearly a decade. Even with a healthy economy and low unemployment, more than 27 million people weren’t covered at any point last year. That could grow to 35 million by 2029, per the Congressional Budget Office, under current law.
The number of people enrolling in the Obamacare marketplace has declined, and more people are dropping employer-sponsored insurance due to cost and other concerns.
Part of this is President Donald Trump’s doing — the administration has slashed efforts to push Obamacare enrollment and rolled back the massive marketing effort that the Obama administration rolled out for years.
There are also more than 400,000 additional uninsured children than just two years ago — and 4 million in all — and states that haven’t expanded Medicaid are seeing the biggest spikes.
“What we also miss in the debate is the number of people temporarily uninsured, who miss open enrollment, who are between jobs, who fall through the cracks,” said Adam Gaffney, a Harvard Medical School researcher and the president of Physicians for a National Health Program. “I see people all the time in my practice in that situation who don’t fill prescriptions and experience serious complications.”
Going without insurance hits patients and health care providers: Average hospital spending on care for the uninsured was $13 million in 2018 up roughly 3 percent annually since 2016.
As the cost of health care has skyrocketed, insurance companies have squeezed patients, charging higher premiums, deductibles and co-pays, and creating narrow networks of providers and aggressively billing for out-of-network care.
Since 2009, the amount workers have had to pay for health insurance has increased 71 percent, while wages have only risen 26 percent over that time.
More than 80 percent of workers now have to pay a minimum amount out of pocket before insurance kicks in — and the amount of that deductible has doubled over the last 10 years, now standing at an average of $1,655, though many workers have to pay a lot more.
These costs are putting care out of reach for millions.
A new Gallup poll found that a full quarter of adults have put off treatment for a serious medical condition due to the cost — the highest since Gallup began asking the question three decades ago. A full third say they’ve delayed or deferred some kind of health care service over the past year. Another Gallup and West Help survey found that 34 million people know at least one friend or family member who died over the past five years after skipping treatment due to costs.
U.S. patients pay vastly more for prescription drugs than people in other developed countries and the disparity is set to grow. The United States spent $1,443 per person on prescription drugs in 2018, while other developed countries fell somewhere between $466 and $939.
In just five years, national spending on prescription drugs increased 25 percent, according to the Government Accountability Office, and CMS expects that increase to “accelerate” over the next several years.
Increasingly, patients are responding by forgoing their medications. Gallup found in November that nearly 23 percent of adults — roughly 58 million people — said they haven’t been able to “pay for needed medicine or drugs that a doctor prescribed” over the past year.
This widespread inability to take needed medication, a government-funded study found last year, is responsible for as much as 10 percent of hospital admissions. And the Centers for Disease Control and Prevention estimates that medication nonadherence accounts for somewhere between $100 and $300 billion in national health spending every year.
The cost of maintaining the status quo is evident not only in dollars but in human lives.
Life expectancy in the United States has declined over the last three years, even as other developed countries around the world saw improvements.
Though the United States spends nearly twice as much on health care as other high-income countries, there’s been a stark increase in mortality between the ages of 19 and 64, with drug overdoses, alcohol abuse, suicide and organ diseases driving the trend. It’s cut across race and gender with the worst effects felt in rural areas.
The opioid epidemic only accounts for a fraction of the problem. The National Research Council found that the United States has higher mortality rates from most major causes of death than 16 other high-income countries.
Researchers at USC estimate that if these trends continue, it would take the United States more than a century to reach the average life expectancy levels other countries hit in 2016.