Physician practices of all sizes are facing financial instability caused by the countermeasures taken to mitigate the COVID-19 pandemic. Ninety-seven percent of practices have experienced a negative financial impact directly or indirectly related to COVID-19, and less than half of primary care clinicians have enough patient volume and cash to stay open for the next four weeks.
These are among the sobering data points presented in a webinar hosted by Henry Schein Medical, “Physician Practice Financial Sustainability During the COVID-19 Pandemic,” and featuring AMA experts. The discussion focused on financial strategies and new federal programs available to physician practices to help address the challenges brought on by COVID-19.
Participating in the webinar were George Cox, director of the AMA division of legislative counsel; Carol Vargo, director of physician practice sustainability at the AMA; and Jennifer McLaughlin, AMA assistant director for federal affairs.
“We understand that the stress on front-line clinicians in hot spots with regards to COVID care has been tremendous,” Vargo said. “While we are very busy in our ERs, hot spots and many primary care physician offices, because of restrictions on nonurgent care, it has limited many practices, hospitals and health systems activities and sources of revenue.”
New AMA resources available for physician practices
Vargo began the conversation by walking participants through two key resources recently published by the AMA to help physician practices manage their current reality. “Tips for keeping your practice in business during the COVID-19 pandemic” offers 14 suggestions of how practices can stay focused on business and financial operations, including:
- Determine whether any bills can be postponed.
- Implement a process for rapid decision-making and planning.
- Create a financial contingency plan.
- Assign one staff member the job of disseminating alerts from your governor’s office, state and local departments of health, and payers.
She also discussed “Making tough decisions: Managing the practice’s employee costs.” This new AMA resource shares different strategies and hypothetical scenarios to think through as practices juggle with how to reduce costs, including various potential redeployment opportunities.
“Making tough decisions” also clearly delineates the differences between furloughed employees and terminated employees.
Neither document should be solely relied on for legal, financial, medical or consulting advice, though Vargo did add that she hopes physicians continue to access these and other resources created by the AMA.
CARES Act, loans and other financial assistance
Cox offered an overview of the several financial assistance opportunities available to physician practices made possible through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Just as the previously mentioned resources are not to be interpreted as legal or financial advice, Cox recommended any physician interested in financial assistance discuss their intentions and plans with a legal or financial expert.
Cox provided his insight on financial assistance opportunities, including the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), small-business debt relief, the Main Street Lending Program, and tax-related benefits.
The PPP is designed to encourage small businesses with 500 or fewer employees to retain those employees on payroll by providing forgivable loans that help cover eight weeks of payroll costs, as well as mortgage interest, rent and utilities. For loans to be forgiven, at least 75% of the loan needs to be used for payroll costs. On April 16, the PPP ran out of funding just two weeks after being enacted. At that time, SBA had guaranteed more than 1.6 million PPP loans totaling $342 billion.
On April 24, the Paycheck Protection Program and Health Care Enhancement Act was signed into law to provide an additional $310 billion funding for PPP.
The EIDL is also geared toward small businesses. Although these loans will not be forgiven, they are more flexible than the PPP in terms of the types of expenses that can be covered.
Small-business debt relief is currently being offered by the U.S. Small Business Administration (SBA). If a practice has an existing nondisaster SBA loan, the SBA is providing financial reprieve by automatically paying the principal, interest, and any associated fees that borrowers owe for a period of six months.
The Main Street Lending Program had not been implemented yet, but once it is enacted, Cox explained that the program “authorizes the Federal Reserve, working with the Treasury Department, to make loans, loan guarantees and other investments and subsidies to provide liquidity for small and midsized businesses with up to 10,000 employees for losses incurred as a result of coronavirus.”
McLaughlin concluded the presentation with a discussion on the Provider Relief Fund and the Medicare Accelerated/Advance Payment Program. The Provider Relief Fund was also established in the CARES Act as a way to provide financial relief to physicians, hospitals and other medical care providers. The amount disbursed to these providers in the first tranche was in proportion to physicians’ and hospitals’ share of 2019 Medicare fee-for-service payments. In the second tranche, HHS is disbursing additional funding based on net patient revenue to physicians who submit revenue and tax information. These payments are grants and do not need to be repaid.
Recipients of money from the Provider Relief Fund are required to document that the funds are being used for lost revenue and health care-related expenses attributable to COVID-19, including medical supplies and equipment, added employees or updating facilities due to new precautions established for COVID-19.
McLaughlin also discussed the Centers for Medicare & Medicaid Services (CMS) Accelerated/Advance Payment Program that provides an advance on future Medicare payments of up to three months’ historical Medicare payments. The program is currently paused, and in a joint letter to Congress, the AMA and more than 100 medical societies advocated for a longer, interest-free repayment period.
The AMA also sent a letter to the CMS last week asking for the program to quickly be reinstated with more flexible terms and to have it be expanded in order to provide cash assistance to Medicaid providers.
The AMA and the Centers for Disease Control and Prevention are closely monitoring the COVID-19 pandemic. Learn more at the AMA COVID-19 resource center. Also check out the AMA’s physician guide to COVID-19 and get guidance from the AMA on reopening amid COVID-19.