Is the Federal Government Doing Enough to Support the Independent Medical Practice During the COVID-19 Crisis?

America’s independent physician practices face unprecedented, devastating financial losses due to the COVID-19 pandemic, reporting, on average, a 55 percent decrease in revenue, and a 60 percent decrease in patient volume, since the beginning of the COVID-19 crisis.

“New MGMA data show that 97 percent of medical group practices have experienced a negative financial impact directly or indirectly related to COVID-19,” said Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association (MGMA). The MGMA further estimates that 36 percent of medical practices will have made employee layoffs, and 60 percent employee furloughs, by May 7.

Anticipating economic loss, the federal government passed the Coronavirus Aid, Relief & Economic Security (CARES) Act, a $2 trillion relief bill that allotted $130 billion to boost the healthcare system on March 27. According to the American Medical Association (AMA), the CARES Act “contains numerous provisions to mitigate the economic damage inflicted on American doctors, hospitals and other healthcare organizations, and should assist them in providing optimal healthcare to their patients.” Three of the most critical provisions to survival of the independent medical practice, which the AMA summarizes on its website, are:

1. Small business loans. Small businesses, including physician practices, with no more than 500 employees are eligible to apply for the Small Business Administration’s (SBA) section 7(a) Payroll Protection Program. This allows a small business to apply to an SBA-approved lender for a loan of up to 250 percent of the business’s average monthly payroll costs. The loan can be used to cover eight weeks of payroll as well as help with other expenses like rent, mortgage payments and utilities.

2. Financial support for hospitals, physicians and others. The CARES Act provides $100 billion through the Public Health & Social Services Emergency Fund to offer immediate financial relief by covering non-reimbursable expenses attributable to COVID-19. Healthcare entities, including physician practices, that provide healthcare, diagnoses or testing are eligible. Examples of qualifying expenses include increased staffing or training, personal protective equipment and lost revenue.

3. Emergency loans. The CARES Act authorizes $10 billion for an “emergency” Economic Injury Disaster Loan (EIDL) to eligible entities with not more than 500 employees. It allows an eligible entity that has applied for an EIDL loan to request an advance on that loan, of not more than $10,000, which the Small Business Administration must distribute within three days. Advance payments may be used to provide paid sick leave to employees, maintain payroll, meet increased costs to obtain materials, make rent or mortgage payments and repay obligations that cannot be met due to revenue losses.

But physicians in New York are struggling to stay afloat despite the  passage of the CARES Act, according to a survey by the Medical Society of the State of New York that was published on April 16. Almost 80 percent of survey respondents reported suffering a loss of revenue of more than 50 percent since the COVID-19 outbreak began. Eighty-three percent reported they have experienced a reduction of more than 50 percent in the volume of patients visiting their practices. The Society also noted that a number of survey respondents reported having applied for CARES Act help as soon as the funds became available, but have received no assistance to date.

“New York’s healthcare system, including physicians, shouldn’t have to face financial ruin, while working around the clock to save lives,” said Art Fougner, MD, president of the Medical Society of the State of New York. “The next package coming out of Congress must include specific funding to help preserve New York’s healthcare infrastructure, including physician practices.”

“Many physician practices attempted to apply for the forgivable paycheck protection loans that were authorized by the CARES Act, only to find that money for the program had run out in just two weeks, and with the Small Business Administration no longer accepting applications, leaving them and millions of other businesses without access to the loans. This, combined with substantial losses of revenue for practices as they have largely converted to virtual visits that pay less than in-office visits, has brought many practices — especially smaller primary care practices — to the brink,” wrote Robert McLean, MD, MACP, president of the American College of Physicians, wrote in a letter to congressional leadership. “The additional funding for the Paycheck Protection Program is a critical and much-needed lifeline for physicians and their practices.”

That cry for help was answered on April 24 when President Donald Trump signed into law the Paycheck Protection Program & Health Care Enhancement Act, which replenishes funding for the Payroll Protection Program created by the CARES Act and adds billions of dollars in emergency funding for physicians and hospitals. The question remains whether that will be enough to sustain the independent medical practice.

Mike Matray, Editor – Medical Liability Monitor

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