Many Health Providers On Brink Of Insolvency

By Christine Vestal and Michael Ollove

WWR Article Summary (tl;dr) With a near-total shutdown of medical treatment outside hospitals, many small businesses that comprise the physician and clinical services industry are struggling to survive.


While hospitals strain to treat the surge of acutely ill COVID-19 patients, the crisis threatens the stability of the rest of the health care system.

Elective surgeries and routine medical care are on hold. As a result, medical providers of all kinds are seeing drastic reductions in patient visits and crushing losses of revenue. At the same time, some continue to pay wages along with rent and other overhead costs. Many worry they'll lose their skilled workers to hospitals.

The combination raises the possibility that the non-hospital health system will be decimated, and many of the surviving providers will be ill-prepared to deal with the pent-up demand that emerges from this crisis.

Virtually all of health care is affected, from surgical practices to dentists to community health centers, which serve 29 million predominately poor patients, to school-based health clinics and emergency ambulance services.

The nation has seen a near total shutdown of medical treatment performed outside hospitals, including physical exams, colonoscopies, dental restorations and routine surgeries, all provided by thousands of primarily small businesses that comprise the physician and clinical services industry.

Many of those businesses, which account for nearly 20% of the nation's $3.6 trillion health care industry, are at risk of failing, health care experts say.

That could lead to further consolidation of the U.S. health care industry and less competition after the crisis subsides, according to Jonah Frohlich, a managing director at Manatt Health, a national health care consulting firm.

"We're going to see a raft of acquisitions and mergers and integrations with independent clinicians who can't survive months of no revenue," he said.

In the meantime, medical providers contacted by Stateline said they're concerned that patients with chronic conditions such as diabetes, high blood pressure and chronic obstructive pulmonary disease will get sicker without medical care and that postponed diagnostic tests, such as mammograms and colonoscopies, will result in serious illnesses going undetected and worsening.

Concerned about the health risks of postponing needed care and the increasing financial damage to the health care industry, which is a major driver of many local economies _ governors in Alaska, Arizona, Arkansas, Georgia, Ohio, Oklahoma, Texas and West Virginia have announced plans to start reopening hospitals and medical practices to elective procedures in the weeks ahead.

But the U.S. Centers for Medicare and Medicaid Services and medical groups, including the American College of Surgeons and the American Hospital Association, caution that when elective procedures resume, providers must follow strict infectious disease precautions and conserve medical supplies.

Here's a look at how the crisis has affected some of the most vulnerable segments of the non-hospital health care industry:

OUTPATIENT SURGICAL CENTERS Some 9,300 outpatient surgical providers have been ordered by states to halt all but medically urgent procedures.

That's meant a 70% to 100% drop in revenue for many surgical centers, said Bill Prentice, CEO of the Ambulatory Surgery Center Association.

Closures stemmed from concerns that these typically small, independently owned surgery centers would otherwise use medical supplies that are in short supply and needed by hospitals, and they would be unable to physically distance their patients.

Many of the nation's surgery centers also have been asked to prepare for potential overflow surgeries from hospitals inundated with COVID-19 patients. But according to Prentice, very little of that has happened.

Instead, many surgical centers have closed their doors and furloughed employees, while others are operating at dramatically reduced capacity.

Touting prices that tend to be half of what hospitals charge and much shorter scheduling times, these specialized centers are one of the fastest-growing segments of the health care industry.

They provide arthroscopic knee and shoulder surgeries, pain management injections and cataract removal, as well as preventive and diagnostic care such as biopsies and colonoscopies, port placements for chemotherapy patients, wound care and a wide range of other same-day procedures.

With so many people staying at home right now, Prentice said, "it's a shame we can't provide the procedures they had scheduled because they have plenty of time to rest and recover." There's a lot of tension right now between patients and their doctors over when their surgeries can be rescheduled. "A lot of patients are very frustrated," he said.

When the crisis wanes, surgery center owners worry that patients with previously scheduled procedures will have to go back to work and won't be able to take time off for the procedures, Prentice said. There's also concern that many won't get their jobs back and won't be able to pay for surgery without employer-sponsored insurance, he said.

At the same time, some surgery centers may have difficulty managing a flood of patients who want to move forward with their procedures once restrictions are lifted, particularly if the centers have donated medical supplies, including costly anesthesia equipment, to local hospitals, he said.

"All of these unknowns have created a lot of fear and trepidation in the health care market that we need to sort our way through," Prentice said.

In Fort Collins, Colo., Rebecca Craig, a surgical nurse who owns Harmony Surgical Center, said she expects a smooth reopening when the time comes. But if that doesn't happen by June 1, she said, her business will be at serious risk of closing.

Harmony is a multispecialty facility with four procedure rooms and 103 employees who serve about 16,000 patients a year, 80 to 90 a day. Now the center is serving 10 to 12 patients a day, Craig said.

Nearly all of Harmony's employees, mostly registered nurses and a smaller number of surgical and radiology technicians, are working half-time or less.

They've mostly been able to get unemployment checks, she said. The surgeons who practice at Harmony are all independent, Craig said, and many of them have had to lay off staff or cut their hours as well.

"The question," she said, "is 'How long before we have to cut back even further?' This can't last longer than June 1 for us to stay in business. It will get to a point where we either have to go to a bank and get a loan or close our doors."

COMMUNITY HEALTH CENTERS The nation's more than 13,000 community health centers have been hit hard. According to a survey published in April by the U.S. Health Resources and Services Administration, nearly 2,100 of those centers have closed at least temporarily as a result of the current outbreak, in part because their employees were unable to work because of family responsibilities and lack of personal protective equipment.

According to the National Association of Community Health Centers, nearly a quarter of community health center patients were uninsured in 2016 and roughly half were on Medicaid, the federal-state health plan for Americans living in poverty.

The crisis is expected to result in a 60% drop in the volume of patient visits to community health centers over the six months following the Trump administration's March 13 national emergency declaration, according to a survey conducted recently by the association and sister organizations.

That's likely to cost the centers $7.6 billion in revenue, even as most have quickly ramped up their telemedicine services to give patients an alternative to face-to-face visits.

The association said that the $1.4 billion Congress has provided so far in emergency COVID-19 funding to community health centers is not nearly enough. It is not clear whether the new emergency package Congress is debating will include more money for the centers.

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