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Doctors face pay cuts, furloughs, supply shortages as virus hits primary care

CNBC logo CNBC 5/25/2020 Spencer Kimball
a man eating a hot dog: Dr Greg Gulbransen performs a medical checkup on a 72-year-old man with Leukemia who is presumed to have the coronavirus disease (COVID-19) while at his pediatric practice in Oyster Bay, New York, U.S., April 13, 2020. © CNBC Dr Greg Gulbransen performs a medical checkup on a 72-year-old man with Leukemia who is presumed to have the coronavirus disease (COVID-19) while at his pediatric practice in Oyster Bay, New York, U.S., April 13, 2020.

Dr. Rafael Guillen spends a lot of time on the phone these days. His practice in the Bronx closed its doors in mid-March to protect staff and patients as the coronavirus pandemic escalated in New York City. He calls patients with the virus morning and night to monitor their condition, about 60 people so far.

Guillen's small internal medicine practice has struggled not only to keep up with the virus, but also to make ends meet financially. Many primary-care practices were already operating on tight budgets, and the pandemic now threatens to push some of them out of business entirely.

Guillen said revenue at his practice is down about 50% from March through May compared with last year as his patient volume has fallen during the pandemic. Many people are simply avoiding the doctor because they fear catching Covid-19 if they need treatment at a hospital, Guillen said. Insurers in the U.S. primarily pay physician practices by office visit — fewer appointments means dwindling revenue. His transition to telemedicine hasn't been able to make up for the shortfall. 

If a swath of primary-care physicians close their doors for good, communities would be left poorly equipped to contain a second coronavirus outbreak that could come in the fall, which would coincide with flu season. Shrinking and disappearing doctors' offices could lead to future epidemics as sick patients go untreated and children do not receive important vaccines. Guillen warns of a looming mental health crisis as isolated patients express feelings of helplessness, anxiety and despair. 

And as millions of Americans have lost their jobs due to the pandemic, many no longer have health insurance. Guillen is seeing a number of patients who have lost their insurance, but he said others are simply avoiding the doctor right now. In New York, many are likely eligible for coverage through Medicaid but it's not automatic — you have to apply. 

"I'm not going to stop seeing a patient because they don't have insurance," Guillen said, but the cost weighs on his practice. "Before the pandemic we were in trouble, and what this pandemic has exposed is everything that was deficient," he said.  

'Small practices barely make it'

For many Americans, the family doctor is their main point of entry to the health-care system. In 2016, primary-care doctors fielded more than 480 million patient visits, or 54% of all visits to doctors' offices in the country, according to a survey from the Centers for Disease Control and PreventionPrimary care includes pediatricians, who treat children; internal medicine doctors, who treat adults; general practitioners, who cover all age ranges; and gynecologists, who specialize in women's reproductive health. 

Though primary-care doctors play a huge role in the overall system, they receive a small portion of the overall spending. From 2002 to 2016, primary-care physicians received less than 7% of health-care expenditures in the U.S., according to one recent study in the peer-reviewed journal JAMA Internal Medicine. Guillen said that his overhead costs have continued to increase at his practice over the years, but his revenue wasn't keeping pace even before the pandemic. 

"The cost of living has increased tremendously, but our profit has remained the same," Guillen said. "There are small practices that barely make it. There are so many things to pay for and all of that has increased except your revenue. I'm not interested in money, but the bottom line is, to keep my office open, I need money."

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The federal government created a $175 billion relief fund to support health-care providers facing financial strain due to the pandemic, and $30 billion was automatically sent to providers based on 2019 Medicare payments. However, Guillen's practice received just $397 because he doesn't have many Medicare patients, according to a database of recipients maintained by the Department of Health and Human Services. Much of the relief money went to larger hospital networks. 

No dedicated funding has been set aside for primary-care physicians, many of whom work in small practices in underserved areas. The Bronx, where Guillen practices medicine with a staff of just three, is one of the hardest-hit boroughs in New York City, which itself has the highest coronavirus caseload of any city in the U.S. More than 44,000 people have tested positive for the virus in the Bronx and at least 3,492 people have died, according to the New York City Department of Health and Mental Hygiene.

The Bronx has the highest rate of positive tests in the city at 34% nearly double the city average, according to antibody tests conducted by Northwell Health. Guillen said there are hot spots in the Bronx where transmission of the virus is increasing even as much of New York City has passed the peak of infection. 

Many residents in the Bronx, particularly people of color, lacked insurance and did not have adequate access to health care before the pandemic, Guillen said. The borough has the highest rate of poverty in the city and the worst health outcomes in New York state, with high rates of so-called morbidities that make patients more likely to die from the virus, including asthma and diabetes.

With little in the way of direct federal support, doctors like Guillen are applying for small business loans through the Paycheck Protection Program, which means they're competing with other businesses — from restaurants to independent contractors to publicly traded companies for money. Guillen's application was approved and he got funded earlier this month, but he said the loan is only enough to cover costs for about four weeks.

The financial outlook at his practice remains "dicey," Guillen said, because even when his doors reopen, patient volume will remain lower than normal as he implements social distancing measures in his waiting room. 

'Dramatically change our business model'

It's not just doctors' offices in New York, the epicenter of the coronavirus epidemic in the U.S., that are experiencing financial hardship. Some 51% of primary-care providers are uncertain about their financial future over the next four weeks, and 42% have either laid off or furloughed staff, according to a survey of 2,700 practices across the U.S. by the nonprofit Primary Care Collaborative and Larry A. Green Center. In addition, 13% predict closure within the next month. 

Dr. Conrad Flick said the independent clinic where he practices medicine in Raleigh, North Carolina, saw a sudden 70% drop in patient volume from one week to another in late March as people grew fearful of going to the doctor and sheltered in place. His clinic, Family Medical Associates of Raleigh, is a small practice with five physicians and five nurses on staff.  

"We're a small business and our profit margin is 3% or 4%," Flick said. "It does not take a lot of business sense to know when the volume of patients is down 70%, you're in trouble."

Even with fewer patients, Family Medical Associates had to rapidly adapt to protect its staff and the people who were still coming in. They converted part of the building that had been used as a weight loss clinic into a dedicated area for examining patients who were displaying Covid-19 symptoms. The clinic also installed plexiglass screens in the check-in and check-out areas.

But as demand for testing soared, the practice decided it was safer to see potential coronavirus patients in their cars in the parking lot. The staff's personal protective equipment — N95 masks and gowns, in particular — started to run low. And in a matter of days, the practice's inventory of nasal swab tests from LabCorp was on the verge of running out. They decided to reserve what was left to test staff members in case they show symptoms.

a man standing in a room: Dr. Conrad Flick and nurse practitioner Ryan Johnson at Family Medical Associates in Raleigh, North Carolina. Independent primary-care clinics have been hit hard by the pandemic. © Provided by CNBC Dr. Conrad Flick and nurse practitioner Ryan Johnson at Family Medical Associates in Raleigh, North Carolina. Independent primary-care clinics have been hit hard by the pandemic.

A handful of Flick's patients have tested positive for the coronavirus, and two were so sick they had to stay in the hospital for several days for monitoring, he said. Fortunately, they did not need to be placed on ventilators. The practice is now referring most patients with symptoms to larger testing centers affiliated with hospitals.

In difficult financial straits, Family Medical Associates has sought to compensate for the drop in office visits by rapidly transitioning to telemedicine, but patient volume is still down overall by more than 25%. Flick and two physicians who own the practice took 45% pay cuts while the practice's other two doctors took 25% pay cuts. The mortgage has been delayed three months, and the practice came close to laying off a third of staff until it got a small business loan through the second round of the Paycheck Protection Program.

Flick said the loan would only buy Family Medical Associates about six weeks of solvency if patient volume drops to its worst low of the crisis again. Many physicians are concerned about a second coronavirus outbreak in the fall or winter, renewed stay-at-home orders and further financial pressure. 

Unlike Guillen's practice in the Bronx, Flick has more Medicare patients and received about $31,000 from the federal government's relief fund. That, too, is helping his practice ride out the crisis as they search for ways to adapt to an uncertain post-pandemic reality. For now, the practice is tracking how patient volume and revenue are shifting. 

"We are going to dramatically change our business model," Flick said, "because I don't think number of patients we used to see will come through our doors soon."

'Telehealth is not going to be enough'

As the pandemic transforms primary care, there's concern that future public health crises are looming. Many patients with chronic illnesses are sheltering in place, and treating them through telemedicine can be difficult, particularly when they are suffering from several conditions, said Dr. Robert Phillips of the American Board of Family Medicine. 

"Those folks are going to come out of hiding sick and needing help, and telehealth is not going to be enough," Phillips said, "and if their practice is gone, we're going to see a lot more people die — not of Covid but of the effects of this." 

It's not only hard to treat patients with chronic illnesses through telemedicine, but from a revenue perspective, it traditionally doesn't pay as much as office visits. Medicare has agreed to cover telemedicine generally at the same level as office visits for the duration of the national emergency, but it's unclear if those changes will become permanent. Commercial insurers and state-based Medicaid have a range of different policies on the issue.  

Patients with chronic conditions that can't be addressed through telemedicine are often forgoing treatment because they fear catching the virus while visiting their health-care provider. Phillips recently urged an 82-year-old patient with a severe thyroid problem to go to the hospital, but the patient refused. "They're terrified," he said. 

Phillips practices medicine at a clinic in northern Virginia that's part of a group called Fairfax Family Practice Centers, which has 12 primary-care offices and 500 employees. The pandemic drove patient volume down 50%, which resulted in a 60% drop in revenue. In response, the group furloughed 50 people and reduced hours for most other staff by up to 50% while maintaining their benefits. Physicians have taken 40% pay cuts and nurse practitioners have taken 20% pay cuts. 

Fairfax Family Practice Centers received about $600,000 from the federal government's relief fund. Crystal Mayers, senior practice administrator, said the money is "extremely helpful" but it's still only enough to cover one round of payroll for staff at each practice. The Fairfax group is now entering its 10th week of furloughs and pay cuts. 

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Vaccines also cannot be administered through telemedicine, and there's growing concern about outbreaks of infectious diseases other than the coronavirus. In hard-hit New York City, the number of vaccines administered to children has dropped 63% compared with a year ago. The Centers for Disease Control and Prevention has warned of possible measles outbreaks after finding that vaccination coverage decreased 70% in Michigan compared with last year. 

"Primary care in general is in a really precarious state, and I'm concerned a lot of practices aren't going to make it to the other side," said Dr. Christoph Diasio, vice president of the North Carolina Pediatric Society. "I'm worried what that means for children because the bulk of vaccines for children happens in independent practices."

Diasio's practice, an hour south of Raleigh, cut staff hours after patient volume dropped more than 50%. He said applying for a Paycheck Protection loan was chaotic, but the office ultimately got funded. Diasio's practice did not receive money from the federal relief fund because, as a pediatrician, he doesn't see Medicare patients. A third of primary care providers reported receiving a PPP loan while a fifth received support from the federal relief fund, according to the recent survey from the Larry A. Green Center.  

Guillen, the doctor in the Bronx, expressed frustration with telemedicine. Not everyone has access to the best technology, and he says it's more time consuming to take notes as a patient describes symptoms over the phone than examining them face to face. Isolated and anxious patients often just want to share their feelings about what's happening with the pandemic rather than talk about the main reason they're on the phone with the doctor, Guillen said.

"The most important thing that physicians will be doing is mental health post-Covid," he said.

'Primary care really could collapse'

There are growing calls for direct federal intervention that prioritizes primary care, as doctors' offices are forced to make tough choices to make ends meet financially in the midst of the worst public health crisis in a century.  

The American College of Physicians, which represents internal medicine doctors in the U.S., is calling for the Trump administration and Congress to provide dedicated financial support to struggling primary-care practices, similar to the $10 billion set aside for rural hospitals by the Department of Health and Human Services. 

Phillips estimates it would cost less than $30 billion to shore up the entire primary-care system in the U.S. through the end of the year. His research will soon be published in the peer-reviewed journal Health Affairs. The price tag would be lower if the government takes a targeted approach that helps practices in rural areas or underserved communities, he said. 

"It's a lot of money, but in terms of the total recovery packages it's relatively small," Phillips said. 

The consequences of failing to provide direct assistance could prove costlier in the long run. Rebecca Etz, a health policy expert and co-director of the Larry A. Green Center, warns that "primary care really could collapse" as the pandemic puts pressure on a system that was already suffering from decades of under-investment. Flick, the doctor in Raleigh, hopes the crisis will give Americans a new appreciation for their family physician. 

"My hope is that this pandemic will show America what the problem is with their health-care system — that they need to reinvest in primary care because they need independent primary care as the first line of defense," Flick said. 

Guillen, for his part, plans to reopen his practice in the Bronx on Thursday using CDC guidelines, but there are a lot of unknowns. He is concerned about running out of personal protective equipment, which is expensive, and he's not sure whether he can get tests in his office or not. The finances, in many respects, are the least of his worries — for now. 

"If I can make enough money just to keep it open that's fine with me because I'm a doctor from the heart," he said. 

Graphics by CNBC's John Schoen.

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