Could COVID-19 Spell the End of Independent Physician Practices?

August 21, 2020 - So far, only 8 percent of physicians have closed their practice as a result of the COVID-19 pandemic, according to a new survey. But many more believe that number will skyrocket, particularly among independent physician practices.

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The survey conducted by Merritt Hawkins for The Physicians Foundation from July 15, 2020, through July 26, 2020, found that the majority of physicians (59 percent) agreed that COVID-19 would lead to a reduction in the number of independent physician practices in their communities.

Data was based on 3,513 responses.

"Physicians are the foundation of our health care system, and those on the frontlines of the pandemic are evidence of this fact as they continue to care for their patients, families and colleagues," Robert Seligson, CEO of The Physicians Foundation, said in a press release. "This survey emphasizes how the pre-existing issues within our health care system, such as physician shortages and lack of patient access to health care, will continue to worsen unless we empower and support physicians as they continue to work tirelessly through a global pandemic."

READ MORE: How COVID-19 Imperiled Physician Practices, And How to Save Them

COVID-19 poses a major health risk for even the healthiest of people, but that is not the primary reason why physicians believe practices will close and the workforce will shrink after the pandemic.

According to the survey, just 4 percent of physicians indicated that they will not return to their practices due to the health risks posed by COVID-19, while the remaining 96 percent said they will continue to practice despite concerns about their health.

Meanwhile, the majority of physicians (55 percent) expect a reduction in income over the next 12 months.

Of those anticipating an income reduction, most physicians (61 percent) expected a decrease of 25 percent or less, while 39 percent expected losses of 26 percent or more, the survey showed.

Notably, specialists were more likely to project larger losses than primary care physicians.

READ MORE: Primary Care Practices to Take $15B Hit from Early COVID-19 Response

Projected income losses are on top of already substantial reductions in compensation from the start of the pandemic. The survey found that the majority of physicians who saw an income reduction (55 percent) in the last four months suffered losses of 26 percent or more. About a quarter (24 percent) reported at least a 51 percent income reduction.

For a select few, such drastic losses will prompt them to close shop. About 4 percent of physicians said they will close their practices within the next 12 months because of COVID-19.

But even these small percentages add up to significant practice closures, The Physicians Foundation said.

The organization calculated that it represents a potential 8,000 additional practice closures on top of the possible 16,000 practices that closed at the start of the pandemic.

In the survey, 18 percent of physicians also indicated that they plan to reduce staff in the next 12 months as a result of COVID-19, while 3 percent would either give up their direct patient role or move to locum tenens, respectively.

READ MORE: Pay-for-Performance Strategies for Independent Physicians, Small Practices

Other predictions in the next 12 months included increasing staff (6 percent), experiencing a reduction in income (55 percent), increasing telehealth utilization (52 percent), moving to a new situation or practice (10 percent), and switching to a primary telehealth position (4 percent).

Notably, 12 percent of physicians said they moved to a primarily telehealth practice in the last four months in response to COVID-19. And while most physicians anticipate telehealth utilization to continue and even increase after the start of the pandemic, the virtual care option may not be enough to keep practices open.

About 72 percent of physicians surveyed strongly agreed that telehealth will not continue unless reimbursement for telehealth and in-person visits is comparable. Additionally, 76 percent strongly agreed that utilization will also be impacted if administrative burdens are put back in place.

The data paints a dire picture of the independent physician practice’s future.

Many private practices are likely to shutter their doors due to the economic impact of COVID-19, which will have a profound impact on access to care.

And in their absence, hospitals are likely to become more powerful.

Half of the physicians surveyed said a long-lasting effect of COVID-19 on healthcare is that hospitals will exert a stronger influence over the organization and delivery of healthcare.

“For many years there has been a fluctuating balance of power between physicians and hospitals, which often have competing agendas and conflicting perspectives on how care should be delivered. By reducing the number of smaller physician practices, COVID-19 is likely to shift the balance further in the direction of hospitals,” The Physicians Foundation explained.

Whether the shift in balance will benefit patients is yet to be seen, but many industry stakeholders have indicated that it will not.

Research has shown that small, physician-owned practices not only provide more personalized and responsive care to patients, but the organizations have lower average costs per patient, fewer preventable hospital admissions, and lower readmission rates compared to their larger and hospital-owned counterparts.

However, the economic reality after COVID-19 will change the delivery of healthcare whether independent physician practices can be saved or not.

"The data reveals a near-consensus among America's physicians about COVID-19's immediate and lasting impact on our health care system," said Gary Price, MD, president of The Physicians Foundation. "We are living through a historical shift in the way we practice and how we deliver care to patients. Our health care landscape is constantly changing right now, and we expect it will be radically different for both physicians and our patients long after the pandemic passes."