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Even After Reopening, Healthcare Delivery Organizations Still Hurting Financially

AMGA officials attest that Congress needs to provide more financial assistance to U.S. healthcare providers

Rajiv Leventhal

Jun 18th, 2020

New research from the Alexandria, Va.-based trade association AMGA reveals that nearly 9 in 10 medical groups and integrated health systems report their revenue has declined by 25 percent or more during the COVID-19 pandemic.

These findings, compiled from recent surveys conducted by AMGA, highlight the urgent need for Congress to provide more financial assistance to U.S. healthcare providers, the association’s officials concluded. The 95 respondents to the AMGA surveys included leaders from 59 of the nation’s preeminent integrated health systems and 36 independent medical groups. The surveys were conducted May 26 to June 1.

The data showed that nearly 90 percent of medical groups and integrated health systems report that their revenue has declined by 25 percent or more during the COVID-19 pandemic, with nearly 40 percent of medical groups and 20 percent of integrated health systems saying monthly revenue losses have exceeded 50 percent.

The CARES Act, signed into law on March 27, provided $100 billion in relief to healthcare providers. The HEROES Act, approved by the House of Representatives on May 15, included an additional $100 billion for the Provider Relieve Fund. In a letter to Senate leadership last week, AMGA asked Congress to continue funding the Provider Relief Fund in future legislative packages. Despite this relief, these survey findings demonstrate that more immediate assistance is needed if medical groups and integrated health systems are to continue meeting the needs of patients—both during and after the pandemic, AMGA officials pointed out. AMGA previously reported survey data showing that two-thirds of integrated health systems said their initial share of payments from the CARES Act will replace less than one week of revenue lost.

It should be noted that an MGMA Stat poll from last month found that 89 percent of medical practice leaders said they have returned to doing in-person visits. More than half (54 percent) reported that all of their providers are seeing patients in person, while 20 percent said 76 percent to 99 percent of providers were seeing patients in person. Today, those in-person visit numbers are likely even higher.

“Health systems and medical groups are operating under a cloud of financial uncertainty that threatens their ability to continue to deliver the best care to their communities,” said AMGA President and CEO Jerry Penso, M.D. “We continue to urge Congress to provide additional funding to stabilize the front lines of the COVID-19 crisis.”

Among the surveys’ other key findings:

•     41 percent of healthcare systems and 36 percent of medical groups are forecasting it will be at least a year  (Q2 of 2021 or later) before revenues return to pre-COVID levels

•     Nearly 23 percent of healthcare systems and 28 percent of medical groups said it’s still unknown when their revenues will return to normal

•     Healthcare systems and medical groups anticipate increasing expenses compared to pre-COVID:

        o    92 percent of healthcare systems and 97 percent of medical groups expect an increase in personal protective equipment (PPE) expenses

        o    87 percent of healthcare systems and 91 percent of medical groups expect increases in telehealth infrastructure costs

The lost revenue is largely the result of medical groups and integrated systems eliminating non-essential surgeries and procedures. While providers are seeing some of this revenue return as elective procedures resume and patients begin scheduling appointments, providers are still facing an uncertain financial future amid a number of changing variables, including the potential for a resurgence in COVID-19 cases.  Indeed, healthcare leaders have previously estimated that for a typical organization, these electives account for about 51 percent of their revenue.

In addition, providers face risks to obtaining adequate reimbursement for care provided, primarily due to variations in telehealth reimbursement and potential insurance coverage lapses caused by unemployment, AMGA officials contended.

There has been no shortage of recent data depicting  the grim financial picture for healthcare delivery organizations. A late May report from Kaufman Hall, for example, found that steep volume and revenue declines hit U.S. hospitals hard in April, driving hospital operating margins down 282 percent compared to the same period last year and 326 percent below budget. A separate COVID-19 financial impact report by MGMA found that, on average, practices reported a 55 percent decrease in revenue and 60 percent decrease in patient volume since the beginning of the COVID-19 crisis. These significant impacts to medical practices of all sizes and specialties forced many to lay off and/or furlough staff.

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