The 21st Century Renaissance: A New Healthcare in the United States (Part 6)

The 21st Century Renaissance: A New Healthcare in the United States (Part 6)

In Rebuilding the U.S. Healthcare Delivery System, Can Physicians Recover Post-COVID 19?

According to the Primary Care Collaborative (PCC), an industry association, physicians, in general, and primary care physicians in particular, are in extreme distress.

According to the US government statistics, the largest distribution of the Payroll Protection Program (PPP) loans went to a broad spectrum of healthcare and social services employers. Approximately 13% of the funds were distributed to healthcare and healthcare-related organizations. Of those, 23,000 medical groups received loans of more than US$150,000 each. We can find very little detail on those that received less than US$150,000. The problem is, that is not nearly enough. In particular, the “potentially” forgivable loans are effectively for payroll with a cap of US$100,000 in annualized salaries. The average compensation for a physician in the United States is well over US$250,000 per year, and much of the composition beyond that baseline is based on dividends and distribution of profits for tax benefits. There are about one million physicians in the United States and most of them work for hospitals, insurance companies and healthcare groups.

A quick assessment from 3rd party sources is that physician’s groups have seen, in most cases, an 80% drop in revenue because of the dependence on a fee-for-service (FFS) compensation structure.  This has aggravated the financial stress due to the reduction of patient volume.

Some of the most chilling statistics provided by the PCC are below.

Clinicians reported an increase in non-COVID-19 morbidity and mortality among patients from pandemic-related constraints and postponed medical care:

  • 82% clinicians reported patients with heightened mental and/or emotional distress
  • 56% clinicians noticed exacerbation of health conditions related to lack of provider access or postponed procedures during the pandemic; 9% have had patients die from lack of access to appropriate care during the pandemic
  • 23% have noticed higher than normal dental issues among their patients; 11% higher than normal vision issues
  • 2 in 5 clinicians are unable to state they have the billable services or cash on hand to stay open through August 2020


During the month of June alone:


  • 45% lack necessary PPE
  • 25% report local labs are unable to keep up with COVID-19 testing requests
  • 37% of clinicians report new layoffs and furloughs;
  • 28% of clinicians have skipped or deferred salaries
  • 61% have reduced in-person visits (by 30-50%) for overlapping reasons: need to maintain physical distance in the office (55%), shifting patients with stable chronic conditions to telehealth (64%), and patient choice (53%) 28% say patient contact is at an all-time high, facilitated by telehealth, while 16% of telehealth billing is denied
  • 10% have reduced video-based care and 24% have reduced phone-based care due to poor payment structure
  • Weakened primary care and unrelenting population need have left many practices unprepared for the summer surge
  • 2/3 are not prepared for loss/reduction of telehealth payments and < 10% are confident surviving that pullback
  • 35% report they are not ready to have COVID-19 surges; 40% are not ready for the next wave of the pandemic; 34% are not ready for the upcoming flu season; an additional 49% are somewhat prepared however, very nervous
  • 58% are nervous about the starting surge in health issues from care delayed or deferred during the pandemic


The results are alarming, and they confirm that doctors and their staff are under huge medical stress – not just financial pressures. Based on a survey, conducted by The New England Journal of Medicine Medical Advisory Group up to 20% of physicians are considering permanently closing their practices. These are not just economic pressures, but also measurable emotional stress as the interaction with patients is also stressful.  The material absenteeism in support staff and many simply walking away from their positions with high degree of depression and anxiety levels that have never been seen before is creating a burden on remaining staff and physicians.

There has been great promise for the widespread use of telemedicine with the expectation that it would “fill the gap” and mitigate, or in other areas, replace the drop-in patient activities from physical visits. Those expectations have proven to be overly optimistic as physicians have continued to struggle to receive reimbursement from insurance companies; furthermore, those who have report their reimbursements have been as low as US$20 for virtual office visit.


Many doctors, both owners and operators, lead the revenue generators and they do not have and are facing a diminishing support structure.  Other than providing additional safety recommendations, the national associations cannot materially help, they can only continue to lobby Congress for additional resources. Many providers are only seeing three material options: sell to hospitals, sell two other private entities, or close their practice.


It is nearly a foregone conclusion that we will see thousands of medical practices never reopen again.


So, what is the answer?


The new post-COVID-19 environment is certainly ripe for a more corporate-based practice of medicine; one that can both relieve the provider of administrative burdens and provide a better quality of life. Further, many provider practices will need to make a full transition from a fee-for-service practice of medicine, to one based on a monthly capitation; however, this will take some time as the payer side of the equation must change first.  Risk-based managed care contracts will be needed to ensure the provider’s long-term sustainable income.


Though not in the same industry, we can recall what happened to the independent gas station operators after the “oil bust” of the 1970s. The first change was in “full-service,” when you purchased gasoline at the station, they also provided mechanical garage services; these stations never came back. Also, after the oil bust, we saw the collapse of the combination gas station / mechanics service model (in most of the country). It bifurcated into a gas station with a convenience store and a separate, more off-street, mechanical service for vehicles. The industry never went back to the pre-oil bust business environment or model.


Today, healthcare is changing significantly and in a similar fashion. Technology and the unfolding economic stress a new healthcare business model is destined to emerge; however, for those that think healthcare will become virtual, you will be disappointed. While it works well for those young and with single treatable issues, it does not work for the aged population or those with multiple comorbidities, formerly called ‘pre-existing conditions.’ One inescapable fact noted in another industry survey was that more than 80% of patients over the age of 65 have returned to see their medical providers because the “demand” the face-to-face, physical “touch” and interaction they are used to with their doctor. This creates a problem for providers in that those over 65 are generally reimbursed by Medicare, which payments are sometimes one third or less than the physician’s ‘usual and customary charges.’ This is not a sustainable, long-term solution for providers either.


Healthcare in the United States is undergoing a historic transformation, and nothing will ever return to a pre-COVID normal. Ultimately, this has created a stressful situation for the individual physician but significant opportunities for those that have pivoted quickly and recognize the “renaissance” occurring in healthcare.


In our view, COVID did not break healthcare in the United States, rather COVID revealed the internal weaknesses that were always present in the healthcare delivery system.


As we have been doing in this series, we share a small collection of RECENT headlines that go beyond the articles we have shared in previous blogs:


COVID-19 may end up boosting value-based payment

Coronavirus Deaths in U.S. Nursing, Long-Term-Care Facilities Top 50,000 – The Wall Street Journal

We Need Primary Care More Than Ever to Fight COVID-19