Dive Brief:
- Medical providers continue to be hit hard financially by COVID-19, as a new survey from the American Medical Group Association found that more than 90% of medical groups and integrated healthcare systems say the pandemic cut revenues by at least 25%. Many have reported revenue losses topping 50%.
- Moreover, a large percentage of the respondents say it will be at least a year before revenues return to pre-pandemic levels. In the meantime, most are also juggling increased expenses for personal protective equipment and telehealth systems in order to provide effective care to patients. “This pandemic has changed the expense makeup for providers,” AMGA CEO Jerry Penso said.
- Although most of the providers surveyed say they have adequate reserves to last at least two more months, AMGA stepped up its pleas for more financial assistance from the federal government, writing to Senate leaders to bolster a provider relief reserve and backing provisions in House-passed legislation to do so.
Dive Insight:
Providers have been slammed by the novel coronavirus as elective procedures were put off to stem the spread of the disease. The newest survey by AMGA again confirms that fact, but also suggests that it is going to be a rocky road to recovery as well.
According to the survey of 36 medical groups and 59 health systems, the revenue hit during the pandemic has been downright grim. More than 50% of medical groups and 69% of healthcare systems say their revenue dropped by anywhere from 26% to 50%. Eleven percent of groups and 20% of systems say it has dropped even more than that.
As a result, 100% of all medical group respondents say they have cut physician pay and furloughed staff. Three-quarters of systems say they have cut physician pay and 86% say they have initiated staff furloughs.
Healthcare systems have a decided advantage when it comes to cash reserves. Less than 18% say they expect to deplete 50% or more of their reserves in response to the lean times. More than 67% say they have reserves that will last them at least six months, including 24% who say they will last at least a year or longer. However, nearly 15% of medical groups say their reserves have already run out, or they expect their reserves to run out within the next month.
There are some bright spots in the industry, as Tenet Healthcare has reported its hospital surgical volumes have surged during the first part of June and are at 95% of pre-COVID levels.
However, both 42% of medical groups and systems say their revenues will not return until pre-COVID-19 levels until the second quarter of next year. Moreover, 97% of medical groups say they expect to shell out more money for PPE and more than 91% say the same is true for telehealth services. Among healthcare systems, 92% say their PPE expenses are expected to rise, and more than 87% say the same for telehealth infrastructure.
Although AMGA noted in a statement that the Coronavirus Aid, Relief, and Economic Security Act has appropriated $ 100 billion for providers, the trade association says that will not be enough.
“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,” Penso said. “We continue to urge Congress to provide additional funding to stabilize the front lines of the COVID-19 crisis.”