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April 22, 2020 03:46 PM

Front-line workers face pay cuts amid COVID-19 crunch

Alex Kacik
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    Modern Healthcare Illustration / Getty Images

    A quarter of frontline healthcare providers and nearly half of primary care physicians expect pay cuts this month as COVID-19 strains their organizations, according to a new survey.

    Of all clinicians who expect compensation decreases, half expect their pay to decrease by more than 25%, according to Bain & Co.'s April 8-13 survey of more than 300 physicians and nurses, 60% of which are frontline hospitalists and emergency, intensive case and infectious disease providers and 40% are primary care doctors and other specialists. As hospitals lose revenue from canceled elective surgeries to protect patients and preserve supplies, additional pay cuts are likely in the coming months, which could spur closures or consolidation, analysts said.

    Many health systems are reporting revenue declines of 40% to 50%—revenue for specialists that are focused on elective surgeries is dropping even more than that, said Michael Brookshire, a partner with Bain & Company's healthcare practice. Even as frontline clinicians, nurses and staff are asked to do more, they are not immune to the pressure COVID-19 is placing on the overall healthcare system, he said.

    "There is a real risk of reduced access—I think some physician practices are going to close," said Brookshire, adding that there has been a large shift from commercial payers to Medicare, Medicaid and the exchanges, which complicates the economic picture. "There is also a risk that fewer doctors will be interested in primary care if the economics get worse and safety concerns are higher. It puts pressure on a market that is already in short supply—the same goes for nurses as well."

    Closures and consolidation loom, particularly for physician practices that rely on outpatient surgeries and routine check-ups.

    More than a quarter of primary care physician practices said they will likely have to close within the next four weeks because of staffing shortages, low patient volumes and less cash on hand, according to a new Primary Care Collaborative survey of more than 2,600 clinicians.

    Many don't have the infrastructure to transition to telehealth, or they have patients without internet access, according to the survey. If providers are using telehealth, more than 10% haven't been reimbursed. Many physicians are also having trouble accessing small business loans and are receiving less than what was promised, 1 out of 5 respondents said.

    "Physician practices are being hard-hit by the pandemic, which is threatening the sustainability of practices and could reduce access to care," Dr. Patrice Harris, president of the American Medical Association, said in prepared remarks.

    If health system-employed physicians have to temporarily close their practices, some organizations have pledged to still pay their salaries.

    Nearly 40% of 119 health systems surveyed said they will provide salary continuation to impacted physicians, according to a recent survey from SullivanCotter. Others are planning to require doctors to take time off without pay or use paid time off. Around 6% are considering laying off physicians, according to the survey.

    Certain health systems and investors will likely purchase physicians and other specialists in a down market.

    Private equity firms will likely buy ambulatory surgery centers, dental service organizations, physical therapy providers and other practices as prices drop, Moody's Investors Services analysts said in a new report.

    "Distressed markets typically create a lot of M&A activity and we are starting to see the beginning of it," said Michael Buchanio, a principal in West Monroe Partners' healthcare practice.

    Consolidation may drive up healthcare prices, while delayed care and reduced access will likely increase spending as patients' conditions worsen, experts warn.

    The Bain & Co. survey offered some uplifting results. Clinician confidence is increasing in cities where the COVID-19 cases are flattening, Brookshire said.

    More providers have deployed additional mental health resources over the past several weeks to help workers cope with stress, but 65% of respondents still report that mental health services have not been added. Fifty-six percent of respondents said they were very concerned for their health, down from 76% two weeks earlier.

    "The need for mental health resources and other supporting services will be more critical for providers to mange the long-term impacts of COVID-19," Brookshire said.

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