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The cancellation of most face-to-face outpatient visits brought about by the uncontrolled spread of COVID-19 has resulted in serious financial difficulties for primary care provider practices in many parts of the country. In an article for an upcoming issue of Health Affairs, Sanjay Basu, MD, PhD, of Harvard Medical School, and colleagues reported that primary care visits of all types were down by 58% in late March and by 69% in April.
Using a microsimulation model that incorporated national data on primary care utilization, staffing, expenditures, and reimbursements (including telemedicine visits), the researchers estimated that primary care practices would likely lose $67,774 in gross revenue per full time physician in 2020. With 223,125 active primary care physicians in the U.S., the cost to "neutralize" their collective income losses without subjecting staff to furloughs was estimated to be $15.1 billion -- an amount that could more than double if telemedicine payments are not sustained beyond September 30.
With such large reductions in revenue as a result of the pandemic, the authors of this study and others predict that the viability of some primary care practices may be threatened. To a certain extent, the severity of the threat will be related to payment mechanisms.
It should come as no surprise that providers whose practices operate on a fee-for-service basis are taking a particularly harsh financial beating, but risk-bearing accountable care organizations (ACOs) are also feeling the pandemic's financial pinch. Even providers who sold their practices to private equity firms in exchange for large cash buyouts are not immune. As the expected return on investment dwindles for the private equity firm, providers may face layoffs or job losses.
With no rapid "return to normal" in sight, it's time to give the often-maligned capitation payment model a second look. Primary care is vitally important during and after a pandemic -- especially for the millions of Americans with chronic conditions. Capitated managed care contracts offer financial incentives that are aligned with prevention in addition to ensuring a stable monthly income for care providers. For providers with capitated care contracts, it can be business as usual despite COVID-19.