COVID-19 may Cause Significant Independent Practice Closures

David Goldhill

The future of the healthcare industry, particularly for independent practices, might include substantial closures and new telemedicine services.

According to a recent study by the Larry A. Green Center and Primary Care Collaborative, about 20% of primary care practices could close by the end of May due to shutdowns linked to the coronavirus disease 2019 (COVID-19).

About half of the providers polled admitted they were unsure if they had enough money to keep their practices open throughout the shutdown and 10% said they had not received payment for telehealth care.

In an interview with HCPLive®, David Goldhill, CEO of Sesame Care, a company that connects direct pay patients to providers, explained how the prepaying is beneficial for customers, why telehealth might be here to stay, and why the healthcare industry might be facing problems in the near future.

HCPLive: From a patient standpoint, does prepaying eliminate some of the cost uncertainty related to healthcare services?

Goldhill: I think the biggest factors for patients are getting lower rates. I think you are starting to see some pressure in how in order to get a test or procedure, tt would be their financial responsibility.

They would discover to their shock that the price they paid in network to the insurer was less than what they could have gotten by offering to pay upfront.

What essentially this is, is a marketplace, so some of it certainly is price.

The fixed nature of price when we’ve surveyed some of our customers, is what they said is their number 1 reason. They’re paying for a service upfront; they know what it costs, no service bills, no other parties involved.

HCPLive: How much have independent practices been hurt by the COVID-19 pandemic?

Goldhill: I can only tell you anecdotally, I know there’s been some studies that we’ve started to see, most of them are literally asking them. Some of the practices we’ve talked to have concerns about their fixed pay obligations, whether it relates to the office or equipment or insurance costs or their personnel costs.

An independent practice is like a small business and the shutdown almost everywhere has cut almost all revenue. There's not a there's not a lot of small businesses anywhere in the country that can survive several months of zero revenue, and I think many of our practices are facing that reality.

HCPLive: Do you expect nurses and other staff members to be especially hurt by the shutdown?

Goldhill: You sort of expect that people at the very least are furloughed right now or having their compensation cut. Part of it depends on the length of the shutdown and it is very open-ended at this moment.

There's not a clear sense when physicians and any businesses are allowed to go back to work and how rapidly patients will feel comfortable coming in.

Patients are going to be less likely to want to go to an office, particularly if you’re treating patients who might be contagious. If physicians can develop an acceptable therapeutic and business model and telemedicine will try to use it for wherever it can be appropriately substituted for in person visits. There’s obviously many, many things that can only be done in person.

The reality is we can structure telemedicine in a way where it has less cost in terms of an administrative burden and scheduling burden and maintaining office space.

HCPLive: Certain specialties like psychiatry lend themselves to telemedicine more than others. Do you think psych doctors will take the lead on this and show that the telehealth model can work?

Goldhill: There are certainly some specialties for which telemedicine is closer to the in person therapeutic experience than others. Even for physical therapy practices, where there’s a tremendous amount you can do virtually.

What I think that it does is it causes you to rethink some of your assumptions as to what can be done in one session. There's probably a lot more in the way of consultation and guidance and as it relates to physical exams.

What one of the issues is going to be is this as good as the in-office experiences and for many, many things, it's not likely to be.

HCPLive: Does telemedicine remove distance as a barrier patients weigh when deciding on a doctor or specialist?

Goldhill: It’s particularly a great question when you think about the difficulty of finding specialty care in rural areas. I suspect this is going to make that practice more widespread. Obviously there are many things that can only be done in an office, but up to those limits I think it's a force multiplier for specialists who are not as widely distributed as the population is.

HCPLive: For the industry, what is the worst case scenario?

Goldhill: There’s a couple of things we’re seeing now that have to be of concern. America's health infrastructure is independent. It’s independent physician practices and independent clinics, it’s localization that has been a part of the way we practice care. One suspects if this, the economic impact of the shutdown continues for a long period of time that’s going to be tested.

In the previous decade we’ve seen meaningful numbers of independent practices become non-independent. We've seen very, very large integrated health systems develop. And I guess I would say that is something we haven't thoroughly debated or evaluated as part of the healthcare system we want.

We will probably be heavily accelerating that trend if any independent practices find themselves unable to survive the economic fallout from this.