Can Physicians Recover Post-COVID 19?
In the early 1990s, we witnessed the emergence of the Physician Practice Management (PPM) industry. In 1990, there was just one (1) public company and by 1999, there were 36. Most failed due to largely flawed business models and the result of not understanding the core business and physicians (topic for another day).
Only a few of these early companies survived into the early 2010s. There were two (2) categories of companies that survived: (1) highly specialized physicians, some were pediatric (and associated specialist), and (2) other general specialists like hospitalists, anesthesiologists, radiologists, and a few others.
On the other extreme were two (2) companies in managed care that provided a comprehensive solution and care management, that many times included captive specialists like cardiologists or even oncologists, as employed staff. The latter were all eventually acquired by managed care organizations.
While there are a few of the category 1 companies still publicly traded, the majority were taken private in acquisitions by private equity. I would not ask them how they are doing in today’s COVID world, as this answer is not pretty. We expect to see one or more in bankruptcy before the year is over as they just can’t recover in their current business structure.
What Must Primary Care Physicians (PCP) Do to Survive?
For physicians to survive, they will need to have either bottomless pockets, something that is generally not associated with PCPs, or they will have to make even more difficult choices that impact their own independence.
Physicians today need two (2) deep tools to progress, one is a profound ability to access and use technology, and we don’t mean just telemedicine, but also all the interconnected devices that consumers have grown accustomed to in their daily lives. Some patients get upset if providers do not have a WIFI connection in their offices, if they have issues calling in for new prescription refills, and yes, issues with the use of Telemedicine, text and nearly 24/7/365 access.
Today, you have realtors selling homes entirely from a virtual visit, to virtual showings and open houses (with both an interior 365-degree view of every room and aerial view, drones and Google® Earth® view), to the virtual walk-throughs and even a fully electronic closing. The real estate industry has advanced, yet many providers feel challenged to use Zoom® or even Facetime®.
Many physicians need a full suite of products and the team to support them, which is something impossible for small or middle size groups (under 50); however, it’s more available today in a broader, more collaborative environment. Post-COVID, we anticipate a new direction going forward in merging technology and new systems into healthcare.
Some point to the challenge’s providers have had in the adoption of Electronic Health Records (EHR), and that this will continue to be an obstacle going forward; however, we disagree. The challenge with EHRs was, and still is, an expensive platform with too little training, and even less support to systems that expanded from their inherent revenue-cycle management side of the business, to document transactions (billing and collection).
We have sophisticated financial systems, not medical systems. None of the current crops of major EHRs started as a clinical platform.
As proof, we admit that even though the modern EHRs can trace its roots to 1966 and Massachusetts General Hospital (Mass General) and the founder of the first language for EHR, that no hospital today can simultaneously handle a dozen or more providers all on the same record at the same time. Very few groups control a U.S. Certified EHR platform, let alone one for example our platform, PWeR® (www.PWeR.com).
The new post-COVID-19 environment is undoubtedly ripe for a more corporate-based practice of medicine.
Today, a majority of the industry depends on whether it is subject to not only government regulations on what the (minimum) performance standards should be, but also to the multi-billion-dollar vendors that can charge 100s of millions (USD) for a health system-wide EHR. Government systems are budgeting in billions of (US dollars), yet no one can prove that in seven (7) plus years of mandated EHRs, that we have saved any (net) lives today – we’re told to wait.
In our previous blog, we noted Telemedicine is not a magic solution; though highly valuable today and in particular, for those young and generally healthy. However, for the elderly, it is but a stop-gap and temporary at best where care is needed, but also where it is expected. By the way, Telemedicine also carries a huge risk for current office-based providers, as organizations with international brands can compete for their “Telemedicine patients” across state borders.
Many organizations are gearing up to provide only Telemedicine with no traditional office infrastructure or added staff labor costs. In the first half of 2020, seven companies like this raised US$100 million or more to expand or start telemedicine, with many more raising money below this threshold.
Today’s medical providers will need in-depth strength in technology.
Not only will medical providers need knowledge in technology that’s ever-evolving, but also they will need to counterbalance the behemoth insurance companies. These companies are continuously playing a numbers game by contracting with the best and most cost-efficient providers, leaving small practices at a huge disadvantage.
How big of a disadvantage? We know that physician medical practices, in particular the PCPs, has had a continuing drop in inflation and adjusted compensation since 2000.
In fact, for the last two years, the average increase in physician compensation from Medicare has increased by only 0.50%. Medicare is no better. That means that for about US$1 trillion, the costs to providers have exceeded their revenue increases.
How have physicians survived? Well, mostly by working more, with longer hours and reducing costs. This has left them under-invested in their facilities, technology, support staff, and themselves. In an unsustainable situation, the healthcare system has to change.
The question we face today…How can this possibly change in the middle of a pandemic? We are confident that we are in the early stage of a significant shift in healthcare – the cusp of a real renaissance; however, more on that next time.
-Noel J. Guillama, President