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CMA advocates for bill to protect physician practices struggling amid the ongoing pandemic

January 23, 2021
Area(s) of Interest: Advocacy 


As part of its efforts to protect physician practices that have been hit hard by the COVID-19 pandemic, the California Medical Association (CMA) has partnered with a coalition—including business groups, health care providers and Assemblymember Autumn Burke—to advocate for a bill (AB 281) that would conform California law with recent changes to federal law that allows the deduction of expenses paid with forgiven Paycheck Protection Program loans.

Federal lawmakers made the change as part of its second COVID-19 relief package passed in late December. Burke’s bill seeks to align state law with federal policy, afford increased financial support to hard hit practices and eliminate the burden of preparing separate sets of books for state and federal tax purposes.

The federal government created the Coronavirus Aid, Relief and Economic Security (CARES) Act and PPP loans through the Small Business Administration (SBA) to offer much needed financial support to struggling businesses across the nation. The loans may ultimately be forgiven if they are used for specified purposes, including payroll costs, business mortgage interest payments, rent or utilities.

These loan programs became a necessary lifeline to many businesses including physician practices that have endured significant financial hardship during the COVID-19 pandemic. In October a survey of California physicians found that 87% of physician practices are still worried about their financial health. Even with more than 8 out of 10 practices now utilizing telehealth, the average volume of patient visits and practice revenue is still down by one third, with 25% of practices still experiencing a revenue decline of 50% or greater. Surgical specialties are particularly impacted because of their inability to practice via telehealth, with average revenue declines of 41%, compared to 34% for all specialties.

While revenue is down, practice costs have gone up 14%, with practices having to purchase personal protective equipment, comply with public health disinfecting guidelines, implement telehealth and make other changes due to the pandemic.

Conforming state law to the federal loan guidelines will help physician practices keep their doors open to ensure Californians can have access to a physician when they need one. In addition, it will help keep physician offices staffed at a time when state unemployment levels are more than double what they were before the pandemic hit. Statewide, 56% of practices report their staffing levels have not returned to normal. In addition to providing vital medical care to patients, physician practices play an important role in local economies, helping to sustain jobs and economic viability during these uncertain times.

Failure to bring state law in line with federal policy would create additional financial strain on physician practices and other small businesses that needed these funds to stay open and continue to pay their employees through the closures of the pandemic.

 

 

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