December 14, 2021
In April of 2020, the California Medical Association (CMA) conducted its first COVID-19 Physician Financial Health Survey, which found widespread concern about the financial health of physician practices. The survey found that 95% of practices were worried about their financial health due to the COVID-19 public health emergency, as practices were seeing an average revenue decrease of 64%. CMA’s second survey, conducted in October of 2020, returned similar results, with 87% of practices still worried about their financial health and viability, with an average revenue decrease of 33%.
Almost two years into the pandemic, CMA’s third follow-up survey to reevaluate practice viability found that after 19 months of sustained revenue decreases, the majority of physician practices (70%) are still worried about their practice’s financial health.
The concerns about practices’ financial health are due not only to almost two years of sustained revenue decreases between 35%-64%, but also to a concurrent 15% increase in practice costs associated with the pandemic.
COVID-19 burnout has significantly contributed to health care staffing issues for both physicians and employees, causing a decline in employee morale, an inability to fill open positions and the need to increase the salary range to attract qualified candidates. As a result, over half of practices that had previously furloughed, laid off, reduced salaries or hours for physicians and staff or temporarily closed their offices have not been able to return to pre-pandemic staffing levels.
Additionally, delays in patient care have negatively impacted patient health outcomes, requiring more specialty referrals, ultimately costing the health care system more. The delays have also placed burdens on practices to divert staff time to make outreach to encourage patients to schedule appointments and offer reassurances of office safety protocols and, almost one in five practice’s capitated payment rates are no longer reflective of the work and cost of caring for their patients.
These sustained financial and staffing pressures have pushed almost one in three physicians to consider consolidation, either in the form of becoming employed by or being acquired by a health system, hospital or other entity, in favor of financial stability, decreased administrative hassle and better access to reliable staffing. Additionally, some physicians note they are now preparing for an early retirement due to the physical, mental and financial stress of the pandemic or have already had to close their practices.
CMA's alarming survey findings highlight the impact of 19 months of sustained financial losses and increased costs, and underscores the need to address these pressures.
If immediate action is not taken to help medical practices—particularly independent small and medium-sized practices—California will face a new wave of consolidation that will increase health care costs and decrease patient access to care.
For more information, see CMA’s COVID-19 Physician Financial Health Survey 3.0.