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Medical groups and integrated health systems face 25% COVID losses in revenue

by John R. Fischer, Senior Reporter | June 18, 2020
Close to 90% of medical groups and integrated health systems have seen dives of 25% or more in their revenue as a result of the COVID-19 pandemic.
Nearly 90% of medical groups and integrated health systems have lost a quarter or more in revenue as a result of the ongoing COVID-19 pandemic.

Close to 40% of medical groups and 20% of integrated health systems report their monthly revenue losses have exceeded 50%, according to surveys conducted by AMGA, a trade organization representing multispecialty medical groups and integrated systems of care. It asserts that such findings indicate the need for greater financial investment by Congress in the nation’s healthcare provider system.

“Health systems and medical groups are operating under a cloud of financial uncertainty that threatens their ability to continue to deliver the best care to their communities,” said AMGA President and CEO Jerry Penso in a statement. “We continue to urge Congress to provide additional funding to stabilize the front lines of the COVID-19 crisis.”

The surveys were conducted between May 26 and June 1, and together collected 95 responses, with 59 from leaders of preeminent integrated health systems and 36 independent medical groups. Of the findings, 41% of healthcare systems and 36% of medical groups predict it will be at least a year before revenues return to pre-COVID levels, with many not expecting to see such results until at least the second quarter of 2021. Nearly 23% and 28%, respectively, say it is not yet known when revenues will return to normal.

Expenses are predicted to increase, with 92% of healthcare systems and 97% of medical groups expecting cost to go up for personal protective equipment. Telehealth infrastructure costs are also expected to rise, according to 87% of healthcare systems and 91% of medical groups.

Congress previously passed the CARES Act in March, which provided $100 billion in relief to healthcare providers, as well as the HEROES Act in May to supply an additional $100 billion for the Provider Relieve Fund.

Despite this help, deferrals and cancellations of elective procedures and surgeries have caused steep drops in revenue. While such procedures are starting to resume, the financial toll of the pandemic has left many hospitals in poor shape and facing new challenges.

AMGA recently illustrated these challenges in a letter to Senate leadership this month that asks Congress to continue funding the Provider Relief Fund in future legislative packages to help medical groups and integrated healthcare systems continue caring for patients during and after the pandemic. It notes that risks such as a resurgence threaten to further strain the financial state of providers, and that obtaining adequate reimbursement for care is challenging at the moment, primarily due to variations in telehealth reimbursement and potential insurance coverage lapses caused by unemployment.

“The financial risks are real, and we have heard that several groups have already run through their reserves,” Penso said. “This pandemic has changed the expense makeup for providers, who now are funding new PPE and telehealth infrastructure costs while simultaneously dealing with significant revenue losses.”

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