Medical Groups and Integrated Health Systems Face Closure Without Immediate Financial Relief; Initial CARES Act Fund Covered Less than a Week of Lost Revenue
Alexandria, VA – Two-thirds of integrated health systems report that their initial share of payments from the Coronavirus Aid, Relief, and Economic Security (CARES) Act will replace less than one week of revenue lost because of the COVID-19 pandemic, highlighting the urgent need for Congress to provide more financial assistance, according to a survey conducted by AMGA.
The CARES Act, signed into law on March 27, provided $100 billion in relief to healthcare providers, but the survey demonstrates that, spread across the entire U.S. healthcare system, its impact has been minimal. AMGA estimates that it will take as much as $318 billion to replace just half of the revenues hospitals and physicians will lose over four months, and in a letter to the congressional leadership, AMGA asked Congress to provide these funds.
The survey of 71 of the nation’s leading integrated health systems was conducted April 15-19 by AMGA. Among the survey’s other findings:
- 40% of respondents say revenue has declined by more than half, with nearly all reporting declines of 25% or more
- 55% report having less than six months cash on hand
- 84% of healthcare systems have furloughed employees and 75% have cut physician salaries
AMGA reported last week that independent medical groups – multispecialty group practices not affiliated with a hospital – are in similar dire straits. An even greater number – about 60% – said they will deplete their cash reserves by summer.
The lost revenue is largely the result of medical groups and integrated systems eliminating non-essential surgeries and procedures and instructing patients to stay home to avoid potential exposure to COVID-19. AMGA members reported the initial $30 billion of the $100 billion in relief funding provided less than a week’s revenues for health systems.
“Health systems are using every possible tactic to remain viable: furloughing employees, cutting salaries, exhausting reserves built up over decades, and accessing commercial loans,” said AMGA President and CEO Jerry Penso, M.D., M.B.A. “Despite these measures, some groups and systems clearly are at risk to close. The financial challenges for providers aren’t going away in the short term, and we need Congress to provide support that better aligns with that reality.”
The consequences of a potential hollowing out of the nation’s health systems and medical groups are severe. Medical groups and integrated systems play an important role in their communities. Not only do they provide care to thousands of patients, including those with COVID-19, but in many cases, they also are one of the largest employers in their communities.
“Closure of any large medical group or health system would have a destructive, long-term impact on the health and financial wellbeing of the communities they serve,” Penso said. “Patients, particularly those with chronic conditions or needing specialists, would be unable to access needed care, resulting in increased hospitalizations and further stressing an already overburdened healthcare system.”
AMGA based its request for an additional $318 billion for the Provider Relief Fund on the average 50% revenue loss its survey found. A full description of the methodology can be found in the letter to congressional leadership.
AMGA is a trade association leading the transformation of health care in America. Representing multispecialty medical groups and integrated systems of care, we advocate, educate, innovate, and empower our members to deliver the next level of high performance health. AMGA is the national voice promoting awareness of our members’ recognized excellence in the delivery of coordinated, high-quality, high-value care. More than 175,000 physicians practice in our member organizations, delivering care to one in three Americans.
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