Many Health Providers on Brink of Insolvency

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While hospitals strain to treat the surge of acutely ill COVID-19 patients, the crisis threatens the stability of the rest of the health care system.

Elective surgeries and routine medical care are on hold. As a result, medical providers of all kinds are seeing drastic reductions in patient visits and crushing losses of revenue. At the same time, some continue to pay wages along with rent and other overhead costs. Many worry they’ll lose their skilled workers to hospitals.

The combination raises the possibility that the non-hospital health system will be decimated, and many of the surviving providers will be ill-prepared to deal with the pent-up demand that emerges from this crisis.

Virtually all of health care is affected, from surgical practices to dentists to community health centers, which serve 29 million predominately poor patients, to school-based health clinics and emergency ambulance services.

The nation has seen a near total shutdown of medical treatment performed outside hospitals, including physical exams, colonoscopies, dental restorations and routine surgeries, all provided by thousands of primarily small businesses that comprise the physician and clinical services industry.

Many of those businesses, which account for nearly 20% of the nation’s .6 trillion health care industry, are at risk of failing, health care experts say.

That could lead to further consolidation of the U.S. health care industry and less competition after the crisis subsides, according to Jonah Frohlich, a managing director at Manatt Health, a national health care consulting firm. “We’re going to see a raft of acquisitions and mergers and integrations with independent clinicians who can’t survive months of no revenue,” he said.

In the meantime, medical providers contacted by Stateline said they’re concerned that patients with chronic conditions such as diabetes, high blood pressure and chronic obstructive pulmonary disease will get sicker without medical care and that postponed diagnostic tests, such as mammograms and colonoscopies, will result in serious illnesses going undetected and worsening.

Concerned about the health risks of postponing needed care and the increasing financial damage to the health care industry — which is a major driver of many local economies — governors in Alaska, Arizona, Arkansas, Georgia, Ohio, Oklahoma, Texas and West Virginia have announced plans to start reopening hospitals and medical practices to elective procedures in the weeks ahead.

But the U.S. Centers for Medicare and Medicaid Services and medical groups, including the American College of Surgeons and the American Hospital Association, caution that when elective procedures resume, providers must follow strict infectious disease precautions and conserve medical supplies.