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COVID-19 and cash flow for independent practices

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Let’s talk cash flow. With the complexity of medical billing in the US, independent primary care medical practices are likely just now feeling the real cash hit of the COVID-19 crisis.

Why now? To start, there’s a standard 45-90 day lag from when a patient is seen in a medical practice to when the practice actually gets paid from health plans and CMS. 

It’s tough for small practices to predict how this reimbursement shakes out, something companies like OODA are trying to help with.

Reimbursement for telehealth has also been a hurdle. Nearly 1-in-5 telehealth bills is being denied according to the latest from PCPCC, despite promises for parity with in-person care during COVID-19.

When patient visit volume crashed in March, many practices were able to get cash support from programs like Medicare Advance Payment, PPP and EIDL. Combined with lagging receipts coming in from Q1 visits, practices likely had an okay Q2 cash position on paper.
It’s now, in Q3, when PCP practices will be seeing financial hardship. Lagging receipts are slim because Q2 patient visits tanked. Practices that already received PPP have likely spent the funds.

Telehealth, which helped get so many practices through the pandemic so far, is slowing down, too. May 4 was the peak for telehealth visits with Elation Health’s PCP community, with a 15% drop since then.

Will this tough quarter be a blip on a medical practice’s cash flow or the start of something more alarming? It could go either way.

The bad news: New COVID-19 shutdowns aren’t helping practices with their reopening. Repayment obligations for Medicare Advance Payments start after 120 days, another financial danger zone ahead from practices that acted early in Q2.
The good news: PPP loan applications are open again through the end of July, giving more small practices a chance at the funding. And overall patient visit volume continues to trend back up toward pre-COVID levels.
Practices: Which way do you see your financial curve bending after Q3?