Most independent practices experienced financial challenges in 2020. Patient volume declined, even with the transition to telehealth, and along with that revenue also declined significantly. Strategies for healthier finances in 2021 can help ensure that the independent physician remains solvent and successful as the pandemic continues.
A Medical Group Management Association (MGMA) poll published in April 2020 showed that 97% of physician practices experienced a negative financial impact from COVID-19. Practices participating in the poll reported a 60% average decrease in patient volume, along with a 55% average decrease in revenue.
For many independent practices, the shift to value-based care and away from fee-for service as well as challenges with reimbursement denials have added to their financial struggles. Experts point to the elimination of these denials as a major opportunity to maximize practice revenue. A separate MGMA poll found that the top reasons for denials include:
- Prior authorization – 42%
- Demographic issues – 29%
- Timely filing – 7%
- Other – 22%; most frequent responses were related to:
- Coding issues (including wrong modifier and improper bundling of CPT® codes) — 23%
- Payer requirement inconsistencies — 14%
- Medical necessity requirements — 14%
- Missing information/documentation — 11%
- Coordination of benefits (COB) — 9%
There are a number of additional strategies independent physicians can put in place for healthier finances in 2021. Financial experts advise that providers should:
- Hold onto their cash. During the pandemic, new spending should be limited to practice enhancements and necessary purchases such as air purification systems for the office.
- Wait to pay off debt, whenever possible. Similar to the advice about holding onto cash, healthcare professionals are advised to be careful about overextending when paying down debt when they may need the cash on hand more urgently.
- Take advantage of government assistance. For practices that need help with payroll and rent, programs such as the Paycheck Protection Program (PPP) may be a good option.
- Apply for loans through private banks and lenders. A loan to keep the practice afloat can help alleviate financial struggles during the pandemic.
Elation Health’s Financial Guide is designed to help your practice deal with the economic effects of COVID-19. Check it out here.
Strategies for healthier personal finances for independent physicians include:
- Reducing unnecessary expenses. There may even be expenses that the individual is unaware of, that are deducted automatically, such as recurring payments for subscriptions or memberships that are no longer used.
- Keeping financial documents organized. Having a clear picture of income and expenses at any given time can help the provider track where money is going and understand what may need to be cut.
- Reviewing investments. Shifts in the market may require a rebalancing of long-term and short-term investments. Reviews should also include the amount contributed to retirement accounts, which can also offer tax advantages when maximized.
Independent physicians have felt the impact of the COVID-19 pandemic, both in their practice and personal finances, over the past year. Implementing strategies to streamline expenses and improve revenue can be critical for continuing stability and success in 2021.