Exploring Doctor Shortages during and after the Pandemic of 2020: Some Dire Consequences but Few Solutions

More than 950 million doctor visits were expected in the United States, had the COVID-19 global pandemic never affected the healthcare industry in the United States. In the first quarter of 2020, nearly 100,000 Americans died because of the pandemic and 38 million people claimed unemployment benefits from the government. Given this general outlook, this article explores how the number of active physicians in the United States namely 525,439 (see Statista) [1] may fare once this crisis passes. The breakdown by physician specialty is listed in table 1 below: 

Table 1: Breakdown by physician specialty. 

According to the 2016 National Ambulatory Medical Care Survey, there were 883 million physician visits in 2016. Based on a 2 percent annual inflation since 2016, this estimate of doctor visits increased to 937 million in 2019 and slightly over 950 million doctor visits expected in 2020. This assumes no pandemic interfered with the standard protocol. 

Nearly 89.7% of the projected 937 million doctor visits (2019) were to private practice doctors, defined by the Small Business Administration as a practice with fewer than 500 employees. In short, 840 million doctor visits were to private practices in 2019. By the end of April 2020, three physician associations representing more than 260,000 doctors out of the total 525,439 employed physicians nationwide, noted that “the situation facing front-line physicians is dire,” based in part on the lead article from the NY Times [2]. The number of doctor visits by patients dropped to half the average of 120 per day, causing typical doctor offices to also realize nearly a 40 percent drop in payments for the First Quarter 2020 compared to First Quarter 2019. 

In matters of how physicians are paid, private insurance accounted for 59.6%, Medicare for 24.7%, and Medicaid for 15.6% in 2019. If 840 million doctor visits went to private practices in 2019 and 59.6% were covered by private insurance, then we can conclude that an expected 500 million doctor visits were covered by private insurance at private practices in 2019. 

By May 2020, over 38 million people filed for unemployment claims in the United States [3]; however, according to a law called the Consolidated Omnibus Budget Reconciliation Act of 1985 (a.k.a. COBRA) employers with 20 or more employees are forced to continue group medical expense coverage for terminated workers (as well as their spouses, divorced spouses, and dependent children) for up to 18 months following termination [4]. 

Industry data suggests that the typical practice’s overhead is compiled of 50 percent to 60 percent of total revenue. Also, typical private practices employ 3.9 Full-Time Equivalents (FTEs) per each Physician, meaning multiple people hired to deal with private insurance companies and special billing software related to insurance billing. In 99% of the doctor visits, either private insurance or state insurances were accepted as the main form of payment for services rendered. This pandemic magnified a significant weakness of these private practices because of the number of patients seen daily by providers has diminished by nearly half the average of 120, resulting in an equivalent drop in the percentage of revenue year over year due to this pandemic. 

Indeed, “the situation facing front-line physicians is dire” holds true when the rhetoric is converted into revenue lost. The article stresses that as many as 60,000 physicians in family medicine alone may no longer be employed in their practices by June 2020, because of the pandemic [2]. 

However, one option to conventional medicine practice, i.e. boutique medicine has taken over many specialties such as general practice, psychiatry, and internal medicine. For example, a physician in North Carolina developed his own model of managed care. He provides 3,500 to 4,000 patient visits per year; his annual overhead breaks down as follow in table 2:

 Table 2: Annual overhead breaks down. 

Since April 2002, this boutique private practice in North Carolina has succeeded in covering the annual overhead of $78,400 with only four patient’s visits a day. Below is an outline detailing how they not only succeeded, but thrived: 

First, the practice is just one staff person per two providers, causing the ratio of 0.5 staff per provider, considerably lower than the national average of 3.9 staff members per Full-Time Equivalent provider. Second, revenue averages $82 per patient visit and the net profit is nearly $62 per patient visit. Third, insurance claims are eliminated; also, the practice has never taken Medicare or Medicaid. Furthermore, patients pay in full at the time of their visits. Fourth, the doctor spends almost 30 minutes with a patient during an average visit; and this efficiency translates to low overhead consistently at 25 percent of revenue, while the national average for overhead is 40 percent to 60 percent of revenue [5]. 

For doctors in a traditional private practice resembling the nationwide model, our research discovered 10 potential benefits for physicians under the CARES Act which plans to allocate $130 billion to medical and hospitals. These are government-supported programs through the Small Business Administration (SBA) include: 

Physicians employed by large health care systems are in better financial shape than independent doctors, at least for now. As one physician, who used to be in independent practice explains: “With the decreased volume of patients we are taking care of, I’m still able to get my salary. Otherwise, I do not know whether I could keep my staff and overhead going [7].” There are many benefits to physicians working under a fixed salary during this pandemic. 

Large companies like HCA Healthcare, which employs thousands of physicians through its 186-hospital system based in Tennessee posted revenues of $12.9 billion in the first quarter of 2020, compared to $12.5 billion a year earlier. However, its first-quarter net earnings were only $581 million, down 44% compared to $1.04 billion from the first quarter of 2019. This is a clear and present danger example of taking advantage of the money earmarked for hospitals under the CARES Act, working the SBA to execute a new $2 billion loan facility and requesting accelerated Medicare payments authorized by the CARES Act [8]. Otherwise this company would suffer dire consequences. 

Another large Tennessee company is Envision Healthcare, which two years after completing a buyout by private equity firm KKR, is struggling to manage its $7 billion debt load. The company is taking several steps to improve its financial position. For example, it is holding back pay for physicians, reducing salaries of senior leadership and furloughing nonclinical staff. Furthermore, clinical pay will be reduced in services with low patient volumes, and performance-based bonuses plus clinician profit-sharing will be delayed until the fall. 

Additionally, Envision temporarily suspended retirement contributions, merit increases and promotions for all employees. If it succeeds in securing funds through the CARES Act, then more than 40,000 team members, 27,000 of whom are physicians and clinicians may not need to worry about an Envision Healthcare bankruptcy filing [9]. 

In the first quarter of 2020, the COVID-19 global pandemic caused a dire slowdown of healthcare services as patients fearing infection opted to stay home. Large companies like HCA Healthcare and Envision Healthcare struggled with the 44% drop in profits and the contemplation of bankruptcy. As more patients stay home for fear of contracting the disease, doctors with private practices, many whom are seeing near empty waiting rooms may be forced to close by the end of the second quarter, due to a lack of cash flow. 

Those private practice doctors that decide to continue operating will change how their practices deliver managed care and experience firsthand the financial support offered by the government through the CARES Act and the 10 solutions provided by the Small Business Administration. For example, some doctors may become more efficient and need less than 40 percent of revenue to cover the practice’s overhead. Others may respond by significantly eliminating the filing of insurance claims and accept cash payments directly from patients at the time of services rendered. Other private physicians may aim to become far more efficient than the national average and reach break-even with fewer than 10 patients per day. 

Whichever decision these private practice physicians take, the COVID-19 pandemic highlighted the need for improvement in the delivery of healthcare in the United States.