Doctors Offices Are Small Businesses Too. And They're Struggling to Stay Afloat During the Pandemic

The Chico Eye Center shut down its surgery center, furloughing 90% of the surgery staff. (Courtesy Chico Eye Center)

At a time when doctors are more in demand than ever because of COVID-19, they are also being laid off and struggling to keep their practices open.

Since hospitals began canceling non-essential surgeries in mid-March to preserve medical resources, and patients have been too afraid to see their doctor for routine care, physicians are watching their revenues plummet.

“We had such a decrease in patient volume, we had to furlough about 75% of our staff,” said Dr. Sean Liston, an ophthalmologist and partner at Chico Eye Center. “So we're still paying their health insurance, but we're not paying them for hours they're not working.”

About half the medical care in California is delivered by solo and small practice physicians, according to the California Medical Association. In a recent survey of its members, 50% of doctors said they’ve had to lay off fellow physicians, nurses and office staff because of the downturn, and 11% closed down temporarily.

Liston specializes in corneal transplants, but he hasn’t done one in weeks. He shut down his surgery center, furloughing 90% of the surgery staff, and the medical office where he does eye exams is only open in the mornings now. The four doctors who own the business suspended their own salaries for March and are considering the same for April.

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“We didn’t pay ourselves because we needed to make certain that we have enough cash reserves to be able to weather this,” Liston said.

They have had to weather a lot. They shut down their office in Paradise after the 2018 Camp Fire burned through town, then watched dozens of doctors leave Chico when there was already a shortage.

“We had almost the same number of patients and significantly less physicians. So it was even worse,” said Liston, who recently served as the president of the local Butte-Glenn Medical Society.

He’s worried that another wave of doctors might close shop if the coronavirus shutdown lasts much longer. That could leave patients scrambling to find a primary care doctor, a pediatrician or a psychiatrist.

The California Medical Association is lobbying the governor to direct health insurance companies to give doctors “retention grants.” Patients are paying their premiums, but insurers aren’t paying claims, the association said, so why not share some of that money around to keep the physician network stable.

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“Three months down the road, we're going to have high demand for physician services, surgical and primary care, and we've got to be able to meet that,” said Dustin Corcoran, CEO of the California Medical Association. “Physician practices operate on very, very thin margins. They don't have the reserves that payers have to weather the storm.”

Blue Shield of California is distributing $200 million to doctors in advance payments and loans, but they will have to be paid back. The federal government is depositing $30 billion in the bank accounts of ailing physician practices, but these grants are based on how many Medicare patients they typically see. So while the grants provided a welcome relief to some doctors, for others they only covered a fraction of their losses.

“If only one payer steps up, that’s not going to be enough to sustain physician practices,” Corcoran said. “That requires a state effort and private payers to do their part.”

Dr. George Scott, an OB-GYN in Manteca, sees very few patients over 65, so he got virtually nothing from the Medicare payment, according to his wife, Debbie Rood, who manages all the finances for the practice.

Their patient load has dropped by half, she said, as women skip their annual exams. Pre-natal visits are all over video now, which takes more time but pays less because there’s no physical contact. On top of everything, their landlord tripled the rent. Rood has been begging her husband and their three employees to conserve medical equipment and even electricity.

“For three weeks I have been telling them, ‘We are not going to have any money. ‘We're not going to have any money',” she said.

Insurance companies are sensitive to doctors’ struggles, but not to the point of handing out grants.

“It's a pretty simple solution to a very complex problem — and we think too simple,” said Charles Bacchi, CEO of the California Association of Health Plans, a trade group for health insurance companies.

Insurers have their own financial obligations and government regulations they must abide by, Bacchi said, and they would rather decide on a case-by-case basis who to help and how. Advance payments or loans might make more sense than grants, because, eventually, patients will come back for their cancer screenings and cornea transplants.

“You can't pay dollars now to keep this doctor's office open and then pay again when someone comes in in four months to have their health care services,” Bacchi said.

But doctors like George Scott have to pay rent and salaries now and in four months, as well as the months in between. Scott and his wife really don’t want to lay off any of their staff.

“If we have to take out a second mortgage on our house, then we'll have to take it out, and we just won't be able to retire,” Scott said.

Scott is 66. If he has to, he said, he’ll just keep delivering babies until he’s 80.