The Vital Role of Community Practices in Delivering Care Through a Pandemic
Community physician practices, like many businesses, certainly felt the strain of COVID-19. In the first two months of the pandemic, 64 percent of patients said they would be unlikely to visit a specialist for any reason not related to the coronavirus, and community oncology practices saw a 40 percent drop in new patient visits. Cancellations and no-shows doubled in the first few months of stay at home orders. As new patient referrals came to a halt and current patients postponed treatments, practices faced not only substantial cash flow challenges, but also concerns about the health and safety of their staff. And of course, healthy patient outcomes remained front of mind for these practices.
The value of community-based care is still clear
While the reality may be that the healthcare environment has been in crisis over the last few months, the coronavirus pandemic has highlighted the vital role of community practices—during ongoing care delivery and in this new paradigm. We’ve seen practices overcome tremendous odds, activate their flexibility in order to serve their communities, and find innovative ways to adjust their workflows to continue delivering care.
Our customers serve patients right in their own communities, sometimes in rural and remote locations. Helping them to keep their practices viable and their doors open allows patients to access treatment at the site of care that is most convenient and affordable for them. The priority is making sure patients have the choice to receive care wherever they need it, especially in a pandemic. The challenges with the COVID-19 pandemic were initially around continuing to deliver care to patients who need it when circumstances and guidelines seemed to be changing rapidly.
A swiftly emerging challenge
Operating a practice that relies on purchasing and administering vital specialty pharmaceuticals in the office is challenging when the immediate future of that business is uncertain, and community physicians pretty quickly began to feel the financial ripple effect of COVID-19-related office closures and cancelled visits.
When the COVID-19 pandemic hit, current patients became hesitant to come into practices. Referrals for new patients dried up. One doctor told us that he has to see 25 patients in a day to break even, and he was seeing about 16 to 20 during the height of the pandemic via telehealth or emergent patients. Before the pandemic, he often had daily patient counts far above his breakeven point, many times more that pre-pandemic.
And while every practice’s experience was different—and will continue to be as more and more localities open up and return to a new normal—on the whole, physicians didn’t have the cash flow from reimbursement coming in during the months coronavirus was at its peak.
Our customers serve patients right in their own communities, sometimes in rural or remote locations. Helping them to keep their practices viable and their doors open allows patients to access treatment at the site of care that is most convenient and affordable for them.
How would they stay afloat? How long would they need to stay afloat? Another concern was how to keep staff safely in the office to treat those who did come in. That put practices in a challenging position—one some practices may still be in. Our customers tend to be small to midsize businesses. They might not have had business continuity plans in place. So, their ability to manage through this from a cash perspective was challenged.And, just because COVID-19 is a health issue now doesn't mean other patient therapies can be interrupted or delayed. Patients are still being diagnosed with conditions that require treatment.
Initial relief efforts
We recognized the signs pretty early that practices might struggle to keep their invoices current after such an abrupt slowdown in patient treatments. We quickly worked with our manufacturer partners, who understood the challenge and began to offer extended dating terms on a product-by-product basis. But practices wouldn’t feel the financial benefit of that until later. With upwards of 40 to 60 percent of their purchase volume tied to those products, many practices’ strategy was to try to manage in the here and now. They were looking at cash flow for the summer months, know there are going be months where diagnostic testing and referrals for new diagnoses and treatment are behind. They wanted to manage for the future.
The influx of government assistance, while it offered some immediate relief, has been both overwhelming and sporadic for the practices. There can be a lack of clarity on how to apply for these things. Practice owners worry about preparing for a potential audit after the fact and correctly documenting how these products or funds may be used. Some practices are not even sure what all they're allowed to use that money for. Tracking all that while maintaining administration duties could place a lot of pressure on the already stressed practices.
The distributor’s role in ensuring care continues
We’ve learned that in these unprecedented times, partnership matters more than ever as we work together to make sure access to care continues unencumbered. The enormous amount of specialty products in the market and new therapies in the pipeline still has to get to physician practices to be able to reach patients. Distributors are the conduit between manufacturers and physician practices, providing a service that manufacturers wouldn't be able to efficiently and effectively offer on their own. Our vital and essential role the pharmaceutical supply chain allows independent practices to stay viable and ultimately able to service patients.
Specialty practices, especially, keep small inventories. Declines in new patients and treatments add to the carrying cost of that inventory. And while a lot of patients who were already on therapy are still getting those treatments, that decline in new patients will be felt up and down the supply chain.
Especially during times like this, the role distributors play in taking on the bulk of the financial risk for supply chain transactions is essential in ensuring access to treatment and viability for sites of care.
With the pandemic, fluctuation in demand also altered the normal inventory management processes. Independent physician practices were concerned about getting access to products for patients that wanted assistive therapies that were indicated in trials or might have some role in combating COVID-19. We worked with manufacturers to make sure that we had adequate inventory and we worked with practices to make sure we could get them access to the products they normally use.
When we sign distribution service agreements with our manufacturer partners, distributors agree to maintain certain service levels such as adequate inventory—not too much, not too little, etc. We have to judge fluctuation in our customer demand and then manage extended dating terms at the product level tied to the pandemic situation. Those terms are ultimately favorable for our practices. At the same time, our financial risk increases considerably and our own cash flow is impacted adversely.
Our [distributors] vital role in the pharmaceutical supply chain allows independent practices to stay viable and ultimately able to service patients.
The financial demands on our business increase on a regular basis. Ours is a capital-intensive business, probably more than any other, especially as more and more expensive therapies launch. The cost of carrying inventory and the accounts receivable risk for us balloons. We also make ongoing investments in technology, data insights capabilities, infrastructure and other innovative solutions to meet the needs of customers.
Adjusting and overcoming: community practices in action
We continue to see practices get really creative in how they provide care. If, for example, a patient was coming in just for an injection, they might actually meet that patient at their vehicle and administer the injection without them getting out. Some do a follow up visit while the patient stays in their car in the parking lot. We also saw telehealth being utilized in a big way with very rapid adoption. Community practices have always been nimble and shown ingenuity, and it certainly showed up as their greatest asset during this crisis.
Some staff, including billing staff, started working remotely. Practice owners are trying to make sure staff remain productive and are pushing out timely billing so reimbursement doesn't lag. Our team looks at reporting to find the gaps. We can help physician practices understand if there are delays in their reimbursement from payers. We know that’s critical right now.
As the economic impact of COVID-19 takes hold, nearly one in five Americans are worried about “losing or not having health insurance” though even more are worried about coverage issues for others. Many have had to face job loss, furloughs, and salary reductions. Job and benefits loss could ultimately boomerang back to practices.
Reimbursement from the payers has been slow as well because they are short staffed due to COVID-19; they're not processing claims as timely as they once did. By some accounts, the time is up to one or two weeks from what it used to be pre-COVID-19—it’s one more contributing factor in the cash-flow crunch for practices.
In the long-term, practices need to recognize that when terms get pulled back and their products don't have this extended dating, they're going to have overlapping invoice due dates. They’ll need to plan for this in their cash flow forecasts. They're going to owe distributors for product bought in the normal payment cycle, together with product that was bought in an extended payment.
Another potential factor to consider is that many practices outsource their revenue cycle management, sometimes these teams are located outside the United States. So, they are impacted not just by what's happening in their community, but also communities in other countries who are also dealing with the global pandemic at different rates.
Navigating the future: don’t go it alone
We’re encouraged by the resilience of community practices amid the coronavirus crisis and look forward to helping community and independent physicians, and even the physician class of trade within health systems, navigate what’s next. Tactically, that means leveraging:
- Operational and financial management software and analytics tools to help practices elevate their business and get the financial insights they need in order to make more efficient business decisions
- Clinical tools that help practices make the right treatment protocol decisions
- Strong purchasing power for independent practices and solutions that help practices collectively tap into access they wouldn’t have on their own
- Inventory management systems that enable practices to manage high-cost inventory and track the drug flow from acquisition to billing and payment
- Advocacy that includes lobbying and putting forth suggestions for what makes sense for our practices. Our physicians have grown to trust in our mutual advocacy efforts over the years as we've worked together to address DIR fees, sequestration, COVID relief funds and more. Among these recent specific legislative successes are the Paycheck Protection Program—Small Business Administration (SBA) loans intended to help cover payroll and rent/utilities expenses for 24 weeks; suspension of the two percent Medicare Part B reimbursement cuts until December 31, 2020; removal of geographical restrictions and increased reimbursement for Medicare telehealth services until the end of the pandemic. We also continue to push for a permanent sequestration cut repeal and telehealth services expansion in future COVID relief legislation.
- Ensuring medication safety and integrity by opposing the processes known as “white bagging” and “brown bagging.” These methods can jeopardize highly individualized patient treatment protocols and ultimately patient prognoses, ultimately disrupting the continuum of care and taking clinical decision-making out of the hands of the physician.
From payment cuts to sequestration to a global pandemic, specialty practices have been thrown many things over the years and have emerged amazingly resilient. Chronic and critical illnesses didn't stop or slow down when COVID-19 flared up, and neither should access to care. Specialty physician practices’ size and structure allowed for a nimbleness and creativity that is conducive to quick adaptations to maintain patient safety during treatment. Keeping practices healthy is part of our commitment to enabling efficient, affordable access to treatment that helps healthcare stay healthy.