The Covid-19 pandemic of 2020 has proven to be the ultimate test of the strength and resilience of the American healthcare system, and the backbone of highly skilled physicians and clinicians upon which it is based. And when it comes to physician compensation, the challenges created by the pandemic may have many physicians wondering what to expect in 2021, when the global and local impact of the pandemic hopefully begins to wane. The social distancing, quarantining and telehealth precautions and procedures adopted almost instantaneously, nationwide, in March of 2020, meant that elective surgeries came to a standstill and office visits dwindled to a trickle.
As a result, American healthcare systems saw furloughs, layoffs and staff reductions to an extent we couldn’t have predicted. According to the American Hospital Association, health systems and facilities in the U.S. lost more than $200 billion in the first quarter of 2020; MGMA research suggests that physician-practice income fell by as much as 55%, as clinics closed or patients chose to delay their visits.
The pandemic has surfaced questions about the efficacy of some of the existing compensation models and their ability to react to major systemic disruptions, while still providing physicians with the income they have come to depend on.
Major Issues in Primary Care
Primary care providers – family medicine, internal medicine, pediatrics, and OB/GYN – were hit hard by 2020’s first round of clinic closures and service disruptions, especially those operating on a fee-for-service schedule.
A study conducted by Healthaffairs.org suggests that over the course of the year, primary care practices are expected to lose almost $68,000 in gross revenue, per provider, due to pandemic issues – leading to total systemic losses of more than $15 billion. And the number could be double that, they say, if CMS policies fast-tracking payment for telemedicine are only a short-lived fix.
Adding to the issues is the reality that primary care continues to experience a shortage of qualified physicians, for a variety of reasons. Even at the medical school level, some students are actively steered away from pursuing a career in primary care as medical specialists can and do, on average, earn twice as much as their primary care counterparts. And given the huge burden created by medical student loan debt, which has come to exceed $200,000 per physician on average, the incentive to pursue primary care after medical school has dwindled considerably.
According to Kaiser Health News, of 8,116 internal medicine residency positions offered to graduates in 2019, only 41.5% were filled by American medical students – and many of those may elect to ultimately pursue a fellowship in another specialty. As a result, the American Association of Medical Colleges predicts a shortage of 21,400 to 55,200 primary care practitioners by the year 2033.
CMS Proposes Long-due Changes that Increase Reimbursement for Primary Care
One particularly bright spot has appeared that might help to ease the financial burdens and ultimately entice more physicians to choose primary care. The 2021 Centers for Medicare and Medicaid Services Physician Fee Schedule, set to be finalized December 1 and put into effect in 2021, proposes an array of changes aimed at addressing primary care issues, including higher reimbursement rates for evaluation and management (E/M) services such as office visits and care management services, as well as a renewed emphasis on telehealth procedures.
Primary care procedures and treatments ranging from electronic home visits to outpatient or prolonged virtual office visits have all been permanently added to Medicare’s lists; rest home visits, emergency visits and even psychological testing are also covered during the duration of the Covid-19 public health emergency.
Further, streamlined EMR documentation requirements for primary care doctors also mean more face-to-face time with Medicare-covered patients, lightening the bureaucratic burden and upping patient numbers. According to the American Association of Family Physicians, the increase in total allowed charges for primary care doctors is now slated for 13%. Given that Medicare spending grew by 6.4% in 2018 to $750.2 billion and Medicaid also grew by 3.0% to $597.4 billion – some 37% of national health expenditures in the entire country – the CMS changes represent a significant reinvestment in primary care.
Admittedly, other specialty areas are less enthused by the CMS’s proposed changes in priority. In order to pay primary care providers more, cuts in payments to surgery and other specialists have been made, in an effort to maintain budget neutrality. The proposed ruling calls for a 9% cut to cardiac surgery, 7% to vascular surgery, 7% for general surgery and 6% to ophthalmology procedures, versus 2020 rates.
Organizations such as the American Medical Association are urging the CMS to treat all physicians fairly, and are upset that radiologists, pathologists and anesthesiologists could be impacted by the realignment of fees, with further delays in treatment, compounding the disruptions caused by the pandemic.
Other Compensation Trends in 2021
With so many specialists facing the reality of lower incomes in 2020 as a result of lower patient volumes, both physicians and facilities have also used this year’s rollercoaster ride to reexamine the fee-for-service model. According to the National Law Review, the long-term fallout of the Covid-19 pandemic is likely to prompt a greater move toward value-based metrics as part of physician compensation.
“The new approach to physician compensation will mimic what we have seen in recent Medicare models, such as accountable care organizations. Outcomes-based, quality-based and population-based compensation arrangements will become more common,” the magazine notes.
Other Financial Benefits and Perks are on the Table
Primary care physicians looking for a new practice opportunity should also keep in mind that salary is just one component of a larger compensation package, as employers look to remain competitive and build long-term relationships to encourage physician retention.
Add-on features ranging from student loan forgiveness and housing allowances to sign-on bonuses are now part of the perks offered to help attract and retain the right physician candidates. Low-interest loans, deferred compensation, personal financial advisors or even time for sabbaticals and research projects are all on the table, as healthcare employers seek to build a happier and more productive workplace for their physician employees.
The Only Thing That is Certain is Change
2020 has definitely been a challenging year, in so many different ways. Doctors are not only saving the world, quite literally, but many are making less money as a result of the pandemic, and working incredibly long, stressful hours. At the end of the day, you have to decide what you want for yourself and your family. Does that require a relocation to be closer to loved ones? A move away from a role as a self-employed practitioner, or decision to strike out on your own or become a medical practice partner? Reimbursement rates and compensation models will continue to change as the industry searches for a solution to the financial complexities that is healthcare.
If you’re looking for a new position, things are picking up in terms of physician recruitment after a six-month lull in the market. This means you have more access to positions that are a better fit your career, and your lifestyle. To connect with a nationally recognized physician recruitment firm, reach out to the healthcare industry professionals at Jackson Physician Search today. You can also search our open positions here.
