Archive for month: July, 2020

Primary care physicians could take $15 billion hit due to COVID-19 in 2020

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Published on: June 26, 2020 on HeathcareDive

By:  Ron Shinkman

Dive Brief:

The financial impact on primary care practices due to the COVID-19 pandemic has been profound and will likely continue in the months ahead, according to a new study published in Health Affairs.

Visits of all types to medical practices declined 58% in March and April compared to the baseline average, and in-person patient encounters declined by 69%, the study found. Although visits are expected to have rebounded by June, volumes are still below pre-COVID-19 levels.

The drop in fee-for-service revenue for the 2020 calendar year is nearly $68,000 per physician, contributing to an estimated revenue decline of 12.5%. That’s a steep enough loss to threaten the financial viability of many practices. Losses to primary care practices nationwide could top $15 billion over the year — a number that could grow if the federal government reverts increased telemedicine payment rates.

Dive Insight:

Medical practices across the United States have been hit hard by the COVID-19 outbreak.

The new study by researchers from Harvard Medical School and the American Board of Family Medicine attempts to put a price tag on that hit by running a microsimulation for projected 2020 revenues based on volume data for general practices, general internal medicine practices, general pediatric practices and family medicine practices.

As a result, they concluded that the average revenue loss per practice per physician will be $67,774, even taking into account revenue generated by telemedicine visits, which did not make up for the massive loss of patient volume during the spring.

That loss could be cut to as little as $28,265 per full-time physician if other staff is furloughed and salaries are cut to the 25th percentile of such cuts that took place during the peak of the stay-at-home orders.

Some practices are also projected to have steeper losses. Rural primary care practices are projected to lose $75,274 per physician. Other studies have suggested that pediatric practices have been hit harder than other primary care fields. Some organizations, such as the American Medical Group Association, say revenue won’t rebound fully even next year.

The study also conducted various alternate scenarios for the remainder of 2020, including a second wave of COVID-19 in the fall. The researchers estimated that would cut patient volumes by about half as much as what occurred during the spring. However, the financial hit would deepen even further, reaching $85,666 per physician.

Altogether, the study projects primary care practices will lose $15.1 billion in fee-for-service revenue this year, not even accounting for a second wave of the coronavirus. The study’s authors note that “this loss would balloon substantially if telemedicine payment rates revert back to pre-COVID-19 levels towards the end of the year.”

The study concluded that while primary care physicians as a whole have not been as hard hit as the hospital sector, the services they provide in managing chronic diseases such as diabetes and as the port of entry for many into the healthcare system makes them too valuable to suffer sustained levels of financial damage.

Article provided by Stephen Bradley

How Employers Can Ease Escalating Employee Financial Stress

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New Edelman Financial Engines survey shows different ways employers can ease increased financial stress due to COVID-19, such as expanding automatic 401k features and offering financial coaching for retirement

Lots of people are experiencing financial stress these days as a results of the COVID-19 crisis, but an even higher percentage are stressed if they are not currently saving for retirement, according to a new survey released this week by Edelman Financial Engines.

The survey reveals close to half of American workers (47%) say they have “a lot” of financial stress, but those saving in a 401k are less likely than non-savers to report financial stress (44% vs. 57%).

Gen X and Baby Boomers report higher levels of financial well-being than Millennials, but large numbers of every age group and race are struggling, according to the survey. Among respondents, nonwhite workers are 2.6x more likely than white workers to describe themselves as poor.

The Santa Clara, Calif.-based independent financial planning and investment management firm surveyed 1,077 American workers the week of April 6, 2020 about their financial stress, economic concerns and use of financial advice. Nearly half of those surveyed reported relatively weak financial well-being across three different measures: level of financial stress, outlook, and ability to handle a mid-size financial shock.

“We are seeing high levels of financial stress among employees and it is impacting many aspects of their lives,” said Kelly O’Donnell, Executive Vice President at Edelman Financial Engines and head of the firm’s workplace business. The firm serves thousands of employers, including 137 of the Fortune 500, and says its financial advice is available to more than 10 million employees. “Companies that give workers better access to financial advice can help alleviate their employees’ financial stress, leading to increased productivity, lower turnover and reduced absenteeism.”

COVID-era worker concerns

Almost half (46%) of workers say they are “extremely” or “moderately” concerned about the stability of their household income. Among these workers, 85% are concerned about their own job, while 46% are concerned about their spouse’s income.

The survey also revealed that workers are “moderately” or “extremely” concerned about:

  • the value of their retirement savings or other investment accounts (52%)
  • the resilience of their employers (41%)
  • their healthcare costs (41%)

Only about two in five (44%) workers said they would be able to easily come up with $2,000 within 30 days for an emergency. About one in 10 (11%) would not be able to raise any emergency funds at all, while nearly a third (30%) would need to make sacrifices and 14% would have to do something drastic to raise the money.

One in three reported taking adverse financial actions, such as depleting their emergency savings or stopping contributions to their retirement accounts. Millennials were most likely to take such financial actions.

“Large numbers of American workers are suffering financially, and their plight is likely to linger even after the economy begins to recover,” O’Donnell said.

Many with high financial stress say it has had a detrimental effect on their work, including decreased productivity, loss of focus, and anxiety or tension in the workplace. Over a third of workers (37%) believe that they would benefit from receiving financial advice during this uncertain time. Non-savers (43%) and Millennials (47%) feel they would benefit the most from talking to a financial adviser.

Opportunities for employers

Indeed, the survey revealed many opportunities for employers to help improve their employees’ financial well-being, such as:

  • Expanding automatic features in the employer’s 401k plan. Automatically enrolling employees, initially upon hire and during periodic re-enrollments, has repeatedly been shown to help workers save on a regular basis. Periodic re-enrollment and automatic contribution escalation features also improve worker participation rates. The survey revealed that workers who contribute to a savings plan are twice as likely to be able to raise $2,000 in an emergency and half as likely to feel “a lot of financial stress” as their peers.
  • Providing access to independent financial planners. Giving employees the opportunity to talk with a financial planner can help improve employees’ financial well-being, resulting in better long-term decisions and improved workplace productivity. Talking to a financial professional is also a proven method to reduce financial stress, and nearly all survey respondents who talked to someone say their outlook improved or stabilized. The survey found that workers who have a financial plan and who are saving for retirement are experiencing less financial stress than those who lack a plan and are not saving for the future, confirming the value of getting financial advice during periods of economic turmoil.
  • Offering financial advice and coaching as a retirement or employee benefit. Comprehensive advice that includes every aspect of a worker’s personal finances, including student loans and other debts, insurance, taxes, mortgages, college planning, estate planning, Social Security and multigenerational issues such as childcare and elder care can help employees navigate critical financial decisions and increase peace of mind.
  • Enabling emergency savings for employees. Workers with emergency savings accounts may be less likely to seek a loan or pre-retirement withdrawal from their plan, improving their retirement security prospects and helping the plan retain assets.

Without these programs and resources, workers may face prolonged and severe financial stress, resulting in decreased productivity, loss of focus, and anxiety or tension in the workplace. During the early days of the COVID-19 pandemic, one in five retirement plan savers said they changed their retirement savings behavior, whether by re-allocating, pausing contributions, or accessing retirement savings pre-retirement via loan or withdrawal.

Edelman Financial Engines says these actions are often triggered by emotions rather than an informed plan and can threaten a worker’s future retirement security.

“When individuals borrow or withdraw money from retirement accounts, it becomes less likely that they will achieve their retirement savings goals,” O’Donnell said. “Pausing contributions or making improper risk allocations can also harm them, especially after a market downturn. All these mistakes can reduce their ability to benefit from economic recovery.”

Article submitted by Joshua C. Harper, CFP®, ChFC®, CLU®, RICP®

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