Beverly Jordan is a partner at a family-medicine clinic in Enterprise, Alabama. Enterprise is situated in “wiregrass country”—a largely rural region, encompassing southeastern Alabama and parts of Georgia and Florida, named for the ubiquitous vegetation that takes root in its sandy soil. Her clinic is one of a few offering primary care in the area; like many independent medical practices across the U.S., it has been gutted by the coronavirus pandemic. Even though her practice received a lifeline from the federal government’s Paycheck Protection Program (P.P.P.), Jordan had to take a pay cut, reduce staff hours, and lay off two new physicians who were about to start work. “For the first time in my career, we’re really just planning short-term,” she told me recently. “We’ve never had this level of insecurity.”
For decades, health care was America’s indomitable industry. While employment in other sectors—retail, manufacturing, construction—rose and fell with the business cycle, clinics, hospitals, and medical practices steadily added jobs. But the pandemic has changed health care’s trajectory. Hospitals now find themselves in dire financial straits as they forgo revenue from elective procedures, and a surge in unemployment is shifting patients from private insurance plans to Medicaid, which is less remunerative for doctors. Some rural hospitals, whose financial footing was already tenuous, are facing the prospect of closure.
Among the most vulnerable parts of the nation’s health-care system are family-medicine, internal-medicine, pediatric, and obstetrics-and-gynecology clinics. With COVID-19 precautions in place, in-person appointments have dropped precipitously. In May, a survey of primary-care doctors found that nearly a fifth had temporarily closed their practices, owing to the pandemic, and two in five had laid off or furloughed staff. Primary-care clinics are tasked with keeping people healthy, and decades of research have shown that the care they provide is associated with better outcomes and lower costs. As my colleague Dhruv Khullar has written, the health consequences of these clinics’ closures could be significant. Vaccination rates for children have already begun to fall; patients are missing screenings proven to save lives; prescriptions are going unfilled. Chronic conditions could worsen; life expectancies could drop.
Even before the pandemic, primary care was in crisis. Primary-care doctors were already among the most poorly compensated physicians in the country; for medical students burdened with debt, those smaller salaries lessened the specialty’s allure. Experts have long warned of a shortage of doctors providing foundational forms of outpatient care, especially in rural areas. Last year, the Kaiser Family Foundation estimated that more than fourteen thousand primary-care physicians were needed to eliminate existing shortages.
For this article, I spoke with more than twenty primary-care physicians, from New York City to rural Nebraska and suburban Colorado. They work in single-physician practices, in multi-specialty groups, or as part of hospital systems. Nearly all of them described dramatic declines in revenue. Many benefitted from the P.P.P.; without it, some of their clinics might not have survived. All of the physicians expressed concern about how they would navigate the uncertainty ahead. “This is taking us down,” Jacqueline Fincher, an internist and the president of the American College of Physicians, told me. “We’re not going to have a vaccine and herd immunity for probably a year—so, is this sustainable for a year? The reality is, it’s probably not, certainly not for most small practices.” If many of them go out of business, the consequences for Americans’ health could be profound and enduring. What’s at stake is not just a pattern of health outcomes but the shape of the health-care system as a whole. The way that patients interact with their doctors and the path that American health care takes in the future may be about to shift.
The challenges facing primary care are rooted in the structure of the American health-care system. This system wasn’t designed at any one moment; instead, it has accreted over time, with each new layer seeking to compensate for the deficiencies of what came before. One of the most consequential layers is fee-for-service payment, which was codified as part of the Social Security Amendments of 1965—the law that created Medicare and Medicaid. In a fee-for-service setup, the payer, usually a health insurer or government agency, pays the health-care provider a set fee for any given service. Break your arm, and your insurance company might pay one fee for an X-ray, another for a splint, and a third for a follow-up visit. Though conceptually simple, the system has obvious flaws. It encourages health-care providers to offer more services, in order to earn more revenue, without necessarily controlling for quality. If one surgeon’s hip-replacement operation is successful, with no complications, but a second’s is complicated by infection, leading to a series of follow-up visits, their fees are still the same; in fact, the second hospital may make more money. “In a fee-for-service payment system,” Atul Gawande has written, “we are actually penalized for making the effort to organize and deliver care with the best service, quality, and efficiency we can.”
To address this problem, government programs and insurers have come up with alternative payment schemes—but, at a fundamental, almost philosophical, level, many of them still operate on a fee-for-service principle. In the nineteen-eighties, Medicare changed its approach to inpatient hospitalizations so that a single global fee covered a particular admission; in this system, a hospital is reimbursed at one payment level for a broken leg, at another for pneumonia, and at a third for sepsis. More recently, the Medicare Access and CHIP Reauthorization Act of 2015 pushed Medicare reimbursements away from a pure fee-for-service model and toward others that pay based on the quality of health care provided. Still, for the most part, it’s the provision of services that indicates that care has happened. Ultimately, when physicians are paid, it’s the number of office visits, lab tests, and surgeries that matters.
The fee-for-service principle reverberates through the whole health-care system, but it has especially dire consequences for primary care, because it favors discrete medical episodes over ongoing and preventative treatment. Payers routinely reimburse health-care providers for specialized procedures at high rates, but primary-care visits—which might include chronic-disease management, routine vaccinations, or smoking and diet counselling—generate lower revenues. This imbalance is due, in large part, to the Relative Value Update Committee (R.U.C.), an extraordinarily powerful group of doctors that advises the federal government on reimbursement rates for physicians. The R.U.C. consists of thirty-one doctors convened by the American Medical Association; it’s structured such that each specialty has an equal say. On the R.U.C., urology, thoracic surgery, and head-and-neck surgery have, individually, about the same representation as all of pediatrics. The Centers for Medicare and Medicaid Services (C.M.S.), which has final authority to set payment rates for Medicare, has in many years accepted the R.U.C.’s recommendations nearly ninety per cent of the time.
Primary-care groups and health-care policy experts have long contended that the R.U.C.’s choices favor procedures over the counselling, education, and chronic-disease management that form the basis of primary care. Twenty years ago, Don Berwick, the co-founder of the Institute for Healthcare Improvement and a mentor of mine, called for a total reimagining of health-care reimbursement in a speech that has since become famous in industry circles. Addressing an audience at the institute’s annual meeting, Berwick told the story of a Montana forest fire, from 1949, that killed most members of a team of firefighters. When the firefighters finally realized the imminent danger posed by the blaze, they tried to outrun it—but they did so while shouldering heavy equipment, including their Pulaskis, special firefighting axes that combine an axe head with an adze. The firefighters did not recognize that, in this new scenario, their old tools no longer served them; many died carrying them.
The health-care system, Berwick said, was falling into the same trap: clinging to a sometimes burdensome tool, no matter the circumstances. “Our Pulaski,” he argued, “is the encounter—the visit.” A better health-care system could only be built if “scientists, professionals, patients, payers, and the health-care workforce” agreed “that the product we choose to make is not visits. Our product is healing relationships.” In 2010, President Barack Obama, in a recess appointment, made Berwick the acting administrator of C.M.S.; he resigned, in 2011, when he concluded that he would be unable to win confirmation from Republicans in the Senate.
Among other things, the structural bias in favor of procedures and office visits has prevented telemedicine—which could make outpatient care more affordable, accessible, and consistent—from gaining a foothold. For decades, Medicare only paid for telemedicine visits if a patient lived in a designated “rural” area or received the treatment in a medical setting; effectively, for many people, telemedicine had to take place in a doctor’s office. The pandemic has changed this equation. In March, the federal government expanded the list of telemedicine services eligible for Medicare reimbursement. Clinics across the country, seeing telemedicine as both a way to provide care and a financial lifeline, raced to embrace phone and video visits almost overnight. “I was so close to getting a ninety-year-old woman to turn on a video call,” Lalita Abhyankar, a family-medicine doctor in New York City, told me. Abhyankar persisted because she’s found that, on the whole, patients become enthusiastic about virtual visits after trying them. Doctors, for their part, have found value in the glimpses that such visits offer of their patients’ home lives. Early in the COVID-19 crisis, when I began conducting telemedicine visits with my own patients, I was surprised to discover that the technology created a feeling of camaraderie. The power dynamic diminished; conversing from our respective apartments, we were on equal footing.
For all the promise of this ongoing telemedical experiment, the future of primary care as a whole remains unclear. C.M.S. has said that the current dispensation is only a temporary emergency accommodation; if support for telemedicine stops before the pandemic does, our country will be taking a big risk. One preview of what might happen comes from studies assessing health outcomes after a patient’s primary-care doctor retires. Such patients don’t face a society-wide diminution in access to primary care; in many cases, they can switch to another physician without undue difficulty. Even so, a recent review of these studies found that nearly all patients experienced unfavorable outcomes, among them difficulty renewing prescriptions and increased use of high-cost care.
Labor economists have long studied a phenomenon called hysteresis: in economics, it refers to a situation in which high unemployment caused by a particular event develops an inertia of its own, remaining elevated even after the initial cause has abated. Nobody is quite sure what causes hysteresis. Do workers’ skills erode? Or do firms find that they can get along with fewer workers? In any case, now that the pandemic has caused extended mass unemployment, hysteresis could play a major role in our society—and our health care. In theory, a physician can sit out the lean times and return to practice once patient volume rebounds; during the Great Depression, for instance, some small-town doctors made house calls and accepted barter payments until the crisis ended. But the situation today is different. A modern medical practice needs physical space, an electronic records system, malpractice insurance, and back-office support to handle the byzantine medical coding on which reimbursement depends. Hanging out a shingle in twenty-first-century America requires more than a diploma; it requires capital.
Patients may also respond in an enduring way to what seems to be a temporary disruption of the doctor-patient relationship. In ordinary times, engaging people in the treatment of chronic conditions can be a fraught endeavor: a patient who’s easily persuaded to take an antibiotic for a urinary-tract infection might nevertheless resist taking a medication aimed at preventing complications from high blood pressure down the road. Regular checkups help patients develop and maintain fragile habits that the pandemic may have disrupted. “I have a diabetic patient who finally came in and hadn’t taken insulin in six weeks,” Gary LeRoy, a family physician in Ohio and the president of the American Academy of Family Physicians, told me. “It’s, like, ‘Why the heck did you not call?’ But, then, I don’t like going to the dentist—and if my dentist says, ‘Well, we’re not doing visits now,’ I think, Yay! I don’t have to go to the dentist,” he said. “It gives you an excuse to not do the right thing for yourself.”
There are steps that governments and insurers could take now to prevent the crisis from worsening. Many commercial insurers and state-administered Medicaid programs still don’t reimburse video visits at the same rates as in-person care; parity is even less common for telephone visits, which are particularly useful for the elderly and for those in low-income or rural communities who don’t have access to high-speed Internet. Some surveys of primary-care practices show that more than half of them haven’t yet received reimbursement for most of their telemedicine visits in recent months—a significant problem at a time of financial strain.
Through the CARES Act and subsequent legislation, Congress has allocated a hundred and seventy-five billion dollars for health-care expenses attributable to the pandemic. How that money will be spent, however, remains unclear; those funds are also supposed to cover aid for hospitals and COVID-19 care for the uninsured, among other things, and a hundred and seventy-five billion sounds less impressive when set against the $3.6 trillion that America spent on health care in 2018. The P.P.P. has helped some primary-care practices, but this is only a temporary lifeline. Without either an increase in funding or a direct allocation aimed at primary care, it seems likely that many clinics will never receive the money they need to stave off closure.
Some policymakers and providers have proposed a more drastic response to the pandemic—one that’s long been contemplated by health-policy experts and is already getting a test drive as part of the Affordable Care Act. Instead of continuing to reimburse providers through a fee-for-service system, the federal government could shift payment for primary care and similar specialties to a so-called capitation model. Under this system, practices are reimbursed on a per-person, per-month basis, usually with some portion of the payment tied to quality measures, such as adjusted mortality and excess hospitalizations. Since the A.C.A.’s passage, C.M.S. has been shifting toward this payment model, using health-care networks called Accountable Care Organizations (A.C.O.s). (Texas’s U.T. Southwestern, Wisconsin’s ThedaCare, and New York and New Jersey’s Montefiore are examples of A.C.O.s.) Despite these efforts, most primary-care practices are still paid mainly on a fee-for-service basis.
“A crisis is a terrible thing to waste,” the economist Paul Romer once said. The weaknesses that have left our primary-care system so vulnerable to the pandemic have been understood for decades, yet change has come at a glacial pace; it’s been easy to ignore the system’s flaws because health-care spending has grown over time, with many health-care organizations prospering as a result. Why undertake dramatic change when there is always more money to go around? Before the 2008 financial crisis, Charles Prince, who was then the C.E.O. of Citigroup, was asked why his bank continued to participate in the speculative real-estate market, given concerns that the bubble would soon burst. “When the music stops, in terms of liquidity, things will be complicated,” he said. “But, as long as the music is playing, you’ve got to get up and dance.” For much of American health care, the music has stopped. The best way to address the emergency is by embracing a better system.
More Medical Dispatches
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- It is not too late to go on the offense against the coronavirus. This five-part public-health plan may be the key.
- The loneliness and solidarity of treating coronavirus patients in New York.
- To fill the vacuum left by the federal government, doctors are relying on informal networks to get the information and support they need.
- Conflict and confusion reign at New York hospitals over how to handle childbirth during the pandemic.
- In countries where the rate of infection threatens to outstrip the capacity of the health system, doctors are confronting ethical quandaries for which nothing in their training prepared them.
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