Radiology Navigates Pandemic-Related Economic Challenges
Practices develop strategies to successfully rebound from the economic downturn
The impact of COVID-19 on radiology was swift and profound. Restrictions on imaging coupled with the pandemic-triggered economic recession left many radiology practices struggling to survive.
At Northwest Radiology Network, a 55-person operation based in Indianapolis, IN, imaging volume plummeted shortly after a March 16 directive from Gov. Eric Holcomb ordering limits on elective and non-urgent procedures.
“We immediately saw close to a 70% reduction in volume and stayed at those levels, and we kind of lived there from the end of March all the way through April,” said Linda Wilgus, executive director and chief financial officer at Northwest Radiology Network. “Our ER volumes got hit the worst, but outpatient care also saw a dramatic reduction.”
Elizabeth Wende Breast Care in Rochester, NY, faced even more dire circumstances when it was forced to close in late March to retool its imaging operation for the COVID environment. That meant creating social distancing in waiting rooms, stocking up on sanitizer and personal protection equipment and developing a whole new workflow for patients coming into the office. The shutdown, which lasted into April, left the practice in difficult financial straits.
“It took a long time to figure everything out,” said Stamatia V. Destounis, MD, attending radiologist at the breast imaging center. “We had to get a loan to fulfill salaries, health insurance payments and retirement plans that we fund for our staff.”
Imaging volume at the two practices inched back toward pre-COVID levels in May and June as the number of COVID-19 cases stabilized and fell across the Northeast. Unfortunately, the improved conditions were not evident in much of the rest of the country. By mid-June, cases began climbing rapidly in states including Texas, Florida, Arizona and California, increasing the slowdown in medical imaging.
“There’s an awful lot of risk in the outpatient and ER settings right now,” said Howard P. Forman, MD, MBA, professor of radiology and biomedical imaging, public health management and economics at Yale University, Hew Haven, CT. “For radiology, it means decreased outpatient work and decreased volume in the ER. Some practices are going to have a muted return to normal.”
In a June report by the RSNA COVID-19 Task Force, 80% of the approximately 2,400 members surveyed said the image volume at their facility had decreased by 25-75% due to the pandemic.
In a recent Radiology article co-authored by his Yale colleague Joseph J. Cavallo, MD, Dr. Forman suggested that radiology practices should anticipate a 50% to 70% decrease in imaging volume lasting a minimum of several months. The recent spike in cases in some states could extend those decreases well into the fall.
“I had expected that this was going to be a period of recovery and I think in the Northeast that’s probably still true for the time being, but I think by September and October that could turn on its head again and we could be in a second phase of cases,” Dr. Forman said. “I anticipate we’ll still be at a point where we have a lot of fear in the community.”
Protecting Payroll During the Pandemic
Along with public fear over the virus, the status of payors represents a significant challenge for radiology practices trying to rebound from the downturn. Widespread unemployment has boosted the proportion of self-pay, no-pay and Medicaid-pending patients, making it difficult for practices to project future income, Wilgus said.
“As people are losing jobs, they’re applying for insurance through the Affordable Care Act (ACA) exchanges,” she said. “All of that is pending and, in the meantime, they still need to access services.”
The challenges forced some radiologists to cut back on hours or take voluntary furloughs to help their practices stay afloat. Practices, in turn, have reduced or eliminated overtime and put off purchases of new equipment and technology.
To bolster their bottom lines, many took advantage of the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, and Payroll Protection Program (PPP) loans for businesses with 500 employees or fewer.
The CARES Act made $100 billion available to health care providers using a formula based on Medicare payments from the previous year. The money does not have to be repaid, provided that recipients submit reports on their usage to the Department of Health and Human Services. PPP loans can be partially or fully forgiven if borrowers use the proceeds to maintain their payrolls and pay other specified expenses.
“Several providers would be out of business if those levers had not been made available by the federal government,” Wilgus said. “They helped us get through a very difficult time.”
Loans are also available through the Treasury’s Exchange Stabilization Fund and the Medicare COVID-19 advance payment program. Practices may defer the employer portion of social security taxes through the end of 2020. A temporary suspension of the Medicare Sequester will prevent a 2% cut in Medicare payments.
But these measures still might not offer enough support for many practices, Dr. Forman warned, especially if COVID-19 infection rates continue to remain high throughout the country.
“Anybody who has an outpatient business and has to make payroll off of incoming cash flow is in a difficult position,” Dr. Forman said. “The PPP and other government programs only go so far, and some of these practices have already used up all of their cushion.”
Continued Vigilance Necessary for Success
In this environment, Drs. Forman and Cavallo advise administrators and practice leaders to be proactive in modifying their practices in order to emerge from the pandemic in the most viable economic position. For example, leaders at Elizabeth Wende Breast Care expanded hours at their primary facility and opened their satellite offices on weekends to increase access to patients who missed screening exams during the shutdown.
Continued vigilance to patient safety will also help practices get back on track when they do reopen, Dr. Forman said.
“Make sure that the environment that patients come into is perfectly safe, even if it means that workflow is reduced and you’re not able to see the same volume of patients as pre-pandemic,” Dr. Forman said. “This, along with frequent testing, will protect the intermediate-term sustainability of your practice. If you don’t get that right you could lose the practice.”
The final toll on the radiology remains to be seen. Experts say that some combination of government assistance and individual managerial decisions will ultimately shape the profession’s post-COVID landscape.
“This will be a tough year financially,” Dr. Destounis said. “We’re back on our feet now, and with our volume and the hours we are now open increasing, hopefully we’ll be able to pay our bills. Only time will tell.”
Register for the RSNA live webinar, "The Economic Impact of COVID-19 in the Radiology Community," planned for Thursday, July 23rd at Noon.
Access the Radiology study, "Special Report of the RSNA COVID-19 Task Force: The Short- and Long-Term Financial Impact of the COVID-19 Pandemic on Private Radiology Practices."
Access the Radiology study, “The Economic Impact of the COVID-19 Pandemic on Radiology Practices.”Access RSNA’s COVID-19 resources.