Private pediatric practices left out of CARES Act
Federal aid helps practices that take Medicare, the program for the elderly
“It’s whatever it takes for us to be able to sustain our business.”
Dr. Sogol Pahlavan
Sogol and Silen Pahlavan, sisters and pediatricians who run ABC Pediatric Clinic in east Houston, have gone two months without a paycheck. With young patients and their parents worried about contracting COVID-19 and staying home, revenues are drying up. That has made the Pahlavan sisters increasingly anxious about how they’ll pay their 40 employees as they burn through cash reserves and an emergency small business loan from the federal Paycheck Protection Program.
“It’s whatever it takes for us to be able to sustain our business,” Sogol Pahlavan said. “That’s the short-term plan, but I can’t take this for six months.”
Private pediatric practices have been left out of the $50 billion federal program aimed at helping medical providers deal with COVID-19 related financial losses. Congress, as part of an initial $2 trillion stimulus bill, carved out the Provider Relief Fund, but required doctors and hospital systems to accept Medicare, the federal insurance program for people 65 and older.
That has effectively cut off small, independent practices such as ABC Pediatric, which accepts patients 15 and under. Without larger physician groups or hospital networks to fall back on, many pediatricians say they are at risk of shutting down even as money flows to 3,000 doctors, pharmacies, and health care systems, according to federal data.
Large hospital systems have received millions in funding from the CARES Act, while smaller practices have received little to none.
“We’re the mom-and-pop shops of the community,” Pahlavan said. “We’re trying to compete against a Walmart.”
Funding criteria
Federal officials distributed $30 billion of the $50 billion fund to providers in April based on how many Medicare patients they saw in 2019. The rest was divided based on 2018 net revenues for medical providers who accepted
Medicare.
Many pediatricians accept Medicaid, which is a joint federal-state health care program for the poor. But it was easier for the federal government to allocate funding based on Medicare billing records, which are readily available in the computer system of the Centers for Medicare and Medicaid Services, said Dr. Hanoch Patt, co-medical director of Pediatric and Congenital Cardiology Associates, a national medical group with providers in Houston and Austin.
Medicaid billing and disbursement is typically left to states to track, so it would take longer to establish criteria based on Medicaid funding, she said.
“The government, it seems, has not figured out a structural way to release those funds acceptably to Medicaid providers,” Patt said.
Asking for help
Meanwhile, with little money coming in, pediatricians worry how they’ll meet payrolls and pay the rent.
Dr. Michael Bornstein, who runs the Pediatric Center, with offices in Katy, Sugar Land and Richmond, said he’s had to negotiate with his landlords, vaccine vendors and a computer system provider to bring costs down. He has saved an estimated $100,000 monthly by deferring payments, but will have to come up with the money as soon as next month.
At the height of the pandemic, Bornstein shut down the office in Sugar Land and divided patients among the remaining two offices. Patients go to the Katy clinic for check-ups, while sick children see the doctors at the Richmond location.
The patients visiting his practice plummeted by two-thirds, from 300 to just under 100 a day, as did revenues. “I’m hoping that this ends just so I don’t fail,” Bornstein said.
Loans help, but don’t make up for all the losses. Bornstein and Pahlavan have received Paycheck Protection Program and small business loans, but expect the money to be gone by the end of summer.
Pahlavan, who declined to disclose amount of her practice’s loan, said the money arrived about five weeks into the pandemic. Before that, she and her sister relied on the cash they saved since opening in 2008 to pay employees as patient revenues dried up in March and April.
The loans, which businesses began receiving in April, were enough to cover two months of payroll and a small part of their rent and utilities. The Pahlavan sisters, however, wonder what will happen as Texas reopens but most of their patients continue to stay home.
They’ve already had to lay off one employee. They’re not sure they’ll last the summer.
Bornstein’s practice received roughly $150,000 from the Paycheck Protection Program. Between that and the business’ cash reserves, he thinks he can survive until mid-July, at which point he would have to dip into his personal retirement account.
Should that run out, and patient visits not return to pre-pandemic levels, it could mean taking steps he’s never had to consider in 27 years in private practice: cutting staff and closing offices.
“Anything I’ve built up is gone,” Bornstein said.
The coming months
As Congress debates another federal stimulus package, pediatricians hope there’s something in it for them and other specialists bypassed by the Medicarebased disbursement.
Federal health authorities said “additional funds would be going out quickly” to help doctors and hospitals that don’t see, or only treat few, Medicare patients.
While Trump administration officials have promised funding for children’s hospitals and doctors who treat kids, pediatricians in private practice are struggling to stay open, said Mark Del Monte, CEO and executive vice president of the American Academy of Pediatrics. There are no statistics yet on pediatrics offices that have been forced to close.
Pediatricians also worry about families who aren’t coming in for care. If they’re not in for preventive checkups and vaccines for measles, polio and other childhood diseases, it could mean sicker children and higher health care costs later on for parents.
“Relief has been promised but so far pediatricians have been left out,” Del Monte said in a statement. “Each day without relief puts more children’s care at risk.”
Doctors will also have to contend with outbreaks of measles, mumps, chicken pox and other diseases spread by kids who never came in for their vaccinations. That is, if pediatricians can keep their practices open.
“If community physicians don’t get the support they need,” Pahlavan said, “and dollars are funneled into health care systems and hospitals, we’re not going to exist.”