The other health care crisis: hospitals, private practices shed staff, cut salaries as pandemic decimates revenue

Beansprout Pediatrics was prepared for the pandemic. Its team—five pediatricians, four pediatric nurse practitioners and 25 ancillary staff—was following the coronavirus news out of China and had stocked up on personal protective equipment.

"An interesting thing happened," co-owner and partner Dr. Brian Temple said. "No one got sick. Everyone stayed home."

Patient visits dropped 50% to 60%. Dr. Temple and his co-owner—who have locations in Bee Cave, Dripping Springs and Spicewood—aimed to avoid furloughs and layoffs but had to cut salaries by 30% and reduce hourly employees' shifts. "As it is, pediatrics runs on a very thin margin every month," he said.

Compared to some other practices, however, Beansprout has been spared the worst.

Three in four Travis County physicians—a full 75%—have taken a pay cut, according to a survey by the Texas Medical Association published yesterday. Doctor and dentist offices are responsible for the third most jobless claims in the area, after restaurants and hotels, according to Texas Workforce Commission data. And by the end of next month, web-based mapping tool HealthLandscape—a division of the American Academy of Family Physicians—predicts Travis County will have a shortage of family doctors.

These are the results of the state's shutdown, which led to sharp declines in patient visits and emergency room admissions and, for a time, banned elective procedures, threatening cash flow. In addition to lost revenue, health care providers are facing increased costs, such as for specialty medical equipment, protective gear and hazard pay for frontline workers.

Hospital systems—some of Austin's largest employers—are also feeling the pinch.

Baylor Scott & White committed to protecting the pay of all staff through the end of this month but, in an emailed statement, declined to say what lies ahead. "As has been widely reported, COVID-19 has had significant impacts on the operations of healthcare systems across the nation, including Baylor Scott & White," it read.

Austin Regional Clinic cut physician pay, and some staff members have accepted voluntary furloughs, according to KXAN.

St. David's HealthCare is providing 70% base pay for employees whose hours have been cut through its pandemic pay continuation program. More than 6,0000 employees across the company have received pandemic pay since March 29, which CEO David Huffstutler said has enabled the company to avoid layoffs and furloughs in an emailed statement.

Dr. Joseph Valenti, an OB-Gyn in Denton and a board member of the Physicians Foundation, said the pandemic has exacerbated existing problems—such as overhead costs increasing at a much faster rate than reimbursement from insurance companies, Medicare and Medicaid. "Physician practices had been underwater for a huge amount of time," he said.

The pandemic may drive physicians out of private practice and into retirement or jobs at hospitals, large medical practices or venture capital-owned firms, which cost patients more. Dr. Valenti's business, however, is bouncing back. After a "horrible" April when patient volume was down 90%, the practice is now at about 70% capacity, which he attributes in part to the field of obstetrics. "Babies never stop being born," he said. "Pandemic or not."

Dr. Temple is seeing a similar shift, but he worries that a second surge of cases this fall or winter could lead to a more complete shutdown. He and his fellow pediatricians could find new jobs at hospitals or large medical groups, he said, even if they would rather stay in private practice. But he worries about their hourly staff. "We're dedicated to trying to keep them," he said.