The COVID-19 crisis has had a severe impact on physician practices. In April, the Medical Group Management Association (MGMA) released survey results indicating that 97% of physician practices nationwide had experienced a negative financial impact associated directly or indirectly with COVID-19, and that on average, practices were reporting a 55% decrease in revenue and a 60% decrease in patient volume.1 Preliminary results of a survey released by the Massachusetts Health Policy Commission indicate that nearly 30% of physician practices in the state—one of the hardest hit by the pandemic thus far—have considered closing.2

Many markets have seen significant consolidation between health systems and physician practices; those practices that have not yet aligned with a health system typically have chosen to remain independent. The widespread damage inflicted by the pandemic has now put these independent physician practices at risk. Health plans have responded with a wide range of measures to support practices through the crisis and preserve their networks, including direct financial support, advances on incentive payments, purchase of personal protective equipment, small business loans, and assistance in applying for federal relief funds.3 As the process of reopening begins and physician practices work toward recovery, longer-term support may be required.


An Accelerated Trend Toward Payer-Provider Partnerships?

The COVID-19 crisis might accelerate a trend in recent years toward new or enhanced partnerships between health plans and providers to expand access to high quality, efficient care for health plan members. This trend has included both health plan partnerships with health systems and their employed or affiliated physician groups and partnerships between health plans and physician practices that wish to retain their independence. Some health plans have established or invested in healthcare services companies that provide management, population health, and technology services to physician practices and are leading their partnership initiatives through these entities.

There are several options for health plan partnerships with independent physician practices.

Expanded value-based contracting relationships 

The sudden decline in fee-for-service revenues resulting from stay-at-home orders and pandemic fears was devastating for many physician practices. The post-pandemic business model is not yet clear, but as practices begin to recover there may be expanded opportunities for new value-based contracting models and other initiatives that could provide better economic alignment and greater stability going forward if another pandemic were to occur.

Another consequence of the pandemic and subsequent recession may be an even greater emphasis on value, as employers face their own financial challenges and seek to contain healthcare-related costs. Health plans or their related health services companies have already begun partnering with state medical societies and companies that support independent physician practices in building their value-based care capabilities.4

The pandemic may also lead to growth in employer use of preferred-provider networks to control costs. This could also offer opportunities for health plans to develop plan structures that incentivize employees to use high-quality physician practices, helping practices restore volume lost during the crisis. Many physician practices have successfully partnered with health plans on these types of strategies while also preserving multi-payer business models.

Management services organization (MSO) support

Relief from administrative burdens will be even more important as independent physician practices refocus efforts on patient care and devote more time and resources to addressing patient concerns over safety in the wake of COVID-19. Health plans may also have an opportunity to provide population-health analytics and services to support value-based contracting objectives. Together, these traditional and “new era” suites of services may provide an opportunity for leading medical groups to scale up and provide an independent alternative for solo or small practices that are no longer financially viable.

MSO support options for independent physician practices include:

  • Traditional business services support in areas such as financial management, human resources, and coding and billing.
  • Practice operations services support in areas such as patient access and scheduling, physician compensation modeling, credentialing, and contracting.
  • Population health support for practices that expanding into value-based care contracting and analytics, as discussed above.

Direct financial support

There may be incentives on both the health plan and physician practice side for direct financial support of practices in order to preserve and enhance independent physician networks. Forms of financial support may include loans or grants to support general operating needs or specific initiatives, direct investments in practices, or, in some cases, acquisition. For the health plan, providing financial support helps ensure that members have access to a robust network of clinical services. As noted earlier, many health plans already have introduced new financial support programs for independent practices to smooth the impact of the sudden drop in revenue experienced by most physician groups during the COVID-19 crisis. 


Determining the Appropriate Partnership Option

Health plans that are considering partnerships with independent physician practices should assess both the health plan’s goals and the goals of practices within the plan’s markets of interest. Key questions include the following:

What are the health plan’s strategic goals and how can physician alignment support these goals?

The health plan may be seeking to preserve independent practices within the context of its existing contracting or network models. It may be seeking to create a broader platform that addresses current gaps in services or specialties. It may be seeking to develop the network by enabling practices to participate in value-based contracts or capitation. Alternatively, physician alignment may be a stand-alone strategy with its own mission and goals.

What is the health plan’s appetite for investing resources in a physician alignment strategy?

The answer to this question will depend on considerations that include the amount of operating and capital investment available and the health plan’s management capabilities and bandwidth.

What are the objectives of independent physician practices within markets of interest?

One objective may be increased financial support, either in the short term to recover from the COVID-19 crisis or in the longer term to address overarching issues of financial viability. Some practices will be interested in preserving physician governance and management, while others may be seeking an employment arrangement. Access to infrastructure—including administrative services, population health capabilities, or IT—may be another objective.

Answers to these questions will help identify the partnership model that best addresses the goals of the health plan and the physician practice. Health plans do not necessarily need to build these partnership models themselves; as noted earlier in the discussion, several health plans have already launched successful healthcare services companies or have partnered with companies that specialize in value-based care support.

Finally, health plans should view this moment as an opportunity to reshape healthcare, innovating collaboratively with physician practices in the market. How can they more tightly align around value-based initiatives? Are there joint programs or products that they could develop together? As collaboration continues, partnership options may also evolve based on the mutual needs of the health plan and its independent physician practice partners.


For more information, contact Nora Kelly by email or phone at (224) 724-3321.


Medical Group Management Association: “MGMA Survey Sheds Light on Dire Financial Impact of COVID-19 on Physician Practices.” Advocacy statement, April 14, 2020.

2 Kacik, A.: “Massachusetts Physician Practices Considering Closure, Consolidation.” Modern Healthcare, June 10, 2020.

3 America’s Health Insurance Plans: Health Insurance Providers Respond to Coronavirus (COVID-19).; accessed June 5, 2020.

4 See, for example, PA Clinical Network: “Capital BlueCross and the PA Clinical Network Announce Value-Based Agreement.” Press release, June 5, 2020.

Meet the Authors

Nora Kelly

Managing Director
Nora Kelly advises healthcare leaders nationwide on strategic financial planning, capital allocation, debt-related financial management, and mergers and acquisitions.
Learn More About Nora

Kristofer Blohm

Managing Director
Kris Blohm counsels executives and boards nationwide on a broad range of transactions, including mergers, acquisitions, divestitures, joint ventures, strategic investments, as well as other partnership and affiliation structures.
Learn More About Kristofer