Small practices are struggling to stay afloat 3 weeks after the cyberattack that crippled the US healthcare industry

The practice, which provides mental-health therapy to almost 500 patients a month, has enough in the bank that von Colditz can pay her 25 employees their next paycheck. But if payments don’t start rolling in soon, making payroll at the end of the month won’t be possible without help. Von Colditz said she’s working on securing a line of credit from a bank and considering tapping into her own retirement account. She’s broken down in tears from the stress.

“It’s really difficult. I pride myself as somebody who really has a good business plan and prepared for this check not coming through or this hiccup,” von Colditz said. “But I never prepared for anything to negatively impact us to this extent.”

Shoreline’s situation isn’t unique. The US healthcare system has been crippled by the cyberattack on Change Healthcare, the company owned by UnitedHealth Group that connects healthcare providers and pharmacies to insurers and facilitates 15 billion transactions each year.

Hospitals and clinicians can’t bill for their services, so they’re going unpaid. They can’t complete important processes, such as checking if a patient has insurance or submitting for prior approval for a service. And some patients can’t afford their prescriptions because pharmacies can’t process drug coupons.

Large hospitals and physician groups tend to have enough cash in reserves that they can weather not being paid for a few weeks or months. But it’s the smaller healthcare practices like Shoreline without a lot of savings that are at immediate risk for not being able to pay their employees or worse, closing their doors and turning away patients. For now, it’s not clear when payments will start flowing again.

This is an unprecedented healthcare crisis

The crisis has laid bare the vulnerabilities of the healthcare system and its over-reliance on one giant medical-claims processor.

UnitedHealth, owner of the largest health insurer, bought Change for $13 billion in 2022 and folded it into its Optum business, which houses medical clinics and a pharmacy-benefit manager. The US Justice Department sued to block UnitedHealth’s acquisition of Change on antitrust grounds, but a federal judge greenlit the deal.

For many healthcare providers, UnitedHealth and the federal government’s response to the ongoing crisis has fallen short. Optum rolled out a loan program to help providers in need of cash, but some have said the loans are pitifully small and come with too many strings.

Industry groups including the American Hospital Association and American Medical Association urged the federal government to provide emergency financial support to healthcare providers. But help has come slow and isn’t available to everybody. On March 5 the US Health and Human Services Department said it would offer advance claims payments to providers that see Medicare patients.

UnitedHealth said last week that it planned to start testing and restoring Change’s claims systems on March 18. But it’s still not clear when the growing backlog of claims would be processed and providers would finally see payments.

Small practices are running out of money

Some small practices are running out of money now.

Kate Ecke, the owner of The Unconventional Therapists, a five-therapist mental-health practice in New Jersey, said she’s dealing with a double whammy. Not only has her income dried up because of the cyberattack, her practice wasn’t paid for most of February, because of a glitch in another major insurer’s system, she said.

After the last payroll, in which Ecke paid her employees in full but slashed her own paycheck in half, her business account totals just $1,000. She has no idea how she’ll make the next payroll or cover her office’s rent and other business expenses. But she said she can’t stop seeing patients, because she fears her therapists could lose their licenses.

“I’ve been putting my head in the sand and hoping it goes away, but the reality is sinking in that it’s not going to go away,” Ecke said.

Optum, HHS, and industry groups have urged commercial health insurers and Medicaid organizations to offer financial support to providers but it’s not clear how many are doing so.

Keely Helmick, owner of Portland, Oregon-based Connective Therapy Collective, said she reached out last week to Medicaid insurer CareOregon to see if they could offer any financial assistance. She’s frustrated that she hasn’t yet heard back. Helmick’s company of 19 employees works with 400 patients, with a focus on queer and transgender individuals. The practice’s patients have low incomes, some are houseless, and they struggle with relationships and trauma, Helmick said.

I’m worried about my clinicians and therapists, but I’m terrified of what this is going to look like for people who need treatment

Brittany Goff, a licensed clinical social worker

Helmick has talked to multiple banks, but she said she can’t get a loan big enough to cover her employees’ next paychecks. Without a resolution, Helmick said she’d eventually have to lay off staff. Already, the practice hasn’t been taking on new clients.

“We are doing such challenging work and to have this added stress, we are not able to do the work as well as we could,” she said.

Some clinicians worried that the Change outage would damage access to care for patients who need it most. Brittany Goff, a licensed clinical social worker who owns Zen Psychological Center in Maryland, said she’s emptied her savings, cashed out stocks, and taken out $400,000 in bank loans and lines of credit to keep her group practice from going bankrupt and having to close.

“I’m worried about my clinicians and therapists, but I’m terrified of what this is going to look like for people who need treatment,” Goff said. “We work with suicidal people, people who need a high level of care. If we’re not getting paid, we can’t work, and what’s going to happen to those clients?”

Providers have been left in the dark

One of the most frustrating things for clinicians has been the lack of communication from their health insurers and technology vendors about who could be affected by the Change outage and what to do. For the most part, they’ve been navigating the crisis by doing their own digging and sharing information with their peers and on social media.

“Just coming to realize exactly what was happening and to get the scope of what was happening, we had to do a ton of work,” said Tiffany Kettermann, the owner of Health Allies, a mental-health practice in Portland, Oregon.

Kettermann said she’s spent hours and hours on the phone during the last couple of weeks trying to figure out which insurers were affected and what her options were for finding an alternative way to submit claims. She said her practice has got a team of four employees spending all their time manually entering claims through a new system.

Von Colditz, the owner of Shoreline, said Shoreline doesn’t rely on Change; its electronic-health record vendor uses an alternative medical-claims processor. So when she first heard about the cyberattack, she assumed her practice wouldn’t be affected. She learned otherwise only when she noticed the claims she’d submitted weren’t showing up in health insurers’ systems.

“This is the second unprecedented thing that as a small business owner I’ve had to deal with in four years, and this is more difficult than Covid because at least with Covid, there was widespread information,” she said. “There was some sort of message that this is affecting a huge population, and these are the steps we’re taking. So we pivoted straight to telehealth and we continued to see our clients, whereas now we’re in this three-week lag time of really now understanding what’s happened.”