The COVID 19 pandemic is causing unprecedented harm to the bottom line of medical practices nationwide. Experts say physicians need to accept that their practice is going to take a financial hit so it is important to start planning accordingly for their practices to take a hit to protect your practice from financial hardship. Medical Economics interviewed healthcare business consultant Owen Dahl who gave the following tips on where to begin.
What can practices do to manage their finances during this time?
The CARES Act gives the opportunity for practices to get a loan to cover expenses based on 2019 tax information. It will cover about eight weeks of operation costs to cover payroll for your staff. This loan is essential for every private practice and it is forgiven if you keep those employees on the payroll after the eight weeks. If for whatever reason you cannot keep those employees after the eight week period you will only be charged a one percent, so it is not as significant of a risk. There is no guarantee that the federal government will extend these loans for more than 8 weeks, but it is certainly something to take advantage of.
If you have been in a stay at home model for 2-4 weeks, you could be living off of accounts receivable (the cash flow that is coming in from prior business), but if you have a thirty day turn over for most of your money after thirty days there is not going to be much in accounts receivable to keep you going. Take this time to clean up your accounts receivable using employees that are on the payroll to incorporate programs that will help you with pending insurance claims or money left on the table.
What about using a line of credit? Is it too late to get one?
If you have been having a good cash flow through your bank they will be more open to giving you a line of credit. If this option is not available it is still something doctors should ask for. Look at what you would need in cash flow for 90 days and ask for that amount and no more.
Use this line of credit for expenses like rent, leasing equipment and fees rather than for payroll. The Small Business Administration Loan is a better option for paying employees so that you can use the loan money for rent, leasing equipment, fees. AR and line of credit are going to help you keep going for a period of time.
What are other key financial strategies you would recommend for physicians?
Going back to the core business model that you have and identify what core services you offer. Using Telemedicine to maintain relationships with your patients is key. In order to maintain financial stability you have to think outside of the box by asking yourself what else can I offer? How else can I maintain those relationships?
Look at where you want your business to be in the long run so that when this process is complete you are in a better position to move forward. Talk to patients, employees, suppliers and banks once you have a clear plan of where you want to end up.
Do you have any advice on how to keep employee morale up?
Look at core business and analyze where you want to be when you come out of this; Who do you want to still be your employee afterwards? How can you keep them happy?
Communicate with your employees so that they are informed on what your plans are and where the practice is headed, but also ask them how they are doing. It is important for ask them about their family life and take the time to understand their stories during this pandemic as well.
You could offer incentives like sending them lunch once or twice a week, gifting them small gift cards, or things to help them entertain their children or anyone they may also be a caregiver for while working from home.
Overall keeping them involved and giving them tangible benefits is key.
In this era of uncertainty you can help your employees stress by communicating with them; It helps relieve their uncertainty so they feel secure during this time which will overall boost their morale. This will help your practice once we start easing out of the social distancing period so that you do not have to worry about recruiting and retraining staff from scratch.
Acumen provides the necessary tools for medical practices to not only survive, but to thrive within their community. We specialize in helping practices become more efficient and profitable and aim to accelerate their growth with proven successes and systems.