BUSINESS PLANNING IN UNCERTAIN TIMES
As independent and system-owned or aligned practices manage their day-to-day operations during these uncertain times, it is vital that specific planning continues to take place and overall obligations continue to be met in the practice.
Most medical groups have been able to survive the initial wave of COVID-19 with help from financial programs such as the CARES ACT subsidies or loans from the Center for Medicare and Medicaid Services (CMS) and Paycheck Protection Program (PPP) through the small business administration.
There is, however, discussion that the fall will bring around a new wave of practice uncertainty between the start of the flu season and a rise in new COVID-19 cases. Practices cannot afford to let complacency creep in and must rather remain focused on certain objectives to succeed.
We have broken these objectives down into three (3) key areas:
Management and leadership must revise their financial plans to ensure ongoing liquidity of the practice in the event of practice volume decreases and less clinical revenue over the next few months. Like what was seen in the spring, the negative financial effect could be driven by any or all these trigger points:
- Decrease in elective surgery
- Fewer outpatient E&M visits
- Whole or partial closure of practice locations or surgical centers
Groups should be developing financial contingency plans based on estimates of minimum cash flow required to stay afloat over an extended period. Based on historical data, that could easily be anywhere between a 4-week and 12-week period, if not longer. Leadership should be doing the following to prepare:
- Reviewing existing loan documents to ensure bond or covenant compliance requirements where a trigger or a default situation could arise if not in compliance
- Reviewing Space and Equipment leases or loans for payout and minimum obligations
- Start considering consolidation of administrative and operating resources as needed
Practices will need to plan for new and extended COVID-19 exposures in their locations as we see more kids back in schools, fall sports in full swing and a new flu season about to begin.
In order to minimize risk, groups should focus on the three areas of direct interaction: patients, staff, and the provider themselves.
- Patients – Areas of the practice to focus on as far as social distancing requirements, cleanliness, and overall patient access include:
- Waiting Room
- Exam Rooms
- Check Out Area
- Effective Screening
- Staff – To ensure staff confidence in their ability to perform their jobs responsibly and safely, take the following steps:
- Communicate personal health requirements clearly between clinicians, patients, and staff
- Ensure basic CDC requirements are being followed, such as checking for fever, loss of taste or smell, any other known symptoms or direct contact with someone who has tested positive.
- Ensure sufficient backup or cross training is in place
- Just like for staff, ensure sufficient backup coverage is in place if a provider tests positive and is required to be out of the office for 14+ days
It is important that, within the overall strategic plan, there is a focus on the adoption of new or revised clinical objectives for the practice groups and that these are performed in some staggered phases.
- Adopt a stepwise approach so that the practice may quickly identify and address any practical challenges presented
- Reaffirm your Telehealth strategy. As a majority of practices have seen a slight wain in overall patient interest in Telehealth (mainly in urban settings), it is easy to let this platform of engagement and patient access be overlooked by leadership
- Target specific patient demographics for accessibility and flexibility
- Younger patients
- Family-related patients helping get online together
- Rural patient base
- Healthcare and other frontline workers
- Consider types of Telehealth visits with most volumes
- Post-Surgical/Post-Partum visits
- Follow-up visits
- Prescription refill visits
- Chronic care and transitional care visits
Following some or all these objectives will provide practices, management, and physicians with a useful framework for informed thought in evaluating their business planning in these uncertain times.
The takeaway is to be proactive and informed in your approach to developing plans, keeping in mind they should never remain static or be based on a one-size-fits-all solution.
Ronnen Isakov is Managing Director Advisory Service of MMG Healthcare Solutions / Medic Management Group. His background includes extensive work in areas including business advisory, valuation, network optimization, transaction support, and project management. MMG is a national provider of consulting services and back office administrative support to independent and system owned physician practice groups. Additionally, MMG has been formally recognized as a multi-year Northeast Ohio Top Workplaces award winner.