COVID has had a major impact on the bottom line of many private practice physicians. Many may be left scratching their head as to whether selling out to a hospital or larger medical group could provide some welcome relief. Up until 2020, this oftentimes was a decision many independent doctors were to later regret.
Owning your own practice certainly means that you have a large amount of responsibility in the running and ownership of your business. A business that may seem like the last person to get paid is yourself. However, the autonomy, control, and flexibility of owning a practice is hard to put a price tag on.
With every challenge, new opportunities arise.
If you are looking into 2021 considering what your plan is, do not sell out before you consider the options.
Business profitability for the past year potentially had a large hit meaning cash reserves may be minimal or completely gone. If your business is working on a cash flow deficit, do not ignore the warning signs.
If you are finding you are holding off making payments, you used to make on time because the cash is not in the bank then this is a big red flag. This includes wages (including your own), vendor payments and tax payments.
The overwhelm of having a cash flow deficit can leave you with a sick sense of worry that keeps you up at night. Before you despair taking some simple action steps can help ease the worry burden and help you regain the control you once had.
Communicate with your vendors
Many vendors will be willing to work with you if you communicate with them on a payment plan. Some may even negotiate down the debt you have with them rather than fear not getting paid at all. When you are avoidant of their attempts at communication, they have every right to feel uneasy. Being proactive in your communication is a solid first step to keeping your relationship with them working.
Look for financial relief
Medicine as a profession is not going away. Review your business lending to see if consolidating some of your debt makes more sense and even build in some cash reserves. You often must spend money to make money and if your practice is behind in what it can offer patients as we burrow through this pandemic, it may mean having to upgrade some IT, equipment, or providers.
Talk to your team
As a practice owner and a physician, you may feel you are the only one who has this burden to bare. What can be easy to forget is that your medical practice is an entity in its own right and you are your team have a vested interest in keeping it alive. Talk to your team and see what ideas they have and how they could contribute. If you have fostered strong leadership within your practice, you may be surprised at what they come up with. Keeping them in the dark when times are tough makes them feel insecure and lose trust in your business and more likely for you to lose your best people.
Know your breakeven and set goals
It is not hard to do a breakeven analysis of your practice. Look at the fixed and variable costs of everything you need to run and your profit margins. It should be a simple exercise you can do with your accountant or consultant that allows you to see what business you need to bring in to get ahead.
Create a budget to work toward and breakdown the services that you provide. Identify what you can realistically do to help you achieve your goal. Remember some services have a higher ROI than others.
Look for lost money
Review your billing and billing practices. Many practices are used to collecting around 50-60% of their billing, often less. There may be many copays and denied insurance reimbursements that have been left uncollected. Now could be a good time to recruit a revenue cycle manager to review your billing and see what leaky holes exist in the bucket. Many revenue cycle managers only charge based on collections, meaning you won’t be out of pocket to engage in their services.
Review your practice strategy
Take some time to really review your practice. Things to consider are to remember why you went into practice for yourself – in what way did you want to make a difference? Do you have an interest you would like to be more expert in? Do you have some patients or conditions you enjoy treating more than others? Do some conditions provide higher value to the practice in terms of revenue or resourcing? Answer these questions and see where the gaps are. How could you free up your practice resources to make some of this possible?
Look at where the market is heading
COVID has potentially changed the way we work – many people will stay remote workers and medicine will be no different. Many routine visits that may have happened face to face will forever become a virtual experience. The benefits are obvious for the patient. Those long times spent in the waiting room will be a thing of the past with remote visits. This may be an asset for your practice if you have a good Telehealth platform that makes it seamless for patient scheduling. If you do not – how can your practice compete?
The biggest thing humans are missing through COVID is the personal connection. Think of ways to humanize your practice including your atmosphere, bedside manner, and that of your staff.
What do patients need now?
Proactive care in safeguarding our own health has been the biggest definer of COVID outcomes. Patients who are at higher risk of death include the morbidly obese, those with heart or lung disease, and diabetes. Physicians have long been frustrated with the lack of responsibility of patients to safeguard their own health. COVID provides a prime motivator and gives physicians a valid topic to raise with patients to support them with lifestyle change.
Patients need better assessment tools, better conversations with their HCPs, and more accountability to make these changes. Programs are available for practices to harness this important opportunity with diagnostic testing, lifestyle coaching and weight loss programs. Many of these can be provided at low or no cost and utilize existing staff members with appropriate training.
The aging population
Approximately 10,000 patients become eligible for Medicare daily. Medicare patients also constitute a large portion of the health care dollar. If your practice services a significant percentage of Medicare patients, ensure your practice is offering all the routine preventive care that is on offer. These services are often low or no cost to the patient or practice and technological advancements mean that what your practice offers can be optimized without the impact on human resources. These services often are provided at no upfront cost with the average physician missing out on $10,000 to $30,000 per month from the database of patients they already have. This is even for practices that think they are currently doing this well.
Consider cash-based services
Many physicians are left feeling raw after insurance clawbacks and denials. As patients become savvier about their own health care as well as scrutinizing their insurance spend, the appetite for cash pay services is there. Some practices are finding that offering a concierge-type service empowers them to live happier with a better quality of patients and without the fear of insurance company demands.
Regenerative medicine is also a growing area as patients learn more about how they can preserve or improve their current health and live a longer and more healthful life. Regenerative medicine can allow you to pursue a specific area of interest and create a segue into more lucrative or expansive services.
Add diagnostic tools or services
Technology is making more and more equipment available to small practices. Furthermore, COVID is driving more patients to smaller establishments for testing services to avoid hospitals for fear of infection. Diagnostic equipment can mean an investment, however, many tools provide a solid ROI that allows revenue to be recouped quickly. The patient benefit also means early diagnosis almost always improves outcomes.
Tools available at a primary care level for these services include neurocognitive, falls, ultrasound, ANS and CV testing as well as diagnostic imaging. The more services your practice provides the more opportunity you have to keep your patients in house.
Some equipment can be available on a rental, or risk free basis without the need for borrowings.
Consider ancillary services
Most practices utilize one ancillary service but there are opportunities for many more. Analyze your patient database and determine the top 5 conditions they suffer from. Do they suffer from pain, allergies, arthritis, diabetes? If so, there is an ancillary to fit their needs. These services again are often available at low or no cost and can provide several thousand dollars or more a month in revenue.
Work with a Practice Development Manager
You know your practice and patient demographic best. Practice Development Managers (PDM) understand the independent practice landscape to know what services can offer your practice the best returns based on your payer mix. They can provide a no-cost analysis and offer multiple solutions that can breathe some fresh life into your business. Their goal is not to work with dozens of practices but instead to work with a handful where they can really help you and your staff to get new programs to work.
Do not wait for the warning signs. Take control over your business and your cash flow to safeguard the autonomy and reward of being independent. Remember if you do what you have always done, it may no longer work into 2021. Now is a good time to review your business practices and if you need help, contact a Practice Development Manager.