Yes you will! I am extremely confident in saying this because while healthcare is not recession proof, it is a proven industry that weathers well during an economic downturn. The closures and financial stress caused by the COVID-19 pandemic are certainly unprecedented. However, you can expect to recover if you spend your time wisely during this period of time.
Owners have the opportunity to focus on 3 key areas. Once the doors re-open, there will be a back log of work. Afterall, all offices are closed. This is not a situation where a natural disaster such as a flood or fire has affected only one clinic. Because all clinics are closed, patients do not have an option. More importantly, as difficult as it is, patients understand the need for the closure as well. Therefore, take this gift of time and focus your attention on 1) Managing your cash flow, 2) working on your practice rather than in your practice and 3) improving and refining your communication skills – both with staff and patients.
1) Managing your cash flow: Despite the media being abuzz with doom and gloom the fact is there are steps an owner can take to navigate through this crisis.
- First call must be to your bank. Look to see if loan payments can be changed to interest only for 3 months. Ask for a temporary extension on your line of credit.
- While money is not coming in from patient visits, why not focus on the outstanding collections. Often when things are busy, people do not always have the time to diligently collect outstanding fees.
- See what can be done to reduce inventory costs without sacrificing the quality of goods or inconveniencing patients. Are you ordering too many of particular items? Can an item be sourced somewhere else at a better price? Just because you’ve always ordered something from a particular supplier or done things in a particular way doesn’t mean you have to keep doing them that way – especially when those other ways may save you money.
- Don’t necessarily cut back on marketing. Consider effective marketing initiatives you can do once the doors re-open. For example, budgeting for a patient appreciation event would be well received.
2) Working on your practice rather than in your practice: Take this opportunity to do the things in your office that you have been putting off.
- Now is a good time to do minor renos, refresh and declutter.
- Do a deep dive into patient charts. Every office has files that have unplanned treatments or requires follow up.
- Review your patient demographics. Do you really know who all your patients are? This will be particularly valuable when you are considering your marketing initiatives once things go back so some type of normal.
3) Improving and refining your communication skills – both with staff and patients. Practice owners often get mired down in the details of treating patients and running the office.
- When you look at the demographics of your patients, you need to consider how they speak. A group of Millennials will use different language and phrasing, mixing in a lot of slang that the Baby Boomer demographic would never use. Now is your opportunity to really look at how you deliver your message.
- Think about how your staff communicate. Helping team members learn to communicate in professional and respectful ways builds a positive atmosphere.
- Encouraging a positive communication environment provides security for people to share ideas, without being judged. By giving your staff a platform in which they can share ideas with one another, creativity and innovation emerge.
Once we get through this crisis, AND WE WILL GET THROUGH IT, history is a great indicator of the future. After every serious recession or crisis like 9-11, SARS or the market crash of 2008, practice values went up. From simple economics of supply and demand, the buyers who are afraid and not buying now combined with the owners who have lost significantly in stock portfolios and cannot sell, will result in too many buyers and not enough good practices. From a practice value standpoint, the current value of a practice should not be affected because of the closure or deferred income because the back log of patient visits will offset it.
As awful as the closures are, I cannot help but emphasize that we are looking at deferred income vs lost income. Even if this closure last 4 months, as economically difficult as it will be the for the owner, as long as owners were not overleveraged before, the practice should weather this crisis as well. Banks are stepping up with increases on lines of credit and converting payments to interest only in conjunction with Ottawa creating a robust stimulus package. The reality is that patients have no other options. Every office is closed. When this finally corrects, the back log of work will keep people busy for a significant period.
The key to successfully coming through this is to stay positive and focus on the opportunity that forced time has given you. There is absolutely nothing that will make your practice one hundred percent recession-proof. But implementing some of the suggestions above to will help ensure you get through these tough times and perhaps even be able to profit from them.
Jackie Joachim is the Chief Operating officer for ROI Coporation. ROI specializes in assisting healthcare professionals in the Optometry, Dental and Veterinary spaces appraise and sell / transition their practices.