Things are—to put it mildly—not normal for physician practices. Shutdowns, fears of COVID-19, massive unemployment, increased prices of supplies, and economic uncertainties have negatively impacted nearly every medical practice in the country. It’s hard to plan for tomorrow, let alone three months or twelve months into the future--particularly when different offices are in different stages of recovery. Fortunately, there is some good news. The latest indications suggest that the sector is reviving—albeit slowly. Now is the time to make the plans that will help your business adjust to the new normal.
How bad is it? In a recent William Blair survey of practice volumes, 15% estimated that their current patient volumes are down more than 50% since the same period last year, and about 42% indicated that their volumes were down at least 50%.
Are you currently experiencing declines in patient volume, and if so, what percentage decline would you estimate versus the prior year?
The Good News
These numbers may sound bleak, but they are actually a good sign. These results show a marked improvement compared to a similar survey in mid-April—when 53% of respondents reported that estimated patient volumes had decreased more than 50%. Obviously, some patients are venturing out into doctors’ offices again. If this trend continues, it will be good news for the industry.
Are you currently experiencing declines in patient volume, and if so, what percentage decline would you estimate versus the prior year? (April 14, 2020 survey)
Indeed, respondents’ answers to another question confirmed that many practices have noticed an increase in patient volume. About half of respondents indicated they are experiencing a bounce back in patient volumes of less than 15% compared with their previous lows. Another 21% see volume increases of between 16% and 50%. However, the sector still has room for improvement, as indicated in the chart below; 15% of respondents still have not experienced any bounce back in patient volume.
As states have begun reopening, have you seen a bounce back in volumes from COVID-19 lows?
Nevertheless, the survey as a whole gives good reasons for optimism that medical practices are generally on an upward trajectory toward recovering pre-COVID patient levels. But this recovery is slow—and uneven. Blair’s survey shows that some specialties, like psychiatry, have not been hit particularly hard by the pandemic, while others, such as GI and pathology, have suffered a great deal. Likewise, businesses in some parts of the country are experiencing more demand—particularly when the region has lower levels of infection— while others continue to see empty waiting rooms.
The New Normal
However, practices should prepare for the possibility that a lower volume of patients is the new normal—at least for the near future. Elderly patients and those with serious medical conditions may not return to the doctors’ offices for a while or may visit with less frequency. Large quantities of unemployed workers mean that many people will not visit the doctor because they lack health insurance.
Unfortunately, another part of adjusting to the new normal is facing higher costs in many areas, particularly in purchasing PPE. Masks, gloves, and surgical gowns are more essential than ever to protect healthcare providers from COVID. But they also have become scarcer, meaning that increased demand—from healthcare providers and the general public—drives prices up exponentially. N95 masks which used to go for .70 cents a piece might now cost $9 or more. Disposable gowns which once cost .22 cents now go for as much as $11.
Prepare for Uncertainty
So what can a practice do in such an uncertain environment? How can you plan or make decisions in the midst of such an inherently unstable situation? Your business may have already taken steps similar to most practices. Many have temporarily closed locations, furloughed employees, or reduced hours. Others have put off planned capital expenditures, particularly in technology.
But there are also more positive and proactive steps you can take to prepare for the new normal. The Blair survey demonstrates that many healthcare organizations have started offering telehealth as a way of reaching patients and keeping revenue flowing in. This is a new initiative for most practices. Only 20% of respondents indicated that they had telehealth options available before the pandemic, but 51% are now using telehealth to stay connected with patients.
If adopting telehealth, did you already have this in place before the pandemic?
This is one silver lining. Thirty percent of the practices that have initiated telehealth measures have experienced a 50% or greater increase in utilization, so this is helping to replace some lost office-visit revenue. Moreover, most organizations (87%) are planning to continue offering telehealth options even after the pandemic is past, demonstrating that they have opened up additional efficiencies and additional revenue opportunities even amidst the current crisis.
Preparing for such an uncertain future also means getting your financial house in order. No doubt your 2020 business plan and income projections have flown out the window. Now is the time to put something in their place—even if it’s only planning three months into the future. Consider that interest rates are low, and many lenders are willing to be flexible these days.
If your mid-size or larger business is experiencing financial challenges, consider restructuring while executing operational changes to address the new normal. You may need to work with payors and lenders to work out equitable solutions that can help your business stay in the black. But first you must understand your situation, establish the operating plan for the new normal and execute to keep your patients and team safe while ensuring your practice remains viable. This can be a complicated process that is tough to manage on your own. If you need outside resources or advice from experts about your options, don’t hesitate to ask for help. We’re all in this together.
If you have questions that you think Bancroft’s experts might be able to answer, reach out to us at email@example.com.