In these unprecedented times, it’s tough to stay motivated and not be mired in the negative. I’ve had to constantly remind myself to focus on what I can do—and not on what I can’t do. At WebPT, we have remained steadfast in our mission to help therapists achieve greatness in practice—in good times and in bad. So today, I’m kicking off a multi-part blog series on shifting your mentality in order to remain positive and productive during this time of strife and change. It’s all about making lemonade when you are handed lemons. Specifically, I’m asking you to look at this “down time” as an opportunity to work on your business when you can’t necessarily work in your business.
So, what does that actually mean? Well, first and foremost, focus on doing everything in your power to come out on the other side of this as healthy as possible—both physically and financially—so that your doors can remain open and patients can again rely on your services. Once you’ve secured financial stability—perhaps by taking advantage of one of the many loan programs available to businesses affected by the pandemic—then it’s time to get back to letting your creative and entrepreneurial juices flow. What are some things you’ve put on the back-burner in the past due your busy treatment schedule? What are some ideas you’ve had before telling yourself, “When I finally get some time, I need to do that.”? Now is that time! Over the course of this blog series, I will outline some checklists that I hope will motivate you to get your citrus squeezer in action.
To kick off the series, we’ll start with making sure you have the cash reserves in place to weather this COVID-19 storm. Having a rainy-day fund to cover at least three to six months of expenses—as we have recommended in the past—would obviously put you in a state of slightly less anxiety. If you don’t have that money saved, though, what can you do now? And even if you do have some cash in reserve, how can you stretch it to make sure you get the most out of it? Regardless of how big your business is—or how much savings you have in the bank—here are five things you should be doing right now to, as our CEO Nancy Ham says, “hug your cash.”
1. Review all of your vendor contracts and negotiate to reduce, delay, or defer payments.
Your commercial lease is a great place to start. During these periods of hardship, landlords would rather negotiate with a great tenant than lose that tenant forever or—even worse—have to take legal action. Direct communication early and often is key. Here are some options to present:
- Rent deferral: Rent payments—or a portion of those payments—are postponed for a certain period of time.
- Rent abatement: Rent payments—or a portion of those payments—are suspended for a certain period of time.
- Rent reduction: Rent payments are reduced for a portion of, or all of, the term left on the lease.
- Loan conversion: Past-due rent payments are converted into a loan payable over time; however, the tenant continues to pay the current rent.
2. Scrutinize all other large cash expenses—such as taxes and employee benefits.
Reach out to your company’s benefits carrier (e.g., Aetna, BCBS, or UnitedHealthcare) to see if you can negotiate deferred payments or payment reductions for a period of up to 90 days. Additionally, if your practice has fewer than 500 employees, be sure to review the CARES Act for financing opportunities. Its aim is to help small and medium sized businesses with cash flow assistance in four primary ways:
- The Paycheck Protection Program (“PPP”), which is part of the Small Business Administration (SBA) loan program;
- Economic Injury Disaster Loans (EIDLs), which are also part of the existing SBA loan program;
- Delay of payment for employer payroll taxes; and
- Employee retention credit for employers subject to closure due to COVID-19.
Your accountant or HR attorney will be a great resource to help you determine what is right for your company’s situation. However, you must act fast, as there is a finite amount of money available to be distributed on a first come, first served basis. $185 billion has already been deployed, so don’t wait another day to file.
The federal government has also deployed a $30 billion healthcare stimulus package. Check your business checking account as many healthcare providers are starting to get direct deposits as part of this program. The grant amounts will vary based on the Medicare Fee for Service payments your practice received in 2019. If Medicare makes up a large percentage of your overall payer mix, then you can expect to receive a relatively larger incentive check. Your local Medicare Administrative Contractor (MAC) should have more information regarding this financial assistance opportunity.
3. Make tough decisions regarding staff.
You may decide to keep your clinic open, as PTs, OTs, and SLPs have been deemed essential workers, and—as I pointed out in this blog post—patients need our services. However, upon analyzing data in the WebPT application, we concluded that our Members have experienced about a 50% drop in patient volumes across the US. If that’s the case in your organization, here are some options to consider (be sure to consult with your practice’s legal counsel for all the ins and outs of these actions):
- Temporary reduction in pay or work hours: This can help you reduce overall payroll costs in the short-term. You can apply these cuts as an across-the-board percentage reduction—starting with your higher-salaried leadership team.
- Mandatory use of paid time off (PTO) or vacation time: This allows employees to have some access to income during this time period—even without working any hours.
- Voluntary unpaid time off: It might be tough to convince employees to take voluntary unpaid time off in the name of business viability, but there may be some employees who are fortunate enough to be able to do this so that other employees may still get paid.
- Furloughs: This short-term voluntary or involuntary program essentially forces employees to take unpaid leave in order to reduce payroll costs, but allows them to retain their “employed” status in order to maintain benefits eligibility.
- Layoffs: This constitutes actual employment termination with the possibility of being rehired at some point in the future.
Regardless of their employment status, remind your staff members to update the IRS with their direct deposit information, as the economic impact payments (i.e., the stimulus amounts for individuals) are starting to be deployed. Sharing this information can also help take the sting out of some of the tough decisions you may have to make.
There are also other ways to handle staffing during this time, including repurposing existing job roles—something I’ll cover later in this series.
4. Collect outstanding balances from insurance companies and patients—as appropriate.
Our current situation provides one more example of why it’s so important to collect copays and coinsurances at the time of service. But with claims slowing down, now is the time to be hyper-focused on collecting all outstanding A/R:
- Therapists with incomplete documentation on past patient visits should be tasked to finalize all visits and get claims sent out ASAP.
- Front office staff should be reviewing and correcting all denied claims (your A/R should be squeaky-clean post-pandemic).
- Patient balances from recent visits (i.e., those from the last 30 days) should be delicately pursued. Avoid being too aggressive during these stressful times, as you don’t want to lose patients forever.
- The Medicare Accelerated and Advance Payments Program may be an option for clinics that see a high percentage of Medicare patients. However, you’ll need to seriously consider the pros and cons of leveraging this option. Essentially, it is a loan that Medicare will slowly recoup via future reimbursements until the prepayment amount is repaid.
Establishing some financial stability now will make it easier for you to make more intelligent, data-driven business decisions moving forward. Communication with your staff, vendors, referral sources and patients—in other words, all of your stakeholders—is paramount during this time. It may seem like you’re working harder now than you ever have before—and that may be true. Change and adversity can bring out the best—or the worst—in people. As leaders in not only our businesses, but also our industry, we must do everything we can to make solid decisions—and take measured action—that will set us up for success on the other side of this crisis. You can do this! You can and will survive; let’s focus on emerging from this pandemic even stronger than we were when we went into it.