Don't underestimate the value of 2020 hindsight. Looking back and evaluating how your practice or health services business fared in the first half of a difficult year could help you better prepare for whatever lies ahead.
Before February, the typical disaster recovery plan in Alabama focused on weather--what to do if a sudden snow and ice event or tornado outbreak shut down offices for a few days. Plans might include the possibility of a hurricane that knocked out power and communications, a fire or a severe financial downturn. Not many plans were likely to have detailed protocols in place for what to do in a pandemic. Now that we've seen how big that vulnerability can be, those plans are likely due for a change.
"The health care businesses best positioned to manage the challenges ahead are likely to be those who review their response and do a white board evaluation. What did they handle well? What needs to be better and how can they manage it?" Hal "Buzz" Kunz III, CPA, of Pearce, Bevill, Leesburg, Moore, P.C. said.
"When it became clear that a pandemic was on its way, our clients set up meetings with us for scenario planning for best case and worst case situations. It helps to take the emotional pressure out of decision making so you can deal with the economics."
Jerry Callahan CPA, PFS
Kunz's colleague Jerry Callahan CPA, PFS, said, "We start with an analysis of the client's present financial position. What reimbursements are still in the pipeline versus anticipated expenses? Based on current guidelines and projections, how is the virus likely to impact your specialty over the next few weeks, and how much can you reasonably expect to bill?
"If a shortfall is likely, we help clients plan how they will manage it. Do they have a line of credit in place or another banking relationship that might help them secure a loan? What programs are available and how can they qualify for them?"
Kunz said, "Early on, we helped clients apply for Small Business Association emergency disaster Loans and HHS relief grants. In some cases, clients were able to ask for payments on a current loan to be deferred, either for a given period or moved to the end of the loan. Then came PPP loans, changes in unemployment benefits, extended sick leave benefits and quite a few changes along the way."
"Reducing expenses wherever possible has been important, especially for those who didn't have supply contracts to stabilize prices. One small rural practice that had paid eighty-five cents for a bottle of alcohol suddenly found itself paying $8.50 and charges for protective equipment went through the roof."
Callahan said, "In health care, salaries are usually the largest single budget item. When there isn't enough work to cover all the salaries, the situation can quickly become emotional. Most practices hold on to their staff as long as possible. You can't just go out on the street and hire someone who already knows how to do what needs to be done. Eventually you have to prioritize which tasks are essential and which employees are most valuable in getting them done. You also need to think about who has the training or could be cross trained to step in if that person becomes ill or has to stay at home to quarantine with family. Which tasks can be done online from home?
Kuntz said, "Human Resources issues are some of the most common questions we've been getting from clients. Is it better to lay off an employee who isn't essential, or to furlough them with benefits? How do employees qualify for unemployment and any special programs that are available?
"One aspect that has been difficult is that the extra $650 per week in government benefits added to regular unemployment benefits means less valuable nonessential employees can stay home and earn more per hour than more valuable employees who work every day. To maintain morale and keep essential employees working, employers have had to be creative in offering other rewards and bonuses to show them they are valued."
An extension on the deadline to pay 2019 taxes helped some health care providers conserve their cash flow, but developing strategies for continuing to generate earnings within the new reality soon became a priority for almost everyone.
"The impact of the pandemic on earnings differed by specialty," Callahan said. "Elective surgeries that were postponed will eventually be rescheduled, but visits for small ailments like a cold or sprain won't be recouped. People tended to turn more toward over the counter remedies to avoid going into a waiting room they perceived as risky for coronavirus exposure."
Even before local governments began to loosen lockdown restrictions, many providers were busy redesigning their offices into safer spaces where patients could feel more comfortable seeking care and where they and their staff could reduce their own risks for exposure. If providers are in quarantine for two weeks, it would essentially shut everything down.
"The CDC, medical associations and several societies for medical specialties have issued guidelines for making office visits safer for both patients and providers," Kunz said. "Offices began to triage patients even before they arrive. Some had them wait in their car for a call or text when it was their turn to be seen. Waiting rooms were set up to maintain physical distance between patients. Temperatures were taken and screening questions asked before anyone came through the door. Masks, hand washing and other strict infection control measures were maintained."
To let patients know how they could safely return to scheduling an office visit, providers sent letters, emails, portal alerts and texts.
Providers also began using expanded guidelines and technology to start offering care in new ways, such as telemedicine visits by computer teleconference or telephone.
"This has worked so well, we expect it will continue," Callahan said. "The virus has probably expanded how care will be offered in the future."
Looking ahead, Kunz recommends keeping a close watch on trends in infection rates and the news from federal, state and local government.
"Until we have a vaccine and proven treatments in place, rebounds can happen. Whether they become overwhelming and lead to more shutdowns will depend on how people behave. Keep a close watch on the numbers in your area and the surrounding area. Also be alert to any new legislation or programs that could help,' Kunz said.
"If you haven't updated your disaster recovery plan lately, it's a good time to get started. Incorporate what you've learned and make your plan as robust and functional as possible. It could make the difference in how well you meet the challenges we will all be facing in the months ahead."
Covid-19, Small Business Association emergency loans, HHS relief grants, PPP, CDC,
Pearce Bevill Leesburg Moore P.C.