COVID-19: Issues to Consider for Healthcare Practices
By David Glusman, CPA/CFF, FABFA, CFS, Cr. FA, Partner, Advisory Services
What does COVID-19 mean for healthcare practices? While hospitals are in urgent mode, everything non-emergency is on hold, most offices have little or no ability to participate in screening activities, and yet payroll goes on.
Here’s what providers need to keep in mind as COVID-19 continues to escalate:
- Medical practices need to determine what their cash flow will be going forward, based on new reduced hours and patients, or office closures. Cash flow is the amount of money you receive less what you need to pay out. In your practice, it is patient revenue less all expenses, payroll, rent, utilities, supplies, etc. Do a best case and worst case scenario (best case is usually easy, but we can help with this, too). Insurance payments slow down as the government focuses on emergency issues, and many “non-essential” governmental employees are home and not able to process your payments. Same for the Blues, Aetna, United, Cigna and the rest. Do you hold off on paying some of your vendors? If so, how long is right in this environment?
- Talk to your banker before you run into cash flow issues. Check your line of credit availability. If you have an available line of credit, should you draw it down, as Boeing or other mega businesses have done, just in case?
- Plan for your staff; how do you handle reduced hours or office closure(s)? Consult with employment counsel and see what the current (constantly changing) regulations and government edicts do to your policies. This will abate; we just don’t know how long it will take or at what pace. You’ll be likely to need most if not all of your well-trained staff. How do you budget for the different scenarios? Consider what you should change in your paid time off or other policies: long-term you need your staff; short-term you need to preserve cash flow. Sometimes paying more people a lower percentage of salary leads to a better spreading of the pain and more loyalty to your practice.
- It is unlikely you have any insurance coverage for office closures (business interruption policies will generally not cover your office closure due to coronavirus, but check with your insurance professional). Your staff, if laid off or working reduced hours, is likely eligible for some level of unemployment compensation. Help them with the applications, if you can.
- If any of your staff contract COVID-19 in carrying out their duties, check with your commercial insurance carrier regarding workers’ compensation issues. They may vary state to state and policy to policy. Help in any way you can. Work with your health insurance carrier or representative to help negotiate the red tape and find out if deductibles and co-payments are being waived in this emergency.
Coronavirus Resource Center
Have more questions about the impact of the coronavirus on your business? Visit Marcum’s Coronavirus Resource Center for up-to-date information.