A year ago, you may have been looking at your practice thinking things were going well. Productivity was up. You and your staff had established a good routine. Your business was earning a profit. Then, March rolled around and the world came to a standstill with the Covid-19 outbreak.
There’s no denying that the pandemic has had huge financial implications across the healthcare industry. Many practices had to temporarily shut down. Even now that protocols are in place for reopening, many practices are struggling, even those that were doing well pre-pandemic.
What kind of effect, short or long-term, could Covid-19 have on your healthcare practice and its overall value?
Understanding Your Practice’s Value
A healthcare practice’s worth is often determined by a third-party. As a medical practice goes through changes, expanding, acquiring additional practices, and hiring new physicians and staff, it is beneficial to know your practice’s value or overall worth.
In theory, determining healthcare practice value should be simple. As with any small business, the value is a function of the future earnings to be generated or the value of the assets that can be used to generate future earnings. However, variables such as physician compensation, operating costs, tangible equipment, medical records, and trained staff can alter and complicate the process. A healthcare practice consultant can help you determine the factors that impact your practice’s value.
Covid Costs on Healthcare Practices
The Covid-19 pandemic brought about unexpected changes to healthcare practices, businesses, and society at large. There were obvious financial impacts on practices. The combination of temporary shutdowns, needing to expand clinical capabilities, and adjusting to social distancing measures has placed a strain on healthcare practices and business owners, even those that were previously doing well. The new expenses, regular operating expenses and bills, and little revenue coming in means many practices are now operating in the red.
In order to reopen, healthcare organizations had to comply with federal, state, and local health and safety measures to ensure patient and staff safety. Failure to comply could result in hefty fines, license suspensions, and other sanctions. Not to mention the fact that physicians could have liability problems if they breach the required standards of care.
To reopen their offices, practice owners are now faced with key considerations such as updating their business operations, instituting new safety protocols, securing protective gear for staff and patients, and developing an appropriate schedule to triage patients.
With the new scheduling plans, patients are spaced out and productivity is lower. Practices are not seeing as many patients in a given timeframe. In some cases, patients stopped seeking care out of fear of exposure to Covid-19. In others, healthcare practices have had to cancel non-emergency appointments and revenue-generating procedures.
Switching to Telehealth
With social distancing in effect, in-office medical appointments have drastically decreased. In an effort to meet patients’ needs while abiding by social distancing measures, many practice owners moved to telehealth platforms in conjunction with their regular office hours. Telehealth provides opportunities to ramp up productivity numbers and to see more patients.
Virtual platforms allow physicians to maintain meaningful relationships with patients and provide quality care while adhering to health and safety guidelines. Moving beyond Covid, these platforms can continue to provide meaningful healthcare opportunities for physicians and patients providing a new way to maintain doctor-patient relationships.
Overall Financial Outlook Beyond Covid
As healthcare practices navigate the current situation and try to move forward, meeting with a business practice consultant may be beneficial in understanding your practice’s current financial health and establishing a plan for the future.
Risks & Considerations
Moving forward, sellers and buyers have options. Sellers need to prove the viability of their businesses. While buyers may want to exercise caution due to the uncertainty of the valuation analyses in the current times. Regardless which side you find yourself in, speaking with a financial practice consultant is important in understanding your value and making sure you are making the best decisions for your practice.
If you are considering selling your practice in the future, you should begin to identify key performance indicators to prove when and how your practice was affected by Covid. Identifying which factors of your practice were affected can aid in understanding the company’s outlook.
On the buying side, you need to understand that valuation analyses may be skewed due to the unknowns surrounding the current environment, economy, and historical benchmarks.
Impacts on Future Valuation
Remember, healthcare services are essential and the market will recover. Covid-19 is an anomaly. While we may have a “new normal” when all is said and done, we won’t be stuck in this limbo forever. Moving forward some private practices may choose to liquidate or close their doors. For others, investment opportunities may increase making practice expansions possible.
There are many unknowns for the short- and long-term when it comes to Covid’s impact on business owners and healthcare practices. That’s why it is important to seek advice from an expert in practice business consulting and practice financing.
Choose LenDRgroup Consulting
Understanding the current or projected value of your healthcare practice can be confusing. Whether you are trying to expand, acquiring a new practice, seeking an exit strategy, or are just simply curious, consult the experts at LenDRgroup Consulting.
Experienced, Certified Healthcare Practice Consultants
At LenDRgroup Consulting, our team of experienced private practice consultants can walk you through financing and managing your practice. We can conduct an in-depth review of your business, day-to-day operations, productivity and costs, and your goals to help determine your practice’s current value and what changes to make to impact its future value.
The team at LenDRgroup Consulting cares about the long-term success of your practice. No matter if you are in need of practice financing or business consulting, we are able to craft a customized plan to fit the unique needs of not only your practice, but also your career. We bring a lending platform comprised of 300+ dental and healthcare-specific lenders.
We do the work for you to match you with the best lender for your needs. It is not a one-size-fits-all lending process. We work to find a successful match. We built this network with the purpose of helping dentists, veterinarians, and physicians achieve their dreams of practice ownership while eliminating the obstacles typically associated with making this transition.
To date, we have helped hundreds of medical and dental professionals launch, expand, and grow their practices. LenDRgroup Consulting recognizes, listens to, and understands the needs of your business and can provide guidance to help avoid costly mistakes. So, let’s get started.
ContactLenDRgroup Consulting today to schedule a one-on-one consultation and find out how we can help with your financing and consulting needs!