Are we in a recession? Webster's Dictionary defines a recession as "a period of reduced economic activity." Witness the recent drop in the stock market, rising inflation, and the depressed housing market, and it's safe to say that if we're not already in a recession, we're certainly on the brink of one.
55%—Percentage of US men who have not seen their primary care doctor in over a year.(AAFP, 2007)
Are we in a recession? Webster’s Dictionary defines a recession as “a period of reduced economic activity.” Witness the recent drop in the stock market, rising inflation, and the depressed housing market, and it’s safe to say that if we’re not already in a recession, we’re certainly on the brink of one.
What does that mean to physicians? There are those who believe that the healthcare industry is somewhat immune to the cycles of the marketplace, in part due to the necessity of its services and demand for skilled workers in diagnostics and treatment. And besides, when you get sick, you get sick. Illness can strike in the best of economic times, or the worst of times.
So, other than perhaps some specialty areas of medicine, like cosmetic surgery where consumer spending is more discretionary, physicians are hardly impacted by a slowdown in the economy, right? Well, not really.
Physicians Feel the PinchNorman Levine, MD, is a specialist in medical practice management with FinexMD, a New York-based investment management company that advises medical practices on long-term financial planning. He believes that there are many ways in which physician practices are affected when the economy goes south.
“What I’ve seen in a lot of practices is that the money that patients owe out of pocket, payment of that has been much slower,” Dr. Levine explains. “What’s happening today is physicians are mailing out a bill and people aren’t paying it. So, physicians have to be more aggressive in obtaining their co-pays and their balances.”
Dr. Levine recommends to physician clients that all of a patient’s finances should be reviewed the day before their next office visit. If an outstanding balance exists, it’s addressed before the patient sees the doctor again. “As the economy worsens, people have this feeling that, ‘I have insurance. I shouldn’t have to pay for anything.’ But you do,” says Dr. Levine.
Dr. Levine suggests that physicians need to do more, particularly during tough economic times, to get their patients to come in. He points to dentists who send out regular reminders to patients for six-month checkups. “Did you ever get a letter from your doctor saying you’re due for your routine physical?” he asks, rhetorically. “Years ago physicians could get by without having to do anything to get new patients. Today, it’s different. Doctors have to make themselves more customer-usable.”
Some practices that Dr. Levine visits are comprised of all male physicians. He suggests bringing a female physician into the practice. Where offices are located in or near Hispanic communities, he suggests making sure someone in the office speaks Spanish.
“I was in an office where all the women spoke English, but half of the patients coming in spoke Spanish,” Dr. Levine recalls. “I could see the frustration on the women at the front desk. If someone called up to make an appointment and can’t speak with the office staff, how are they going to make an appointment. Physicians need to have an office staff that reflects their community.”
Barry Fine, MBA, CFM, a financial advisor and a colleague of Dr. Levine’s who works exclusively with physicians, says he has seen practices that have $400,000 outstanding for well over 180 days. “That’s unheard of,” says Fine, who together with Dr. Levine, offers physicians a solution that will enable them to recognize that cash today and use it to add more services that generate additional revenue.
“When an account receivable has been identified by one of our medical practitioners, we can provide them with a non-recourse account receivable program that gives them 85-to-90-cents on the dollar today,” Fine explains. “Physicians can use the money to increase revenue well above the 5% cut they have to take to realize the cash right away. They can clearly make it up in a tax-deferred account or by adding a modality like a pain center or cosmetic medicine.”
Fine agrees with the premise that, in many respects, healthcare is one of the few sectors that runs counter-cyclical to recession tendencies. He points out that with 77 million baby boomers expected to retire by 2020, there are key shortages in the healthcare sector—jobs that will need to be filled. But, he also recognizes that many medical groups are hurting because they’re fighting to get cash from the receivables that they have outstanding.
“That’s why we provide physician practices with these solutions,” he explains. “They receive a cash infusion, and then decide how they want that money invested—in a qualifying plan, or expanding a modality, or just paying bills with it. It’s a grand slam.”
Ed Rabinowitz is a veteran healthcare reporter and writer. He welcomes comments at firstname.lastname@example.org.
“The stock market has forecast nine of the last five recessions.”—Paul Samuelson