As States begin to open up for non-emergent dental treatment and procedures, providers will have to prioritize effective and complete recovery actions in order to minimize the impact and fallout of the COVID-19 crisis. By minimizing the impact, DSOs and groups will maximize recapture of revenue.
Understanding cash flow impact is going to be critical. You will need to evaluate cash flow spend over the next three to six months. Not every dental group or DSO has a tool in place to forecast cash flow, and the cost and time to create such a tool may be an obstacle, but it is essential.
Having more control over revenues and expenses is a good place to start. Increasing time spent on payables will decrease time spent on inventory and receivables. Try to accelerate collections and revisit past-due accounts, with the understanding that some patients’ employment status and/or financial resources needed to accept treatment may be impacted by the crisis. Review your budget and determine any wasteful or unnecessary spending.
- Review delayed elective visits and procedure to determine who you can recapture.
- If teledentistry is going to be continued or utilized, make sure coding is accurate to ensure payment.
- Evaluate if you are providing services with historical losses. Now may be the right time to discontinue them.
Patient Acquisition and Retention:
- Determine if your group has any negative publicity associated with COVID-19 that you will need to over come
- Create a patient communication plan to educate, inform and entice patients to return to the dental practice. The ADA’s ‘Advisory Task Force for Dental Practice Recovery’has developed a free toolkit with interim guidance which recommends measures to take to help protect patients, staff and dentists from COVID-19 as dental practices re-engage in providing the full range of oral health care.
The toolkit includes:
- Sample letter to patients
- Guidance on pre-appointment screening
- In-office patient registration procedures
- Reception area preparation strategies
- Chairside checklist
- Staff protection strategies
- Supplies shopping list
- Evaluate if all key providers and leadership is fully staffed. Determine if any vacancies need to be filled in order to resume operations. In order to recapture, you must be able to operate with a fully staffed and well-functioning team.
- There may be some staggered schedules depending on how your state has you re-open and potential for limiting patients. You may also have expanded hours and days in your week to capture additional patient flow that may want to come in.
- Use this opportunity to evaluate systems and other operational/administrative tasks you have been putting off and get them done.
Preserving cash is key. Now is the time to build relationships and foster communication with your supply chain. Do not avoid opening up a dialogue with your vendors, landlord, lenders and your team. Instead, building strong relationships now is crucial to implementing a complete recovery plan.
Vendors: Call each of your vendors to discuss payment terms and open the lines of communication on how you want to work with them as cash is tight.
Landlord: Call your landlord to discuss amending the lease or deferment of payments. Ask for three months of risk abatement with lease payments added to back of lease. Understand that under your current lease, your last three months maybe at a higher rate than currently. You need to ensure there isn’t a balloon payment owed at day 91.
Lenders: Request leniency from your creditors. Call your lender to discuss a three-month abatement of interest only payments on any and all loans you have. This would include credit cards if you want to defer those as well. Ensure your lender doesn’t setup a balloon payment for this payment and re-amortize the loan.
Team: There needs to be consistent and constant communication with your dentists and your team during and after the dust settles from the pandemic. They are concerned and looking to leadership for guidance. Transparent and frequent communications with them on how you are handling situations, understanding your safety protocol for them and the patients, and reassurance for any anxiety about their future earnings will make the team stronger and more unified, positioning your practice for a strong recovery.
Strategic Decisions – Assumptions to Think Through
- Take this time to make a to-do list of those areas you have been wanting to work on within the practice.
- If you haven’t already – apply for EIDL and PPP loan.
- Ensure your financials are up-to-date to the most recent month. If this isn’t something you have done in the past, guarantee it is a future priority to make sure you stay on top of cash flow and practice recapture of revenue. Furthermore, this will allow for you to stay on top of expenses and see if there are any you may be able to reduce.
- Put together a 12-month monthly plan of how much revenue (based on historical performance) and expenses that you believe you can recapture. Think of scenarios’ such as:
- Opening additional hours, opening additional days and what the payroll costs of these scenarios are.
- Accept that you may not having a full schedule like your previously did. Will you be limited to the number of patients in the practice at any given time?
- If you are in orthodontics, factor in not having capacity in your schedule for new starts and what the 24-month impact of that is to your future revenue
- Will you ramp up marketing as you had before? Will you try new marketing campaigns?
- Will you hire all your team back immediately or phase them in? Are there certain team members that were underperforming?
- Will you be required to have additional PPE or Other Capital Investments that will need to be made such as barriers between chairs in the open bay?
Preparing to Re-Open
As we begin evaluating re-opening, we first need to look at the date that our respective states are suggesting as the current target date to re-open. The date may change, but it’s important to plan as if it will happen.
When reopening, understand what practice changes implemented during the pandemic will remain consistent for the future and evaluate which processes could be improved going forward. Understand your financial implications in the new and future practice environment and invest in resources to assist in navigating complexities of the impacts of the pandemic.
- Are we going to expand hours? Expand days? Ensure you give those team members that are responsible for filling the schedule the parameters of how they can book additional hours.
- Are we taking extra measures for social distancing? Sterilization between patients? PPE equipment?
- How are we communicating this to our team, our patients? We want to ensure their safety is our priority.
- How do we recapture the revenue missed? Are we able to evaluate the contract schedule and get our patients back within treatment time frame?
- Do we need to run some promotions?
- Build a budget/plan to set goals. Be prepared to update along the way as this is unforeseen.
- Make someone on your team of advisors or within your organization accountable for the set goals and determine a communication strategy for these goals.
As you evaluate your recovery and reopening plan, take time to consider the opportunities that may be available and your goals, even during a crisis. Mike White and the team at CliftonLarsonAllen (CLA) have deep industry insight and are invested in your success. They are ready to assist you in building your practice back through effective cash flow management, and help you develop your personalized recovery plan today.
Contact Mike White to help you prioritize effective
and complete recovery actions in order to minimize
the impact and fallout of the COVID-19 crisis.
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