Most people enjoy certainty, predictability. Steady as she goes! So, what do you do when an unprecedented crisis envelopes you at a moments notice? Conducting some very informal surveys live from the aisles of Target, the most common answer appears to be to buy a pallet of toilet paper and 55-gallon drum of Purell.The correct answer is to control what you can control. The way you react.
First and foremost, we are your trusted advisors when it comes to all things dental insurance. We take great pride in that. However, like you…I am a business owner as well. So I wanted to take this opportunity share with you how we are thinking and planning during this anxious time.
Your first priority is to identify what’s acceptable for the short-term. I’m talking dollars and cents. Remember…we crave predictability. So, let’s forecast and prepare for several scenarios.Let’s stay focused on the near-term. How much revenue can you anticipate for April? May?To answer this question, let’s unpack this. – Are you going to be open and available to treat emergencies? Will you limit this to patients of record? If so, how much will that generate? – Can you provide teledentistry services to your patients?– How much did you make during the first half of March?– How many claims dollars are open for submission?– How much is your insurance A/R?– How much is your patient A/R?– How many patients are on payment plans?– Do you have any treatments where you will continue receiving checks (i.e., ortho)?– Can I anticipate any rent payments (i.e., if I own my building)?– What am I missing?
Now that you’ve roughly modeled your anticipated revenue for March – May, it’s time to make decisions.
Categorize expenses.– What expenses can’t be cut?– What expenses save me time/money or help me generate revenue?– What expenses can be delayed?– What expenses can be cut? Here is an example of how we categorized expenses and made decisions.Without getting a PPP loan (which I’ll cover in a topic this week) from Uncle Sam, based on my napkin math above…I need to get my expenses down to $40k per month.Can’t Cut:– Healthcare benefits, – Malpractice and other insurance.Don’t Cut…Who Helps Me:– Accountant, attorney, insurance consultant, other consultants,– Patient communication, scheduling and review management software.What Expenses Can Be Delayed:– Software vendors should be willing to pause billing or reduce your monthly rate during this time (i.e., Dentrix/Eaglesoft support), – Rent (approx 5%). Cut:– Travel, entertainment, maintenance, CE’s, advertising (approx. 5.5%) Good news is many significant expenses are variable for practices like dental supplies, labs, and office supplies. These should drop to near $0 while you’re not seeing patients. That’s more than 15% of your monthly expenses. You can cut more than 25% of your expenses before you get to people.How we looking???What is it going to take to bring your expenses down based on your income dropping from around $75-$80k per month to around $40k?
This exercise assumes the economy begins restarting around June 1. I feel like that is a pretty good estimate for Plan A given what we know today. If not, we just continue out into additional months.Further, this exercise does not include use of lines of credit, working capital loans, proceeds from the recently passed CARES Act. Monies available from any of these sources obviously provides valuable cash to extend your capabilities.
Read practical tips to drive patient volume this fall. Tip #1, continue to communicate your offices protocols to keep patients safe.
Dental providers affected by COVID have a number of resources available to support their successful re-opening. CARES Act monies are available through August 3, 2020.
Join Five Lakes Founder and President Nick Partridge as he discusses what to do now that you've submitted your PPO termination letter.
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