Are you starting to worry about your practice’s financial health because of the COVID-19 pandemic?
There are ways to keep your practice afloat.
Specifically, ask yourself these questions:
What can you do to lower your monthly expenses?
Identify which supplies are absolutely necessary and which auto-shipments can be cancelled. Perhaps you have large vaccine orders or expensive equipment leases you can temporarily let go. This will allow you to order only as you need it.
Ask vendors about payment extensions, rate comparisons, and cancelling auto-draft payments so you can pay at your discretion. If leasing space, talk to your landlord about rent extensions, subleases, or decreasing space altogether.
Remember, the largest single expense for most practices is labor. Determine if your practice is appropriately staffed according to specialty benchmarks. If you are overstaffed, now is the time to make adjustments.
How would you go about reducing staff work hours and/or pay?
If staff cuts are being considered, have an open and honest conversation with your employees. They know times are tough.
Ask if it would be easier for anyone to avoid the stress or obligation to work because of circumstances beyond their control (e.g. lack of childcare, caring for elderly) – some staff may volunteer.
If not, assess the value of each position and consider your options:
- A furlough is a temporary layoff from work. People who get furloughed usually get to return to their job afterwards.
- A layoff is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons.
Reducing staff pay can be tricky:
- Non-exempt staff: If reducing non-exempt employees’ rates of pay, the Fair Labor Standards Act (FLSA) requires that all covered non-exempt employees receive at least the applicable federal minimum wage for all hours worked.
- Exempt (salaried) staff: If reductions in the predetermined salary of an exempt employee cause a loss of the exemption, the employee must then be paid at least the federal minimum wage and overtime pay required by the FLSA.
If an exempt employee volunteers to take time off due to insufficient work, but also takes time off for personal reasons other than sickness or disability, his or her salary can be deducted for one or more of those personal days; however, the employee’s decision must be completely voluntary.
What tax credits are available?
On March 20, the Internal Revenue Service (IRS) announced that small and midsize employers can take advantage of two new refundable payroll tax credits, designed to immediately reimburse, dollar-for-dollar, for the cost of providing COVID-19-related leave to their employees.
The key takeaway is paid sick leave for workers, complete coverage, fast funds, and small business protection. The IRS will provide prompt payment for eligible employers who pay qualifying sick or childcare leave. Employers will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and childcare leave that they paid, rather than deposit them with the IRS.
Is bankruptcy an option?
There are multiple bankruptcy options, each with advantages and disadvantages. Always consult your certified public accountant and attorney before taking steps toward bankruptcy.
Bankruptcy does not necessarily relieve you of all financial obligations, and sometimes requires dissolution of the company, the selling of assets, and fines. Make sure you fully understand the consequences before pursuing.
Other financial considerations include:
- Financial assistance;
- Implement telemedicine;
- Reduce expense obligations;
- Reevaluate space needs and options;
- Renegotiate lease terms;
- Deferment of payments;
- Review insurance policies for business interruption coverage;
- Ensure correct coding and that all charges are captured;
- Work old accounts receivable;
- Collect all time-of-service payments and past due balances;
- Manage rejected claims timely; and
- Promptly close encounter notes.
Also, be sure to check out TMA’s Practice Viability FAQs.
For up-to-date information during the COVID-19 pandemic, visit TMA’s Coronavirus Resource Center and Telemedicine webpages frequently as information is rapidly changing.