Dealing with Office Closures During COVID-19 & How to Come Out Ahead
During these uncertain times in the dental industry, our founder and CEO, Adam Zilko, was able to sit down with Chris Mahan of Mahan & Associates to discuss the best decisions dentists can make right now in dealing with the current COVID-19 crisis. Mahan & Associates has been helping dentists for over 30 years through financial, management, and operations consulting, including managing payroll, tax strategy, HR, and pensions. Chris Mahan and his team have helped dentists thrive in and out of crisis, financial issues, and uncertainty.
Click the video below to watch the full conversation - it may be the best advice you hear all week in terms of the COVID-19 crisis and dentistry.
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Where To Begin
Many dental practices are dealing with financial issues and uncertainty right now, and in order to navigate these uncharted territories, there needs to be a plan in place. The moves dentists make today, will help their practice not only survive this crisis, but rebound into the greatest second half of a year you’ve ever had.
You may be wondering:
- How can I manage expenses right now?
- How can I protect my team members?
- How can I come out of this stronger?
- What moves can I make today to ensure my practice's success?
- How can I take care of my employees in the short term?
- How can I fund expenses?
- How can I take advantage of this downtime?
Adam and Chris shared their advice and strategy, and it begins with opening up your cash flow to take care of your employees.
How to Open Up Your Cash Flow to Work on Your Practice
With closure notices and extensions being announced every day, dentists need to keep cash flow on hand. Liquidity is paramount, and deferring investments into elective 401ks or pension contributions (for owners) may be the best first step.
As new legislation comes out of D.C., it seems there will be income subsidies for employees coming in the very near future. In this discussion, Chris Mahan mentions that he is hearing word that business owners will be included in these subsidies. The ADA is persistently advocating for dentists in their discussions with Congress to make sure dentistry is included in those business owner subsidies. These could very well end up being the best source of income replacement for dental practices.
Additionally, banks have been given more clearance to automatically defer payments on loans, modify loans, and make more options available on credit cards with rates frozen, locked, or lowered. Do not underestimate the amount of cash flow this could provide for your practice, and take a look into your bank for any changes or support. Lines of credit are also opening up, especially to business owners, and the federal government is making moves to even work around the banks and provide non-recourse capital.
How To Cover Payroll While Your Practice is Closed
Once your cash flow is secured, how are you going to spend that money TODAY? First and foremost, you need to take care of your employees to the best of your ability. They are your number one asset! While you could have your staff cash in their PTO and vacation time, those benefits may not be an option at smaller practices. If you truly cannot afford to pay your staff fully or fairly, the best way to keep your staff afloat may be the hardest decision you have to make: a temporary mass layoff.
Yes, it sounds bad. However, it is the best thing for your employees, and here is why: as a business owner, you have already paid into unemployment quarterly. That was an investment your practice made for times like these, and it is time to cash in on that investment. If you decide to wait until the very last minute to halt payroll, using most or all of your cash flow in the process, and then lay off employees, there may not be a practice for them to come back to, putting both you and your employees in the worst possible position. The sooner your employees are able to file for unemployment with your state, the sooner they will be taken care of with an unemployment check. Once the crisis has settled and you are able to open your doors again, your employees will end their unemployment benefits and will be back on your payroll.
Where to Invest Your Time and Money Right Now
Second to your employees, your money needs to be invested in anything that will help grow your practice. Mitigate all cash flow that is not going to directly grow your practice, and keep any consultants and marketing. Knee-jerk reactions to cut your marketing will hurt more than help at this time, because the amount of dental work needed has not lowered in this crisis, it is only paused. When you are back up and running, there will be a huge demand for dental work, and only the practices with the greatest presence (via their marketing) will win those patients and profit. Additionally, many of your peers and competitors are giving in to the panic and cutting back their marketing, which will create a larger impact for all of your marketing. Keep your consulting and marketing, and give your practice the competitive advantage to grow the day those doors open back up.
Learn from Past Economic Hardships
While assessing past dental clients, Adam Zilko mentioned the practices that took longer to recover after 2008, 2009, and 2012 economic hardships were the ones that cut way back on marketing during those times. While cutting back on consulting and marketing may have short-term benefits to your wallet, it has long-term implications for your practice success and revenue. For some practices and businesses, that long-term period lasted a decade or more. Chris Mahan chimed in to say he knows practices that still have not recovered from the 2008 recession….12 years later.
The Action to Take Today to Come Out Ahead
Disasters and crisis have created some of the most life-changing discoveries in human history. This is the time to look at ways to stay innovative and get in front of patients. One of those ways includes offering virtual consults. Just this week, insurance providers have adjusted their reimbursement rates for virtual consults, as they have no choice: patients need help, and in doing so, they are protecting hospitals and practices from filling up, protecting people from catching this virus. If you get in front of patients with teledental consults, you can start to stack appointments for May, June, or whenever you are able to open your doors again. After all, they will need dental work as soon as this is over, so start talking to them now via virtual consults to invest in the future of your practice.
“These times are the biggest opportunities for those sharks, for those natural-born killers that want to get out there, stack it, and grow their practices. This is the time that they can do it on a discount.”
-Chris Mahan, Mahan & Associates
If you want to know more about which teledental programs follow HIPAA compliance, how to best maintain communication to retain your patients, and how to invest in your practice’s future right now, reach out to us here, or schedule a call with us below.