(First published in Australian Doctor Magazine - April 2020)
There is no question that we are in challenging times as the world navigates the health, societal and financial impacts that COVID-19 has delivered.
The financial impact to general practice is ranging from 'still hitting the same billings' and 'growth in billings with more doctor availability through less travel and leave', through to practices feeling the impact with revenue reductions of up to 50% of their usual income levels.
The latter outcome is typically driven by lower recovery rates per patient hour, with many private practices now operating at bulk-billing rates.
What financial support can you access?
Stay on top of your figures. Communicate with your practice manager. Communicate with your doctors. Communicate with your nursing and administration staff. Communicate with your advisers. There may be areas of opportunity you are not seeing, and these people will be well placed to share their observations with you which may be a great source for practice improvement.
There is no question that we are in challenging times as the world navigates the health, societal and financial impacts that COVID-19 has delivered.
What are we seeing and what help can you access?
The latter outcome is typically driven by lower recovery rates per patient hour, with many private practices now operating at bulk-billing rates.
The decline in billing rates is, in many cases, also combined with declines in patient visits, arising from increased fear and the deferral of routine matters in favour of only matters of high importance and urgency.
The Cashflow Boost stimulus package offers up to $100,000 tax free (with a minimum payment level of $20,000) to all employers regardless of the COVID-19 impact to you.
Where you have multiple employment entities you may access this payment multiple times.
This includes a sole practitioner or associate doctor who engages administration support through wages.
The “Job Keeper” program will apply to practices who have experienced a drop in turnover of 30% or more.
It will pay the practice $1,500 per fortnight, per “eligible employee” to supplement wage costs and payments to employees.
In considering the 30% revenue drop it will be important to not only focus on revenue from billing but also consider Practice Incentive Payments and other practice revenue.
This payment may also be available to sole practitioners and those who practice through a trust and take distributions in lieu of salary.
Other state-based incentives and support have been announced including payroll tax reductions or deferrals in all states, land tax concessions in some instances and one off grant payments for severely affected businesses.
The mandatory Commercial Tenancy Code of Conduct provides guidelines to landlords and tenants for establishing revised rental arrangements and are applicable where the tenant has turnover of less than $50 million and has suffered a revenue decrease of 30% or more.
Banks are all working through the measures they will offer, which will not only include new loans but also the opportunity for a “repayment holiday”.
You should be aware of the cost of interest being capitalised but take steps to put a hold on your loan repayments where cashflow is difficult.
What else can you do?
Invest time in support staff contacting and educating patients about available options for continuity of care.
Identify those patients whose attendance patterns have changed and prioritise communication with them. When they understand the measures that you have taken and the options available so they can continue to receive regular care, this may assist with regularity of appointments.
Ensure you are taking steps to appropriately claim Practice Incentive Payments and keep measures in place to ensure these income streams don’t drop away.
They will be an important source of cashflow at this time.
Consider how technology automation can assist the accuracy, speed and availability of information to you to support you in making decisions in your practice.
Options include: Surgical Partners for income reconciliation, doctors pay calculations and to reduce the chance for fraud; TANDA for rostering, attendance and leave management; Cubiko for practice analytics and insights; and Xero with Hubdoc for financial processing and reporting.
And finally…
And remember you are not alone - everyone is feeling the impact of these times.
Staying level-headed and making informed decisions is always the best idea.
If you need more information on the above initiatives, or other challenges facing your practice and personal financial affairs, ensure you reach out and seek help – just like you would recommend a patient do with their health concerns.
If you have any questions regarding the above, contact Director of Business Services and Taxation, Megan Smith at msmith@prosperity.com.au. Alternatively, we have Specialist Health Sector Advisers in each of our offices. If you would like to speak to one in your location, call 1300 795 515.
