Orthotown July/August 2020 - 36

How many of us had these reserves available
when the pandemic hit?
Some clients we advised during this
crisis had enough personal liquidity to
support them and their families; however,
some of them did not have the same level
of liquidity in their practices. It's time to
evaluate where you are with your reserves
and begin to plan accordingly. We believe
a good starting goal is to have enough cash
to fund one month of payroll, with a goal to
have enough on hand to cover three months
of expenses.
Another aspect of liquidity that got some
much-needed attention in many practices
was accounts receivable. Because practices
were closed and the doctors had time, it
allowed them to take a deep dive into their
accounts receivable.
Many practices used this time to:
* Clean up old accounts receivable
that will likely never be collected.
* Contact patients with larger
unpaid balances to establish
ongoing payment plans.
* Reach out to PPOs on rejected
claims to get that money in.
* And, most importantly, review
their collection policies internally
to allow for quicker collections
and to minimize rejected claims
that were left untouched because
staff members were "too busy."
We hope to see better collection stats
moving forward, because many orthodontists
have taken the opportunity to improve in
this area.

Credit considerations
What about access to credit? As we had
conversations with clients during the crisis,
we were amazed at how many did not have a
business line of credit or couldn't remember
if they had one-and if they learned they
did, the line wasn't for as much as they
could have had.
While many emergencies are unforeseen, there are some we can be prepared
for, including health issues, temporary
disabilities, natural disasters, etc.

36

the service with the vendor to see if there
were other levels of services available at
lower costs.
What about your staff? What have you
learned about how to handle your staff if
a crisis hits again? Doctors struggled with
whether they should furlough them, allow
them to stay on the payroll, or offer them
the opportunity to take their PTO. What
will be the plan the next time? We think
many practices will use this crisis as an
excuse to either reevaluate their employee
manuals or implement one.

External investments

Any of these hazards can occur at any
time, and we need to make sure we have
quick access to lines of credit both for our
businesses and personally. Now's the time to
review what you have and take the necessary
steps to make sure you have this in place.

"Need" versus "want"
What have we learned about our practice
overhead and our personal cost of living?
In the early stages of the crisis, as practices
were closing their doors, we helped clients
to review the practice overhead to see what
they could defer in terms of monthly bills
and which services they could effectively
"turn off" while their practices were closed
and the revenue was drying up.
What we heard was that clients were
starting to reevaluate their expenses, both
professionally and personally, and defining
what they really needed, versus expenses that
were simply on autopilot. They reviewed
exactly what they were paying and how
important it was to their practice. It gave
some the opportunity to shop around for
lower-priced alternatives or to discuss

Many doctors took the opportunity to
reevaluate their investment strategies and
their risk levels. We saw the markets take
another deep dive similar to the 2008-2009
era and many newer doctors had never
experienced an investment hit like this.
They had been enjoying the stock
market ride with some great investment
returns for the past several years, so this
crisis was a real eye-opener to many. Having
the time away from their practices allowed
many to educate themselves on other
forms of investments outside the stock
markets, whether that be real estate or real
estate-related activities or other forms of
passive investments, such as other small
businesses or side businesses.
Those with side businesses such as
consulting, education, seminars or lecturing
took time to add to their inventory of
materials so that they might increase their
other sources of income in case their practices
face another crisis like this. If you have not
done this, you should.

In parting
We all need to appreciate where our
wealth is invested and to be comfortable
with our investment decisions and clear on
our short-term and long-term financial goals.
We hope that if there is a silver lining in
this crisis, it's that you had the opportunity to
critically review your practice and are ready
to come back strong after this crisis subsides.
Stay healthy, stay safe and be well. ■

JULY/AUGUST 2020 // orthotown.com

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Orthotown July/August 2020

Table of Contents for the Digital Edition of Orthotown July/August 2020
