7 Important Actions for Physician Practices to Take During the Pandemic
The COVID-19 pandemic has created an array of obstacles for all healthcare providers. While many healthcare workers are front-and-center caring for those suffering from the disease, independent physician practices are suffering from declining patient volumes and a prohibition on elective surgeries. These financial challenges are forcing practices to assess how they can continue to operate during these turbulent times, as healthcare leaders triage their own practices. Here are seven important actions that all physician practices should be taking during this time.
1. Make sure you receive your practice’s economic relief payment.
The Department of Health and Human Services (HHS) began distributing $30 billion of economic relief to eligible healthcare providers related to the healthcare-focused provisions of the CARES Act. These payments are automatically distributed, but providers should make sure they receive their expected payment. There are certain terms and conditions that each physician practice will need to comply with, and an attestation form will need to be completed. Each practice should review these requirements and ensure they are prepared to comply.
2. Develop cash flow projections.
Cash flow is the lifeblood of any physician practice. If your practice hasn’t already, it should prepare a 13-week cash flow projection to help identify short-term sources and uses of cash as well as any potential cash shortfall. Key items to consider include the following:
- Projected payer payments and how they are impacted by changes in patient office visits, related surgeries, and testing
- Contemplated staffing levels
- The existing physician compensation formula and possible short-term modifications that may be needed
- Utilization of any loan proceeds or advance payments
- Debt service and vendor relationships
3. Evaluate third-party contracts.
Physician practices often partner with health systems to help provide the highest quality care possible to patients. These efforts are memorialized as contractual agreements that cover a variety of services, including call, medical directorships, service line management, and more. These agreements should be reviewed to determine how COVID-19 impacts potential compensation to be received and services to be provided.
4. Consider participation in the Accelerated and Advance Payment Program (APP).
The Centers for Medicare and Medicaid Services (CMS) has expanded its APP, which allows physicians and medical groups to request an advance on their Medicare payments (up to three months of payments). Each practice should evaluate the need to utilize APP proceeds in conjunction with projecting its current and future cash flow needs, keeping in mind that the advance payments will be recouped by CMS at a later date. Practices should also weigh the additional administrative requirements in tracking these proceeds against patient charges.
5. Review your malpractice insurance policy.
During this pandemic, healthcare personnel have been front-line heroes, dealing with the tremendous spike in medical needs. Many physicians, nurses, and other medical personnel have been providing essential medical services outside of their current specialty. Practices should contact their malpractice insurance carriers to determine whether they have coverage for these services being provided outside of their specialty. Since the use of telemedicine has grown exponentially during this time, practices should ensure their malpractice insurance covers these services as well.
6. Review your business interruption insurance policy.
Each practice should review its existing business interruption insurance policy and communicate with its carrier to see if losses resulting from COVID-19 are covered. If you do have a valid claim, it is important to gather documentation to substantiate your claim and to consult with legal counsel.
7. Start working on Paycheck Protection Program (PPP) compliance.
Businesses of all varieties have been applying for PPP loans, and physician practices are no exception. Once you receive your loan funds, there is still work to be done. One of the primary benefits of PPP loans is that all or a portion of the loan proceeds may be forgivable, but documentation is critical for loan forgiveness. Each practice needs to monitor headcount, personnel costs, and other qualifying expenses in order to maximize the forgivable part of the loan. Documentation of these costs will need to be certified at the end of the applicable 60-day period.
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