Assessing the Recession

May 1, 2009

How is the recession likely to affect your practice? And what can you do to soften the blow?


While some patients are putting off needed care, and most physicians expect a long-term slow-down, not every physician is stagnant right now. For one thing, some patients are scheduling visits while they still have insurance or can afford their COBRA coverage, so your practices may be experiencing a boom-before-the-bust.

But others are already feeling the pinch. Physicians with a heavy surgical practice are the worst off. Inpatient surgeries dropped 2.2 percent in the fourth quarter, compared to the same period the previous year. Outpatient surgeries dropped 1 percent. But outpatient visits actually rose 2.8 percent, suggesting patients might be putting off surgery in favor of office visits for symptom management.

While the horizon remains cloudy, do you batten down the hatches just in case? If your schedule still feels busy, should you prepare to layoff staff anyway? How can you tell how you’re doing?

The key is to compare this year’s first quarter performance to last year’s. For more up-to-date insights, compare month to month: April 2008 to April 2009. The goal is to see what’s happening and make changes before you suddenly find yourself in a hole 60 or 90 days into the billing cycle.

Some things to study:

What is the percentage change in the total number of patients seen in your practice? Look at the totals, but also look at changes in your ratio of new-versus-existing patients (assuming you are in a specialty that sees the same patient repeatedly over time). Few practices can live on existing patients alone. Patients move, lose insurance, even die. You need a steady influx of new patients to make it long-term, so if your ratio has gotten out of whack, take steps to reverse the trend. For example, in some markets, walk-in clinics in drugstores or other storefront locations are siphoning off less complex cases - people whom traditional practices used to treat and turn into patients for life. So what are you going to do? You can extend your hours to compete or work with the doc-in-a-box providers, start a marketing program - whatever. Just make sure you’ve got some fresh faces coming in.

Has your payer mix changed? You might still be running from exam room to exam room, but more of your patients may have switched to lower-paying payers. Some may have turned to Medicaid after a layoff, others forced by cost-cutting employers into lower-paying plans, and still others - scared of the future and just trying to belt-tighten - may have opted for the cheaper HMO this year instead of the PPO. Recognize it now, and see what you need to do to make ends meet. You might see more patients a day, add other payers, or cut costs. Again, the key is to avoid the sudden discovery a few months from now that, despite feeling busy, you have to dip into your own dwindling savings to pay staff.

Has your patient accounts receivable changed? A rise in uninsured, underinsured, and just plain broke and scared people likely means patients owe you more money. Understandable, but your obligation is to tighten your processes so that you are getting paid quickly when you can. No more passes on copays. No more six-month billing cycles. At the very least, take a look at how big and old those patient accounts are and listen to what those numbers are whispering in your ear about your long- and short-term stability.

What’s happening in your market? The Bureau of Labor Statistics has an array of figures on its Web site, including unemployment rates by county, city, and other-sized data slices. Visit www.bls.gov/lau. If unemployment has risen recently in your area, you might not yet feel the effects as folks struggle on with COBRA or just cobble together the means to pay from savings. But that won’t last long.

Bottom line: Now is not the time to be driven by unanalyzed fears or groundless optimism. Be responsible for understanding your own economic forecast.

Pamela Moore is director of content and strategy for Physicians Practice. Moore has been writing for physicians on practice management issues for 10 years and she is a recognized speaker and commentator on healthcare management. She can be reached at pam.moore@cmpmedica.com.

This article originally appeared in the May 2009 issue of Physicians Practice.