These are challenging times for everyone, but they are especially so for independent medical, dental and veterinary practices as consumers put off routine checkups and elective procedures.
The challenges are especially acute for dentists. As the CDC noted in a guidance document1 last week, “Dental settings have unique characteristics that warrant additional infection control considerations.” The guidance recommends that dentists “postpone elective procedures, surgeries, and non-urgent dental visits.” In California, most dentists are complying. A Health Policy Institute study2 published by the ADA on April 3rd reports that 69% of dental practices in the state are closed for all but emergency services such as cracked teeth or pain, and another 27.8% are not seeing any patients at all.
Community banks are helping local practitioners file for PPP loans.
Many local dentists and other practitioners have filed applications for Paycheck Protection Program (PPP) loans, which were created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as traditional SBA 7(a) loans. Demand for PPP loans, which offer favorable loan terms and a loan forgiveness component to incentivize small businesses to maintain or rehire their employees, continues to be high. (The ADA has published detailed guidelines3 for dentists regarding PPP loans.)
Like other small businesses, independent practices have turned to community banks for these loans because larger banks focus on larger businesses. Community banks, particularly those with specialized healthcare banking teams, excel at building relationships with smaller, local practices.
This can be a good time to invest in equipment and technology.
Forward-looking practitioners are looking beyond maintaining their staff, toward meeting the challenges of pent-up demand and higher expectations for office safety. They’re investing in equipment such as advanced air purification systems to help mitigate the effect of aerosol-generating procedures and create safer environments for themselves, their staff and their patients.
Some are also preparing to meet the anticipated demand by expanding investment in new, more efficient equipment and exciting new technologies. One California practice employs 3-D printing technology and dental milling systems to produce crowns, bridges and full dental implants. During the shutdown, that practice has pivoted to printing nasal swabs for COVID-19 testing of staff and patients, and they plan to acquire equipment that is expected to deliver positive results in five minutes and negative results in 15 minutes, while patients wait in their cars. The screening equipment costs $1,500.00 and will be more widely available only when hospital demand has been met.
For medical professionals who co-occupy large medical complexes, there could even be the opportunity for implementing lobby testing for all patients and visitors.
This can also be a good time to establish a line of credit.
If you don’t already have a line of credit, now is a good time to establish one, which will provide the flexibility needed for rainy days or for investing in equipment such as the screener described above. Many clients have expressed a feeling that the fee for keeping a line of credit open is a small investment in peace of mind as insurance for situations like this pandemic.
As the crisis abates, new acquisition opportunities will likely arise.
Finally, some are on the lookout for practices in which older practitioners, especially dentists, are prompted to consider selling their practices and retiring. This trend had already begun before the COVID-19 pandemic. As we noted in an article4 in February of this year, “As the boomer population retires, and will require more healthcare services, a large percentage of their doctors and service providers will also be retiring—because they too are baby boomers.”
The time to talk with your local community bank is now.
Community banks are generally better able than large ones to work closely with practitioners. If lending decisions are being made locally, community banks are more likely to factor in personal relationships between the bank and the practitioner. Furthermore, those that specialize in practice finance know the local competitive landscape and can help practitioners make better, more informed strategic decisions.
So, if you are an independent practitioner and you want to capitalize on post-COVID-19 opportunities, talk with your local community bank’s healthcare specialists about how to do that. Do it now.
Patti Thompson-Derry, Senior Director Market Executive/Private Banking at Banc of California, has been lending to providers and their practices, outpatient facilities, and hospitals for over 30 years. She has financed practice buy-ins and buy-outs, tenant improvements, equipment, and working capital needs created by expansion and delays in reimbursement, all at competitive rates and terms. These views belong exclusively to Patti and are not necessarily the views of Banc of California.
Learn more about how we empower your practice to succeed, and you to prosper bancofcal.com/healthcarebanking – 424-369-6040
1 “Interim Infection Prevention and Control Guidance for Dental Settings During the COVID-19 Response,” CDC, revised April 27, 2020, https://www.cdc.gov/coronavirus/2019-ncov/hcp/dental-settings.html
2 “COVID-19: Economic Impact on Dental Practices (Week of April 20 Results),” ADA, April 20, 2020, https://surveys.ada.org/reports/RC/public/
3 “Paycheck Protection Program (PPP) Loans and Dental Practices,” ADA, April 24, 2020, https://www.ada.org/~/media/CPS/Files/COVID/PPP_Loan_Summary.pdf
4 Schneiderwind, B, 2020, “How Baby Boomers Will Change the Landscape of Medical Offices,” OCBJ, Feb 17, p22