Dental Practices and COVID-19 [April 2020]
The impact of COVID-19 on the US economy is unprecedented. In a matter of five weeks, 26 million people lost their jobs unemployment rose from ~4% to >20%. As of today (4/26/20), the US had ~1M cases and 55K deaths. Total new cases and deaths per day have not stabilized with a new peak on 4/24/20. Most states in the US have established social distancing measures that have shuttered many local business starting early March with many projected to be required to go till July. The Federal government has deployed the largest stimulus package in the shortest timeline in US history (e.g. vs TARP or New Deal). In order to stem unemployment, the government announced the PPP (Paycheck Protection Program) of loans with forgiveness of $349B which ran out in two weeks. An additional $250B was approved for non-banks on 4/21/20.
What can practice owners do now?
Most practices are closed for non-emergency practices per regulatory guidance by geography. Many practices are paying their full-time employees during this time which will lead to a lower profitability year with no revenue for several weeks with lower revenue for several more.
Make sure you apply for a PPP loan (easiest via your current bank). Any small business with <500 employees is eligible. The loan can up be for up to 2.5x monthly payroll costs (max $10M). PPP loans can be forgiven depending on if borrowers maintain head counts and payrolls at pre-pandemic levels and use their loan for permitted expenses.
The money can be used for payroll (no more than $100,000 annual salary per employee) as well as benefits (including paid sick leave and insurance premiums) and taxes on compensation. Up to 25% of the loan may be used by the business to cover mortgage interest, rent, utilities and interest on pre-existing loans. More details on eligibility and forgiveness can be found here on the Treasury's website.
Several online calculators are available to help you calculate eligibility amounts and forgiveness. Here's one by Intuit. For nuance for dental practices on these expenses, Cain Watters has a high-level guide here.
For information about state and regional programs, see an aggregation here.
What do practice owners need to think about for re-opening?
Even with shelter-in-place orders expiring in many places in May, be prepared for lower revenue even as cities are reopened. Many customers will not be ready to full resume their regular life due to ongoing fears regarding COVID and may put off anything they consider optional (e.g. regular dental check-ups). Depending on the profile of your practice patients, you may be disproportionately affected. Many people will remain unemployed, furloughed or on a lower salary which will also cause them to spend less. Many others will not have access to their typical dental coverage due to changes in employment.
Two major takeaways for practice owners: (1) Prepare the practice for a post-COVID world in terms of space/separation in the waiting room, strategic scheduling/lower utilization to reduce crowds and extra sanitization etc. and (2) Time to re-invest in more marketing with messaging related to (1) as well as on long term benefit of regular check-ups. More great conversation can be found on the Dentalpreneur podcasts on this topic.