"Recession-Proof" Your Practice
You can minimize the ripple effects of an economic slump.

The U.S. economy has turned sickly. Corporate profits are falling. Major companies are announcing big layoffs, and much of the high-tech sector is on life support. Consumer spending, a major measure of how secure Americans feel about their jobs, may be the next indicator to head south.

When the economy slows, healthcare providers feel the impact, usually about 6 months after the slump begins. Patients' healthcare needs don't change. They're still going to require care from you. But if a number of your patients lose all or some of their health insurance benefits, you'll feel the pinch.

Here, I'll explain why a recession doesn't need to have a profound effect on your practice if you're prepared for it.

WHERE ARE THE PATIENTS?

The first sign of economic stress may be a shift in your payer mix, with a larger percentage of your revenue coming from Medicare. Why is this so? As health insurance premiums rise and companies try to reduce costs in the face of slowing business, many employers will require higher co-payments and deductibles from their employees. Your patients who hold down jobs are likely to fall into a pattern of putting off visits, or stretching the space between checkups because they fear for their job security and are afraid of missing work, or want to conserve all the cash they can.

You may also begin to have difficulty collecting co-payments. One way to handle this is to bill patients more quickly or begin asking for the co-payment up front. But be careful you aren't overzealous in collecting these monies or you'll risk driving away some patients altogether.

THERE ARE SOME POSITIVES

In a downturn, your staff will have fewer employment options, which means there should be less pressure on you to raise salaries. Generally, your overhead costs should remain stable or even drop during a recession, as suppliers of products and services compete to keep their existing customers and attract new ones.

While you're looking for ways to reduce costs during economic turbulence, you'll still need to make sure you're investing in the appropriate software and technology to keep your practice running efficiently. Finding more effective ways to run your practice may make up for some temporary loss of income.

USE CREATIVE STRATEGIES

You can take other positive steps as well to ensure that your practice weathers the economic storm with the fewest possible adverse effects. You can:

• Let patients know about the different plans you accept (so they don't leave your practice if they change plans).
• Ask all of your patients about any changes in their healthcare coverage.
• Explore electronic enrollment verification and claims submission with HMO and PPO plans.
•  Closely monitor your collections and cash flow.

A Market your practice more aggressively to attract new patients. Some practices will cut back on marketing during a downturn. Use your advertising dollars wisely and you can gain market share. If a certain type of advertising has worked well for you in the past, this is the time to use it again. Inexpensive ways to increase your practice's visibility include direct mailings, participating in community health fairs, writing a column for a local newspaper and appearing on talk shows.

Taking these proactive steps will not only get you through the slump, but will also position your practice to benefit when the economy recovers. 

Mark E. Kropiewnicki, J.D., LL.M., is a principal consultant with The Health Care Group, Inc., and a principal and president of Health Care Law Associates, P.C., in Plymouth Meeting, Pa. He regularly advises physicians and practices on their contracting matters and business law obligations. He can be reached at (800) 473-0032.