A CNBC news article warns of a projected mild recession in 2023, including a 5 to 5.5% increase in interest and unemployment rates. On top of that, more and more physicians are shifting out of private practices in favor of employed models because of the following factors;
High costs of maintaining a private practice
Administrative and organizational burdens
Business challenges for physicians who are trained to focus on delivering patient care
Challenges to technology, including EHR systems
Mental health, burnout, and stress
Considering all of these, it would take much effort to maintain it during a recession. To help you out, we have gathered FIVE recession preparedness strategies that you can apply to be more conditioned to approach 2023’s predicted economic downturn.
1. Understand How the Economy Works
One of the key players that affect the welfare of your practice is the economy itself. When the economy is good, practice decision-makers don’t have to make a considerable effort to turn a profit. In contrast, significant steps and decisions are necessary when the economy is on a downward trend. What you need to know is that economic declines happen now and then, and several practices have proven time and time again that surviving a recession is possible!
Because an economic crisis affects everything – including your competitors – you shouldn’t rush into decisions. Whatever decision you make during this time can either get you ahead or behind them. Slow down, monitor the economic climate, and base your decisions on that and what your practice needs to move forward.
2. Know the Data of Your Practice
According to statistics from Insider Intelligence, the US healthcare industry accounted for more than 19.7% of the country’s GDP spending in 2020. This number alone is enough to tell that much data is making up your practice, all of which you need to understand better. How much are your projected earnings and fixed expenses? How many people do you need to accommodate your expected number of patients? How much difference in profit did you make this year and last year?
Your numbers can help you have a more solid picture of your practice and, ultimately, determine what it needs to grow or at least stay afloat. When you have a more robust understanding of your practice’s data, a recession will unlikely cause significant trouble to your cash flow.
3. Protect Your Assets
On top of knowing the economy and your practice better, approaching a recession also means protecting resources that keep your practice moving. As a safety measure, you should have the following insurance to prepare for 2023;
Specialty business liability insurance and malpractice coverage
Personal and business life insurance
It’s worth noting that many doctors were in compromising situations when they faced unexpected exposures they would otherwise survive in if times weren’t tough, so you should exert efforts to protect what you can.
4. Prioritize Saving Over Spending
Expenses are practically unavoidable in running a practice, but to survive the recession, you should consider temporarily holding off capital outlay that doesn’t generate a significant profit. Doing so will allow you to have more financial leeway to save up. Moreover, having money to spare can help sustain unavoidable practice-related expenses when profit becomes hard to come by.
In regular times, expenses that don’t contribute significantly to your practice’s welfare are usually considered unnecessary but harmless. However, they can quickly become a threat during an economic crisis because they take off a massive chunk of your financial reserves that could otherwise go to something more essential. Because of that, your priorities should go towards saving as much money as you can.
5. Invest in Your Team
Some of your practice’s valued assets are the staff members who work to keep its wheels going. To cut costs, laying off some people can minimize payroll expenses, but this also runs the risk of burning yourself out if you can’t meet the demands of your practice due to being understaffed. Unless you are currently paying non-productive people, you should consider giving your employees more attention and engaging with them more.
Chances are your team significantly contributes to how many patients are seen in a day and, ultimately, how much profit you make. What’s more is that they can also help you effectively strategize how to grow your practice while keeping costs to a minimum because they know the practice, what it needs, and what it offers.
Also, did you know that having a great team doesn’t mean additional overhead cost? Most people think that you need a big budget to employ effective team members, but with the rise of remote workers and medical virtual assistants, that’s not necessarily the case. You can enjoy several benefits when you leverage virtual talent, including;