by Steve Kikikis, OMNI Practice Group

In Washington State, Governor Jay Inslee has halted all non-emergency services and elective procedures for the next 8 weeks forcing most medical offices to close during this time (hospitals, surgery centers, dental offices, etc.)

Rent is still due!
The obligation to make a rent payment is not automatically stopped because your business has been forced to close! Here are some ideas of what you can try:

Talk to your Landlord.
Engage with your landlord right away. It may be news to them that your office has been forced to close, leaving you with little to no ability to produce revenue. They might in a situation to help, though this is a negotiation not a guarantee. Ask your landlord if they would be willing to waive or reduce your rent, a 90-day deferral of rent could be option, or just pay the CAM/NNN – anything can help. Offer to make it up over time once the doors are back open and you’re treating patients. Remember the landlord may be having their own financial hardships, but they do have an interest in you being able to pay the rent for years to come.

Check-in with your Insurance Agent.
Some insurance policies have coverage for unique circumstances in the case that you are not able to run your business. This may help with covering rents and loss of wages.

Legally...
I am not an attorney, nor is this an attempt to provide legal advice. So, check-in and consult your attorney, make sure they specialize in Commercial Real Estate Law with a focus on Medical leases and contracts. On rare occasions, your lease may include Force Majeure, which could offer relief in unforeseeable circumstances that prevent someone from fulfilling a contract, but this is unlikely. After a quick review of a traditional WA State Commercial Brokers Association Lease, there was no Force Majeure clause within the document.
Ask your attorney about Common Law which is prevalent in many states. This may address the impossibility to perform and make an income, it doesn’t automatically relieve you from your rent obligation, but the fact that you are forced to perform only emergency procedures in WA State may allow for an avenue for relief.

Loan…
Banks across the nation are offering short term Small Business Loans at low rates as a method for giving small businesses financial aid. First, check-in with specific banks that focus on loans for Medical providers. Small Business Loans are available now. Some larger national banks may offer other loan programs or allow for deferred payments for the time being. Now may also be a good time to refinance your practice loan into a lower rate loan and saving you money.

If you need help getting in touch with a qualified attorney, banker, want to talk about your specific circumstances and ideas, or just want to tell me I am wrong, please contact me at [email protected].

Connect with Steve on LinkedIn: https://www.linkedin.com/in/steve-kikikis-378b8697/

By Corey Young, DDS, MBA, CVA

What a crazy time we are in. At least to me, this is a sober reminder that major disruptors are almost impossible to predict. I am reassured that our nation seems to be taking the situation seriously and I do firmly believe we can weather this storm. Most of you reading this are making difficult decisions about staffing, how to deal with emergencies, and how you are going to pay the rent for the next few months. I don’t envy any of you right now. There is a strong support system in this industry ready to help. Don’t hesitate to reach out. I think you will find all of us willing to go the extra mile right now to help you keep the ship afloat.

Many of you reading this are very close to transitioning your practice, some of you being on the fence. It is human nature to want to put off transitioning until after this crisis is over. You may even be getting that advice from your CPA or financial adviser. I am going to give you three reasons why you should do exactly the opposite.

One, value. We have been in a booming economy. Many of your numbers have been at all time highs over the last couple of years. Now COVID-19 hits. How long will we be shut down? How will the economy look on the other side? Will the clients pull way back on elective treatments for a couple of years like they have done in other recessions? In the present, buyers and bankers will mostly be willing to look past these next couple of months as an anomaly. Practice values will hold. For a while. That said, as someone who does Valuations and sells practices, I can assure you that in two years no one will care what your 2018 and 2019 numbers look like. In two years, what happens in 2020 and 2021 will be the new reality.

Two, market. There is a backlog of practices that are nearing the market. The people who work the transition market have been wondering when that bubble will burst for a few years now. I for one believe this crisis will do the job. Most doctors are going to ignore me and wait two, three, even five years, watch the market flood, the economy falls off its current pace, and wonder why their practices are down in value and are hard to sell. The early bird gets the worm.

Three, time. Many of your potential buyers had their hours cut, some by 100%. They have unprecedented time right now to look at practices. Odds are you also have more free time than normal. Realistically, practice sales won’t close until this crisis is over. That said, there are months of work between deciding to put a practice on the market and a practice changing hands. When life gives you lemons… 

By Corey Young, DDS, MBA, CVA, ABI

What a crazy time we are in. At least to me, this is a sober reminder that major disruptors are almost impossible to predict. I am reassured that our nation seems to be taking the situation seriously and I do firmly believe we can weather this storm. Most of you reading this have had your professional world rocked. You’ve probably had your hours cut. Some of you may even have been laid off. Fortunately, there is a strong support system in this industry ready to help. Don’t hesitate to reach out. I think you will find all of us willing to go the extra mile right now to help you keep your ship afloat.

Most of you have thought about buying a practice at some point, some of you have been seriously pursuing ownership. There is going to be a lot of advice out there right now saying that it is far too risky to buy a practice and it is better to get/keep a nice safe, secure job. I am going to give you four reasons why you should do exactly the opposite.

One, financing. Interest rates are at an all-time low. Most banks are willing to defer principal payments or even the entire payment for months. Some have even said a year. I’m not going out on much of a limb to say these are the best lending conditions you will see in your career. Historically, there have been periods of higher interest rates. When I was a kid in the early eighties, they were fourteen percent. There have been many times when banks weren’t as generous on the amounts they would lend. One hundred percent financing is not a given.

Two, taxes. The government is going to spend a fortune to deal with this crisis, we have an aging population, new social safety nets will probably be put in place, etc... It is hard to imagine a scenario where taxes don’t go up, maybe way up. Nobody gets hit in a tax hike as hard as a non-business owning high wage earner. As a professional, this is you.

Three, working for a corporation in a down economy. Corporations aren’t inherently bad entities. Many are fabulous. That said, unless they are a non-profit, they aren’t set up to be a charity. The shareholders and private equity backers are going to demand performance once this crisis is over. If clients hold off on elective treatment, keeping revenue up will require a high volume. You could be expected to see many more patients, in less time, than you currently do. It happened to physicians, it happened to pharmacists, it could happen to you.

Four, time. Odds are you have more free time than normal. No one, especially the bank, is going to expect you to complete a practice purchase before this crisis is over. That said, doing the work now could put you in a position to complete the purchase when the restrictions are lifted and capitalize on the built-up demand, which inevitably will occur.

In the words of Rahm Emanuel, “Never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”