Field trip to the ‘new normal’: A look at where ophthalmology will stand after COVID-19 pandemic
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Thirteen percent finished. If you believe the experts who study pandemics and their aftermath, that is about all the further along we are in getting through COVID-19 as a country and as a planet.
Imagine starting a cross-country road trip from New York to Los Angeles. As of this writing, you have made it to the West Virginia state line. Just 87% left to go. The experts say that we are in for a long haul and that we all have to settle in for the ride.
In some client offices — particularly retinal and glaucoma subspecialties, and in rural communities — practice life is rapidly on the mend. One rural practice reports that 95% of patients who were called to set up their next appointment say words to the effect of, “Thank God you called, honey, I’ve been looking for an excuse to get out of the house!”
In other practices, those in hard-hit urban markets, patients, staff and doctors alike are holding back, even if their governors have loosened the reins.
But COVID shocks notwithstanding, virtually all private ophthalmic practices will get through this, even if tens of thousands of private restaurants close down and Carnival Cruise Line makes their bondholders weep.
So, let’s take a trip together past the 87% of this pandemic still left to us and try to imagine our practice lives in March 2022.
Demand for eye care
The seminal question is, “What will happen to market demand for eye care in America?” The baseline rate of demand growth for ophthalmologist services, before COVID-19, was pretty robust at 4+% per year. Said another way, because the ranks of seniors are growing so fast and seniors use vastly more eye care than younger folks, ophthalmology is still riding an age wave that will last for the next generation.
How much of a business headwind will COVID-19 represent? This can be looked at in three ways.
- First, the grim loss of patients who are taken away by this virus.
- Second, the loss of patient volumes, hopefully transient, that is due to patient fear.
- And third, the loss of practice profits because patients have to be spaced out, protective gear is obliged, and extra cleaning will drive higher staffing costs.
Let’s get the grim part out of the way first. As of this writing, more than 70,000 Americans have died from COVID-19. There is no way to know for certain, but 2 years from now, depending on what forecast you read, there could be as few as 150,000 total COVID-19 deaths or well more than a million. Let’s use a dreadful, and hopefully way high, 500,000 as a placeholder figure. So far, seniors 65+ years old have represented roughly 70% of deaths, so if these underlying figures are correct, we might see about 350,000 extra seniors expire over a 2-year period, which is about 9% over the usual baseline of about 2 million seniors expiring in America each year.
Expressed differently, with a little more than 15,000 active practicing ophthalmologists in America, the average ophthalmologist might prematurely lose about 23 senior patients. On a human level, this is of course a profound tragedy. But practice-wise, this is not a mortal blow.
How many patients will stay away from doctor’s visits, and for how long? We have absolutely no certain answer. But based on the experience of a long-term client in Singapore, a country that has battled successive waves of deadly viruses, patients have become fairly blasé about the need to wear masks and check temperatures before they enter the eye clinic. COVID-19, like SARS, swine flu and H1N1 before it, seems unlikely to keep patients from eye care, especially after a vaccine, herd immunity or effective medical intervention becomes available.
While it does not appear that these first two direct impacts — patients lost forever and patients scared away — will unduly affect the economics of eye care, the third dimension surely will harm the profession because of a loss of efficiency and rising costs, as the accompanying simplified solo practice table portrays.
So, the doctor in this sample takes a 36% pay cut. But it does not stop there. Chances are, the same doctor had to borrow money to cover operating losses in 2020 and maybe even in 2021, if COVID-19 came roaring back (as happened during the Spanish flu pandemic.) This doctor is still paying off this loan, which is a further headwind on profits.
|
|
Before COVID-19 |
After COVID-19 |
|
Collections per year** |
$1,000,000 |
$900,000 |
|
Expenses per year* |
$650,000 |
$675,000 |
|
Profit (MD income) |
$350,000 |
$225,000 |
|
Patients per year** |
6,000 |
5,400 |
|
Expense per patient visit |
$108 |
$125 |
|
Profit per patient visit |
$58 |
$42 |
*Increased because of extra cleaning, personal protective equipment and longer hours.
**Decreased because of social distancing and having to spread out patients.
A different world
Unfortunately, we cannot employ the restauranteur’s refuge of paring down to a “ghost kitchen” — basically a 100% delivery outfit, with no on-site customers. Health care’s equivalent of ghost care, telehealth, at least in the high-touch/high-tech world of ophthalmology, is a poor and temporizing substitute for in-person care. (And thank goodness for that because, alternately, ophthalmic care, like radiology, could be exported to Mumbai.) Even with augmented payments and liberalized standards, telehealth is economic fool’s gold.
It seems certain that the post-COVID world that awaits us will be survivable. But it will be a different world:
- Some practices in rural America will be relatively unscathed. Their patients have practiced social distancing as a lifestyle.
- Some doctors will notice this and depart from the cities they love (where their favorite restaurants are shuttered) to practice in the heartland.
- Some surgeons will thrive in relative terms as their older colleagues take this as a signal to retire early or downsize to a better work-life balance (something that the 2020 lockdowns taught them to appreciate).
- Private equity will have to restructure their transactions or fade away. Abruptly, in some weak cases. There is no special prize for going broke slowly.
- Lay staff wages will continue to stagnate, even fall, as high unemployment rates linger for a few years.
- Jittery patients will potentially decline refractive and premium lens options long after viral deaths subside and the masks come down.
- The value of the building you own, or the rent you pay, may soften.
- Attendance at national meetings and congresses will fall, and virtual education will rise.
- Industry innovators will have to pare their offerings to those things that are not just mildly clinically interesting, but that briskly generate income or save costs.
Stay safe. Stay healthy. We are in this together.
For more information:
John B. Pinto is president of J. Pinto & Associates Inc., an ophthalmic practice management consulting firm established in 1979. John is the country’s most-published author on ophthalmology management topics. He is the author of John Pinto’s Little Green Book of Ophthalmology, Turnaround: 21 Weeks to Ophthalmic Practice Survival and Permanent Improvement, Cashflow: The Practical Art of Earning More From Your Ophthalmology Practice, The Efficient Ophthalmologist, The Women of Ophthalmology, Legal Issues in Ophthalmology, Ophthalmic Leadership: A Practical Guide for Physicians, Administrators and Teams, Simple: The Inner Game of Ophthalmic Practice Success and a new book, UP: Taking Ophthalmic Administrators and Management Teams to the Next Level of Skill, Performance and Career Satisfaction. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.