The latest facts
Research scientists, doctors, politicians, executives and citizens are all waking up simultaneously — in the space of just a few weeks — to the reality that this coronavirus (COVID-19) issue could go on for awhile and have a potentially significant impact on global economic growth and geopolitics, as well as vacation planning and practice operations.
Ophthalmology is a wonderful profession, but it is uniquely exposed to the possible impacts of COVID-19. We certainly have it better off in our ophthalmology practices than Princess Cruises and Delta Air Lines. But my Singapore client is now reporting that business is sharply off. Our mostly geriatric patients are the most susceptible to dying from the virus. And the typical ophthalmologist works nose-to-nose with 150 patients a week. Before long, some of those noses could be loaded.
New red dots are popping up daily on the excellent (if spooky) Johns Hopkins map showing worldwide cases.
Research scientists, doctors, politicians, executives and citizens are all waking up simultaneously — in the space of just a few weeks — to the reality that this coronavirus (COVID-19) issue could go on for awhile and have a potentially significant impact on global economic growth and geopolitics, as well as vacation planning and practice operations.Source: CDC
First, the apparent facts as of this writing:
- Coronaviruses are nothing new; they were first discovered 60 years ago.
- Catching COVID-19 results in everything from mild flu symptoms to brisk respiratory decline and failure.
- Like the common flu, death rates are much higher for seniors, around 8% in some reporting.
- Treatment thus far ranges from relieving symptoms to ventilator life support; no vaccine protection or cure is available at present.
- In the last month, the number of reported new daily cases in China has fallen by a factor of 100 (with mass quarantines), while reported daily cases in rest of the world are up by a factor of 100.
- In cold mortality terms, nine Americans have died along with about 3,000 more in the rest of the world. To put that in a public health perspective, that is about how many people die worldwide every few hours from cigarette smoking.
- That said, as of the end of February, in those younger than age 50 years, the risk for death was less than 0.5%, while in those older than the age of 70 years, it was more than 8%. No deaths had occurred in children younger than 10 years as of Feb. 26.
- Thus far, the personal and economic disruptions of COVID-19 are perhaps more impressive than the raw infection stats:
o The U.S. stock market fell nearly 14% in a single week.
o Nonessential business travel is being canceled by major corporations.
o Holiday plans are on hold (Venice, anyone? Tokyo?).
o Nationwide bans on large public gatherings are spreading.
o Amazon’s most popular hand sanitizers are on indefinite backorder.
Here is one more fact: Ophthalmologists are terrible hand washers. In our consulting observations of thousands of patient encounters through the years, we have noted that male eye doctors wash or sanitize only 50% of the time between patients, and female eye surgeons are only slightly better at about 65%. These disappointing rates are seen even when otherwise thoughtful doctors manipulate the ocular adnexa of patient A and moments later the adnexa of patient B. (And are being observed by a visitor!)
A thought experiment
As the old man used to say, “Expect the worst, hope for the best and settle for anything in between.” With that, here is a thought experiment concerning an adverse COVID-19 scenario over the next 12 to 24 months.
1. It does not take much of a leap of imagination to assume that the U.S. economy, now in its 11th year of expansion and overdue for a recession, is nudged into recession faster and deeper because of COVID-19. That in itself is not too worrisome, especially to health care providers who are generally resistant to the business cycle.
2. But with recession comes a drop in investment values, by as much as 30% or more, depending on which analysts you read. Now, that is not too much of a bother for 40-year-old eye surgeons who have years and years to save for retirement. But a significant percentage of America’s surgeons are older than 60 years. If the stock downturn is sustained, some will have to delay or downsize retirement.
3. We all remember what happened to elective/cosmetic care volumes in 2008-2009 with the Great Recession. A reversal of consumer confidence will hit elective care providers the hardest.
4. If COVID-19 has the same transmission rate as influenza, the common flu, we might find about 45 million Americans infected if a pandemic sweeps the planet (and keep in mind, this coronavirus is now present in approximately 60 countries as of this writing).
5. Fatality statistics for influenza are about 0.1%. Epidemiologists are venturing guesses of anything from 0.5% to 3% for COVID-19. Let’s assume that 1% is the right answer. That would be about 450,000 extra fatalities, or a 15% increase, in the annual U.S. death toll.
6. A significant part of the patient care performed by ophthalmologists is referred by optometrists. In the midst of a pandemic, it is easy to imagine a significant percentage of optometric patients pushing their appointments out until the “all clear” signal emerges.
7. It seems likely that the youngest, healthiest patients might well delay their eye doctor appointments, which does not sound great. But they will eventually come back. What about older patients?
8. Seniors represent about 60% of the cash flow of the average general ophthalmology practice. On the present trajectory, COVID-19 appears to have as much as an 8% fatality rate among seniors. If 8% of 60% of your business goes away permanently, that is a nearly 5% drop in cash flow. And since most costs are fixed, that translates to a 10% drop in profits.
9. Keep in mind that all of these statistics are averages. You do not practice in an average community; you practice in your community, which may be more or less affected by COVID-19.
10. And all of this is before considering the knock-on effects of this virus. Elevated staff absences. ASC and clinic supply disruptions. Restrictions in movement and quarantines for the hardest-hit communities.
11. COVID-19 is certainly on the radar screens of all thoughtful health care market participants:
a. Hospitals with generally thin operating margins, which have to front-load needed resources for a coming pandemic, while developing critical plans to protect their workers.
b. Government payers, whose finances could be so stretched by COVID-19 as to oblige (and provide political cover for) further reimbursement cuts.
c. Government policymakers, some of whom are seeing COVID-19 as another good reason to shift to universal health coverage.
d. Insurance companies, which are now realizing their potentially significant exposure to unforeseen claims.
e. The pharmaceutical and device industry, which has to interpolate between supply line snags, a pullback in non-critical capital investments and a sensitive customer base that tends to say, “When in doubt, don’t.”
f. Private equity firms, which would reasonably see COVID-19, at the least, as a business development headwind, if not a tornado wiping out this delicate enterprise model.
Practical things to do
Stay informed. Click on www.aao.org for updates and useful portals. Scan your local public health department’s website for physician-aimed advisories.
Follow the evolving CDC recommendations for infection protection and control practices at.
Increase the number of sanitizing stations in your office. Urge sick staff to stay home. With a discrete sign, ask patients to report any flu symptoms at the front desk before they move throughout your office and potentially infect a wider cross-section of staff and patients. Subject to official public health recommendations and your own sensibilities, if COVID-19 takes hold in your community, consider front door temperature and travel screening.
Tell your patients what you are doing to reduce infection risks during the pandemic; use your website and post signage. And do not just say it, but show it: Let patients see you sanitizing your hands as well as wiping down patient contact surfaces.
On the economic front, develop a plan for what you would do if 25% of your practice revenue was interrupted for a few months. The average practice has ready capital access equivalent to less than 3 months’ operating expenses and would be hard-pressed to thrive in this scenario. Build on your reserves, if possible: Apply for a larger line of credit. Increase personal savings. Make sure the billing department is as efficient as possible and collecting all allowable fees.
Scan your staff and providers for any “key man” vulnerabilities. In some small practices, this could be a single billing staffer or administrator. In other settings, even the temporary loss of a single high-producing surgeon could be problematic.
Reassess your retirement trajectory and financial position. February’s severe correction in the stock market was long overdue and should have been already built into your personal financial plan and asset allocations, particularly if you are approaching retirement. But if you (like many) have more hopes than plans, now is a time to harness the shock of a drop in your net worth to reset your expectations.
Steady your nerves and be prepared to make difficult decisions if the deepest or most prolonged impacts above come to pass. As much empathy as you may have for all of your staff, it would be better to modestly cut costs (including payroll costs) to allow the practice to sail through the disruptions that may be coming than to threaten everyone’s job by retaining a full staff census as patient counts drop.