Medical Practice Solutions To Survive The Perfect Economic Storm

The purpose of this letter is to describe the economic situation faced by medical practice owners and managers and the solutions available to offset these challenges. As well we have added an Appendix of our most relevant Best Practices Videos for Patient Acquisition from our Education content.

As expected from the last 6 months the economic headwinds we face as a nation and practice continue. The upward pressure of increased consumer living expenses from rising interest rates has decreased consumer interest and capability in pursuing reimbursed and cash-pay medical procedures. It is important that you evaluate your current practice performance and optimize it towards solutions that can offset that decrease in consumer demand and ultimately practice cash flow that is expected for at least another 18 months.

In short, you should prepare for equal or less revenue and equal or higher expenses over the coming 18 months as compared to the last 18 months; this means harsh pressure on cash flow and profits. The positive factor in the current environment is that technology is providing practices more solutions than ever with respect to understanding their situation (analytics) and being able to attack the challenges of this economic storm with automation and more efficient than ever marketing channels.

Economic Issue Review: Increasing interest rates over the last 2 years have made it more difficult for consumers to pay co-pays/deductibles and/or purchase cash-pay-related medical services due to less spending power. Whether with less cash on hand due to increased daily expenses or less borrowing power, the average consumer is in a much more challenging purchasing power position than 2 years ago. This has a direct correlation to consumer medical interest and financial capability to pursue treatment.

Google Trends reports that the “Medical Facilities & Services” search volume has dropped -7.4% since 2021 and -10.7% since 2019. Consumer search volume in the Google Search Group of “Cosmetic Surgery” related terms has dropped 18% since the post-Covid high of 2021. Obviously, there is a decrease due to Post Covid, but if you look further this search volume is reaching post-2008 financial crisis lows.

The average consumer’s ability to spend money outside of necessities has dropped faster than the decrease in search volume due to rising interest rates and increases in costs across nearly every aspect of their life (rent, mortgage, food, gas, etc.). Interest rates have increased by over 300% since 2019.

Ultimately this means the average practice will feel a larger negative impact than the search volume numbers above as this does not take into account the decreased purchasing power of the consumers who are searching for education but do not have the financial capabilities necessary to move ahead with treatment.

We have seen many practices this year have a decreased appointment to purchase rate of 30%-50% from last year alone due to this hidden double negative of consumer purchasing power. That being said, it is clear that those practices that have maintained a consistent and aggressive marketing plan to new patients and existing have performed much better than those that have not. Their marketing plans are nominal in cost as they revolve around the website (nominal cost), social media (no media cost), and existing patient recall (no media cost).

The above practice challenges are compounded by increased practice costs, decreasing insurance reimbursement, and personnel retention. As practices, we are looking into the “Perfect Economic Storm”…