What Steps ENT Private Practices Are Taking to Financially Survive the Coronavirus Pandemic

Waco Ear, Nose & Throat was approved and funded for a federal Paycheck Protection Program (PPP) loan through a local bank in the nick of time to help save the practice. Unfortunately, not every private practice has been fortunate enough to obtain funds through the loan program created by the CARES Act passed by Congress in the aftermath of the COVID-19 pandemic. The CARES Act allotted $349 billion initially, with a second round of $310 billion, to help keep small businesses in the U.S. afloat while their doors were closed by law. These funds are expected to have run out by the time this article is published. But even those who have received PPP funds will still need to be proactive, flexible, and perhaps even creative in figuring out how to financially survive the coming months.

“It’s disconcerting that the first round of the program was shuttered after less than two weeks,” said Bradford Holland, MD, one of three physicians at Waco Ear, Nose & Throat, a private practice located in Waco, Texas. “There are many stories of sister practices and medical colleagues who were in the pipeline but didn’t get funded because of the sheer volume of applications,” he said. “We felt fortunate, but it’s clearly leaving a lot of people in the dust.”

As of this writing, even with the loan, Dr. Holland said his practice’s existence is tenuous beyond mid-June if some semblance of normalcy does not return—had Waco Ear, Nose & Throat not gotten the loan, their doors might have closed permanently.

According to the U.S. Department of the Treasury, PPP loan amounts do not have to be repaid as long as, during the eight-week period after the loan closes:

• Loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs incurred before Feb. 15, 2020; and
• Employee and compensation levels are maintained.

Payroll costs are capped at $100,000 on an annualized basis for each employee, and not more than 25% of the forgiven loan amount may be for qualifying non-payroll costs. Businesses that use the loan amount for anything other than the above and/or that do not maintain their staff and payroll will owe money when the 1% interest loan is due in two years. Loan forgiveness will also be reduced if the business’ full-time employee head count is reduced, or salaries and wages are decreased by more than 25% for any employee who made less than $100,000 in 2019. Practices will have until June 30, 2020, to restore their full-time employment and salary levels for any changes made between Feb. 15, 2020 and April 26, 2020.

They’re working much less than 75% of their normal hours, but we’ve made a commitment to our staff that they won’t be paid less than 75% of their normal pay. —Jed Grisel, MD

With elective surgeries put on hold by law in some states, otolaryngology practices spent weeks effectively shut down or operating in a very limited capacity, primarily for emergencies. Jed Grisel, MD, of Texoma ENT & Allergy in Wichita Falls, Texas, said his practice was operating at about 30% of its usual volume from the time the governor of Texas made it illegal to perform elective surgeries in late March through the end of April. Dr. Grisel’s practice was able to secure a PPP loan for $430,000 to cover payroll for their 38 employees during that time and into the next month. “They all have families and mortgages or rent and other bills to pay, and we really wanted to find a way to avoid furloughs or layoffs,” he said.

While the loan will cover payroll for about two months, Texoma ENT & Allergy will need to rely on its small amount of savings and the incoming revenue from insurance companies to cover other expenses. The business paid staff 75% of their normal pay—per the requirements for the PPP loan to be forgiven—but reduced their employees’ hours substantially. Dr. Grisel said most of the staff came in one day per week to work on reorganizing and preparing for reopening the allergy shot clinic. They also used that time to train staff on how to use the previously purchased new electronic health record system that will debut in June. “They’re working much less than 75% of their normal hours, but we’ve made a commitment to our staff, at least for the next two months, that they won’t be paid less than 75% of their normal pay,” he said.

David Melon, MD, of Carolina Ear Nose & Throat – Sinus & Allergy Center P.A., with three locations in North Carolina, said his practice’s largest expenses are payroll and healthcare costs. They have been covering those costs with a PPP loan, advance payment from Medicare, HHS grant money, and a physician partner salary reduction. Their ambulatory surgery center is a joint venture with two regional hospitals and is coordinating only emergent surgery support functions until elective surgery resource restrictions are lifted. “The ambulatory surgery center is doing similar PPP support mitigation strategies so as to be able to rapidly respond as a lower-cost point of service for ambulatory surgery once the non-emergent case restriction is waived,” he said.

Beyond the PPP

While the PPP may have been the most beneficial component of the CARES legislation in allowing small businesses to secure a forgivable loan, there are other programs that can assist private practices. Gavin Setzen, MD, past president of the American Academy of Otolaryngology–Head and Neck Surgery (AAO-HNS) and an otolaryngologist in private practice at Albany ENT & Allergy Services in Albany, N.Y., secured a PPP loan for his practice but also applied separately for the Economic Injury Disaster Loan (EIDL) program, which provides grants up to $10,000 in the form of an immediate advance. Dr. Setzen’s practice has a staff of 115, including 10 otolaryngologists, eight physician assistants, seven audiologists, a CT technologist, a speech-language pathologist, and an allergy testing and immunotherapy department. At the time of this reporting, they were closed to non-urgent in-person patient visits but were providing telehealth services. EIDL funds, he said, can be used to meet working capital needs other than payroll. The practice also requested debt forbearance (an agreement between a lender and a borrower to temporarily suspend debt payments) for 90 days. The forbearance amount will be added to the term of the mortgage on the practice’s new 54,000-square-foot office building and ambulatory surgery center, which Dr. Setzen said has been very helpful from a cash flow perspective.

Other ways to maintain cash flow, according to Dr. Setzen, include candidly discussing the practice’s financial situation with landlords, billing services, vendors, IT support, and others, as well as contacting malpractice insurance companies. In New York, he said, malpractice premium payments were suspended for 60 days if the practice was not providing more than 20 hours of care per week. For some practices, it may be worth considering temporarily transitioning to part-time status.

“Also, file a claim with your business interruption insurance carrier,” he said. “It will likely be denied, but the claim is on file and there is pressure to have this [COVID-19] considered a covered event.”

Predicting the Future

Dr. Setzen believes that as many of the surgical procedures performed in otolaryngology are minimally invasive, outpatient, or office-based, patient concerns about disease transmission will have a significant impact for the foreseeable future on the performance of these mostly elective surgical procedures.

“I think until there’s adequate diagnostic testing, serology demonstrating immunity, herd immunity, and a reliable, readily available vaccination, there will still be hesitation amongst patients and otolaryngologists alike when diagnosing and treating conditions where viral load transmission and potential for a realization of particles exists,” he said.

I think until there’s adequate diagnostic testing, serology demonstrating immunity, herd immunity, and a reliable, readily available vaccination, there will still be hesitation amongst patients and otolaryngologists alike when diagnosing and treating conditions where viral load transmission and potential for a realization of particles exists. —Gavin Setzen, MD

Beyond government assistance, Will Harrill, MD, also of Carolina Ear Nose & Throat Sinus & Allergy Center, said his practice has been able to keep up with the ever-changing landscape of the pandemic with support from organizations including the AAO-HNS, the North Carolina Society of Otolaryngology and Head and Neck Surgery, and the practice’s own malpractice carrier. The initial speed of the pandemic’s impact on otolaryngology as a specialty, he said, was so rapid that grassroots communication, including teleconferences and email chains both statewide and across the U.S., were very helpful in terms of filling best practice voids that would ordinarily have a formal review process before being disseminated.

He added that financial hardship may be most pronounced in the private practice world, given the equity ownership risk and responsibility that add an extra layer of anxiety onto the desire for answers to questions that have never been asked before.

“Many of us remember being in Denver at the annual AAO-HNS meeting on 9/11 and scrambling into cars with colleagues we had never met or not seen for years as we all carpooled home over the following 24 hours,” he said. “COVID-19 has been sort of the same, with many of us taking a virtual journey together through this.” 

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Renée Bacher is a freelance medical writer based in Louisiana.