Uncharted territory: Plastic surgeons in private practice navigate financial uncertainty during the COVID-19 pandemic
In just a few short weeks in March, the threat of a coronavirus recession loomed far and wide, as bustling cities became ghost towns, non-essential businesses ceased operations, hospitals canceled elective surgeries and millions of Americans filed for unemployment. Although the ASPS member surgeons who spoke to PSN agree that the Great Recession of 2008 hurt the cosmetic medicine industry, they argue the impending financial crisis wrought by the coronavirus will have a much more substantial effect and potentially force some practices to close their doors, as the number of executive orders to suspend all elective surgery grows.
"The 2008 recession doesn't come close," says Gary Smotrich, MD, New Jersey. "After 9/11, the threat was overseas. Now the threat is someone next to you at the bar. People are being ordered to stay home. No one was prepared for this. It's challenging for everyone, but it's certainly an issue for those of us still in private practice. If you're salaried, you'll still get a paycheck. But if you're in private practice, it can be problematic, and I don't foresee any bailouts for physicians and private practices. I don't think there's a medical specialty that's going to be hit as hard as ours."
One of the most notable differences from the 2008 recession is the speed and severity of the crisis and how – in a matter of weeks – it drastically changed the way people live and work.
"This feels a little different from 2008 in that it escalated so quickly," says George Pope, MD, who started his practice in Orlando more than 30 years ago. "Patients and plastic surgeons don't know what to do. Some offices have closed, some are still open. Because of the accelerated pace, surgeons may find themselves in a situation where their cash flow is greatly affected by this. If you've been doing reconstructive surgery, you're waiting on insurance checks to come in. But, if you're purely cosmetic and depending on new consults or pre-ops to pay for their upcoming surgery, there's no cash flow."
In 2008, Anu Bajaj, MD, had just opened a private practice in Oklahoma City, Okla., that focused solely on reconstructive surgery. She transitioned to an aesthetic practice a few years ago and says the uncertainty wrought by the coronavirus will hit her differently.
"It's changing hourly, so it's hard to know what's going to happen," Dr. Bajaj says. "From a private-practice standpoint, the No. 1 concern going through everyone's mind is how to pay your bills, how to pay your staff, how to cover your overhead and how to support your family. Those are very real concerns."
At press time, the U.S. Senate had approved a $2 trillion stimulus that provided help to small businesses. Further details on how that effort will help plastic surgeons is available at PlasticSurgery.org/COVID19.
"If you're running a solo private practice, you don't have a lot of wiggle room, and the new bill that grants workers two weeks of paid sick leave and up to 12 weeks of paid family and medical leave would put someone like me out of business," Dr. Bajaj says. "This could be the death for some private practices if it lasts for more than a couple weeks."
ASPS/PSF Board Vice President of Membership Steven Williams, MD, who started his private practice in 2008, notes the financial pressure amidst the outbreak will feel similar to the Great Recession, yet the pandemic will present new challenges, such as decreased medical resources and overall burden on the healthcare system.
"The health crisis is the primary concern right now, but as people recover, resources will be an issue. Many plastic surgeons don't have their own surgery centers, and plastic surgeons relying on hospitals to perform cosmetic surgery will see a much longer-term challenge," he says. "Even when things stabilize, hospitals may take longer to recover because they are dealing with sicker people. There will be a general backlog of elective surgery from ophthalmology, orthopedics and GI. All those procedures are building up, and those hospitals are going to deal with those types of issues first.
"Plastic surgeons performing aesthetic surgery will be in the back of the line, so without access to a place to perform those surgeries, they will be even further behind," he adds. "That's a significant difference from the 2008 recession."
Dr. Smotrich says the pandemic is a wake-up call to examine the nation's healthcare system.
"This could make some politicians reconsider universal healthcare because a virus doesn't ask for an insurance card," he notes. "We have a patchwork healthcare system, and when this pandemic is over, the discussion for some level of guaranteed coverage may get louder."
Dr. Williams recently had to turn away prospective cosmetic patients due to the Bay Area's "shelter-in-place" order, which, at press time, was slated to remain in effect until April 7. In addition, he postponed all non-urgent surgeries and non-postoperative appointments with plans to immediately resume all services when the order is lifted.
"Even though we just did an emergency hand procedure today, in a practice like ours, we have hundreds of thousands of dollars of cosmetic plastic surgery that's waiting to be done," says Dr. Williams, whose practice is 85 percent cosmetic. "But for the good of the community, we can't do it right now."
As more states continue to mandate shelter-in-place orders, Dr. Williams notes this is a critical time for private practices to maintain open communication with their patients and staff.
"One of the hardest things is figuring out what to do for our patients and what to do for our employees," he says. "Your team is going to be nervous and scared, and you need to be sure you're providing resources. For some practices, that may mean temporarily reducing hours, or laying off staff. For all practices, it means they won't be doing a lot of active hiring or expansion.
"We haven't made any cuts yet, but we're monitoring the situation and trying to make decisions one week at a time," he continues. "Part of this is challenging because it's not clear what the government is going to do. If the government is providing resources, then that becomes easier for us to support our employees. If not, we are looking at things like unemployment. I think that's going to be the reality for most practices and probably ours too on some level. We still have to find ways to take care of our patients."
When Florida hospitals started canceling elective surgeries, Dr. Pope says plastic surgeons were still able to perform procedures in freestanding ambulatory surgery centers or operating suites in their offices – until the governor suspended all non-essential elective medical surgeries.
At the time of writing, Dr. Pope's practice had remained steady with a minimal decline in consultations and nonsurgical procedures, although he noted he postponed all elective, non-essential surgeries and furloughed his staff indefinitely.
"Even my aesthetician had to stop working," Dr. Pope says. "Now we're mandated not to do anything, which is unfortunate. Some of our patients who were temporarily laid-off wanted to proceed with their surgeries and use their time at home to recover, but that's no longer an option. We are told the ban is for two weeks, but it could go on until May. Maybe we'll get some relief from the federal government. It's going to really impact a lot of practices. We'll be closed indefinitely, which is hard to fathom."
The business and financial resources available at plasticsurgery.com/covid19, includes information that ranges from conducting layoffs and furloughs to unemployment benefits and telemedicine information, to supporting plastic surgeons as they deal with the economic impact and uncertainty during the pandemic. The Society also extended its grace period for dues through May 31 and will reassess as needed. ASPS members facing a financially challenging time can take advantage of the dues installment payment program to delay payments without any interruption to their benefits.
In the waiting
As private practices across the nation temporarily suspend elective procedures to adhere to CMS recommendations and the Society's guidance regarding elective and non-essential patient care, plastic surgeons can take advantage of their involuntary downtime by assessing their practices, improving their operations and preparing for recovery.
"It's an ideal time for you to conduct a maintenance check on your systems and processes, train staff on software and make sure your intake and surgical consent forms are up-to-date," Dr. Pope says. "It's also a good time to take a look at your office, and implement repairs and updates as needed."
Dr. Bajaj intends to use her downtime to work through financial issues, manage her office and get organized.
"I have a small staff, so we can still meet and get things done," she says. "We'll work on our pre-op and post-op instruction forms, record social media videos and focus on putting together patient-education videos. On a personal level, I want to focus on hobbies I've always wanted to pursue, such as taking an online writing workshop, painting and drawing."
While plastic surgeons diversified their practices with medical spas and Botox offerings to generate revenue during the 2008 recession, Dr. Smotrich notes the solutions that worked back then will not work today. "There's so much competition for the cosmetic dollar now," he says. "We're also increasingly losing reconstructive procedures to other specialties and the market for injectables has become attractive to other specialties – medical and otherwise. You can't just flip a switch and change to a reconstructive practice overnight if you mainly perform cosmetic surgery. After 30 years of taking E.R. call, surgeons like myself decided enough was enough and switched to an exclusively cosmetic practice. But when a crisis like this happens, you begin to miss those reconstructive procedures you gave up."
Dr. Williams agrees that today's competitive market makes it difficult to apply strategies that were successful 12 years ago.
"Diversification is always helpful because it allows multiple streams of revenue and reinforces the diversity our specialty has to offer," he says. "I would always advocate for responsible expansion and diversification, but there were fewer medical spas and business entities providing those types of services in 2008. The space is more crowded now."
Diversification is necessary, but it'll likely look different for every plastic surgeon, Dr. Bajaj notes.
"A med spa still is a financial investment and requires a higher overhead," she says. "The easiest way for me to diversify is to return to ramping-up the reconstructive component."
Dr. Pope says some of the strategies plastic surgeons implemented to attract new patients during the 2008 recession could still work in the future – such as offering discounts and specials on Botox, fillers and other procedures.
"It may be something to consider to get the phones ringing again when this ends," he says. "If plastic surgeons have a good relationship with their banker, they can also apply for a line of credit if they don't have one already, and their bank can help them get through their dry spell when their cash flow has really plummeted."
While waiting for their practices to resume to normal, Drs. Pope and Bajaj joined other plastic surgeons in offering virtual visits for consultations and follow-up care.
"This alternative would be a way to salvage some of these consultations that would otherwise be cancelled," Dr. Pope says. "I've never been one to do virtual appointments or telemedicine, but this entire situation may change the way we see our patients.
"I do think we have to strike a fine balance between showing concern for our patients and encouraging them to have surgery," he adds. "You don't want to look mercenary."
For Dr. Bajaj, telemedicine is a temporary solution for her practice.
"So much of what we do as plastic surgeons is based on feeling tissue, assessing things and being tactile with our hands, so I'm not sure how you can do an effective consultation purely through a virtual platform," she says. "I can't imagine scheduling an aesthetic procedure based on that type of evaluation alone."
'You're not the only one'
Navigating a landscape that seems to change on a daily – if not hourly – basis while also working in an unstable economy may engender feelings of anxiety about the future of the specialty for plastic surgeons in the early stages of their career. Dr. Bajaj encourages young plastic surgeons to reach out to their colleagues for support during this difficult time.
"You're not alone," she says. "In a time like this, it's really easy to feel negative and focus on how awful things are for you. I find it really helpful to reach out to my peers. You're not the only one going through this. If we can figure out how to get through this together, we can help each other out."
Dr. Smotrich advises younger plastic surgeons to add a component of reconstructive surgery to their practice to diminish risks in an economic downturn.
"No one wants to deal with insurance companies and the host of reimbursement issues, but reconstructive procedures can help when the economy sours," he says, adding that this crisis could change the trajectory of some young plastic surgeons' careers. "Surgeons new to practice may well gravitate to the security of a salaried position or reconsider plans for an exclusively aesthetic practice."
On the upside, newer practices can adapt quickly to unexpected changes and adjust when necessary.
"Pivoting a new practice may be easier," Dr. Williams says. "The nice thing about being established is being known in the community. We have patients to turn to once we return to normal. The downside is a lot of us have bigger overheads and longer leases, which locks us in and decreases our ability to be flexible. There will always be a need for reconstructive surgery, so smaller practices may find that building gigantic med spas and large cosmetic practices doesn't make as much sense anymore, and they may choose to downsize their cosmetic ambitions or primarily focus on reconstructive surgery for the time being."
During a time of heightened uncertainty around the future of private practices, Dr. Williams urges plastic surgeons to remain calm and keep their patients' needs at the forefront.
"We are taught as surgeons that panic and actions without forethought are counterproductive, and those principles still apply," he tells PSN. "We need to take a sense of what our patients need. For practices that have a balance of reconstructive and cosmetic, reconstructive patients may still need resources. All of our patients – both cosmetic and reconstructive – need to have clear messaging about what's available. Patients who've already had services provided need post-op support. All of that cannot be forgotten."
Dr. Smotrich says plastic surgeons should brace themselves for an immediate slowdown in all cosmetic procedures for an indefinite period.
"People are not going to have the money, mental capacity or time to fathom the idea of getting plastic surgery right now," he says. "When you think about what's important in these times, it's a roof over your head and ensuring the safety of your family and security of your job. No one is thinking about cosmetic procedures, especially while dealing with the stressors of trying to make it through life – potentially without a steady income."
Dr. Pope remains hopeful that most practices will survive the pandemic and the economy will rebound once again, despite the temporary closings of private practices.
"I've been doing this a long time, and I've seen a number of downturns in my practice over the decades," he says. "I was four years into my practice when the FDA issued a moratorium on silicone-gel breast implants. That was tough. Women were afraid to have any implants. They weren't used on a widespread basis until the moratorium lifted in November 2006, but the breast augmentation business eventually picked back up. Women were enthusiastic about it again. Slowdowns always turn around. When the economy bounces back, plastic surgery practices will recover."
The COVID-19 pandemic will ensure financial preparedness for the next medical crisis, Dr. Pope maintains.
"We are in uncharted waters," he says. "No one knows how long this is going to last. I think it's a wake-up call for all of us to run as lean a practice as we can, to keep overhead costs to a minimum and build up a surplus of cash – so if something like this happens again, we're prepared. This is good practice for the future. Everyone needs to formulate a plan for the next time."