Although infection rates (which may be meaningless) and Covid-19 related hospital censuses (which are highly relevant) vary throughout the country, two things are for certain.
First, there remains, and will likely remain for the next year or longer, despite the talk about vaccines, a very high likelihood of additional “nonessential” case shutdowns. Take, for example, the decision last week by New Mexico’s governor to place a new “temporary” ban on elective surgeries.
Second, unless you’re lucky enough to find a buyer with a short-term memory problem (or one run by 30-something MBAs focusing on “getting deals done” to collect this year’s bonus), the value of most healthcare businesses is in the range of 50% less than it was a year ago. For some, that’s a low estimate of the drop in value.
And, here’s a third point for your long range consideration. That’s the fact that governors have become so emboldened to exercise dictatorial power, and the public has been so meek in bending to it, that future shutdowns for other “epidemics,” however defined, are likely. Bad flu season. Shut them down. You think I’m kidding. I’m not. Just wait and see.
So what’s the takeaway for you? Well, depending on just who you are, it means that unless you have developed a unicorn type practice or healthcare business, you need to adjust to the new reality. You need to find ways of making your business far more profitable, far more malleable, and far more resilient, finding every edge in order to (i) pull out current cash so you are not dependent upon a later, large purchase price that might never come; and, (ii) depending on how your business is structured (such as an ASC), to increase EBITDA in order claw your way back up to an acceptable, even if low, valuation.
