No, I don’t have a crystal ball and I can’t predict the future. But that doesn’t mean that I’m blind and can’t see a cliff dropping off on the near horizon.
Last week, the Wall Street Journal quoted McDonald’s CFO Ian Borden’s comments at an investor conference; “lower-income consumers increasingly have spent their savings and are turning to grocery stores instead of restaurants.” “Some of those consumers are just choosing to eat at home more often.”
The same day, the same paper reported that “America’s penny-pinching is starting to hit dollar stores.”
It reported that Family Dollar, an operator of dollar stores catering to lower income shoppers, is set to close 1,000 stores. Its CEO stated that “Family Dollar is a victim of the macro environment out there.”
Perhaps more interestingly, when you think “lower income”, understand that Family Dollar, which operates under both that name and under the “Dollar Tree” banner, stated that its suburban locations are gaining customers earning over $125,000 a year. Lower income?
Many medical groups have come to expect that their businesses run like vending machines. Push the button and out comes collections. But the reality is far different, and the better analogy is to a slot machine. Sometimes you push the button, and nothing comes out. And, because this isn’t a real slot machine, you can never “win” more than your bet.
Consider what happens to your group’s business in an economy when an increasing number of people choose not to eat at McDonald’s because it’s too expensive. Consider what happens to your group’s business when people earning over $125,000 a year shop at dollar stores.
What happens to your ability to collect deductibles and co-pays?
What happens when that’s happening in an economy in which payers are cutting contractual rates or not agreeing to increases that keep pace with inflation?
For hospital-based physicians there’s at least one other funding source: hospitals. That means negotiating for stipend support, and we’re seeing an increasing demand for our services negotiating those agreements.
For office-based practitioners, it’s conceivable that we’ll see a return to the (dare I say ) kickback-challenged world of medical directorships of this and that. Or, an even quicker exodus into hospital employment which appears to be “safe”, but hardly is.
For all, it behooves you to stay on top of collecting co-pays and deductibles as early as possible.
Wimpy, from the Popeye comic strip, famously said, “I’ll gladly pay you Tuesday for a hamburger today.” At some point, patients who can hardly afford a hamburger today will buy one and then tell you that they’ll pay their co-pay on Tuesday.
