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  • Private Practice and Stimulus Bill

    Now that the full text of the bill is available, has anyone read and interpreted what this might mean for private practices? Or had it interpreted for you by an expert? I have read pertinent parts but honestly the verbage is so confusing I don't want to make any decisions based on my limited understanding.

    What are the options going forward for struggling private offices in this crisis?
    - Furlough employees and allow them to collect unemployment (that is increased by this bill)?
    - How do the "business loans" work regarding payroll? There was some mention previously of this loan becoming a grant (ie forgiven) if the employees are kept on for a certain amount of time... I can't find specifics about that. I'm less interested in a loan as regardless of interest rate that is still an expense we'd ultimately have to cover.
    - Is there an exclusion in any of this for an office with 100+ hourly employees where 10+ HCE make 7 figures a year (basically are us greedy surgeons going to be left out because of our past income, even though it is irrelevant with the current situation and no meaningful cases/billing for the foreseeable future)?

  • #2
    We're looking into the nuts and bolts of this as well. Our practice is assuming that things will be slow for at least the next 3 months and the A/R from the reduced work-load and lack of elective cases will begin to hit around May. I'd also be interested in hearing what others are doing. If it looks like we truly will get reimbursed for maintaining our current staffing levels, that may avoid some furloughs/layoffs. Otherwise, we'd likely have to lay off staff as our production drops to approximately 10-20% of normal

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    • #3
      House passed this. Signing at 4pm.
      I would expect Treasury/Fed to work out the terms. Mnuchin mentioned it.
      The Fed also last week had some loan programs.
      https://www.reuters.com/article/us-h...-idUSKBN21A3OC
      Mainstreet lending programs. Not sure if Treasury will be flowing it through the Fed. With the intent, I would expect details have been ironed out and available on Monday. Just a guess. Mnuchin mentioned his intent for it in some cases to work like a grant. Big difference from a loan.
      Mulitiple avenues coming down the road.

      Chase Bank:
      http://recovery.chase.com/contingency-plan
      Might be best to check with your bank.

      Coronavirus Aid, Relief and Economic Security - CARES Act: The legislation passed by Congress today contains several provisions to provide emergency assistance for Small Businesses affected by the pandemic. The next step is for the Small Business Administration (SBA) to issue guidance to banks such as Chase on how and when to provide much needed loans to our small business clients under the Act. We will update this information as we learn more.

      This is our current understanding of the provisions in the bill for Small Business owners:
      • Paycheck Protection Loan Program expands loan eligibility under the SBA 7a program with the intention to assist businesses with covering costs related to payroll (including healthcare and certain related expenses), mortgage interest, rent, leases, utilities and interest on existing debt.
      • Borrowers will need to certify that they’ve been impacted. There will be no personal guarantees or collateral associated with the loan. Detailed application requirements are still to be determined.
      • Loan amount maximum is 2.5 times average monthly payroll or up to $10 million.
      • There will also be a payment deferral and loan forgiveness program.

      As we have information on timing, we will update this site. Chase applicants may need to be a Chase deposit account customer as of March 1, 2020, and be able to apply online.
      Last edited by Tim; 03-27-2020, 10:30 PM.

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      • #4
        I think many private practices are asking the same questions. Certainly my two-person ortho hand practice is going through a similar dilemma. I recall initially reading in this bill that practices choosing to keep employees will get some type of tax credit... so we will have to see how that balances out against laying off employees. I agree that this increase in unemployment makes us "feel better" if we have to lay off some employees. But that still remains an option we hope to not pursue. Of course... that can all change very quickly. I'm in agreement with the OP 100% that a loan is just that... a loan. At the end of the day, we're not looking to borrow money to keep our employees paid. We're looking to stay in business by maintaining patient volume (either face-to-face or telemedicine), cutting expenses, and continuing to provide the services that we know best.

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        • #5
          Originally posted by EastBayHand View Post
          I think many private practices are asking the same questions. Certainly my two-person ortho hand practice is going through a similar dilemma. I recall initially reading in this bill that practices choosing to keep employees will get some type of tax credit... so we will have to see how that balances out against laying off employees. I agree that this increase in unemployment makes us "feel better" if we have to lay off some employees. But that still remains an option we hope to not pursue. Of course... that can all change very quickly. I'm in agreement with the OP 100% that a loan is just that... a loan. At the end of the day, we're not looking to borrow money to keep our employees paid. We're looking to stay in business by maintaining patient volume (either face-to-face or telemedicine), cutting expenses, and continuing to provide the services that we know best.
          https://eig.org/wp-content/uploads/2...on-Program.pdf

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          • #6
            The payroll protection program is probably the biggest one for physician practices, especially those with employees. To qualify, you have to have less than 500 employees. You can get a loan up to 2.5x your monthly payroll amount (average of previous year, not sure if it means 2019 or previous 12 months, with salary not to include $100k annually, plus payroll taxes, health insurance, retirement plan). What is forgiven is the amount used from that loan over an 8 week period (plus interest) that is used for payroll (same definition as before), rent/mortgage+interest, utilities, and (I think) interest on business loans. The amount of forgiveness is decreased for any decrease in employee salaries in excess of 25%. It's also decreased by a ratio of the number of employees on payroll currently versus one of two given time periods (provided in the bill, practice chooses which time period). If you've laid off employees, you can hire them back. If you've cut salaries and/or employees, this will decrease the amount able to be forgiven. Everything not forgiven will need to be paid back. Maximum interest is 4%, maximum term is 10 years, which would be set by the lender. The payments are deferred for at least 6 months, but I'm hearing for 12 months. This is a SBA backed loan for 100% of the first year. You'll apply for these loans through banks that offer SBA loans. I imagine there will be a bigger run on these loans than there was on toilet paper.

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            • #7
              Originally posted by jhwkr542 View Post
              I imagine there will be a bigger run on these loans than there was on toilet paper.
              I think you're right. I'd like to rush out tomorrow and get one though my guess the bankers aren't set up for this yet. I wonder if there are reputable on-line banks that would handle this. Maybe some WCI advertisers?

              Comment


              • #8
                SBA loans lenders. The application will be online. I attached the Chase page.
                •This process is low documentation on the frontside and the Feds pay the SBA fees.
                •T&C’s need to be read.
                •Sign that you qualify and you get the funds.
                •The catch will be, compliance and documentation will happen at the end for the loan forgiveness.

                What could go wrong? PSLF comes to mind. Make sure you understand the T&C’s .
                I would guess it’s limited SBA current lenders.

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                • #9
                  Thank you everyone for posting. I am looking into these loans to keep my staff without reductions. Please keep this thread updated. I will try as well.
                  "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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                  • #10
                    This is what I was looking for.

                    So what happens when payroll has 1 physician making 150K salary and 5 employees well under 100K. How do you calculate the 2.5X loan. Do you exclude the physician in order to not have to repay that amount with interest or add him while calculating the loan to be taken out?

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                    • #11
                      Still trying to figure this out. In theory, you should be able to take the loan, pay whomever, including yourself, and some of the amout you paid can be forgiven so long as you followed the right procedure. Possibly a $10k cap per employee.

                      Our business advisors are earning their paychecks this month.

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                      • #12
                        Am I the only one that is skeptical about this? It seems too good to be true. I also heard that one needs to show 50% decrease in revenue. Is this true? Obviously more will be coming out soon.

                        Comment


                        • #13
                          Originally posted by jhwkr542 View Post
                          The payroll protection program is probably the biggest one for physician practices, especially those with employees. To qualify, you have to have less than 500 employees. You can get a loan up to 2.5x your monthly payroll amount (average of previous year, not sure if it means 2019 or previous 12 months, with salary not to include $100k annually, plus payroll taxes, health insurance, retirement plan). What is forgiven is the amount used from that loan over an 8 week period (plus interest) that is used for payroll (same definition as before), rent/mortgage+interest, utilities, and (I think) interest on business loans. The amount of forgiveness is decreased for any decrease in employee salaries in excess of 25%. It's also decreased by a ratio of the number of employees on payroll currently versus one of two given time periods (provided in the bill, practice chooses which time period). If you've laid off employees, you can hire them back. If you've cut salaries and/or employees, this will decrease the amount able to be forgiven. Everything not forgiven will need to be paid back. Maximum interest is 4%, maximum term is 10 years, which would be set by the lender. The payments are deferred for at least 6 months, but I'm hearing for 12 months. This is a SBA backed loan for 100% of the first year. You'll apply for these loans through banks that offer SBA loans. I imagine there will be a bigger run on these loans than there was on toilet paper.
                          Thanks for the reply. So to further simplify what you're saying, private practices can get 2.5 times monthly payroll as a loan. And that can be forgiven based on the number of people still with your company in the future. Correct? Where did you find this simplified explanation? Did you glean it yourself from the bill or from an advisor?

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                          • #14
                            Originally posted by Kamban View Post
                            This is what I was looking for.

                            So what happens when payroll has 1 physician making 150K salary and 5 employees well under 100K. How do you calculate the 2.5X loan. Do you exclude the physician in order to not have to repay that amount with interest or add him while calculating the loan to be taken out?
                            This is what I'm wondering too. Our lowest physician (shareholder-employee) of 20 docs makes $500k. None of us physicians care about supporting our own salary as we'll be fine for many months if necessary, but the potential benefit of supporting the incomes of 100+ hourly employees would be a huge weight off the practice. But it only really makes sense for us if the loan is forgiven. Otherwise I think we are likely better off furloughing people and letting them collect unemployment.

                            Comment


                            • #15
                              Originally posted by abds View Post

                              This is what I'm wondering too. Our lowest physician (shareholder-employee) of 20 docs makes $500k. None of us physicians care about supporting our own salary as we'll be fine for many months if necessary, but the potential benefit of supporting the incomes of 100+ hourly employees would be a huge weight off the practice. But it only really makes sense for us if the loan is forgiven. Otherwise I think we are likely better off furloughing people and letting them collect unemployment.
                              It is my understanding that one of the cons to unemployment vs FMLA is many may have found work elsewhere by the time your business reopens.

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