COVID-19 and the Healthcare Industry: What has Changed?

COVID-19 and the Healthcare Industry: What has Changed?

We are all aware of the challenges and issues that COVID-19 has thrown up for businesses with its impact on cash flow, income and costs. Businesses are having to change the way they work and deal with clients, customers and suppliers. Additionally, they are having to consider the costs of this, as well as the costs of purchasing additional equipment, whether that be PPE or equipment to facilitate new ways of working. 

Lenders have been besieged with applications form their client base for CBILS and Bounce Back Loans and they have had to deal with an ever-changing lending criterion introduced to them by a third party.

Governments have reacted to the challenge with financial packages, tax deferments and furlough schemes unheard of in our lifetime.

What about commercial finance brokers?

But what about the Brokers, how has this affected them?

Aside from the obvious impacts in some firms of furloughing staff, suddenly there’s no more hot desking, suddenly there’s working from home and Zoom calls instead of meetings. What other challenges are they facing and what challenges are yet to appear?

With some lenders closing their doors to new business and others dealing with a large client base seeking assistance – how has that affected brokers?

Our experience of this is that it has been more difficult (but not impossible) to place business, especially in the property market, as firms reduced capacity and some changed lending criteria. The good thing is that is now being reversed, with valuers starting to go out again and firms opening and now, in some cases, increasing their lending criteria. 

Action Point

COVID-19 has challenged commercial finance brokers to adapt to remote work, navigate tighter lending criteria, and find ways to place business amid changing market conditions.

COVID-19 and the healthcare industry

In the healthcare market, most clients have put purchases on hold. The good news is that they are on hold, not cancelled, and these will proceed now with the sector returning to work. 

If we look at the dental sector as an example, the period for which dental practices have been closed has, in some cases, proved useful for the dentists. It has allowed them time (which they generally do not have)  to review and reflect on what they want from their careers and whether they want to buy, sell or start up a practice.

For us as Brokers, this has resulted in a high number of enquiries and conversations around what they can obtain in the way of finance, and a lot of conversations around the steps required to start a practice. 

Action Point

The COVID-19 pandemic has led many in the healthcare sector, especially dentists, to pause and reconsider their career paths, resulting in increased inquiries about finance options for buying, selling, or starting a practice.

Samera continues to raise finance for healthcare.

We at Samera worked with 6 clients last year to set up squat dental practices, providing them with guidance as to what they needed to do to be successful. This has enabled them, with the assistance of bounce back loans, to weather the crisis. Since the pandemic, we have now started working with another 4 clients to establish squats.

Completions on business purchases have continued and enquiries regarding new purchases have been slow but are now picking up quickly, with several new purchases now ongoing.

So, overall things are good. The main challenge to brokers at present is the focus of the lenders. For a long period while dealing with CBILS and bounce back loans, the major healthcare lenders were focused on dealing with their customer base and the applications they were receiving from them to assist them with their cash flow issue. 

Most lenders are now open for new business but one or two are still not able to deal with non-banked applications, as their credit teams are still dealing with the Covid issues. This will change over the next few weeks and business will be returned to normal.

Action Point

Samera has successfully assisted six clients in establishing squat dental practices last year, and four more since the pandemic, utilizing bounce-back loans to navigate the crisis. Business purchases continue, with a resurgence in inquiries and ongoing transactions, signaling a positive trend. The main challenge for brokers is lender focus, with many initially preoccupied with CBILS and bounce-back loans. Most lenders are now open for new business, though a few are still adjusting, expecting a return to normal operations soon.

What are the challenges going forward?

So, what will be the challenges going forward? Will lenders have the same appetite for the healthcare sector that they had pre-Covid 19? Will the impact of social distancing, the need for new equipment and the constraints put on time bring a big change to the market?

The sector will always be needed, demand will be high and over the past few years has been growing substantially. New entrants to the market due to the demand and profitability of the sector will always be there. Once businesses adapt to the new way of working, they will again be successful. 

Review your business

What is needed is a review of how you work in healthcare and what you need to go forward. Do you need to borrow to buy new equipment, fund changes to your business premises, whichever part of the sector you work in? Businesses need to work with their accountants and advisors to gauge the impact on their business and act now to ensure they can deal with those changes. 

Brokers have the contacts within the banking industry to assist businesses and ensure that they get the right finance in the right structure. Use the experience of the brokers, especially those with extensive banking experience, as they know how the lenders think and what they need.

Action Points

  • Adapt and Invest: Healthcare businesses must adapt to new operational standards post-COVID-19 by investing in necessary equipment and modifying premises to comply with health guidelines.
  • Strategic Planning: Conduct a thorough review of business operations with the help of accountants and advisors to gauge the pandemic’s impact and prepare for future changes.
  • Secure Financing: Utilize the expertise of brokers with banking experience to secure financing for essential investments, ensuring the business can adapt and grow in the new normal.

Click here to read our article on How to finance a healthcare business.

Surviving a Financial Crisis

Our healthcare business consultants are experts at helping medical health providers and their businesses survive a financial crisis. We can help with cash flow management, raising finance and optimising your accounts and tax structure.

Book a free, no-obligation consultation with one of our team to find out more about how we can help you and your business.

For more information financial crises and your business, including more articles, videos and webinars check out our Learning Centre here.

Make sure you never miss any of our articles, webinars, videos or events by following us on Facebook, LinkedIn, YouTube and Instagram.