Determining when, how, and why you should consider staff reductions can be challenging. During the COVID-19 pandemic, making these decisions is even harder.
On this special episode of Inside Reproductive Health, I spoke with Sara Mooney, Director of Administration at Seattle Reproductive Medicine and Marianne Kreiner, Chief Human Resources Officer at Shady Grove Fertility. Together, we lay out some details of the CARES Act, the Paycheck Protection Program, and answer employment questions from fertility leaders in clinics across the country.
We are all in this together. If you need help navigating your business through this pandemic and want to know how to prepare your clinic when it is over, sign up for our Communications and Marketing Toolkit.
To get started on a marketing plan for your company, complete the Goal and Competitive Diagnostic at FertilityBridge.com.
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Welcome to Inside Reproductive Health, the shoptalk of the fertility field. Here, you'll hear authentic and unscripted conversations about practice management, patient relations, and business development from the most forward-thinking experts in our field.
Wall Street and Silicon Valley both want your patients, but there is a plan if you're willing to take action. Visit fertilitybridge.com to learn about the first piece of building a Fertility Marketing System--The Goal and Competitive Diagnostic. Now, here's the founder of Fertility Bridge and the host of Inside Reproductive Health, Griffin Jones.
GRIFFIN JONES 1:12
Today, we're talking about staff reductions, the different options for them when you make those decisions. I have two very good friends of mine, Sarah Mooney and Marianne Kreiner. Sarah is from Seattle Reproductive Medicine. She's the Director of Administration. Is that your title?
SARA MOONEY 1:28
Correct. Yep.
JONES 1:30
And Marianne is the CHRO at Shady Grove Fertility. So we've got West Coast and East Coast here. Sarah really wanted to hit the disclaimer as we all have that she's been an expert in this for two weeks. And all of this is moving so, so quickly, that's why we're doing these webinars because if I do it in an article format, it's already irrelevant in three weeks. So we're doing the webinars to constantly update people because this is changing so quickly. And I'm doing everything that I can to not become an expert in this subject. So, Sarah, Marianne, my good friends, welcome aboard. Sarah, we’ll let you start because you wanted to have a little bit of a disclaimer introduction and Marianne can add anything as well.
SARA MOONEY 2:17
Well, thank you for having both Marianne and I here. Like I said, I have really become an “expert” in the last two and a half weeks, but what I have learned the most is to learn from others and to know that I am not an expert in this field and to know when to say, I don't know the answer, because this is such a crazy time it's ever changing, and it's okay. And I hope I can just provide a little bit of what I have learned in the last two weeks, which has been a lot, but we can learn from each other through this process and just be here for one another, and I think that is what is really important right now.
JONES 3:17
What do you think, Marianne? Would you add to that?
MARIANNE KREINER 3:22
Yeah, I think that this is a good opportunity to just chat about, you know, what practices are facing in light of the SRM recommendations and what that might mean as far as revenue impacts and moving into assessing how downstream that's going to affect the business and what steps can be taken in order to protect the practice, particularly when you're talking about a private organization, perhaps, compared to an academic institution.
JONES 3:43
And so, Marianne--I've got questions that people have sent me ahead of time, you guys can also ask your questions in the Q & A and we will try to get to them and I would just like to start with--we're going to go into the different options of things that people can do, but there's a time when you have to make this decision. And, you know, we use certain metrics in my field, which is the creative services firm, we have things like if you can't project out after three to six months, if you have a client concentration issue, if a few big projects stall a certain amount of time, that's when people start making these types of decisions. Even then, I feel like this is just so different. But when do people start making these decisions and how? What are the things they're looking for that makes them say, Okay, now is when I should either be furloughing people or making pay cuts or doing layoffs? And it might sound like the answer is immediately obvious because most people have ceased most of their external operations, but many people have not made any furloughs yet, many people have not done any layoffs. We did a poll a couple weeks ago and about half of the groups said that they did not envision them doing anything. And so I don't know if it's that high, because a lot of people have done all of the different options that we're going to discuss. But a lot of people have not. So when is the time that people--what are the triggers? And what's the timeline for people making these decisions?
KREINER 5:31
I think that a lot of it comes down to understanding where things are from a projected revenue standpoint. And part of that revenue comes from the procedures that you're doing. And there are a number of procedures that aren't happening right now. So you're not doing egg retrievals, you're not doing IUI, and other such procedures, and the revenue is not going to come in on the other side. And the reality is, in the month of March, you're collecting on services that you performed in December, January. So you're looking ahead to when is some of the impact going to hit us? And if the reality is that the work isn't being done now there's that lag that will follow you through and that you have to have the compensating balance on the other side. And if you're looking at where things are now and forecasting over the next week, am I seeing a 20, 30, 50% decrease in what it is that's happening? How am I going to compensate on the other side? Where do you start in looking at the expense side of the equation, when the revenues aren't meeting what they need to meet in order to pay your other obligations--your leases, your equipment, your people, certainly being your biggest expense. So I think each leader has their own tolerance for what level they are okay with seeing that revenue dip and everyone, regionally, are impacted by this differently. Each department of health seems to make their own determinations as far as how much work people can do and certainly, with the guidance from ASRM that guides what people are being recommended to and not recommended to do. I think there is flexibility within there for people to make decisions that feel best for their situation. Sara, would you have some things to add?
MOONEY 7:32
Yeah, I agree. You know, for us it was what is the revenue coming in and what are the expenses going out? And we have a lot of expenses and we know this. We're one of those organizations that have already done cuts, because of our projections. And I would like to kind of reiterate what Marianne said about state as well. There's different states that have much stricter rules on what you can do and what you can't. Thankfully in Washington state, we are still able to perform some of the functions. Again, it might not agree and line up with what ASRM says and we are working through that as well, but you have to look at what state regulations tell you you can and can't do as well. And then base predictions on that. I mean, there's so many things that go into this.
JONES 8:37
And maybe we talk about those a little bit more, because a few of our clients haven't laid off anyone yet. They really don't want to. And one of our clients asked if this person should mention that--we're doing a Facebook Live for them--and this person asked and I said, “Well, how far can you see out?” And he said, “Four weeks.” I said, “Don't say anything to that effect of that you're not going to this.” I think if you can't see out at least 12 weeks in terms of--and I don't know, if anybody has that much cash on hand if they're at 12 weeks all payroll expenses, PPP notwithstanding. So you know, at some point if this goes on to April, or excuse me if it goes on well past April to June, July, I mean, at what point, Sarah, do you really start--or Marianne--do you really start to endanger the business whereas okay, at this point, we really have to either make cuts or furlough or layoff?
MOONEY 9:39
I think it comes down to again the numbers that you can sustain it and what your comfort level is for us. It was time to make those cuts as of last week.
KREINER 9:52
Again, I go back to--I liked your point Griffin about having the ability to see out more than four weeks, we just lack that ability at this point. And so if you're looking at declining revenues, and you are starting to look at what your expenses and what your contracts, say and where it is that you can cut, now's the time to prepare for probably what's going to be a recession and the companies that have come out of the recession strong, or those that have, you know, really deleveraged their company and freed up that cash and made sure that they were doing the things that they could bounce from this. No question, I think also the states that have mandates, those states for mandated coverage, they're going to be able to bounce a little bit easier. We don't know where our patients are going to be in these non-mandated states at the end of this on the other side. There's so many factors that go into driving what this revenue and the revenue projections are going to look like. So it does come down to comfort, it does come down to relying on your financial professionals in forecasting what this is looking like, and coming up with what does the worst case scenario look like and preparing and know what you're willing to do and what you're not willing to do before you get to the emergency.
MOONEY 11:24
Even if you, you know, let's just say next month, were able to see patients and everyone can go back to work and business as usual, you're still going to have people very hesitant about--especially your cash pay patients--coming in the door. And so you have to know that there's still going to be a drop in business, even if it was business as usual. And people can come flooding through the gates two weeks from now, because people will just be nervous and scared and $20,000 is a lot of money when you haven't been working or you are on furlough and they're going to reassess priorities. So you have to put that into your projections as well as you're going to have a decrease in business.
JONES 12:15
It's a business as unusual right now. It's one of the reasons why on the marketing side, I'm really, really hammering that we have to build the funnels right now to be as busy as possible with new patient virtual consoles for those that still can do checklist testing, or when we're able to again, that we just have the waitlist ready of treatment-ready patients. Because I do see the point, Sarah, that this is going to expand, but if we are able to fill the funnel wider now and also convert those people so that they're ready for treatment, it won't hurt as bad because you will have legitimate scarcity. You will be busy doing treatment, as opposed to--because you're fitting it all into one window and I actually see that backlog helping with what otherwise would be uncertainty in a recession, which is why this is all so different. So we're starting to get a lot more questions and I want to make sure we go through them as quickly as possible. One of the questions that I had ahead of time was what's the difference between a furlough and a temporary layoff? To my understanding, all layoffs could be temporary, right? The idea of a layoff is that you could bring somebody back whenever, you either do or you don't. Furlough is a defined period of time that you can either then extend the furlough or not. Can you answer that? The difference between a temporary layoff and a furlough?
KREINER 13:42
I think I'd argue that the temporary layoff is ceasing the relationship--the employment relationship, so that you would then go through the process of rehiring the individual. Whereas a furlough is they remain as an employed individual, many people opt to continue health insurance benefits during that time. Where it’s if the individual would be on a leave of absence, and so therefore, they would pay back when they return. So the idea is that it's a temporary solution with the intent of returning people. And yes, there's a set period of time, generally 30-60 days that would be assigned and that could change during the course of the furlough--things need to be shortened and people needed to be called back or vice versa, extended. But by no means is intended to be something that is perpetual and goes on. At some point, you then run into some laws as it relates to the WARN Act potentially, as far as the size of the individual, the populations who are being terminated in effect, and generally, each state--sometimes there are many WARN Acts, but in general, if you're keeping a furlough to a 12 week time frame, you don't seem to run into those issues.
JONES 15:12
Got it. One doc wants to know, how do you choose between laying off or furloughing or shared work program? So maybe we just--so we've talked a bit about layoff, furloughing, let's talk about what--we’re seeing other questions about pay cuts--so why don't we just lay out the options, we've got layoff, we've got furlough, we got shared work, we've got pay cuts, salary reduction, let's just lay out what those what the different options are for people and when it makes sense to use them.
MOONEY 15:41
So I'll start. I am deep into furloughs and shared work in my world right now. That is really what we have been doing and not every state has a shared work program. Shared work, for Washington, you have to apply for and get approval. I applied for it last Monday and I'm still waiting for approval, it's not a guarantee. Basically, it allows you to reduce their hours and still get unemployment and you get paid overall just a little bit higher rate then if you were just strictly laid off. So there's a benefit to the employee to be on the shared work program as well as you are still retaining and keeping those employees engaged and working and part of your organization. We had to do both. We could not shared work everyone because there wasn't work for some people to do. So we did have to furlough. I am a fan, as of right now, of furloughing rather than just straight layoffs because we're not in the position. I was in the position to just start laying off people. I really think all of our staff is fantastic. I want them to all come back. I'm hopeful that this is a four to eight week period and so that is how we made our decision. And then if we need to lay people off at the end of the eight weeks because things are not bouncing back, we may have to do that. I don't know if that answers the questions, but that is kind of where we are in our world.
JONES 17:29
It makes sense.
KREINER 17:31
I think an interesting comment that you made Sarah was about the shared work, and I'm wondering if some of those that you're speaking to from the shared work aspect are exempt individuals, maybe making a little bit more. And the reason why I ask is because--and that was my guess--is because with the stimulus package, and individuals who are furloughed, earning the additional $600 on top of their states potentially maximum benefit, some people are going to be paid more to stay at home than they are to be at work.
MOONEY 18:08
So we were told--so this is one of those things that is ever changing by the day and this was as of last Friday, where that was approved--is they told us that it will still be advantageous, more advantageous to be on the shared work program. And, again, nothing is documented, but I have a feeling that they are going to incorporate that $600 for unemployment also into the shared work so that you're also receiving that as well. But we're waiting for more information on that.
JONES 18:37
Can we also talk about the difference between a tired furlough and--what was the other example, jumping back into Q&A--tired furlough or full furlough?
KREINER 18:54
So I think it's tiering the furlough.
JONES 19:05
Oh, is it tiered furlough?
KREINER 19:09
I think. And so there's different ways in which furloughs can be applied. There's been some really creative things that I've seen out there, where some organizations are doing it--and operationally, it has to be planned for where individuals, it's been projected, you need to have at least two months of expense savings from the payroll side of things, so that everyone would be subject to an eight week unpaid leave over three months. So essentially, you would have furloughs that are going on and sometimes in those furloughs, you may have a full week on week off, week on, week off, again, operationally, that may not work in every industry or in every position. But in that case, what's interesting about that is that everyone is sharing in the same experience where the expectation is that each person is in it together and that there will be eight weeks of unpaid leave during a three month period. I think, you know, tiering it as far as when this happens might be another way that people are looking at it. So whether it be a group that happened--Sarah mentioned, you know, a group that has already occurred--and then perhaps, you know, further down the pipe, though, there will need to be a decision for practices to have a second or a third round of reevaluating where things are. So I think looking at the needs and what the volume is, the work that needs to be done, drives those decisions. And certainly, when you prioritize looking at who needs to be there doing the work, obviously, job function is important, because that's where you need to start. Looking then secondly at who your rock stars are the people who are your diehards, who you have to kick out of the office. Those are individuals that you would want to preserve, certainly. And so that would be another way certainly of tiering the furlough. Can you think of anything else? Griffin or Sarah?
JONES 21:23
I'm not sure about that. But it does make me think, when you’re talking about the rock stars or people that have--I have heard about people using this opportunity to lay off people that were performers, which sounds like people that they otherwise would have terminated. To me that doesn't sound like the right move, because it's either performance or it's not. It's either you're laying them off because you don't have the work for them or not, and to mix those things up, now, from my view, the entering into this liability realm when you actually got rid of someone for performance, I think, to me, it seems better for you to just terminate that person for a cause for performance. And so that means you need to be documenting those issues. And if you still feel like well, I want them to have the benefits because I don't want them to be destitute, then fine, you can offer a severance. But to me, it doesn't seem like this is the time to mix termination for performance with just using these layoffs as a convenience, am I missing something?
MOONEY 22:38
You should be working in HR!
KREINER 22:40
You drank the HR Kool-aid!
MOONEY 22:43
You shouldn't be in marketing, you should join our HR circle.
JONES 22:41
Well, I have to do this--so this is not my realm of expertise, but I have employees and I'm going through all of this myself. I've got three full time employees, I’ve got four part timers. And we're all going through this together. And so one person asked a question about the SBA loan. So I'm going to do a little poll right now while I answer this question to the best of my ability, which is just do you plan to apply to the Payroll Protection Program? So I guess this is just for--if you are someone that doesn't have the authority to do that, just don't answer, but this is for the folks that can answer there's a poll right now, I don't know if you can see it, because I don't have answers coming in yet. Maybe I'll have to relaunch. Megan are people seeing that poll?
MEGAN FERACI 23:31
No, I can’t see the poll.
JONES 23:35
Well, I'll try--
FERACI 23:37
Oh, there it is. I’ll relaunch it.
JONES 23:38
Okay, it’s the last one. It's question number nine, the PPP question. So people are asking, do you do recommend people take an SBA loan and continue payroll at full pace? So I'm going tell you what I know, which is not a lot because this is changing so quickly. I've just been on the phone this week with my tax accountant, our bookkeeping accountant, another accounting expert I know, another financial advisor, as well as my banker. I've talked to five people about it this week. I'm not an expert, I'm just telling you the aggregate of what I know at this point. So it's about the PPP, Payroll Protection Program, that is through the SBA, it's an SBA loan, but you will get it through your bank. You're not going to apply directly to the SBA for this loan. The loan amount, the loan maximum is 2019 payroll divided by 12--your monthly average payroll from 2019, times two and a half. I was originally told that it was just the last 12 months from the loan date. So let's say, we're taking it out on April 1, we hired somebody expensive in January, our payroll’s greater, that you could do April 1, 2019 to March 31, 2020, that's what my banker told me yesterday. And then the other accountant that I spoke to today showed me a letter from the Treasury that said it's 2019. But it's a monthly average of payroll, 12 months, I think it's 2019, times two and a half, that's the loan maximum that you can take out. Then up to eight weeks of that is forgivable. Eight weeks payable for payroll is forgivable. So you will have to at that point, prove that you have not, that your headcount hasn't been reduced, but I don't know what that means for those that you've reduced by cause. And it will also mean that you cannot reduce anyone's pay by more than 25%. So for that person that's asking should I take out this SBA loan, my recommendation is that every single person look into this, but it's not necessarily a grant. I think it's going to be good for me because I'm not planning on making these cuts within the next six months. I'm really looking at keeping my people. I think it will work out for us. I think it will be forgivable for us. But if you're going to have to make these cuts anyway, and you're going to be less than, you're going to have to do more pay cuts or have a much lower headcount, then that amount is not gonna be forgivable. Do you have any advice on that stuff, Sara and Marianne?
MOONEY 26:42
Ah, that’s a little bit out of my realm right now, to be honest.
KREINER 26:47
Unfortunately, fun fact, my first job was as a commercial lender, doing SBA loans for small businesses. I've left that life behind and I'm really glad right now I’m not doing that job, but you 100% gave good advice. If you want to learn more about these SBA loans, go to your bank, they have commercial lenders who are trained with the SBA, they'll help you through this process. That's their job.
JONES 27:16
So we have a few more people that have answered. I'm going to wrap that up right now. We've had 20 of our 60 people answer that and a couple more coming in. I'll give you just 10 more seconds for that, and then I'll answer the next question, which is more about reduction in compensation. Here's the results that we have. It sounds like well over two thirds of you are going to apply to the program. Another third aren't sure. For those of you that aren't sure, I would just look into it for the reasons that I said. It might not make sense for you if you feel like you're just going to end up with a loan, because it's not going to be a 10 year term--they were originally saying that it's not going to be might be five, it might be two. They are going to have forgiveness on interest and principle for the first six months, but I think interest will still accrue during that time. So, just look into it. For those of you that are unsure, just look into it and may or may not be for you. Let's move to another question, which is about executive and physician salary reduction, because this might be more relevant to people if they want to do this because if I'm not mistaken, the PPP is talking about that you can't cut more than 25% of salary--that's for folks 100K or less, which is not our physicians and our executives. So Sara, Marianne, what are the options for executive and physician salary reduction?
MOONEY 29:02
I think it's reducing salaries. I think that, you know, for us, we're doing a 50% reduction in salaries for our executive team. And I think no one throughout the organization should be spared from this. We all are in this together and physicians are also taking a pay cut. They don't have money coming in and just how can they pay themselves? They can barely pay for all the expenses. So they're also taking a hit. So for us, we're all in this together and people are reducing pay and we know that and understand it.
KREINER 29:53
What I was going to say is if you're looking at doing cutbacks, I think that you have to lead by example, and it has to impact you as well as an owner and as a CEO, you get the largest salary cut yourself. You know, you're seeing these airline CEOs and CEOs of other organizations now, I think I saw Hanna Anderson, which is a retail company, the CEO put something out on LinkedIn today saying that he is going to be temporarily forgoing his salary amid the cutbacks within the industry as a way of trying to help save some for the staff. So it is a meaningful, and I think an important, step for the owners and the CEO to take.
MOONEY 30:34
I will also add, it's been a part of our message as well. When we're having the difficult conversations with our employees, we're also messaging that this is impacting top to bottom. It's not just you guys. Which they understand and they appreciate and I think it helps with the culture as well that again, you're not alone in this. It’s not just you, we're all impacted.
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JONES 33:02
Dr. Chen said in the comments to us that, you know, nothing in medical school prepared us for this and nothing prepared us for this. Even if you went to MBA, even if you've owned a business for decades, none of--this is the shittiest thing about owning a business or being in the seats at this point. And so this is where you earn your badge as a leader of going through this. And there's--I don't think that there's a right answer, but I do think things are really different. Now, one of my favorite consultants, has said that the principal should never reduce their comp to lower than the highest paid non-equity employee. And in normal times, in a normal downturn, that makes sense because you're talking about having to--you would otherwise be masking really important operational decisions that you have to make. But I just don't know if that's the case right now. And all I can think about is how I cry like a baby every time I watch “It's a Wonderful Life” every Christmas and how I think that God Damn, I want to be George Bailey. I want people to think of me like that. And I know that's not the right. It's not how you'd run a business. But there are times where I believe that is how you run your business. And that might be one of those times. One person wants to ask, what kind of support do you recommend for employers to provide employees who have been temporarily or partially furloughed?
KREINER 34:44
I think that you have to think about those individuals and ways to continue to engage them outside of getting the news and the shock that is involved with that, ensuring that if they are individuals who've been laid off, or excuse me furloughed, and therefore you anticipate bringing them back, setting up opportunities to meet throughout the week, whether it be daily or weekly, whether it be as groups or one-on-one, there are, I think. opportunities that you can maintain that connection. Because if you're not in the office, we don't have those spontaneous collisions running into each other in the break room in order to grab coffee and whatnot. And so setting up a 15 minute touch base each day in order to just have coffee together, or maybe doing a happy hour each Wednesday or Thursday, or Wednesday and Thursday, whatever it takes, and doing it using some video conferencing tools are a great way to really help continue to keep up that connection. I think even little simple things. Sending a card in the mail, Hallmark has free cards that they'll send to you now making sure people know that you're continuing to think of them. People will remember this.
JONES 36:13
Yeah, I think things that I would add is that I think the idea of letting somebody go on a Friday afternoon is from office space or something, I don't think that's what you do here. I think you do this on a weekday. I think you do it in the morning. Because you want people to--you want to let people know that your door is open so that they have time to process, so that they have time to talk to other people that are in the office, if you're even still in the office. Or did they have time to Zoom you back or call you back? If you do have to do it--if you can't do it in person because of the circumstances right now, please do it over video. Not on the phone, ideally, never by text or email and do it in the morning so that people have time to approach you, let them know that they can do that, and I think it's also not the time to walk people to the door or to say, like, you can't take any of the files with you. You've excused those people before or you are now for cause and the rest of these people aren't them. And so I think that's one thing they can do. And then so I do think that you know, one thing we, again, we haven't let anybody go, but we're trying to stay just as a group as possible in those virtual events of having everybody check in and been super helpful for that, too. Megan's let me know that there have been people raising their hands. I'm sorry, there's a lot of chat going on too, which is awesome--I can't keep up with it. And look at this, I think it's awesome that you all are chatting and answering each other's questions and commenting. Just make sure that you're doing all panelists and attendees because I see some people are just doing all panelists. And then that's just me, Marianne, Sarah, and Megan that are getting it, if you do all panelists and attendees and everybody else can see you, because for some people, it's like a 50% conversation. Megan, ask those folks that raised their hands if we answered their question, if not if they want to--if they want to raise their hand, and if they want to come on, we'll make them a panelist real quick so that they can get on video and ask us, we'll let them jump the line. So Megan, ask those people and then interrupt me after we do the next question. So another one is, if you're an employed physician and get a salary that is actually a draw based on revenue minus overhead that is projected to be negative, can you draw zero pay and qualify for unemployment?
MOONEY 38:55
I know you can draw zero pay. I don't know if you can file for unemployment. Marianne, do you know that?
KREINER 38:55
I mean, I think there's no reason why you can't file, the question is whether or not within the state in which the individual is employed is going to pay and how much they will pay. I think that there's no there's no reason why. Ultimately, if you do receive pay at some point in the future for those hours, Uncle Sam wants that money back. That's why they want to know if any pay has been generated, and they'll be looking for reports on that. So that's the other piece to keep in mind.
MOONEY 39:30
That's a good clarification. Anyone can file and I would strongly suggest to file, it's just whether or not you're going to get paid and at what part? I don't know that.
JONES 39:40
Yeah, you've shared what others have done with physician salaries or MDs cutting or forgoing their pay? Yes, all over the place. Some people are doing it to the tune of 100% at the moment, so it's the total range for that question, but MDs are absolutely cutting or forgoing their pay right now, how much is completely an individual decision. I don't know if I know how to answer this, but maybe you all do in terms of a projections answer, which is a friend of mine, doc on the West Coast asks, How do you prepare for the worst case scenario and in this person's mind, it's seeing new data, that COVID has a negative effect on pregnancy. So I think what this person is asking is, what if we find out that there's a really damaging effect that really means that, we might not be able to see normal operations for a year or two. I think that's the sort of scenario that this person is envisioning. What does that mean for us? How do you even analyze that type of projection?
KREINER 40:54
I mean, I think certainly that that is one of those big scary, hope it never happens things. If that were to be the case, and let's talk through that. What are the other things that the physicians are able to do in order to help the patient if you're not getting them pregnant? And so you're looking at people pivoting and performing other work, whether that be pivoting and and helping people with doing some sort of OB/GYN work, or otherwise, I don't know how you would be able to continue certainly in that scenario, which is a scenario I had not considered. I don't know how you would do anything else, other than come up with another line of business. You know, Amazon came online and started their business during the worst possible time of the recession and they were able to set up Amazon Marketplace and thrive. So it really is now about what your other lines are and are available to you.
JONES 42:11
Another friend of mine, a nurse from Canada offers a suggestion, which is we're probably going to be talking about freeze-alls. And if that's the case, then I think we'd become even more relevant because it really means that egg freezing is important, that really means that freezing embryos is important. And that would then extend the window of people that we are able to serve if that were the case. So thanks to that person for asking. What if your draw as an employee-physician is negative-based, or the formula-based on revenue and overhead, you don't have the money to pay your employer, can they go after your house? So I don't know if this is all if this is in your scope, it sounds like this person is, I guess, is what kind of collateral is against their business? If you have a personal guarantee against your business? I think that's what they're asking. Do you have any information on that, Sarah?
MOONEY 43:25
I don't.
JONES 43:28
So to me, it sounds like it depends on whatever financing you have, if you have a loan against is that like personally guaranteed?
MOONEY 43:43
That's what I would--I agree. I agree with you and then what the contract says. It’s stated in your contract if-
JONES 43:41
Yeah, so okay. So this is an employee physician. They're asking about their draw. So they've been given a draw. It's negative because you don't have revenue coming but yeah, I think you have to look in your contract. I've never heard of that where someone in a draw contract has a personal guarantee or collateral? I've only heard of that in loans. But you'd have to look at your contract, I believe. Another doc from the East Coast asks if you have contracted physicians, can you legally furlough them or reduce their salaries?
KREINER 44:20
Anyone who has a contract, it would need to be something that's agreed upon with that individual. And so you would sit down with them in order to have a conversation just like you would with your landlord, just like you would with your mortgage company, just like you would with any creditor, you would have to sit down and come up with an agreed upon amount that you are willing and able to pay, and then you would work with that individual in order to negotiate something that makes sense for both of you and hopefully you're able to reach an agreement. Because what's the alternative? The alternative is, I mean, termination?
MOONEY 44:57
I think this is also a time to take a look at your current contracts, and also policies and make some addendums to them as well. Like, I have people who are still wanting to be reimbursed for different programs that we offer and we have nothing that states in our policy like that maybe we should, you know, if there's a pandemic that hits and we are unable we can cease this program at any time. And you might want to have a clause in your contract that has something with that as well, a clause if some unfortunate event happened.
JONES 45:36
So we had someone else ask--this was an anonymous question that they wanted me to ask anonymously, they emailed me before the webinar--which is what do you recommend about staff hired just before the pandemic? So it sounds like people who were supposed to start work during or they're probably supposed to start like late February, early March or now. What do you recommend with those folks? Do you believe in first in, last out?
MOONEY 46:11
For us we did.
KREINER 46:12
I believe it, it depends. It's the classic answer, right? And it depends on what that role is. If it's a role as a physician that you've been trying to hire for a really long time and you found the perfect candidate, you work to justify and hire that person. And maybe they don't come on if they were supposed to be full time they come on in a reduced capacity. But you have to have a long look at this and make sure you're not just making a decision for the immediate future, but who are the people you need on your team in order to help bounce and so I think that there could be cases where, yeah, you can't put on a blanket, hiring freeze. There needs to be examples of where, Yeah, I really need that embryologist or whatever the position is because I'm simply not going to be able to pump up like I need to once we get to the other side.
JONES 47:05
Yeah, Sara, when you think of that is the benefit, is it just for a cultural reason or something? Is there a legal reason? Because for me, unless there's some sort of other legal considerations to me, I absolutely don't believe that. You've hired the last person that you needed because your company is going in a particular directory, and that person might still be the most relevant to getting you to that direction. I absolutely don't believe in first in, last out.
MOONEY 47:52
I agree. For us, we didn't have a position like that. For us. It was maybe a front desk position or call center. It was mostly those type of positions that have just recently been hired. And we furloughed them. So they're still employees because they're fantastic and they're great, but I don't have the resources and literally, they were hired a week before this, but I don't have the resources to train them right now. And so I needed them to be furloughed for this timeframe so that I could have my all-stars who can produce at 120% when I am down 50% in my call center focusing all their attention on that and not on trying to cross-train someone who is 20% productive. And so that is why for us--but I agree if there was an embryologist hired and it took me six months to fill that position, I would probably take a look at that and I'm just throwing positions--I think it’s position-determined as well.
JONES 48:43
To Marianne's point, too, this might be the time that some of you have to make new hires because for the longest time, you've all been struggling to find embryologists, struggling to find docs, struggling to get the right nurses, and might have that opportunity now. And so, I would be thinking about that if you're able to bring someone on that you just otherwise couldn't, you might take advantage of that.
MOONEY 49:22
Absolutely.
JONES 49:23
Another doc asks, can you discontinue 401k match if you do not have a policy? I'm almost certain you can. But check on that with respect to PPP if you're applying for that, because I think it does count to overall comp. I might be wrong about that. Can you ladies add anything about discontinuing 401k or other benefits?
MOONEY 49:46
I can tell you that in our clause, it specifically states it's based on board approval, and it's done once a year. And so this might be a year where we don't approve it. And so we have that out to not fund the 401k.
KREINER 50:11
I think it's plan specific. And so you'll want to work with your 401k provider, and pull out those plan documents in order to review what you have there and to see if you have flexibility in order to amend that, but that is something that you can do. Some other things that came out with the CARES Act, related to 401k allows individuals to change their loans to be up to $100,000, if you so choose to allow that to happen as a plan provider. And then it also allows you to extend the period of time in which people repay those loans by three years and there's a clause which allows people to withdraw without the penalty. So there's a couple of options that are new that have come out of the CARES Act as it relates to 401k plans that provide a little bit more access to your employees for purposes of helping to keep them whole during this time.
JONES 51:11
So I want to wrap this up pretty quickly. We still have a couple of questions coming in. If I feel like it's something we haven't touched on, get it in now, there's just a couple more. What we haven't talked about is health insurance or extending that to furloughed employees. One person wants to know how long practices can do that or are doing that for. To me that that's part of the severance calculation or part of the overall calculation. Do you have any advice about how you plan for health insurance to furloughed employees?
KREINER 51:47
So that is something that is specific to a choice that you can make as well as to what your contract with your insurance providers states. Some insurance providers have been very proactive sending out information saying that if someone was eligible on March 1 and they experienced a reduction in work hours that take them to be less than full time or therefore ineligible for health insurance benefits, they will continue to be eligible as a furloughed or reduced hours individual. At the same time, again, there's still that flexibility for the employer, depending on how they're setting up their furloughs to say, how long that might go on. Generally, though, what you do see is that you would have the furlough extend for a set period of time, at which point a decision is made one way or the other as far as to extend or to lay off, and that health insurance would either extend or end at that point. They don't have to run concurrently.
JONES 52:44
We had one other person that asked, one person from the Midwest saying they've put a number of employees on temporary leave and paying them at 66%, keeping benefits so this is--so I guess it's not furloughing them because you're still--is this a partial furlough? Or is this something different? Because they're not working, but they have received a pay cut. They're getting their health insurance and they're getting a pay cut. So is this a temporary or is this a sort of reduced furlough or is it simply a pay cut and you're not working right now?
MOONEY 53:37
Sorry, I'll go ahead. To me, it seems like a very generous company that is doing that. And to me, it is the latter. It's not a furlough. Furlough, you're typically not paying employees for it. It'd be the temporary layoff with benefits and pay.
JONES 53:42
My advice to that person is you might consider a really look into the PPP because you're almost there anyway, if you're paying them at 66%, try to get that up to 75. And if it's for those folks over six figures, then you might be good with that. For those that aren't, get them up to 75 and maybe the health insurance is included in that.
MOONEY 54:09
Griffin just to clarify, they're not working and still getting paid 66%?
JONES 54:14
That’s what it sounds like! It doesn’t say everyone. It says we have put a number of employees on temporary leave and are paying them at 66% keeping benefits.
KREINER 54:26
That's really nice. Those individuals would then be eligible--that practice would then be able to take advantage of the payroll tax credit which is a 50% through the end of the year, when you are paying individuals who aren't working, where your business has been impacted, so that will unlock that benefit for them.
JONES 54:50
So I would say for those folks, you're probably just better off to say okay, you work four days a week now or you work three days a week, whatever it is cut the rest of the time off. Get that PPP benefit, and then have them do something. There’s so much crap we can be doing right now from an operations perspective, every single one of your departments has operational efficiencies that you can be working on. It reminds me back when I was in landscaping, and it would pour rain and we couldn't go out and cut the lawn,, that's when we pull all the tools out of the garage, cleaned up all the spiderwebs, we scrub the trucks down, do all of that stuff that we wouldn't do on a normal revenue billing day. And that's true for us at higher levels, with operational efficiencies. In marketing, there's so much more that you can do for your marketing systems, but that's also true for every single operational efficiency. So if you're doing that, get it up to 75%, apply for the loan, and then maybe have them work three or four days a week at a reduced capacity. This is the last question that I'm going to answer and we're going to do that because we haven't talked about it at all. Which is one person wants to know about hazard pay? Do you recommend it for staff that is still working?
KREINER 56:20
It’s an interesting concept. I know Costco was doing something like that, except they said that you wouldn't get your hazard pay until after this was over. So essentially, you needed to still be employed on the other side and still be working for them. And I believe it's June or July when that hazard pay will accumulate and pay out, so it's an additional $2 an hour. But they'll receive that hazard pay in the future because you know, look, you're not obligated to pay it right now. I think it's an interesting way of structuring it to help retain those individuals and encourage them to come to work if they are being nervous. I have not so much heard about it within healthcare practices, private physician offices, OB/GYN clinics, dentists offices.
MOONEY 56:57
I will say that's a really interesting concept and the problem that we're having right now is that employees who are continuing to work are really nervous to work and are asking for temporary furloughs themselves. They might have loved ones at home who have a compromised immune system or they just don't feel comfortable. But we need a workforce and so maybe having some kind of incentive--it's an interesting concept.
JONES 57:30
Faith said that she believes that the CARES Act will require employers to pay up to 11 weeks of pay at 60% after a 10 day waiting period for anyone unable to work after April 2 due to childcare issues. So that's something for people to consider and for those taking time off to care for their sick kids. Thanks for letting us know about that, Faith. We've had more questions come in, but we've already wanted an hour guys, and so I'm going to wrap it up. I do appreciate how--I’m sorry for those questions that we couldn't answer, we'll do another webinar. Maybe I'll be able to get somebody that can just speak to PPP, if you want, if you have other questions. You're welcome, Eileen. Thank you. If you have other questions, just let me know. Next week, we're going to do one about consenting, the week after we'll do one about financing. So I’m getting a lot of requests, just let me know. Just email me what you want us to cover and we'll cover it. Sara, Marianne, you too are experts in this. Thank you so much for coming on and helping us and my heart goes out to you and everybody else that is dealing with this right now because it's the hardest part. Colin says Awesome work to both of you. And I totally agree.
KREINER 59:00
Colin, thank you.
MOONEY 59:01
Thank you.
JONES 59:02
Thanks, ladies.
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You’ve been listening to the Inside Reproductive Health Podcast with Griffin Jones. If you're ready to take action to make sure that your practice drives beyond the revolutionary changes that are happening in our field and in society, visit fertiltybridge.com to begin the first piece of the Fertility Marketing System, the Goal and Competitive Diagnostic. Thank you for listening to Inside Reproductive Health.