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Thousands of Del. health care businesses get PPP loans

Katie Tabeling July 16, 2020

Specialty care offices, a community clinic and a hospice care center in Delaware were among the top practices that secured millions of dollars from the Paycheck Protection Program, while smaller offices also received their share, ...

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Specialty care offices, a community clinic and a hospice care center in Delaware were among the top practices that secured millions of dollars from the Paycheck Protection Program, while smaller offices also received their share, according to data released by the U.S. Small Business Administration. First State Orthopedics, Regional Orthopedic Associates, Anesthesia Services, Westside Family Healthcare, and Delaware Hospice top the list of more than 2,000 health care-related businesses that netted millions to withstand the fallout from the COVID-19 pandemic. The health care sector represents 11% of Delaware recipients of the largest PPP loans, which range between $150,000 and the limit of $10 million. Thirty-three health care-related companies received at least $1 million in PPP funds. The program was created to help small business owners retain and pay employees with forgivable loans. The funds originally needed to be spent in eight weeks, but recent changes extended that to 24 weeks while also bumping down the threshold for payroll spending to 60% from 75%. “Thank God for it, because what I’ve been hearing across the medical community from community physicians to larger practices is that it’s incredibly helpful for payroll costs,” said Dr. Joseph Straight, president of the Medical Society of Delaware. “Early on there was incredible pressure on some of the smaller practices with fears they would have to shut down or furlough or layoff staff.” Roughly 85% of recipients in the health care sector reported that the PPP loans helped retain upward of 60 jobs per office. Those smaller practices face overhead and payroll costs before the partners start to think about paying themselves, Straight said. When Gov. John Carney issued the stay-at-home order in March, many patients started to put off treatment or delay outpatient surgeries to limit exposure to the coronavirus. “It’s patients with pre-existing conditions like diabetes or those needing to see an orthopedic specialist who really delayed coming in. When there’s less patients, there’s less revenue coming in to offset all those overhead costs,” Straight explained. First State Orthopedics, the state’s largest orthopedic practice with 16 locations, obtained at least $5 million, according to the SBA data. The maximum it would have received under the ranges provided is $10 million. The practice reported it saved 486 jobs with the PPP loan. First State Orthopedics representatives did not respond to Delaware Business Times’ request for an interview. Straight, who practices at First State Orthopedics, said he was not involved in applying for the PPP loan and could not speak about it. It wasn’t the sole orthopedic practice that secured the federal funding, as Regional Orthopedic Associates landed at least $2 million to help retain 132 jobs. Delaware Hospice received a $3.4 million PPP loan and was able to fend off both furloughs and layoffs, according to Susan Lloyd, its president and CEO. All the money was devoted to payroll expenses, since Delaware Hospice has 285 employees across four locations in the state and one in Pennsylvania. “These are positions that are 24/7/365, from morning, noon or night. For us, holding onto our valuable team members was incredibly critical, even as there was a lot of unknowns at the time, because we need to be there for our patients and our families,” Lloyd told DBT. Delaware Hospice serves around 350 families per day and about 600 families in the state, and the need for service does not end because of an economic shutdown. “We’re very community-focused, so it’s about what we can do to make our patients comfortable. We’ve had to spend a lot of money on the right equipment, and we’ve been pivoting to telemedicine as much as we can,” she added. Other companies with a large number of jobs retained with the SBA loans include Westside Family Healthcare, a nonprofit federally qualified health center, and Anesthesia Services, the largest anesthesia group in Delaware that is also the exclusive provider to ChristianaCare. Both organizations secured a loan worth at least $2 million, with Westside reported retaining 238 jobs and Anesthesia supporting 155 jobs. Across the board, family practices and dentists also typically acquired loans worth between $150,000 and $350,000. Dr. Sharad Patel at Dover Family Physicians said that he was incredibly nervous about the financial outlook when the pandemic hit, mainly about keeping on his 30 staff members and two physician assistants. The $300,000 loan Dover Family Physicians obtained was specifically geared to protecting the payroll, which Patel said is his main expense. “Before the stay-at-home order, we were seeing 130 patients a day and afterward we were seeing 20 a day,” he said. “That’s a significant drop in revenue. It’s also a scary time because patients are hesitant to come out and on the other side, we had to take precautions with patients that we let in.” The PPP loan allowed Patel and his partners to buy more equipment and focus on telemedicine in the coming weeks. From April to June, the customer base did return but patients were seen over telemedicine channels. “The money definitely let us move forward so we could start thinking about the equipment we needed and the changes in the office that needed to happen for socially distancing,” he said. Headed into August, Patel said more patients are returning to in-person visits. Right now, patients are handed a wireless pager like the ones given at restaurants with wait times, so patients know when it’s their turn to come inside. “We’re still preparing for the fall wave, but that’s also when flu season hits and it’s our busy time,” Patel said. “I don’t think we’ll see another hit like before because the transition will be seamless if we need to make it.”

By Katie Tabeling ktabeling@delawarebusinesstimes.com

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