Healthcare Is Not Recession Proof: Safeguard Your Practice or Med Spa Against an Economic Downturn

The economy is on a wild ride. Government policies have been announced and rescinded at a pace that could give a watcher whiplash.

Markets are swinging wildly on a mix of reality and conjecture that has consumers clutching their wallets.

The Great Recession of 2008 showed us that while it’s more resilient than some sectors, healthcare is far from recession proof. Savvy practices are taking steps now to protect their businesses, whatever the economy has in store.

Healthcare spending grew slowly during the Great Recession as Americans were reluctant to pay out of pocket for care. Surgery volumes decreased as people delayed elective procedures like cosmetic surgery and joint replacement.

In 2008, unemployment spiked, causing many people to lose their insurance coverage. Even if unemployment holds steady this time, it’s unclear how recent cuts to Medicare might impact patients’ ability to pay for procedures.

Why People Think Healthcare Is Recession Proof

If healthcare isn’t recession proof, why do people think it is?

Historically, healthcare has been less vulnerable to economic turmoil than other sectors. People might cancel vacations, repair worn items, and cut back on entertainment, but when illness or injury hits, they still seek healthcare. However, when times are tough, patients may put off seeing the doctor, especially if they have to pay for the visit out of pocket.

Meanwhile, insurers and government programs like Medicaid can be slow to pay and don’t always reimburse the full amount.

For practices already operating on narrow margins, reduced patient volume and payment delays can cause real hardship — especially as costs like insurance, salaries, and tools remain high.

So while your healthcare practice might be less susceptible to a recession than, say, a hotel, it’s far from being secure. Hotels are not recession proof, but the concept of a time share has helped the hospitality industry supplement a source of revenue that is vulnerable to fluctuating economic factors with a more stable recurring source of revenue. The more you rely on elective procedures, the closer to the margin you may find yourself.

How a Recession Could Impact the Aesthetics Industry

When you think of specialties that rely on elective procedures, plastic surgery probably tops the list.

On the up side, plastic surgeons and med spas tend to draw their patient base from high income brackets who aren’t as dramatically impacted by economic downturns as patients with fewer financial resources.

That affluent base isn’t immune to a downturn — they’re likely heavily invested in the stock market and watching their net worth rise and fall day by day.

But their household income and spending habits are likely to see minimal disruption, even if we enter a full-blown recession. The prevalence of buy now, pay later (BNPL) financing for elective procedures and out-of-pocket costs adds another option for households reluctant to completely curtail spending in times of economic stress.

In recent years, cosmetic procedures have been increasingly marketed to a middle class audience. That market segment is more likely to put off elective procedures, even if they were previously planned.

Plastic surgeons and med spas can continue to nurture this segment by marketing less-expensive alternatives, like noninvasive injectables, as a substitute for full surgery.

You can also subtly shift your marketing messaging to emphasize the feel-good effect of cosmetic treatments.

The “lipstick index” is a phenomenon that finds people under economic stress will still indulge in small, affordable luxuries that make them feel good.

Med spas, plastic surgeons, and dermatologists can take advantage of the lipstick index by promoting noninvasive aesthetic treatments as a way to feel good and boost confidence, even when times are tough.

9 Ways to Recession Proof Your Practice

1. Stick to the Fundamentals of Good Business

Focus on the basics. Do what it takes to deeply understand the opportunities and challenges facing your practice.

Set and monitor key performance indicators so your decisions are rooted in data. Nextech offers tools that track practice data and present it in clear, easy-to-understand visualizations.

With this data, you can prioritize the services with the highest profit margins and spot patterns that could lead to opportunities or threats.

Quickly respond to threats, find opportunities, and control costs with Nextech Advanced Analytics.

2. Get Ahead of Trends

By tracking the data in your market, you can see what kind of an impact the economy is having on your community.

See what kind of treatments patients in your area are looking for. If your market is hit by a downturn, the data will help you identify potential underserved markets nearby.

One trend that’s been growing steadily is telemedicine. If you’re not yet offering online consultations and appointments, you’re almost certainly leaving money on the table.

When elective surgeries were temporarily shut down during the COVID pandemic, telemedicine allowed Schlessinger Dermatology & Plastic Surgery to stay busy, seeing 40+ patients per day even when they couldn’t open the OR.

Are you taking advantage of these top trends in plastic surgery and trends in medical aesthetics?

3. Keep Marketing Your Practice

When tightening your belt, don’t cut your marketing budget. Marketing is not a cost center; it’s a revenue generator.

Adjusting your message to focus on less-expensive procedures like injectables takes advantage of the lipstick index: A prospective patient thinking about putting off her facelift may be persuaded to get Botox in the meantime.

If a recession hits, there’s a good chance at least some of your patient base will have to delay planned procedures. To replace those lost patients, you need marketing to put you in front of new people.

The analytics in Nextech’s built-in marketing platform can help you identify the channels providing the greatest ROI. Lean into what’s working, and look for untapped opportunities.

And don’t underestimate the power of referral marketing. Connect with other healthcare providers in your area to create a referral network.

Make the most of your marketing efforts.
Check out our guides on Marketing for Med Spas and Marketing for Dermatology Clinics.

4. Prioritize Patient Retention

While you’re marketing to new patients, don’t neglect the ones you have. Give them an experience worth coming back for.

In the aesthetics fields, the right technology is key to turning consultations into clients. This plastic surgeon saw a 45% increase in conversions after introducing Nextech’s TouchMD photo management and patient engagement platform into consultations.

Once an appointment has been set, reduce no-shows by sending automated reminders. A convenient online portal that allows patients to schedule and reschedule helps you avoid gaps in your schedule.

Automated outreach can also encourage past patients to make a new appointment. Customer relationship management (CRM) software is known for lead management but is good for a lot more. It can help re-engage former patients who’ve lost touch or to continuously nurture relationships via email drip campaigns.

Remind them if they’re due for an annual exam, let them know about new services and offers, and provide helpful educational information via email and text. On each of these touchpoints, include a link to schedule an appointment.

Above all, make sure you’re delivering an outstanding patient experience. 

Nextech’s integrated EHR and practice management system makes this easy, empowering staff to focus on patients, not paperwork, making check-in and checkout fast and easy, and providing an online portal that lets patients engage with your practice when it’s convenient for them.

5. Get Paid On Time

People coming in the door are great only as long as you’re getting paid for the care you provide them.

To show patients you’re sensitive to financial upheaval, promote the various payment options you offer, such as paying online or in the office, and paying in full or in installments. Consider offering a BNPL option if you don’t already.

Reduce payment processing time by integrating your payments system with your EHR. North Texas Plastic Surgery can reconcile an entire month in less time than it used to take to reconcile a single day thanks to their integration.

Get your insurance reimbursements faster by improving your first-pass approval rates. Automated coding and billing tools that are integrated with your EHR help by eliminating human error.

6. Maximize Medicare Reimbursement Rates

If your practice bills Medicare, now is the time to make sure you’re maximizing MIPS.

The right EHR makes it easy to automatically track MIPS data, whether you’re participating in traditional MIPS or MIPS Value Pathways.

Submitting complete data on activities your practice is already doing can mean the difference between just avoiding a penalty and actually qualifying for a higher reimbursement rate.

7. Run an Efficient Team

Invest in technology that automates administrative work so your staff can focus on activities that generate revenue, save costs, and improve the patient experience.

McKnight Eye Centers reduced administrative hours by up to 20% a week by implementing a streamlined EHR and PM system.

Nextech’s efficiency tools also helped Pima Eye Institute save 10 minutes per patient without reducing face time.

8. Maximize Revenue Streams

If the economy deals a temporary blow to your per-patient revenue, you can offset the drop with alternative revenue streams.

Offer product lines like skin care, eyewear, or supplements to support patients after they leave. Smart inventory management tools help you keep the right amount on hand and monitor supplier pricing so you know the best time to buy.

Nextech’s integrated point of sale system enables patients to buy products at any time during their appointment. With a direct integration to the EHR, front desk staff can see clinicians’ recommendations for cross sales and up-sells, making the offer a natural part of checkout.

9. Manage Cash Flow

Cash flow can be a real headache for healthcare practices, which often have to wait weeks or months between providing a service and getting reimbursed by payers.

Build a strong financial plan using revenue cycle management tools that can help you forecast upcoming revenue and expenses and make sure you have enough cash on hand.

Get paid faster and reimbursed higher with Nextech’s Revenue Cycle Management support.

Build a Practice That Can Withstand an Economic Downturn

Healthcare might not be naturally recession proof, but there are things you can do to make sure your practice stays resilient in a shaky economy.

Above all, don’t stop investing in your business; just invest in areas that can deliver a quick and powerful ROI. Efficiency, automation, revenue management, and marketing are all areas to prioritize.

Nextech’s customizable EHR and practice management technology platform helps med spas, plastic surgeons, dermatologists, and ophthalmologists deliver better care faster and with less burnout.

Schedule a demo today to see what Nextech could do for you.

About the Author 

Robin Ntoh is VP of Aesthetics at Nextech. A recognized expert in the business of elective healthcare and aesthetics, Robin has seen success in the launch of both her own consulting company and the addition of consulting services for Nextech — serving more than 400 clients. Her 35+ years include small- to mid-business management as well as executive leadership for one of the leading aesthetic HCPs, Nextech.