Allen Brinkman became market president for Seacoast Bank in Tampa last year bringing years of banking experience in the region with him. He says one particular
things he’s doing in his new role is focus on the business of health care — particularly its impact on small medical practices.
His team worked with one physician, for example, who bought a commercial building for his practice with a loan that matured every five years. When those first five years passed, that physician was faced with a significantly higher interest rate — one that would increase his monthly expenses by several thousand dollars. “We were able to come in with a couple of products that brought that payment down and fixed the rate for much longer to take
the risk out of his business for a long time to come,” Brinkman explained.
Then there was the physician who wanted to add new revenue streams to her business, which required an investment in new technology. Seacoast offered equipment financing to ease the burden of heavy up-front costs, Brinkman said. “We provided a solution for that, which added a new dimension to her business and gained some revenue. Now she’s off and running.”
Health care is often seen as a lucrative industry, but in recent years, revenues have trended downward, particularly for small medical practices. Changes in reimbursement practices from both the public and private sectors, along with shifting technology needs, are creating a new reality for doctors — one in which they have to make substantial investments to sustain and grow their businesses without predictable cash flows.
“They’re having to think about their capital strategy and how it is structured to create financial efficiencies for their practice,” Brinkman explained. “On top of that, they are providing a really complicated solution to their customers that requires a lot of time and a lot of focus.”
That has made the physician/banker relationship more critical to small medical practices in recent years, Brinkman said. There are a number of tools available that can ease financial burdens or make new investments possible. But doctors are busy — not just providing health care services but managing their practices, he said. They don’t have the time to research the latest financial products or broader business trends.
In this complex environment, a good banker becomes a vital resource, Brinkman said. “I tell my team, I see ourselves as physicians to a degree: Bankers diagnose a problem, and once you diagnose the program, you bring in your experts — treasury management, tax planning, wealth management, equipment financing — to heal whatever ailment that physician has,” he said.
Those “ailments” can include unpredictable recurring expenses, like the physician facing increased interest rates on his commercial loan. For situations like that, practice owners can take advantage of owner-occupied commercial real estate loans, which can provide competitive rates that are fixed for a longer period of time to help stabilize cash flow, Brinkman said. “That way, you know over the next 10 or 20 years what your payment will be, and you can plan for that,” he explained.
Another issue is the need for technological investment. With the advent of electronic medical records, as well as the overall pace of innovation in health care, technology can provide opportunities to streamline a practice or add new revenue streams. But to take advantage of that can require a significant up-front investment, Brinkman added.
“Most technology today is creating efficiencies, and as these practices see their revenues decline, they’ve got to make up their margin, usually with efficiencies or more volume,” he said. “A $200,000 investment can seem scary, but if your time horizon is the next 15 years, you really need to do it or you’re going to face a more dramatic problem.”
And then there’s the looming specter of fraud — an issue for all small businesses, and one that is growing in health care. A forgery or a bad check can wreak havoc on a practice, but treasury management services can mitigate that risk by implementing certain triggers that monitor for problems, Brinkman explained. For example, physicians could set up their practice so that they have to approve any checks cashed above a certain amount. The result is a system that pushes information to practice owners, rather than forcing them to find it on their own.
If bankers are like a physician in diagnosing financial problems and providing solutions, then they are also responsible for doing what’s right, Brinkman said. It’s a fiduciary responsibility rather than a Hippocratic one, but it’s one he takes seriously. “Giving bad financial advice has terrible implications,” Brinkman said. “But if we’re in tune to what’s going on and thoughtful about their future, it becomes a really fulfilling component of the relationship. And when it works, the banker/physician relationship is beautiful.”
Seacoast Bank is one of the largest community banks headquartered in Florida with approximately $6.7 billion in assets and $5.2 billion in deposits. The bank provides integrated financial services including commercial and retail banking, wealth management, and mortgage services to customers through advanced banking solutions.
By Mary Johnson, a freelance writer for The Business Journals.