Marketwatch May 1, 2020

COMFORTABLE…UNCOMFORTABLE

The continued uncertainty around COVID-19 is what makes it seem so risky. One of our sales associates described it best…COMFORTABLE…UNCOMFORTABLE.

That makes comparisons to previous pandemics, recessions, depressions or the known dangers of season flu so pointless. We must understand reliable projections about risk, take steps to reduce our personal risk and find a way of living (engage in businesses). That balances the trade-offs “between the disease and the curve.” That’s life with some degree of uncertainty and some degree of risk.

Some randomness in today’s unorganized world:

• Government’s heavy dependence on sales tax income needs to be reevaluated and their business model diversified.  For example: Braselton lives on sales tax from entertainment and Hotel/Motel tax with no property taxes. Most North Georgia counties show 30-37% of annual revenues from consumption taxes. What happens when no one spends any money? Norton Sales Associates note a market increase of vacation homes, farms and mountain escapes over the last four weeks. With the potential shutting of summer camps and avoiding air travel, several buyers are seeking Vacation ● Retreat ● Bunkers closer to home. Watch for heavy distance socializing on the waters. North Georgia is most affected by the evaporation of short-term rentals; VRBO, AIRBNB, and other sharing services as they took a hit, however, the second home investor or user has really taken a hit. New protocols of cleaning and prohibition of back to back rentals should ease some of the renter’s concerns. Norton sees, hears, and feels a pent-up demand and impending summer surge, fall deluge for this product. Social distancing in a cabin in the woods will be a huge boom to the mountain and lake communities.
• We are concerned with some backlash against communities that road blocked retreating Atlantans and instituted ridge full time resident actions even against taxpaying second homeowners. We sympathize with owners of Lake Lanier, Lake Burton, Lake Rabun, Lake Seed, Lake Nottley, Lake Chatuge and Lake Hartwell.
• North Georgia’s poultry industry may be slightly ahead of the curve on safety. While the Latino community is showing up as a virus hot spot, the poultry industry has been prepared for Bird Flu, Salmonella, and Ebola outbreaks for years. Companies like Fieldale, have rigid sanitation and disease protocols and in past years, have paid workers with the flu to stay home. The distance between employees is problematic but plexiglass and cardboard shields are part of the new manufacturing assembly line across all industries.
• The sharing economy with companies like Uber, AIRBNB and We Work has become a training tool with the concerns of building understaffed healthcare emergency services, but it goes against private property rights and kills potential food, drug and essential commerce. There must be a balance somewhere, risk vs mountain community economic viability.

EVEN MEDICAL DELIVERY IS SHAKEN

The Coronavirus is shriveling the businesses of doctors’ practices, which serve as the home base for most patients. Small and independent groups that are facing the most severe cash crunches may eventually be forced into less-than-ideal options: sell the practice, which would further consolidate the industry and expose patients to higher costs, or close their doors for good. The federal government and health insurers are paying doctors for telehealth visits, but that isn’t making up lost revenue. Some doctors are reporting revenue is falling anywhere from 50% to 90%, according to several sources. Hospital care for COVID-19 and social distancing are taking priority over primary care checkups, endoscopies and other non-urgent services.

Many doctors have started receiving the federal government’s loans and grants designated for medical providers. But the small business funding program is an administration nightmare for many doctors who applied.

• 20% of primary care practices now believe they will temporarily close within the next month, according to a new survey of doctors.
• “The economic pressures on physicians, especially small practices, are so severe right now that their survivability is in question,” said Bob Doherty, an executive at the American College of Physicians. “Unless the financial situation improves, within the next several months, many are going to have to shutter or sell out.”

What’s next: Hospitals, insurance companies and private equity firms – which have been rapidly buying physician practices since well before the pandemic, will view financially distressed practices as golden opportunity, especially if the doctors are valuable sources of referrals.

WE ARE N THIS TOGETHER…

NORTON NATIVE INTELLIGENCE

For More Information email info@gonorton.com