This week we conclude our review of essential business and legal planning for physicians.
This week we conclude our review of essential business and legal planning for physicians. This list is a start and should not be considered complete, as there are many fine details and nuances particular to your fact pattern that may call for additional areas of consideration. It is, however, a reflection of the most common and widely applicable issues the author has seen with a client that includes several thousand physicians. As always, use this article for self-examination and a starting point for personalized care.
10. Professional Accounting Service. Do you have a “good” CPA or a “great” CPA? A “good” one tells you what you owe; a “great” one proactively looks for ways to help make that number as small as the law allows. Taxes and payroll are just the beginning, today’s demanding business climate means you must have a sophisticated fiduciary who proactively offers solutions and shows you legal tax-avoidance options in addition to the exacting administrative and reporting functions we rely upon them for. Top CPAs include discussions of issues like debt-financing costs, cost-segregation studies that produce large tax benefits on your business, and commercial real estate. They will even discuss energy-efficiency studies that make your buildings greener and produce tax-credit benefits that I’ve seen as high as $1.80 per square foot. Don’t skimp on this area; your bookkeeper and QuickBooks can’t adequately advise you on any of the issues I’ve raised above and these are just two anecdotes from a tax code filled with opportunities for the educated or well advised.
11. Exit Plan Strategy. Ok you’ve been successful - now what? Make sure that your business is an additional asset when you want to leave and that the planning you have done minimizes your tax exposures on the sale or transfer. A little proactive work here can save you as much as 50 percent in taxes. Exit planning means more than just planning for your own exit, planning in the traditional sense of retiring, and selling your practice, however. It should also include planning for your partners, associate doctors, and even key admin and RN/NP/PA staff that may be an integral part of your practice’s business model and revenue stream. It’s a good idea to know how you’d handle the planned or worse, unplanned, loss of one of these key assets through death, illness, or termination of employment for any reason. Physicians Practice managing editor Keith Martin did an excellent, in-depth piece on exit planning for doctors that provides greater detail from a variety of experts. We have seen many long-running and successful practices with a few key producing/billing members fall on hard times when taken by surprise without a plan; could your practice take a 30 percent to 50 percent or even 10 percent revenue hit?
12. Tail Liability Coverage is a vital extension of your personal asset protection and malpractice insurance planning. Many physicians think of this exclusively in terms of retirement but there are many instances where it must be implemented including buy out of a partner and separation of employment. In many cases the costs of this insurance are covered in documents like buy/sell or employment contracts. Make sure you know what you have and who bears the cost of this coverage, and never skimp on it if you are yourself the payer. I’ve seen a variety of surprise lawsuits against dentists, mental health professionals, and others who considered themselves outside the traditional oncologist/surgeon/OB/GYN high-risk stereotype. The number-one cause of medical malpractice claims is failure to diagnose, which may not manifest until several years later and the liability will be there for you whether you are still practicing or not.
As stated earlier, this list is a simple, general starting point and has been updated for 2013. It was originally more than 20 items; some of those have been combined here in the context of more comprehensive planning or the descriptions of key team members. We will continue to update and modify it as the business of running a medical practice continues to evolve and present new challenges.