In the second part of the “self-exam” physicians and practice managers should perform to ensure optimal operational health, we’ll look at everything from data breach insurance to exit strategies
This is part two of a checklist of vital legal and financial planning that doctors and practice managers can use for a comprehensive “self exam” see part 1 here.
In the second part of the “self exam” physicians and practice managers should perform to ensure optimal operational health, we’ll look at everything from data breach insurance to exit strategies.
10. Employee Dispute Resolution Package: This helps prevents employee lawsuits and makes your practice a hard target. Right now employees win 75 percent of the time and the average sexual harassment verdict, as just one example, is at $530K. Your business is five times more likely to be sued by an employee than for any other reason. Have a plan.
11. Data Breach Insurance, a.k.a. Cyber Liability Insurance: You’ve likely seen headlines with healthcare facilities facing financial exposures of up to seven figures when lapses in electronic data security occur. Remember that almost every medical practice has massive amounts of sensitive financial, legal, and HIPAA-protected information and a corresponding legal duty to protect that data. Threats range from improper disposal of computers, disks and drives (human error) to viruses, theft, abuse, sabotage, and billing fraud.
12. Proper Corporate Formation: Is your formation, or lack of it exposing you to liability and taxes? Will it hinder you in the case of sale? Do you have too many eggs in one basket? For example if your practice owns the building it operates from you are needlessly exposing the real estate asset to professional liability. Simple fixes can save you millions if something bad happens.
13. Professional Accounting Services: Do you have a good CPA? Taxes and payroll are just the beginning. You need an expert advocate who proactively offers solutions and shows you legal tax avoidance options in addition to administrative and reporting functions we rely upon them for. Your CPA must do more than tell you what you owe.
14. Real Estate Depreciation/Property Tax Reduction Study: Get tax deductions for depreciation NOW when you need them. You can get large current deductions on your investment real estate in a safe and legal way.
15. Income and Receivables Protection Planning: Make sure the cash flow you use to fund all these other things is safe. Your income can be “equity-stripped” just like a piece of real estate and the value put within protected structures that grow them in a protected and tax-advantaged way.
16. Tax Reduction and Retirement Income Planning (Including Pensions): Remember, it has to last at least 30 years and account for inflation. Instant lesson: compare the costs of an automobile or a loaf of bread 20 years ago to their costs today and see if inflation made a difference. Imagine dealing with that kind of cost increase on a fixed income 20 years from today.
17. Estate Planning: Who gets what, when and at what cost in estate taxes? You can make the estate tax exposure number zero in many cases. Do you really think our current national debt will allow doing away with this exposure? We and the tax and estate planners we work with don’t think that the current high limits will last beyond the next 24 months.
18. Long Term Care Insurance: The costs of this kind of care are soaring - can you risk your retirement savings and family’s legacy by not having it? Medicare has a five-year look back and requires that you are nearly destitute before they cover essential daily care.
19. Exit Plan Strategy: Okay, you’ve been successful - now what? Make sure that business is an 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.
General lists like this can only be the beginning of your self-exam, there is no substitute for professional help and evaluation of your specific needs in these areas. Many of the items listed here have been covered in greater detail in my past columns, so please utilize the information resource and archives that Physicians’ Practice provides or feel free to e-mail me with questions.
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