CPAs, management consultants, lawyers – tapping into the right expert help.
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Most physician practices will need help on occasion with tasks or questions that require expertise you don’t have in-house. Three types of advisers that can add tremendous, even essential, value to your practice business are CPAs, management consultants and attorneys. But before picking up the phone to engage one of these experts, it’s important to think through which type of assistance you need.
Virtually any business can benefit from the ongoing help of a certified public accountant (CPA), especially for tax filings and related questions. Tax rules are quite complicated and change frequently, so when it comes to business taxes, doing them yourself can quickly become costlier than hiring an expert.
CPAs also create financial statements: balance sheets, income statements and statements of cash flows. Financial statements can be invaluable for understanding your business performance and progress over time. These reports are also essential if you’re looking for financing or considering selling your practice - lenders and prospective buyers will require them. If you’re just starting out, teaming up with a CPA who can advise you on setting up your accounting can help avoid costly mistakes and revisions down the road.
CPAs offer invaluable tax and financial reporting services you can’t easily get from any other source. But it’s important to have realistic expectations. For example, CPAs’ adeptness with financial information doesn’t imply they can look at it and diagnose at a glance why your profitability is declining. Nor can they prevent, or easily spot, embezzling - a common misconception. When buying or selling a practice, it’s also critical to understand the limits of your CPA’s advice. CPAs often get involved in buying and selling small businesses, but the standards for valuing practices are often quite different from other categories; relying only on a CPA for valuation help in a buy-sell situation can lead to mispricing, potentially causing you to overpay for a practice you’re buying or set the price of the one you’re selling suboptimally.
Consultants of various stripes provide many services to practices. IT consultants, for example, can help you set up and maintain your technology infrastructure; marketing or reputation management consultants can help you promote your practice and manage your business image. But if you’re looking for help with profitability problems, streamlining workflow, solving personnel issues, strategic planning or other business advice that requires a more holistic viewpoint, consider engaging a practice management consultant.
Practice management consultants look at your business from the perspective of a general manager. Usually, they have deep experience running practices and other types of businesses. They often have academic training in business analysis, too. They combine their knowledge with a fresh perspective and a data-driven approach to get at the root of business problems (and spot opportunities, too).
In some ways, practice management consultants are like primary care doctors - even healthy practices can benefit from an occasional checkup. A practice management consultant can also be a good first call for help with a seemingly intractable business issue. But like primary care doctors, good consultants should also be prepared to refer you to specialists when they can serve specific needs better. For example, unless a consultant is also a CPA or attorney (uncommon), they should refrain from giving tax or legal advice.
When you need a lawyer, there is no substitute. It’s important to have reliable legal advice available for the common situations your practice business faces (personnel issues, employment and partnership contracts, leases) and not-so-common ones, too (lawsuits, liability claims and discovery of any potential criminal activity, to name just a few).
It’s no secret that attorneys can be expensive. Sometimes, practices are reluctant to involve an attorney in “boilerplate” agreements, or when pursuing a contract that is “just a formality” and seems unlikely to be revisited any time soon. But often, contractual relationships don’t go as planned, and the decision to forgo legal review before proceeding can end up costing more than it saves.
There are better ways to avoid costs than skipping legal advice and hoping for the best. One of the best ways to do so - and avoid other pitfalls as well - is to be sure you and your lawyer agree up front on the scope of work. Without clear boundaries on scope, legal discussions can expand unintentionally into business decision-making. This can be costly not just because it runs up your legal bill, but also because the legal lens is often not the best way to analyze business problems. Contain scope by making sure that all matters you discuss with your attorney are actually legal ones.
Defining the scope may also allow you to negotiate a flat-fee arrangement with your attorney, depending on the nature of the case. This can keep costs predictable - and discourage forays into unrelated discussions.
Attorneys, CPAs and consultants all offer potential benefits to your practice, depending on your current needs. A key to working well with any external adviser is to understand what services and advice you need before making the call - and to work with a professional you can trust to refer you to a different type of expert, if appropriate.
Don’t be afraid to seek help from CPAs, lawyers, or consultants when appropriate. The money you spend on them can help you avoid greater expenses, give you peace of mind and even set your practice up for increased profitability.