Issue link: https://viewer.e-digitaledition.com/i/538813
M EDICAL PRACTICES ARE bombarded with administra- tive costs, so their physicians have a natural reluctance to pay for a highly experienced office manager, receptionist, billing clerk, consultant, accountant or other advisor. As with most things, you get what you pay for. Always hire the best. Your practice will benefit in the long run. In today's medical environment, it seems as if business issues dominate the running of a physician practice. In many ways, they do. Doctors have acquired vast medical knowledge, but not as much business acumen. Here is some basic advice from your CPA: 1. Hire well. Your receptionist can make a new patient come back or a regular patient leave. The ICD-10 transition, absent any postponement, is set for an October implementation. Is your biller already studying the new codes that apply to your practice? Embezzlement occurs at a high rate in medical practices. Are you placing too much responsibility and reliance on one person who is overwhelmed or inexperienced in handling his/her duties, or worse still, able to wrongfully take patient co-pays and have the practice pay for his/her personal expenses? 2. Embrace complexity. Medical practices too often do not have clearly drafted employment agreements, compensation agreements and ownership agreements. Operating on a handshake or common understanding is the prescription for a dispute that costs time and money. It is important for asset protection purposes and tax planning to analyze whether the different investments a medical practice can acquire should be held in legally created entities that are separate and distinct from the medical practice itself. There should not be any investments in your medical practice other than assets used for the operations of the practice. The office building should be in a separate entity. Any ancillary medical study revenue should be in a separate entity. Your personal investments should likely be in a limited partnership protective entity. 3. Care about the numbers. Financial statements are not meaningful if the physician does not review them. As a physician running a business, you need to be provided with financial data that is timely and meaningful to running the practice. You also need to be able to read financial data. Get with your accountant and medical consultant to discuss how to make this happen. Insist on comparative financial statements with identical prior time periods so you can see trends and note discrepancies in your practice. 4. Act like you have a mean boss. Don't mix personal expenses in your medical practice. Don't take out patient collections without knowing the tax ramifications of that revenue and whether the practice has sufficient cash on hand. Please pay attention to making timely payroll and income tax deposits and filing timely payroll, franchise and income tax returns. A medical practice can be a very successful business that is destroyed by the personal spending habits of the physician. Many doctors are working harder for less income. This could be a sign that the practice and the physician are not controlling costs or protecting revenues. 5. Plan for the future. Go on a two-day retreat to reassess your practice and, if necessary, your quality of life. Assume you are going to live a long time and start planning for a retirement nest egg. Your medical practice is a valuable asset. Find the right medical practice partners and draw buy/sell agreements that protect this asset. Your most valuable asset is yourself. Get adequate disability insurance and take care of your health. Plan for that rainy day, as it will likely come sooner than later. Jim R ice, CPA , i s a shareholder at Sol Schwar tz & Associates, P.C. He has 37 years of experience in public accounting. In addition to providing business consultation, financial planning and various other accounting services, Rice specializes in income tax planning and consultation. He works with a high concentration of physician practices and high-net-worth individuals. Contact Rice at jprice@ssacpa.com or 210-384-8000 ext. 112. ■ Should Tell His or Her Physician Clients By Jim Rice ONE OF THE FIRST PIECES OF ADVICE I GIVE MY PHYSICIAN CLIENTS IS TO AVOID BEING POUND-FOOLISH AND PENNY-WISE. What Every CPA ++++++++++++++++++ + +++ + +++ ++++++++++++++++++ ACCOUNTING ❯ 1 0 | San Antonio MD NEWS ■ M D N E W S . CO M