Spending a little time on mid-year planning will make for a smoother and more successful 2022! Doctors, dentists, surgeons, and other medical practitioners should take a hard look at the last 6 months, and see how close they have come to their operational and financial goals. It may be time to reevaluate and refocus on which goals are still reasonably achievable, and pay attention to which areas of their strategic plan are at risk. Summer is a good time to start reflecting on concerns or issues that may have occurred throughout the first half of the year and how improvements can be made moving forward to put the practice (and the practitioners) in better shape at the end of the tax year.
- Review corporate contracts, and make sure you have a proper buy/sell agreement in place. Don’t operate off outdated documents and agreements. Parties actually may be applying compensation formulas or other parameters that do not match what is in place, which could result in an unexpected wage claim or legal dispute. A retiring practice owner may receive an overly rich severance formula or buy-out compensation that harms the practice if documents were written when the practice was more financially sound.
- Take another look at Telemedicine and your remote workers, you may be creating “nexus” for state tax even if it you do not have a physical presence in that state. Beyond the physical presence issue, you must consider whether a physician is required to be licensed in a state, or whether the physician is renting equipment like patient monitoring devices. States may also claim that nexus is created by the use of mobile health apps in their states. In many instances, exceeding a sales threshold amount is enough to create nexus in a state. Telemedicine could be subject to sales tax in some states, as well as income tax, and payroll tax!
- Most importantly for healthcare practices, it is essential to review all corporate documents regularly to assure ongoing compliance with state and federal healthcare laws. HIPAA has changed over the years, yet many organizations have become lax about HIPAA training and fail to educate or enforce the law, which puts them at risk for substantial liability and fines for noncompliance. Review HIPAA policies and training, and revise and update as needed. In 2022, every practice should confirm that it has a Business Associate Agreement with third parties that might access any practice records or patient information and arrange for updated training for staff.
- Make sure the practice’s operations are compliant with state and federal health laws (ie, Stark and Anti-Kickback). Almost every possible arrangement that includes a healthcare provider implicates some state and federal laws. If there is any third party to which the practice refers/receives referrals and/or has any financial arrangement, these relationships should be reviewed for compliance regularly. Review all management agreements, leases, marketing agreements, contractor agreements, and any others. These documents may need to be amended to reflect the actual arrangement of the parties or terminated if the arrangement is no longer in place. Oral arrangements may also need to be documented.
- Review the practice’s employee policy manual and update the practice handbook as needed to assure compliance with state and local laws like disability leave, sick days, and maternity leave. Practices need to be sure that any new or modified policies from 2021 (ie, vaccination requirements) are addressed in the policy manual and are shared with all parties.
- Do a financial audit. Medical and healthcare practitioners benefit tremendously when they spend time with their Fuoco accountant reviewing the practice’s financial performance, expenses, budgets, projections, and examining your debt-to-income ratio. How are each of the providers performing? What additional lines of business or products should the practice explore to increase its revenue? Can it afford to bring on a new mid-level provider? Like any business, a practice needs to be savvy about reviewing its books and planning strategically for growth and profitability.
- Also spend time with your Fuoco accountant reviewing your financial situation and opportunities to save related to:
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- Pass Through Tax Discounts (beware phase-out thresholds)
- Depreciation in real estate if you own the building/office
- Mileage & food expense deduction
- Health Savings Account & IRA contributions
- Student loan payment deduction
- Continuing education expenses
- Self employment tax deduction
There may be additional tax credits for:
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- Professional dues and subscriptions
- Investment losses
- Professional fees in excess of 2 percent of your AGI
- Home mortgage interest
- Malpractice insurance expenses
- Scrubs and other work attire
- Don’t shy away from a detailed dive into the practice’s billing and collections, and insurance payors on an annual basis to ensure compliance with the law and to allow for education, rate adjustments, and to correct any incorrect billing practices. Practices that have not done an annual financial audit should start in 2022!
Contact Us: Our CPAs and healthcare accountants have worked with healthcare professionals and medical practices for many years. Let us help guide you, so you can take better care of your patients and practice medicine instead of worrying about cash flow, budgets, collections, etc. Contact us for a consultation about your practice or your personal financial health at CPA@fuoco.com or call toll free: 855-542-7537.