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Asset Protection for Your Medical Practice or Business , Learning To Fire the Right Way

November 1, 2011 By Leave a Comment

By Ike Devji, J.D.

Imagine that after two decades in business with 100 plus employees and not a single EEOC or employment complaint your business is facing a class action lawsuit by disgruntled former employees discharged for cause. Imagine that these employees call every other employee they can reach and try to get them to join the lawsuit against you. Imagine that many of these employees are currently unemployed or underemployed due to economic conditions and are happy to have a new business, yours. Now wake up, it’s 2011 and all of this is real.

Over the last 45 days I have helped three different clients with issues similar to this fact pattern. In every single case the toxic employee that brought suit and/or encouraged others to do so was employed until the time of the suit, fabricated serious and offensive complaints at discharge or in anticipation of discharge. They also shared one other characteristic, in every single case they had been toxic or had been performing poorly for some extended period of time and should have been fired long ago but were not because of fear of conflict or because the manager of practice owner was trying to “be nice”.

I’m all for charitable giving, but I must be clear on this point; your HR practices are not the place for you to be “charitable” and can cost you and all your other employees your livelihoods. Part of the hesitation we see is based on the fact that most people don’t know how to fire and discipline in a safe and effective way, below is a simple outline we use to help you get a handle on a real “process” just like you have for most other operations in your practice.

Start early, even in the interview process and make all employees aware that you have a specific discipline process and high standards. Encourage them to communicate on any issues related to the workplace and their performance. Be clear about your expectations and requirements and how they will be enforced. Use a written job description that outlines their responsibilities and your performance expectations and then be ready to back it up.

THE FOUR STEP GUIDANCE AND DISCIPLINE PLAN:

VERBAL – Given instructions, corrective feedback and outline your expectations for behavior or performance that is below par or creates conflict with other employees or patients immediately.

WRITTEN – Upon the SECOND incidence of any undesired behavior or shortfall of the performance the position clearly required and which was clearly outlined in the initial interview and written job description (see how it is repeated, re-enforced and most importantly, DOCUMENTED?) provide specific written record of the issue, save it in their file and provide them notice by giving them a copy.

HAVE AN AFFIRMATIVE AGREMENT – As a last salvage attempt and to preserve a record, use an affirmative agreement that specifies the behavior you need to correct and have the employee agree to specific, immediate changes in their behavior and performance to conform to their job description and previous corrections. Use a written  form that they have seen before and that should be in their handbook.

FIRE THEM– If after the three above attempts don’t produce the desired results, you’ve done your part and it’s time to discharge the employee; again it is vital to have a process. Get keys, passwords, building entry keys and other security related issues covered and consider changing key locks and alarm codes. Have a witness if possible and follow a specific discharge process including an exit interview. Record the exit interview if possible so that the interaction is documented. If possible provide the employee with a final check they are due or any severance you may offer as a courtesy at the time of discharge, it takes some of the anger they feel away even if they know that being fired was their own fault. Finally, provide them an opportunity to provide feedback, either during the interview or in writing on a form you can provide; give them a chance to speak their mind and vent anger that might result in a lawsuit.

As always and as covered in my previous articles, get both EPLI (employment practices liability insurance) and a real, customized employment manual from a top employment law resource, not a free form of the internet or an outdated one you copied from another practice and get legal advice from an experienced employment law attorney sooner rather than later if you feel you have an employee that threatens your practice.

For more information, see our index under employmentlaw and visit http://lawsuitfreeworkplace.net/members/ my thanks to Douglass Lodmell and Paul Edwards for their guidance on these issues. This article originally appeared at www.physicianspractice.com, the nation’s leading practice manage,ment resource and appears here with permission.

Filed Under: Asset Protection, business legal planning, business survival, chiropractors, dentists, doctor sued, Employment law, lawsuit awards, liability, physicians, recession lawsuits, recession survival, scams Tagged With: , , , , ,

Four Key Team Members Every Medical Practice Needs

June 8, 2011 By Leave a Comment
By Ike Devji, J.D. | June 7, 2011

Every medical practice has a variety of specialized team members that handle patient intake, billing, collections, office management, and, of course, the delivery of the actual medical care itself. In the best medical practices this system is continually refined and each member is carefully selected and trained to ensure that the practice runs as safely and efficiently as possible. 
What many good doctors and practice managers often overlook however is the importance of the “outside” staff that supports the operations of the medical business. These outside professionals are just as vital to the success of a practice as any internal employee and must be chosen with the same degree of care. Here are five key relationships to review in your own practice: 

 1. A top CPA: There are wide ranges of performance and involvement by CPAs in the businesses of those they serve. Some are what I refer to as “tax preparers,” meaning they take your papers and tell you what you owe to the exact dollar. A necessary skill, but today’s economic conditions and reimbursement rates require more. You need a real “tax planner” — someone who is BOTH technically proficient at the paperwork and who is proactive about spotting and suggesting ways for you to pay the minimum amount legally possible. Which category does your current CPA fall into? Make sure they are working as hard to save you money as you worked to earn it. 

2. A really great insurance agent (or two): Insurance is your indispensible first line of defense against a variety of exposures from malpractice to data breach and even traditional life and health. In many cases these needs are served by two different agents, one who handles life insurance planning for the staff and principals and another who is a property and casualty or “P&C” professional to help with liability coverage and health insurance. There are certainly many agencies that do both, but my experience with thousands of doctors leads me to believe that most are better at one or the other. I also prefer multi-line agents that have the entire universe of products available to suit my client’s needs at competitive pricing, not just one insurance carrier’s line. 

3. A great lawyer(s): The plural is included because no matter what they tell you no one attorney can adequately handle all the needs that arise in a practice; at this point we lawyers are nearly as specialized as doctors. A good attorney is someone you can reach out to in a time- and cost-effective way to discuss issues, who is not afraid say, “I don’t do that but I know a guy who is an expert in that area.” Do you have a guide through this maze you can trust to get you the best help, even if it’s not from him? Look for someone who is proactive and can help identify issues and exposures, as they are almost always cheaper and easier to prevent than to fix or defend against. 

4. A sophisticated financial planner: I’m fortunate to work with some of the best in the country, and all share common traits. Again, being proactive and realistic about risk, both in the market in general and in terms of being a high-risk professional, is important. Top advisors can actually help you identify investments that are tax advantaged, market-risk averse or at least hedged, protected from outside liability by law (like life insurance and annuities in many cases) and will identify which good investments need protective wrapper like a limited partnership to hold them safely. They will also, in conjunction with your CPA, identify opportunities to reduce taxes and allow to safely and predictably keep more of everything you earn by examining the costs and benefits of things like defined benefit plans and other legal tax deferment strategies. 

These four categories form the absolute core of any well-crafted external support team, but many other professionals and relationships are required. It literally can take a village depending on the size of the practice involved. For help in identifying other areas of planning that need to be addressed, please see my previous two-part article, A Doctor’s Self-Exam of Legal and Financial Essentials.   

This article originally appeared at www.PhysiciansPractice.com the nation’s leading practice management resource, where Ike Devji is regular contributor. It is reprinted here with permission.

Filed Under: chiropractors, cpa, dentists, Doctors, financial advisors, FINANCIAL ISSUES FOR DOCTORS, Ike Devji, medical practice mangement, physicians, Uncategorized Tagged With: , , , , , , ,

Is Your Physical Office an Obstacle Course of Liability? PREMESIS LIABILITY

March 17, 2011 By 1 Comment

By Ike Devji, J.D.

You spend time worrying about “technical” issues that create liability like practice procedures, HIPPA and billing compliance and other patient related procedures, all with good reason.

Sometimes however, other more basic liabilities are innocently created or overlooked by even the most informed practice managers and doctors. Here are two simple issues to examine as a starting point:

 

Is our facility ADA compliant? This goes beyond the obvious like having handicapped parking and restrooms and includes very specific legal requirements for the construction of public spaces like entrances, thresholds, pathways, elevators, counters, even your signage! There have been countless lawsuits on this issue with businesses nationwide, often generated by people who are not even your patients when a “scout” spots an opportunity for a lawsuit. There are specialists in ADA compliance review available in nearly every jurisdiction that will inspect your facility and supply a list of violations and the required corrective actions. What “fully abled” people take for granted and easily overlook will surprise you and the small investment required in a compliance review will almost certainly be less than the cost of responding to an ADA complaint or lawsuit. Still not convinced? Consider that in some states, plaintiffs filing ADA lawsuits are allowed to seek punitive damages, attorney’s fees and extra monetary sums, plus you’ll still have to make the changes legally required.

Have we created dangerous conditions in our office or do we allow others, including our employees and patients, to create them?

I recently read a request from an elderly person looking for a referral to a personal injury attorney after being injured at their doctor’s office. How? By the expensive bicycles of two patients who did not want to leave them outside and asked the receptionist for permission to bring them in. The elderly patient entered the waiting room, tripped over the bikes, severely injured his knee and had his cheek pierced by a section of the bike’s break cable that nearly took out his eye. The liability here is most certainly going to be attributed to the practice, and frankly they are likely a much more attractive defendant as a “deep pocketed” corporation than another patient. We have seen similar issues faced by practices all over the country, including accidents between patients in the parking lot. In more than one case the liability has been attributed to the practice by the plaintiffs for the same reason; it makes more financial sense to (as one real example) sue a doctor’s office for not having enough speed bumps in their parking lot than it does to sue the widow on a fixed income who hit a child in the parking lot.

This same logic extends to a variety of issues like cleaning crew schedules (should you EVER have wet floors during business hours?), waiting room construction and furniture selection, access to electricity or electronics, including medical devices that can cause harm, and in one case, how a flat screen TV a dentist put in his beautiful high end office was accidentally pulled over by a toddler, falling on top of him and injuring him severely. Again, there are low-cost safety inspectors that can walk your facility from the parking lot to the exam room and look for similar issues. One simple way to start today? Walk through your entire facility like you are preparing for the arrival of BOTH a puppy and a toddler that has just learned to walk and look for anything that could hurt them, including access to dangerous substances like cleaning products that may be stored in a bathroom cabinet or other publicly accessible space and consider outlet covers and other child proofing devices you might commonly find in a home, while making sure they wouldn’t limit access by a handicapped person. See how this might get complicated quickly?

These examples and questions can’t possibly provide you with a complete overview, but this should create awareness and a starting point from which to examine these issues in your own practice. Finally, make sure your general liability insurance is an adequate first line of defense and covers employee actions and omissions.

This article was originally written for and published by www.PhysiciansPractice.Com, The Nation’s Leading Practice Mgmt. Resource, where Mr. Devji is also a regular contributor.

Filed Under: Asset Protection, business legal planning, commercial real estate, dentists, doctor sued, Ike Devji, liability, liability insurance, medical practice mangement, physicians, property insurance Tagged With: , , ,

For Medical and Dental Practices, the Devil Is in the Details – PRACTICE MGMT.

March 3, 2011 By Leave a Comment

The business side of medical practice is more demanding than ever before, in fact it practically takes an expert MBA to keep up with many of the issues as they rapidly change and evolve. We found one, Chris Amato , CEO of Triton Practice Solutions shares some of his insights   an outside expert  brought in to “audit” top medical practices below. As always, the best medicine is preventative - Ike Devji

There are many additional challenges that the Medical and Dental communities are facing in today’s world that have increased significantly with the downturn in our economy compounded by the health care reform that our government is actively perusing. This leads to ask the one fundamental question to every Doctor in practice today … “Have you developed the ‘business’ side of your practice to match the level of the ‘clinical’ side of your practice?” This perspective is very foreign to many Doctors as they did not necessarily set out to be an entrepreneur or go to school to be a business owner. Yet as all Doctors experience after going into practice for themselves, owning a practice entails much more than being highly qualified clinicians.

The Doctors that I tend to work with are the savvy professionals that not only acknowledge this fact but have a desire to see their practice to be amongst an elite group, in that their “business side” equally matches the “clinical side” of their practice. These Doctors recognize that making money and keeping it are VERY different challenges that can and will be addressed in their practice. As a result of asking this not so exciting question, there are some very common problems that I find in the diagnostic process of evaluating the “business side” of their practice.  

9 out of 10 practices will have some if not all of these areas as issues that need to be addressed (or in many cases readdressed). Here are the 5 most common areas:

1)   Financial Systems – How is your money tracked and controlled?

Their needs to be the most complete, comprehensive and accurate billing systems in place. The revenue cycle management for billing however is only one aspect of the financial systems that need to be addressed. Unfortunately 3 out of every 4 practices will have some kind of financial impropriety/ embezzlement situation at some point in time within the life of the practice. How much money is the practice really making? How is the cash-flow being tracked? Is there any kind of practice budget, standards or variance reporting to identify any honest (or not so honest) errors in accounting? Going back to the fundamental principal… If you can not measure it, you can not manage it. Doctors do this well on the clinical side of the practice for patients. They would never prescribe a treatment plan until the information was gathered from the test run to begin to identify what the problem really is and how its impacting the patient. Yet from a financial perspective, if the financial systems have not been set up properly for managerial accounting. The tests cannot be run and the information is then not available to even identify that there is a problem. The notion of running a business based on the balance of the checking account will potentially leave much earned profit on the table and open the door for financial impropriety.

2)   Corporate Formalities- Is your corporate veil intact?

A primary reason for setting up some form of corporation or legal entity is to separate the Doctor’s personal liability away from that of the practice itself. Regardless of the type of entity that was chosen and established  (i.e. PC, PLLC, S. Corp. Etc) there are formalities that need to be followed and proven if challenged, to keep the asset protection in place. By not following the formalities, it could be said that the doctor has established the precedence that they are running the practice as a sole proprietor. Even though an entity like a corporation was set up and files taxes, they could be treated like a sole proprietor in the event of a lawsuit as a result of. This could force the liquidation of the doctors personal assets to satisfy a courts judgment.

3)   Legal Documents – Are the “I’s” dotted and “T’s” crossed?

Documentation, documentation, documentation… There is a pretty good understanding in most practices of the necessity for documentation in such areas as HIPPA or OSHA compliance and patient records but there are other legal documents that are many times overlooked or not established in a correct or complete manor. Things like formal loan documents to and from shareholders, rental agreements, Shareholder Operating and Buy/Sell agreements, to name just a few, are monumentally important. These legal documents are not the day to day squeaky wheel if you will, but they can go from not being the squeaky wheal to the blaring siren once a negative event calls for their presence and they are incomplete or nonexistent. By making sure you dot the “I’s and cross the “T’s” in these and other fundamental documents can be the very thing that stops a financial catastrophe in its tracks. Having these documents reviewed by a third party who can help identify areas of exposure or weakness is usually a good safeguard.

4)   Tax Returns – Are they accurate? Are there “Red Flags”?

One of the biggest misconceptions pertaining to the taxation of a practice and its doctors is that the accuracy and liability of the tax returns falls on their accountant or CPA. Any of the accounting firms and CPA ‘s I have ever worked with (and that is literally hundreds around the country) issue some formal statement indicating something along the lines of… “We have NOT audited the accompanying financial statements and accordingly do not express any opinion or any other form of assurance on them. Likewise, the tax return itself in the box where the individual or shareholder signs the return states… “Under penalties of perjury, I declare that I have examined this return… and to the best of MY knowledge and belief, it is true, accurate and complete.” This then places the liability for accuracy back on to the individual or entity filing the return.  With the IRS making it well known that they have more than tripled their audit loads and that they are really scrutinizing higher income, service oriented businesses, this is a “business side” of the practice issue that needs to be addressed. In defense of most accountants and CPA’s, the majority of the issues I flag here are NOT a result of an incompetent CPA but rather the result of things like… lack of information, lack of communication and the doctors not knowing the questions to ask.

5)   Asset protection & Estate Planning – Are you and your family protected?

As I mentioned earlier, it is one thing to make money, it is another thing to keep it. The more money that a doctor makes, the more assets they accumulate, the more successful a practice is, the bigger target they become.  Protecting your life’s work in the event of a lawsuit as well as ensuring that your wishes and assets make their way to your designated heirs can only be accomplished through proper planning. I recently had a conversation with a Doctor regarding this area and his first response was very negative towards the cost of doing this planning in a complete and comprehensive manor. This is probably the most common response and objection to this issue that I encounter. After doing a simple review of his financial statements, the cost to do comprehensive planning was significantly less than what he had spent that year in advertising. He was willing to spend double, almost triple the planning cost to make more money through his advertising efforts but not willing to spend a fraction of the amount to protect his life’s accomplishments (not to mention his family). This was a very sobering reality check for that doctor putting things in a very different perspective.

As I mentioned before, with 9 out of 10 practices having one or more of these areas that need to be addressed the question is not… “should I have these areas reviewed by a third party?” but rather “when do we get started”.

For more information on how an audit can help your practice contcat  Chris Amato, MBA CEO/ Senior Advisor at Triton Practice Solutions chris@tritonba.com 480-477-5775 . Prior to founding Triton,  Chris traveled across the country analyzing businesses in a vast array of industries. All in all he has seen more than 600 companies literally from coast to coast.  He was ranked in the top 5% of over 250 Business Analysts with a large national consulting firm. Chris also earned a number of various awards for his work including the coveted “Directors Circle Award “ for his exemplary business diagnostic skills as well as being nominated by the firm’s senior executives to “Presidents Cabinet” (An advisory counsel). With over 15 years of entrepreneurial experience and his business model to “Empower Your Business”, he is committed to helping business owners succeed.

Filed Under: Asset Protection, business legal planning, chiropractors, dentists, medical practice mangement, physicians, Uncategorized Tagged With: , , ,

Two Types of Liability Insurance Your Practice Needs (and likely lacks)

November 29, 2010 By Leave a Comment

To address two common exposures that are often overlooked and important in protecting your business against a potential lawsuit;  employment practices liability and cyber liability, I turned to insurance expert Aaron Stauss at Gilbert Insurance  for some details on how you can be protected.

If you have employees, a website, or your business works with or stores personal, medical, financial or other valuable data, then your business has exposures that most likely are not covered in your general liability policy.

Employment Practices Liability

As the number and severity of employee practices claims rise, business with employees should have in place an employment practices liability (EPLI) policy to protect the business against costly litigation and / or damages.

An EPLI policy will provide coverage / defense cost from a potential lawsuit brought forth by an employee for…
• Discrimination (racial, religious, gender, age)
• Sexual Harassment
• Wrongful Termination
• Failure to Promote
• Retaliation
• Employee Related Libel, Slander, Defamation
• Mental Anguish, Emotional Distress
• Invasion of Privacy

According to the Equal Employment Opportunity Commission (EEOC), the average number of EPLI cases filed per year is 80,000 cases. A recent study finds the average payout on an employee-related claim is approximately $180,000. We could list hundreds of example of employee lawsuits, but to get the idea all you need to do is go to the EEOC’s website and browse through the hundreds of cases in the Newsroom.

Cyber Liability Insurance

As businesses continue to rely more on technology and the internet, it also increases the potential for data security and privacy breaches. The average cost of a data breach is $204 per lost record. Question… Is your computer network protected from…
• Hacker Attack
• Human Error
• Fraud
• Virus Transmission
• Employee Sabotage
• Power Failure
• Natural Disaster
• System Malfunction

Examples of the Impossible that Actually Happened
An employee of a financial institution loses a laptop with client data. Multiple lawsuits are pending with defense costs exceeding $700,000.

Computer hackers breach your electronic system containing your patients’ medical records, and you are sued by the patients for failure to protect private information.

Don’t pay out of pocket or spend your time defending yourself against a potential lawsuit. If you feel your company has a need for either EPLI or Cyber Liability call Aaron Stauss at Gilbert Insurance Group (480) 926-9020.  To learn more about their services and team, please visit their website at www.gilbertinsurancegroup.com.

Filed Under: Asset Protection, business legal planning, business survival, dentists, doctor sued, Employment law, lawsuit awards, liability insurance, Uncategorized Tagged With: , , , , , , , , , ,

PROFIT RETENTION STRATEGIES FOR MEDICAL PRACTICES –

November 18, 2010 By Leave a Comment

 

IT’S NOT JUST WHAT YOU MAKE; IT’S ALSO WHAT YOU KEEP. 

With the economic impact of the new healthcare laws and the President’s final 2011 budget uncertain, practice owners and managers would be well served to focus their attention at this time on profit retention strategies. The thousands of doctors we serve are facing challenges including: 

  • Current Depressed Economic Conditions
  • Decreasing Compensation and Insurance Reimbursement Rates
  • Increasingly Hostile Litigation System that Targets YOUR wealth
  • Stalled or Negative Investment Momentum
  • Increasing Overhead and Liability Insurance Costs
  • Increasing burdens of Income and Estate Taxes; the estimated “death tax” will be 55% of everything over $1MM in 2011 as of the time of publication 

A properly constructed profit retention plan is generally easy to implement and is one of the only ways owners can take more dollars home without earning extra dollars.  

Some ideas to help you keep a larger portion of every dollar you make: 

 Increasing Business Tax Structure efficiency. You walk around turning off lights to save money but is your business tax structure maximized to pay as little as legally possible? One of my Associates, attorney Trisha Lotzer, of Lotzer Law Group in Scottsdale, Arizona examines this issue below. Trisha’s practice, like mine, includes a heavy emphasis on working with medical practices and their owners and she has successfully negotiated over $200 million dollars in transactions including successful medical and dental practice formations, affiliations, purchases and sales 

Guest Author, Attorney Trisha Lotzer

 

 The purpose of profit preservation is to preserve or even increase a practice’s profitability regardless of changes in healthcare policy or expiring tax cuts. Profit preservation plans should be tailored in the context of governmental policies, business operations and customized to maximize the profit preservation potential consistent with personal and professional goals, such as estate and transition or succession planning.  Important strategies that owners should consider at this time include changing from an S-corporation or C-corporation status, energy studies, cost segregation studies, insurance and investment audits.   

 Currently, your practice’s tax status is either working for or against you in terms of profit preservation.  With this fact in mind, how do you know which is the right election for your practice and how do you make sure that you are not passing up any dollars that you rightfully earn?   

 Most healthcare practices and small businesses are organized as S-corporations, or as LLCs with an S-election.  This election is generally advantageous for tax purposes because it allows practice owners to avoid the “double taxation” that necessarily accompanies C-corp status and allows owners to benefit from earnings that “pass through” to their individual returns. Whether you are a C-Corp or an S-Corp, it is especially important to consider the negative consequences of a C-Corp, such as double taxation, and reassess your corporate tax status. 

 Following are two (simplified) examples and clarify what is meant by “double taxation” and “pass through” income.  Let’s compare an S-Corp and a C-Corp that each earn $1,000,000 of taxable income after qualifying deductions and expenses: 

 The C-corporation that earns $1,000,000 is taxed at the highest corporate tax rate of 35%. That leaves $650,000 after taxes are paid. If you, the practice owner, take that $650,000 as a dividend that dividend will be taxed at 20% (the anticipated dividend tax rate).  The result of the tax on the dividend results in another $130,000 in taxes, for a grand total of $480,000 in taxes and you, the practice owner, nets $520,000. 

 With the S-Corp. that earns $1,000,000 the practice owner would net $600,000 and pay just $400,000 in taxes.  This is because the $1,000,000 “passes through” to the owner’s individual tax return.   And, even in the highest bracket, the most the owner would be taxed is 40% because there would be no “double tax” on a dividend.  

 (Note from Ike: This is one of many formulas that competent tax counsel must advise you on. Other common formulas often include the physician taking a commercially reasonable salary, let’s say $250K, and taking the balance as dividends from the corporation they own. This moves a larger portion of practice income to the capital gains rate, using the hypothetical numbers above, 20% for capital gains vs. 40% as personal income.) 

 This merely represents the most basic “double tax” scenario.  There are other taxes, including state taxes and self-employment taxes, and other factors that must be considered and weighed for your particular practice scenario.  Tax policy must also be taken into consideration when electing tax status as a strategy for profit preservation.   

 For example, in 2011, some S-Corp practice owners may find themselves pushed into higher personal tax brackets.   Based on current reports from congress and the White House, the President’s proposed budget will likely include a tax cut for middle-class taxpayers and the previously enacted tax cuts on upper-income taxpayers would be allowed to expire. If that occurs, individuals currently taxed at 33% would be taxed at 36% and those taxed now at 35% would be taxed at 39.6%.  Therefore, we can reasonably anticipate that a number of practice owners will have a higher income tax for certain individuals and for that reason it is reasonable to consider a change to C-Corp status.   

 While there are a few exceptions, there is a rule that states that if you lose your S-election you can’t re-elect S-Corp. status for five years.  For this reason, current S-Corp owners and those contemplating a change from S-Corp to C-Corp status should be especially cautious.  Change to or from a C-Corp should be considered by ever practice owner but it should only be executed with the guidance of qualified tax and wealth preservation specialists.    

 Trisha’s examination of this issue above is a great start, here are some other profit retention strategies I encourage my clients to examine: 

 Cost Segregation Studies. These studies allow meaningful tax deductions now when you need them most as opposed to spread over 30 years at about 3% per year the way they are typically taken. Most commercial property, even leased, qualifies for the study and the deductions and we can even arrange for a free feasibility study for commercial property with an aggregate value of at least $1MM, an easily attainable entry level. As a bonus, you can even re-capture lost depreciation for as much as the last 20 years! 

Energy Studies. Again, owners of commercial properties are seeing energy tax credits of up to $1.80 per square foot when the study is completed and simple low cost changes are made. Would that kind of recurring savings be valuable enough to you to, for instance, change the kinds of light bulbs you use and add a skylight? In most cases it is. 

 The financial “Audit”. Give your insurance and investment planning a physical and make sure it is working as hard for you as you did to earn it. We have seen that at the worst, some clients lost as much as 60% of their investment portfolios due to the market and their investment allocations while others were down only a fraction of what the market lost and are relatively free of anxiety. Why the huge disparity in results between advisors? What we see is that it is relatively easy to make money in good times by using a simple allocation table that at first glance seems well diversified between different types of investments such as technology, energy and etc. What those plans, such as the cookie cutter ones we see from certain commercial brokerage firms are typically lacking in is a good down-market strategy that values principal protection as highly as it does growth. There are ways to get all or most of the market growth available with guaranteed rates of return or principal guarantees. These types of strategies, when properly allocated, are part of the backbone of what saved the second, more fortunate group of investors described above. These clients are not only whole or close to it, but are now poised and financially equipped to take advantage of emerging opportunities. 

 Similarly, we find that many practice owners are paying more than necessary for various types of insurance coverage they have in place while they are at the same time lacking in many types of coverage I now describe as essential or are underinsured in areas like their disability insurance. To put it simply, the cost of life insurance, as just one example is now cheaper for the consumer than it was a few years ago. This means that any policy that is more than a few years old should be audited to see if it can be converted or replaced at a lower cost. How dramatic can the changes be? In one case, a doctor’s children will receive 500% more from one of her life policies because of some simple changes we made and issues we spotted without her paying any increase in premium. 

Again, as the economy and income and profit slow, never taking a step back, or at least taking as few as possible, becomes more important than ever before. Remember, a portfolio that is down 50% will need to DOUBLE to get back to where it was. How long did it take you to double your money the last time? Do you have that kind of time left? If you don’t like the way you answered those questions for yourself, perhaps it’s time to take a good look at how you are structured and what kind of stop-loss measures you have in place. In many cases it is not too late to make some positive changes and “buy and wait” is not the right answer for every investor or every investment. 

Increasing your personal tax efficiency. We deal with high net worth clients every day and are continually surprised by the amount of money that they leave on the table for the government by not maximizing their legal options. For most physicians “just” an IRA or 401K is not adequate tax planning. Even if the money you save is “long term” or retirement money that cannot be used now, you still get to keep it. Many of the most sophisticated programs provide multiple benefits like estate planning and Asset Protection. 

A few examples of planning to consider include section 79, post retirement medical reimbursement, defined benefit programs and captive insurance plans. Don’t know where to start? Don’t worry, we can help direct you to experts to show you which plans apply to your unique situation and which have features like guarantee of principle, low market risk, tax deductibility and Asset Protection. 

 Examining your current practice tax status and the other measures suggested above are all highly effective profit preservation strategies.  Each strategy should be examined with caution and undertaken only after a careful analysis of the overall economic factors of the practice and the long term effects or plans of the practice and its owner. 

 Most strategies can be implemented rather quickly and effectively at any time during the fiscal year. Some mid-year changes may require additional income tax reporting work by shareholders and advisors.   However, in many cases this small amount of paperwork can yield great rewards and is a powerful way to preserve practice profits in uncertain times.  As always contact us for more info or to discuss these issues and how they apply to your practice.  

RELATED ARTICLE: BUSINESS SURVIVAL PLAN 

 http://www.proassetprotection.com/2009/10/2010-business-survival-plan/ 

 ABOUT OUR GUEST CONTRIBUTOR: 

Lotzer Law Group, P.C. – Phoenix, AZ: http://lotzerlaw.com/
Attorney Trisha Lotzer Specializes in business law for corporations, small businesses, medical groups and medical and dental practices. She has successfully negotiated over $200 million dollars in transactions including over $95 million dollars of successful medical and dental practice formations, affiliations, purchases and sales. She can be reached at 866-570-4449 or at: Trisha@LotzerLaw.Com 

 CIRCULAR 230 NOTICE:  To comply with U.S. Treasury Department and IRS regulations, we are required to advise you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this article is not intended or written to be used, and cannot be used, by any person for the purpose of (1) avoiding penalties under the U.S. Internal Revenue Code or (2) promoting, marketing, or recommending to another party any transaction or matter addressed in this article. 

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