New Year’s Practice Resolutions – Step Back and Focus on Where You’ve Been and Want to Go

Jan. 1 is a new year, and a time where many individuals feel invigorated in life and look to move in a new direction. The local gyms are full of newcomers, eating habits and diet plans have been refreshed, and we strive to renew our personal financial plans. With this newfound energy and clarity, it is also a time to take into consideration a refresh to your medical or dental practice.

 

Too often, we see many practices become complacent in the day to day. Owners and management find it difficult to step back and focus on where they have been and where they would like to go in the future. At this time, I challenge them to take some time to renew their practice’s well-being. Here are some areas in which you might do so.

 

 

 

 

For those practices that are a December year end, yes, I understand that it’s early in the year. However, with a year under our belts relative to the American Tax Cuts and Jobs Act, it may be time to consider opening the discussion. While the law has been in effect for some time, many provisions are still being interpreted.

 

This is particularly true relative to medical practices and the 20{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} pass-through deduction, with entity type being a big question mark. In general, medical practices were exempted from the new deduction as a specialized service. Yet, depending on the income levels of the individual owners, there may still be some financial benefit.

 

The decision to consider your entity type relative to the pass-through deduction should consider several factors. The first is whether there would be any situations whereby a provider may be able to receive a benefit. This is relative to taxable income on their individual return, as well as filing status.

 

Next would be to determine the costs of switching to a new entity type, if not already a pass-through entity. This would require different tax filings, as well as a legal refresh to many practice agreements. Finally, and often most difficult, is consideration of your current compensation arrangement, and whether it could be integrated into a manner that would leave profits in the business to flow through to the individual owners. For those practices that do not share profits or distributions equally, and that have a wide disparity in income between the owners, this can be difficult to arrange. Without performing a review, however, there could be the potential that tax savings are being left on the table. 

 

 

 

 

Many agreements were created when your practice was formed. One of those was likely your physician-compensation agreement. Over the years, there have been many changes to the medical reimbursement landscape — and your current formula may not reflect this. As such, it may be a good time to consider reviewing your current arrangement.

 

Compensation arrangements can vary from the simple — equal sharing of profits — to the more complex — quality incentive-based compensation. There are many factors to weigh in determining whether you are utilizing the appropriate formula for your practice. One of those factors is the current landscape of reimbursement. Many carriers are continuing to move away from the traditional fee-for-service reimbursement approach and are shifting to quality-based approaches. Are all providers in your practice being held accountable to their impact on these payment adjustments?

 

Another factor to consider is that of recruiting. Bringing new physicians to our area is not the easiest task, given that Boston and New York are essentially in our backyard. Having a formula that best fits the needs of the practice and has a positive impact in their future revenue stream is extremely important.

 

 

 

 

With increasing overhead, and shrinking reimbursement, it is vital that all practices evaluate the area of revenue generation to see where they may be able to raise more within their current structure. First, one may consider mid-level providers. Examples of these include, but are not limited to, nurse practitioners, physician assistants, physical therapists, or audiologists.

 

If your practice is stretched to capacity and you are delaying patients from seeing a provider, bringing in a mid-level is a way to open doors to patient access. It also can allow a physician the ability to see and treat patients with more complicated ailments.

 

Second, it is worth reviewing whether your practice should open the doors to certain ancillary services. This could be done through a simple poll of your staff and patients, or through a review of industry publications and a competitor analysis.

 

The best fit for these services are generally those that are most complementary to your current practice and operations. This could include skin-care products for a dermatology practice, massage services for a chiropractor, or audiology and hearing-aid fittings within an otorhinolaryngology practice. The goal is to create a ‘one-stop shop’ for your patients.

 

Before embarking with mid-level providers or ancillary services, there are two areas of concern that should be considered. First is the cost. Each of these would require some extension of funds, or new costs of the practice. An analysis should be performed to confirm that the projected revenues exceed these incremental costs. Second are regulatory concerns.  Many regulations, such as the Stark Rules, exist and run through or parallel with many ancillary services. A healthcare attorney should be consulted in all cases, so no unintended or unknowing violations are created.

 

 

 

 

Finally, after considering a reinvigoration of your practice, it is important that you take some time for yourself. For change to become successful, you will need to ensure that your own personal physical and mental health is recharged and at full strength.

 

Exercise and other relaxation techniques will be instrumental in keeping you away from needing to make your own office visits. Additionally, with the current volatility in the equity markets, it is a good time to meet with your own investment advisor to verify that your strategy is aligned with those of your practice and future needs.

 

With the new year comes time for rejuvenation and a chance to reinvent yourself. With the opportunity presenting itself, it could also be a time to rejuvenate and reinvent your medical practice. Taking some time to step back from the day to day may offer an opportunity to refresh your practice for the future.