Four Steps For A Healthy Medical Practice

Four Steps For A Healthy Medical Practice
Kelly Phillips, CPA & Principal at Bell & Company PA

When there's a medical emergency, the tradition goes, someone will shout, "Is there a doctor in the house?"

The same can be true for your medical practice and its financial health. If someone is screaming, "Is there an accountant in the house?" it may be time to treat your finances like a patient. Many times, these financial emergencies can be avoided with a little preventative care.

Here are a few steps to take next time the office administrator starts talking about cash flow and accounts receivable aging:

A Healthy Diet Of Regular Review 

When you have practice management meetings are you only looking at the bottom line and collection percentages? Both are important, but the rest of the financial statements can tell you about the health of your practice.

Many a practice has had trouble signs in the financials long before anyone noticed or inquired. It's important to ask questions and understand what you are looking at, not only to protect yourself, but also to protect the practice from fraud or mismanagement. Talk to your accountant or financial advisor. Let them look at the financials and help you formulate questions. If you aren't getting comprehensive financials in a timely manner, that's a red flag. Examine trends and question items that are out of line with what you expect.

Watch Your Personal Tax Weight

Is your withholding sufficient to cover your tax liability? Do you need to make estimated tax payments? If you have to write a check every year and you have an idea of what it might be, now is the time to take a look at the tax liability you can expect. A good CPA will meet with you in the fourth quarter to project your tax liability and make sure you are covered. Just like you, your accountant hates to be the bearer of bad news. If your accountant doesn't see your information until after the year closes, there's little that can be done.

Exercise Follow Through

Are you maintaining your corporate status by filing franchise reports? Having stockholders' meetings and recording minutes? Are you using the company checkbook like your personal checkbook? Is your health insurance treated properly based on your corporate structure?

As your practice grows, it's easy to let things slip through the cracks. Just like your procedures, the follow through makes the difference. If you get audited by the IRS or the state, or sued, taking care of all these formalities can make the difference between a favorable outcome and a disaster.

See Your Accountant Regularly

Does the practice have a qualified CPA who deals with doctors' practices regularly? That person can be a wealth of knowledge for examining your statements and reports. Having a practiced eye look at your financials — even quarterly — can help you in practice wide decision-making.

Making a few healthy financial changes and treating your financials like a patient rather than a chore can make a huge difference in your practice and its growth and longevity. Taking some preventative steps now can keep you from shouting, "Is there an accountant in the house?" later.

(Kelly Phillips, CPA & Principal at Bell & Company PA)