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FINANCIAL
MISTAKES
Five Major Financial Mistakes
Made by Doctors
By Jim Rice, CPA
To become a physician takes exceptional dedication and focus. # 2 Trying to keep it simple
Doctors acquire a vast quantity of medical knowledge but too little Doctors don’t want more complexity to an ever challenging career.
in the business management area. In today’s environment, business
issues can dominate the running of a medical practice. It is im- However, complexity can provide great benefits. Separating different
portant for you to be aware of common mistakes that are made in locations and services can give asset protection and isolate loss cen-
operating a practice, and even more importantly, to address the ters. Owning your building in a separate partnership provides many
possibility that you are making some of these mistakes. The mis- advantages. Moving your unprotected investments into a family lim-
takes below were gathered from years of experience in assisting ited partnership creates asset protection and allows for future tax
physicians in their practices. planning. The right federal taxable entity for your practice can help
avoid payroll taxes. Tracking provider performance and clearly estab-
# 1 Putting the wrong people in place lishing compensation goals can create motivation and reward. With
A medical practice deals with many different insurers with their the low interest rates, financing your life insurance premiums and
using the arbitrage makes sense. Don’t operate on a handshake; doc-
own codes and rules. Billing and coding errors can quickly be the ument all agreements with fellow partners and employees.
downfall of a practice. With the government stepping up fraud
abuse audits, hiring an expert billing assistant can be crucial. Your # 3 Not paying attention to the numbers
spouse, cousin, best friend, etc. may seem like a good way to avoid Accountants prepare financial statements all day long that doctors
theft and give you an assurance in dealing with someone you are
comfortable with, but does this person know health information do not look at or understand. These financial statements, if timely
technology or accounting so that you get timely and accurate in- prepared with comparison to similar prior periods, can identify ex-
formation on how your practice is doing? Placing too much re- cessive expenses, declining collections, etc. The data can also help the
sponsibility and reliance on one person can also be a problem. doctors anticipate future income tax payments that are looming and
Embezzlement occurs too often in medical practices. Establish in- therefore budget for them. Doctors do not have time to learn how
ternal controls to safeguard cash in and out. You invest much time to interpret financial data, and they tend to not ask for help. Get
and cost into your staff. Hire well. your accountant to sit with you and explain what the financial state-
ments mean and how you should use that information. If you have
32 San Antonio Medicine • January 2016
