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THE BUSINESS OF
MEDICINE

There are a number of things to consider when it comes to the • Do I know how much income I will need in retirement?
eventual sale of your practice — everything from the tax implica- • Do I know how much control in the practice I must maintain to
tions to whether or not you will pass the practice down to a family secure my retirement income?
member or sell outright to a third party. In order to make a sound • Have I started creating replacement income from other sources?
decision that is best for you, your practice, your patients, and your
family, it's important to thoroughly weigh all of your options. Consider key tax strategies
There are several indicators that can be used as a good barometer It’s probably not your job to know the in’s and out’s of tax codes,
for where your practice stands today. Creating a strategy will prepare but having the right tax strategy is a crucial step in knowing, under-
you and your practice for the day you leave and will ensure the trans- standing, and maximizing the value of your practice. If you’re un-
action and transition meet your expectations. To ensure there are sure about whether you are fully taking advantage of the best tax
no misunderstandings in your current conception of business fi- strategies, consider the following:
nance, you can work toward implementing solutions that will ensure • Have I determined my financial goals?
your assets and financial future are secure. • Am I proactively planning to deal with the changes in tax laws?
• Will any sources of my retirement income be tax free?
Have your practice valued by an expert • Am I working with financial experts?
Most practice owners could tell you what their company is worth,
but the amount can often be misleading, even to the business own- Prepare for the unexpected
ers themselves. The valuation of a medical practice is a multi-faceted We can’t always predict the turning of the world, and sometimes
figure, and calculating it correctly is a complex task. To know even the soundest foundations can collapse without much warning.
whether or not you can be confident in knowing the current value Don’t get caught in the trap of thinking that your company or in-
of your practice, ask yourself the following: dustry is untouchable, or “that will never happen to me.” To make
• In the past 12 months, have my reimbursements increased? sure that you’re being realistic about vulnerabilities, ask yourself:
• Do I have control over my career and future earning potential? • Do I have a formal succession plan prepared and on file?
• If I have capital investments, am I satisfied with the return am I • Does my succession plan have a provision for disability?
getting from those investments? • Do I have personal disability income insurance coverage?
• Can I predict the stability of my current position or industry? • Do I have contribution protection for my retirement account if
• Do I preform a yearly review of my estate and my practice’s fi- I become disabled?
nances?
Diversify your retirement plans
Coordinate personal and practice financial plans Your practice is very likely a good nest egg for your financial fu-
Finding the time to coordinate personal and practice financial ture, but that doesn’t mean that you shouldn’t diversify your retire-
plans can often get put on the back burner again and again. Ask ment plans. If you want to make sure you’re covered from all angles
yourself these questions to get an idea of how up to date you are when you decide to retire, consider the following:
with your finances: • Do I have investments other than my practice?
• Do I have a will that is up to date? • Will my retirement funding come from more than four sources?
• Do I have a plan to retain key employees if something happens • Do any of my retirement assets have guaranteed returns?
to me? • Have I had my retirement income projected and analyzed to iden-
• Have I had my trust and estate plan reviewed in the past three tify shortfalls?
years?
• Are my assets protected from potential litigation? Whether you intend to exit your practice soon or expect to con-
tinue practicing medicine for years to come, exit planning can bring
Plan for the unexpected positive benefits to you, your practice, and your family. Specifically,
Running a practice is hard work and time consuming. We all in- exit planning works to position you to leave your practice how and
evitably end up putting off planning for our financial futures until when you want, with the money you decide you need, and trans-
the future, but this isn’t always the best strategy. Ask yourself: ferred to whomever you choose. It’s never too soon to start plan-
• Do I know when I want to retire? ning for your future and the future of your practice.

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