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Physician Practices: Failing to Plan Could Cost You

Earlier this year we shared our The best planning ment have access to the trends in these
thoughts on the Tax Cuts and Jobs Act’s strategy may be to KPIs, so course corrections can be made,
provisions related to the healthcare maximize your or improvement plans implemented?
industry. Physicians should plan for the profits. 3. Does your internal accounting staff
potential short-term and long-term Healthcare industry have the skills, tools and time to provide
financial impact of these changes on trends such as changing the data you need to run your business
their practices. reimbursement models on a real-time, proactive basis?
have been making it more Before 2018 comes to a close, talk to
Changes in QBI have limited and more challenging for your advisors about options to improve
benefits for physicians. That physicians to run a prof- your business performance using your
makes planning even more itable practice. With data in a more proactive, powerful way.
important. uncompensated care added
Many physician practices are struc- to the equation, physician Other tax changes
tured as pass-through entities, which BY EVAN MORGAN, CPA, AND KEVIN N. FINE, MHA practices will have to make In addition to the changes in the pass-
may enable their owners to qualify for a some tough decisions through income deduction, the repeal of
new tax deduction – depending on regarding payment models. the ACA individual mandate will affect
income level. phase out. But a medical practice is a business. the vast majority of physician practices.
Pass-through entities include subchap- Healthcare professionals with incomes Assessing your performance at year-end
ter S corporations, partnerships and above the phase-out thresholds men- and setting up the right processes and Contact your tax advisor to learn more
some limited liability companies, but the tioned above will not be eligible for the reporting as you begin the new year can about these and other provisions within
benefits are severely limited for “speci- 20% pass-through income deduction. In help you turn data into actionable the new tax law that could affect you or
fied service trades and businesses” some cases, higher-earning physicians insights that can improve your profitabil- your practice.
(SSTB), including physicians. Owners of could even see a net increase in their ity.
qualifying pass-through entities will 2018 taxes resulting from other changes As 2018 draws to a close, consider Evan S. Morgan, CPA, is a director of tax
receive a 20% deduction on “qualified in the new income tax law. these questions: services in the Miami office of Kaufman
business income” (QBI), effectively As a result of this tax law change, some 1. What are the key performance indi- Rossin, one of the top accounting firms in
reducing their maximum effective tax owners of pass-through entities may con- cators in our business? Daily production, the U.S. He can be reached at
rate from 39.6% in 2017 to 29.6% in sider changing their business tax struc- collection metrics, and claims status with emorgan@kaufmanrossin.com.
2018. But this deduction is limited for ture from a pass-through to a subchapter different health plans might be some of
medical professionals who make over C corporation. However, you should them. Can you compare them across Kevin N. Fine, MHA, is a director of
$157,500 (single filer) or $315,000 filing consult with your tax advisor and attor- offices, practice groups and down to the healthcare advisory services at Kaufman
jointly. For those with more than ney before making any changes to your individual level? And what about more Rossin. He can be reached
$207,500 for individuals and $415,000 business structure or tax election status. subtle factors like practice mix? at kfine@kaufmanrossin.com.
for joint filers, the deduction starts to There are pros and cons to consider. 2. Throughout the year, does manage-

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South Florida Hospital News southfloridahospitalnews.com December 2018 3