Learn what to look for in a physician accountant
If you think that all CPAs are created equal, think again. As a busy physician and higher earner, you would likely benefit from the assistance of a healthcare accountant. To shed further light on this specialized financial service, we spoke with Reed Tinsley, CPA, CFP (certified financial planner), CVA (certified value analyst), and CHBC (certified healthcare business consultant).
Reed is a national expert in the fields of healthcare accounting and practice management. He is recognized by the American Medical Association, Southern Medical Association, and others. In addition to being an author and speaker on these topics, he provides his own clients—who are only physicians—with a plethora of “buckets” including accounting, practice management, practice valuation, physician personal financial planning, physician litigation support, and practice brokerage. He bills himself as a “one-stop” shop, which is necessary in providing holistic financial support to his clients.
Interview between Naveed Saleh, MD, MS and Reed Tinsley, CPA, CFP, CVA, CHBC
What is a healthcare CPA?
Reed: Every CPA is basically the same. You ought to be able to do accounting, and taxes and tax planning correctly. What a healthcare CPA brings to the table are the buckets. I’m not the only one; there’s a lot of healthcare CPAs out there. Bringing things that provide value to the practice. Payment in my opinion for a healthcare CPA is not perceived as overhead - it’s perceived as an investment. Because at the end of the day, you’re helping that practice make money. I’m also a resource to the [physicians]. I don’t charge for phone calls, emails, and texts. If I don’t know the answer to a question, I’m a member of a network with over 200 members (who I call my “partners”, and all they do is healthcare. The organization is the National Society of Certified Healthcare Business Consultants, which is a valuable resource to anyone working with physicians and dentists.
What added value do healthcare CPAs bring your physician clients?
Reed: You bring a lot of knowledge to the table that generalist CPAs don’t bring. That’s the value proposition. For example, I’ll make sure that my clients are in compliance with HIPAA and OSHA. I review billing collection reports to make sure that here is no revenue slipping through the cracks and also looking at/monitoring the revenue-cycle management process, including accounts-receivable management. This is an ongoing process where you’re interacting with the client all the time. There’s constant communication throughout 12 months.
What is tax planning, and why is it important?
Reed: Everyone wants to pay the minimum to the IRS. As a CPA, it’s my job to figure out what I can do to help minimize my client’s tax burden, and that’s called tax planning. Everyone thinks of taxes as a year-end thing, and I see it as a throughout-the-year process. If are looking at the books (ex. Quickbooks which many physicians use as a bookkeeping solution), you can see what your client might be reporting on their personal tax return. It’s an ongoing conversation. You have to be proactive throughout the year and not reactive at the end of the year, which is I see is what most CPAs tend to do.
I get one or two physician clients a year where the CPA does the tax return and tells the client, “by the way, you will owe $90000 with your return,” and they’re shocked. They ask [their accountant] why didn’t you tell me. You didn’t see this coming throughout the year? That’ s an example of being reactive and not proactive; not being hands-on throughout the year. I’m always doing a lot of tax projections in November and December each year.
Does the tax situation change when a physician has various business interests (e.g., ambulatory surgery centers, infusion centers, labs)?
Reed: Unless the physician is heavily involved in investments, is an easy tax return. There should be nothing complicated to it.
You’ve got to be real hands on with businesses. It changes when the doctor is the sole owner of the business. Is it going to affect the personal or business tax return? What are the Schedle-K1 numbers from sub S corporation or partnerships. ‘No tax surprises’ is a guiding tenet. I’m doing a lot of tax projections and part of those tax projections involves profit-loss of investments. You also have to ask yourself whether the clients are in compliance with Stark Law, Anti-Kickback, and so forth.
Can healthcare CPAs help value a physician’s practice?
Reed: There’s not a lot of CPAs who really specialize in physician valuation believe it or not. Four years ago, my son and I started a brokerage service selling practices all over the country. That is going phenomenally well because of the aging of physician population. I get a lot of inquiries about retirement, what am I going to do about my practice, or how am I going to transition out of a group. You transition based on what the buy-sell agreement says, and most of those haven’t been updated in 10 years. There’s another project [that I help with].
How can a physician avoid being audited by the IRS?
Reed: Do your tax returns correctly! A CPA can identify things that don’t look right, and the question is what you are going to do about it. Like the physician who has 5 cars on the books and is trying to depreciate and write them all off. Or, the doctor with a whole bunch of family members on the payroll who aren’t doing anything. The red flags pop up, and you deal with them. Moral of the story: Be extremely hands on and catch these issues way before so they can be addressed.
What is the recourse for the audited physician?
Reed: I’ll help somebody through the audit. Sometimes we win and sometimes we lose. You’re dealing with stuff after the fact. The books have been closed. I’m the face person. I never let the IRS talk to the client. Under the power of attorney, it’s me and the IRS. I try to find every angle to dispute that audit adjustment.
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