Accounting and Tax Services for Physicians

If required, a compilation or preparation of financial statements is defined as presenting in the form of financial statements information that is the representation of management (owners) without undertaking to express any assurance on the statements.

For physician practices who prepare their own financial statements internally, it is often a good idea to have them independently reviewed by a Reed Tinsley CPA. This review can be conducted on a monthly, quarterly, semi-annual, or annual basis. You must make sure they are receiving accurate, reliable financial information. This also allows for ongoing tax review and related planning.

A physician practice might want or need to prepare a financial forecast for many reasons:

1. to budget income and expenses for the upcoming year
2. or general business planning purposes
3. to aid in the valuation of the entity
4. to fulfill a lender’s requirement for granting a loan

The difference between a forecast and a projection is that in a forecast, all the assumptions are expected to occur, whereas in a projection at least one assumption is not necessarily expected to occur and may be improbable. In other words, a forecast presents management’s expectations; a projection presents management’s expectations based on a ‘what if’ situation.

There may be a time when a physician needs to have a prepared personal financial statement. Personal financial statements are sometimes needed when obtaining a bank loan, for tax or estate planning, or during the preparation of a personal financial plan.

As a CPA dedicated to physicians and their medical practices, my goal is to minimize your tax burden and make sure there are no year-end tax surprises. My tax services include the following:

• Tax planning and analysis
• Tax projections and analysis
• Tax preparation Federal and State
• Representation before taxing authorities
• Problem resolution
• Practice acquisition/divestiture tax consulting
• Structuring of physician buy-ins and buy-outs
• Tax impact of proposed practice merger
• Practice valuation tax analysis

Diagnostic business planning begins with the evaluation of the overall finances of the medical practice. Particular emphasis should be placed on charges, collections, adjustments, and other write offs. Is the practice growing or are the doctors working harder to maintain the same income level?

Ongoing review of the practice’s gross collection percentage, net collection percentage, and accounts receivable ratio or days in A/R. Assess whether all these statistics are reasonable for the practice’s particular medical specialty.

Compare each overhead category to the same overhead category from the prior year. Identify and question significant changes. In addition, decide how the practice’s overall overhead can be reduced in the upcoming year.

Every practice needs to know what it costs to render a particular service. These calculations should be prepared at least annually.

Conduct an in-depth analysis of a current aging of the accounts receivable, with emphasis on payer aging’s.

Review all managed care plans to assess their profitability. If the plan’s rates or profitability are not acceptable, assess the potential for renegotiation.