1. Have Contracts with Third Parties Reviewed and Have a Policy about who is authorized to sign contracts. Permit only managing physicians to sign contracts… of any kind. This is often overlooked on simple things like a new photocopier. The receptionist signs a contract without realizing the ramifications. No one reviews it. No one realizes the term of the agreement. Some agreements require the practice to notify the vendor of termination to avoid an auto renewal. Designate someone to know the details of the office lease, the leases for the office equipment and any and all such agreements. Track renewal terms. On at least a quarterly basis, review the list of contracts and determine how to handle any upcoming renewals.
2. Exercise care in selecting retirement plan investment managers. While many CPA firms do a great job in managing retirement plan assets, we advise practices to keep the practice accounting functions and the plan investment management separate. Use an independent accountant who is paid for accounting services and not compensated for the sale of financial products to you.
3. Know exactly what you are paying to any and all advisors. While many clients dislike the bills from hourly or flat fee advisors, at least it is clear how much you are paying. Avoid giving into the psychology of feeling like you didn’t have to pay anything because a commission came off the top and you didn’t have to write a check. There is a reason for the shift to administrative and investment expenses being paid from plans and/or off the top. You pay more but you feel like you paid less. Always be clear about cost. If you are writing a check for health insurance premiums, you are paying a commission. Do you know how much it is?
4. Protect yourself from medical malpractice lawsuits. Review your malpractice insurance for the best possible coverage. Make yourself as judgment proof as possible. Real estate, furniture and equipment should not be owned by the medical practice. Use another entity to own valuable assets. The assets can then be leased to the medical practice, making them less accessible to a malpractice claimant. Each physician should engage in personal creditor protection planning. If you are sued for medical malpractice, keep in mind that the attorney representing you works for and is paid by your insurance carrier. Most of the time, that works well but there are circumstances where you should engage an independent lawyer. At a minimum, keep the practice’s business lawyer in the loop on any medical malpractice suits. Of course, the best protection is to adopt top notch practices and policies for risk management so that suits are avoided in the first place.
5. Maintain and regularly review insurance coverage for the practice. We often find clients do not have sufficient protection for such things as employee theft or unowned automobile liability. Review and consider all optional coverages.
6. Adopt policies and procedures that ensure compliance with all applicable medical laws. While it is likely not necessary to engage in an exorbitantly expensive compliance audit, periodic reviews of billing procedures, patient file documentation and third party financial arrangements should be conducted by a trusted advisor with appropriate skills and experience. Consultants should be hired through your lawyer so that any reports provided stay as confidential as possible pursuant to the attorney client privilege.
7. Review the practice compensation plan. Be certain that the plan complies with Stark and all applicable regulatory rules.
8. Review your malpractice insurance coverage and be certain that you are maintaining adequate limits.
9. Review the structure of your retirement plan. Physician plans can readily be designed in a way that avoids most testing requirements and reduces administration costs while allowing physicians to maximize their contributions to the plan.
10. Review and update the agreements between the partners. Unfinished or archaic agreements are a recipe for disaster when one of the group members experiences a life changing event. What happens when a physician becomes disabled? Dies? Becomes a drug addict? Has an affair with a nurse?
© 2009 Parsonage Vandenack Williams LLC
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