Log In

Here’s How Group Practices Can Avoid New Financial Threats

Jason M. O'Dell, CWM
Carole C. Foos, CPA

December 2009
Capital Ideas

At one time, the practice of medicine was an attractive career option. But working in medical groups has become much more challenging over the past 20 years and is no longer as attractive as it once was.

Unfortunately, the financial hurdles of operating a successful medical practice could become much more difficult. An approaching confluence of events could have a significant financial effect on most physicians, unless they take steps now to protect themselves.

Cutbacks in Medicare reimbursement will reduce the income of most doctors. Even physicians who don’t treat Medicare patients are not immune to this cut. If a practice’s private insurance contracts offer the practice some percentage (say 120%) of Medicare rates, a cut in Medicare reimbursement will lower that practice’s insurance reimbursements. In addition, the health reform being considered in Congress could further reduce physicians’ income. On top of these two events, federal officials are considering a significant tax increase for high wage earners.

Coming Tax Changes
There has been some discussion about reducing the value of itemized deductions to 28%. If this reduction becomes law, physicians could pay federal income taxes at rates as high as 39.6%, but only be able to write off their itemized deductions at a rate of 28%. This change represents almost a 30% reduction in the value of a physician’s deductions. For physicians paying large mortgages, or who have significant health expenses or other itemized deductions, this change could cost them $5,000 to $50,000 annually, and this increased tax cost does not include any changes to income tax rates.

In addition, most states are facing financial difficulties and many are considering a variety of direct and indirect tax increases, especially for those who are in higher income tax brackets. ....

This articles can viewed in its entirety by registered users only.

Login (requires cookies)

Forgot Password:
Click here if you cannot remember your password

Register Here:
Click here to register