The highly skilled professionals working within medical and allied health sectors are an essential part of our lives. Each year, particularly being parents of busy and active children, we each spend many hours visiting the doctor, physiotherapist, chiropractor, dentist, orthodontist….the list goes on. As medical professionals, you look after us and our families.
But how well do you look after your business?
Working in this sector comes with its own set of unique challenges. For practice owners, these challenges are even greater. Juggling patient care and the needs of a business in a demanding marketplace can be stressful, but it doesn’t have to be. With the right business strategy, operational efficiencies and structure in place, coupled with advisers you can trust to assist when needed, you can be confident that your business will stay on track while you keep your attention where it needs to be – on us, your patients.
Business strength now, to survive an uncertain future
The health sector and Medicare is currently facing significant reform – but when those reforms will happen, and what they will entail, is not yet known. This uncertainty translates into stress for health practitioners. How can you run your practice if you are uncertain of the future?
The only thing a business owner can plan for, is change. To ensure your business has the strength and resilience to adapt, and in fact thrive, in a changing environment requires a strong practice model. Ensuring your business has quality programs, systems and processes within a flexible structure will provide your business the operational capacity and flexibility to adapt to a changing marketplace.
The health of your business is like your own health – a healthy and strong body and mind now, may offer a better outcome when facing a medical challenge in the future. We can aid your practice by working with you on strengthening your practice model through our expert analysis, advice and implementation.
Keeping your practice in shape – periodic business check-ups
If you feel prepared for the future ahead of you, that’s fantastic. But it’s always good to check in every once in a while to make sure your practice is operating as smoothly as it should be. No different from an annual visit to the dentist and doctor. Over time, the systems and processes in any business can become less efficient, and tax and other financial obligations may need to be reviewed. Our periodic practice health checks ensure that your practice is in tip-top shape, as well as identifying any new opportunities that may have come along.
Our review would consider a number of aspects of your business including people, processes, and technology.
Your business’s backbone – financial systems and processes
One aspect of business which is constantly evolving is the financial systems and processes that are available. Without robust systems and processes that operate efficiently, a business will lack stability – like a patient with a weak spine. Some of the key questions that we may ask in a check-up include:
- Can your current accounting processes and systems cope with increased complexity of transactions?
- How much manual labour is required to produce financial reports?
- Can you better use automation, cloud accounting software and applications to streamline the current processes?
- Does your current system provide real time, useful information that will actually enable you to actively manage your business throughout the year?
- Can your system facilitate measurable KPIs and budgets then report your businesses actual performance against those?
- Does your current system provide cash flow management tools that ensure you always have enough cash to run your business and meet your obligations?
You may find that what you believed was a great way of doing business can be vastly improved by making better use of technology and expertise.
It may also be that you would prefer to leave the financial management to the specialists – RSM. There are opportunities to outsource elements of your business operations from bookkeeping to tax compliance, financial reporting, and even as far as a full outsourced CFO function. We can cater for all of your needs.
Staying out of harm’s way – tax compliance
There are two certainties – death and taxes. As a medical practitioner you help your patients delay one of these. As accountants, we can help you manage the other. You are likely well aware of your tax reporting deadlines. However, due to the complexities of the tax laws, it is best to refer to the specialists when determining your tax position. We are experts in managing your tax obligations and in ensuring you are achieving the best outcomes possible.
Another key aspect to our business check-up would be to review how your current structure is used from a tax minimisation perspective. The Australian Taxation Office (‘ATO’) released guidelines on their expectations around the allocation of how profits from the business structure of a professional practice, such as a medical practice, are carried on through a partnership, trust or company. Reviewing your business’s flow of profits against these guidelines is important to ensure your practice is considered by the ATO, to be a low risk of breaching the anti-avoidance provisions contained within the tax laws. This reduces the chance of ATO audit activity, which, if it does occur, can be a real distraction from otherwise maintaining a healthy business.
Using superfood to enhance health – tax opportunities
Tax does not always have to be a compliance burden. There is also a Federal Government incentive for companies undertaking eligible research and development (‘R&D’) activities. In some circumstances this program can provide a 45% refundable tax credit. So for $100k spent on eligible R&D, companies can claim up to $45k cash back in the income tax return, adding a very healthy boost to your company’s cash flow.
You may wonder how this incentive can be applied in the medical industry. R&D activities can not only relate to activities such as trialling drugs and developing new medical devices or technology, but can also relate to the development of innovative software; apps; developing, trialling new or improved medical equipment or procedures (e.g. IVF, Invisalign); as well as new weight loss or illness-related online dietary packages (e.g. diabetes) where scientific research has been v undertaken.
If your business is investing in the future of healthcare and is trying something new or different, there may be an opportunity to make a claim.
Taking your practice from strength to strength
So, your business is now healthy and thriving? You’ve had your business check-up and we have discussed the next steps. There are two paths – continue on the current journey of maintaining your business or grow it into something more.
Taking your business into new markets; inviting new partners; or expanding your service offering is exciting. However, it can be overwhelming and scary at the same time. The key to success through this phase is to plan effectively and implement efficiently. This is not a task that should be undertaken without the right help. You wouldn’t try to provide a patient with care outside of your speciality, would you? Likewise, we recommend you seek the right expertise when commencing on a new business venture to give both the new venture and your existing business the best chance of survival.
Throughout the growth journey there are a number of issues to consider, including:
- Protecting your assets – you’ve worked hard to build up your practice, and the process of change can cause instability. By ensuring your assets are properly protected, you can be confident in moving forward with changes to your business.
- Legal and financial requirements -The transition to any growth plan can be a big undertaking. It can also introduce new legal and financial obligations of which you should be aware. It may be that you need to change the legal structure of the business; negotiate new lease agreements; implement remuneration policies; you may have new or changed registration requirements; and of course there may be tax consequences. Each of these needs to be considered, understood and planned for.
- Valuing your business – knowing the monetary value of your business gives you a good idea of your future direction. Ensuring your practice is professionally valued gives you a solid idea of where you are in the market, and the confidence you need to make decisions.
- Planning for the future – you’re expanding your practice now, but how will this look in the long-term? Do you have a strategy in place to make sure your plans unfold as smoothly as possible? Having a clear projection of your practice in the long term enables you to make confident decisions.
Preparing for the worst
We can’t control the future. Therefore, part of ensuring the ongoing health of your practice is to protect both the business revenue and your personal income from life’s unavoidable pitfalls. Think of this as your insurance policy. Your insurance policy should include a variety of tools such as partnership and shareholder agreements as well as actual insurance policies (income protection, life and key man insurance). A key component of being prepared for the worst, is having a succession plan for your business. This plan outlines how you can exit from your business either in retirement or should something happen to you. It ensures that the business is viable and healthy even when you are no longer working in it.
As a medical and allied health professional you look after your patients health needs. As patients, we rely on your expert opinion and trust that you will do the right thing for our health. At RSM we can help you continue to provide exceptional care by offering our support and expertise in business. If you would like RSM to help look after the health of your business, please contact us and our team.
Sally Colquhoun and James Campbell