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Some Steps to Consider

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Medical practice succession planning is a dynamic process requiring current physician ownership and management to plan for the future and implement the resulting plan. Many doctors approach succession planning initially through retirement planning. Once they understand the issues and realities of the tax laws, they are much more amenable to working out a viable succession plan. At the Institute of Medical Business Advisors Inc, we find that some physician-clients have not clearly articulated their goals, but have many pieces of the plan that need to be organized and analyzed to meet their objectives; including both personal and financial issues.

Link: www.MedicalBusinessAdvisors.com

A Step Wise Process

The steps necessary for successful succession planning are as follows: 

• Gathering and analyzing data and personal information
• Contacting the doctor’s other advisors
• Valuing the practice according to USPAP and IRS guidelines
• Indentifying the right qualified physician purchaser
• Projecting estate and transfer taxes
• Presenting liquidity needs
• Gathering additional corporate information
• Identifying dispositive and financial goals
• Analyzing the needs and desires of non-key employees

An Integrated Approach 

Succession planning can help address financial and nonfinancial issues in a timely manner. Proper planning can also help the doctor accomplish goals with effective, appropriate strategies that satisfy family needs as well as tax issues. Here is a triad approach:

1. First: Address financial and nonfinancial issues in a timely manner

As with other estate planning engagements, there is no due date for succession planning. The owner of a medical practice is busy growing and managing the office. S/he is often not focused on the desirable outcomes in an orderly practice succession. For example, if family members are involved in the practice, there is a good chance that personal issues will need to be addressed. These nonfinancial issues can be just as important as financial concerns when building a comprehensive, workable succession plan.

2. Next: Focus on taxes

Taxes are important because the medical practice probably represents the largest concentration of wealth in the doctor’s estate. When planning for estates with large amounts of wealth, doctors frequently ignore personal issues. It’s important not to make the critical error of maximizing tax savings but destroying the practice through a poor succession plan.

3. Finally: Identify and reach goals

When the physician-owner has addressed succession planning issues in a timely manner, s/he has the opportunity to develop the most effective objectives to accomplish goals. Given enough time, the doctor can even modify goals to reflect changes in the economic environments, as well changes in his or her personal life.

Assessment 

Medical practices exhibit particular strengths and weaknesses not typically found in publicly owned companies or non-professional family businesses. For example, many times the doctor doesn’t realize the type and amount of planning that needs to be done to transfer the business to a new doctor for maximum value. That is why doctors often need the advice of professionals to define goals and formulate medical practice succession strategies.

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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PHYSICIANS: www.MedicalBusinessAdvisors.com
PRACTICES: www.BusinessofMedicalPractice.com
HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

Filed under: Career Development, CMP Program, Estate Planning, Financial Planning, iMBA, Inc., Practice Worth, Research & Development, Retirement and Benefits, Taxation | Tagged: certified financial planner, certified medical planner, Financial Planning, IRS, medical appraisal, medical practice succession planning, medical practice worth, succession planning, USPAP | 1 Comment »