THE PHYSICIAN ASSISTANT BUSINESS OWNER

RICHARD O’BRINGER, PA-C

ASAPA Spring Conference 2011

DISCLOSURES

Stockholder - Zimmer Holdings Stockholder - Cardo Med INC COM Stockholder - Pfizer INC President / Owner – Richard O’Bringer,

PA-C, a prof., corp. dba - Advanced Surgical Associates.

Member / Owner – Axis Surgical, LLC (ortho implant distribution distributorship)

DISCLAIMERS

This is a Commercial Presentation

Physician Assistant owner since 2004• Not an Attorney or CPA• This is not legal or tax advice• Shared experiences• Overview • Monday morning

www.PAassist.net

Learning Objectives Communicate PA rights & responsibilities of

incorporating and billing Medicare

Analyze basic options for incorporating

Analyze tax benefits and cost analysis of incorporating

Develop business plans, corporate compliance, HR, resources, & leadership

Create sales and marketing strategies, trends, and tools

Pre-test question #1Physician Assistants can bill Medicare

“independently,” and be paid directly from Medicare, ONLY using their;

A. Social Security number B. TIN of an approved corporate entityC. PA UPIN NumberD. Through their physicians UPIN

Pre-test question #2A “distribution” from your corporation does not

need to be reported to the IRS as income?

A. TrueB. False

Pre-test question #3Which type of corporation is “double taxed?”

A. S-CorpB. C-CorpC. LLCD. LLP

Who We Are

Advanced Surgical Associates offers PA first assist surgical services to surgeons.

Our services are free since we bill insurance directly

Actively expanding and recruiting PA’s

Getting Started in Business

Incorporating

hiring firingpayroll

business plan

corporate compliance

billing

bookkeeping

taxes

liability

asset protection

contracting sales

marketing

invoicing

inventory

litigation

insurance

Spirit of an Entrepaneur

“This just might work and I think I’ll try it”

“The journey of a thousand miles begins with a single step”

~ Buddha

“Beginning is half done!”~ Confucius

Is Ownership Right for You?

Independent Contracting Offer PA services hourly, per-diem, other? Consulting?

Independent billing Negotiate collection split with doc?

Four walls Clinic, other?

Tax benefits

Federal Law and PA Ownership4/1/2002 - CMS expands employment & ownership opportunities. PA’s permitted up to 99% ownership interest in approved corporate entity that bills Medicare program. Any other person own 1% (spouse, family member, friend, business partner)

TIN vs. SS#

Some states restrict PA ownership to 49% (varies)Doc must own 51% - Avoids conflict of interestReview laws in your state

Arizona has no such restrictionsNon-medical entity can own 49%Consult with AAPA, State Academy & attorneys who know how to structure

Ownership VS Compensation VS Physician SupervisionPA owners still have physician supervision per state regulation

Education helps to reassure control and compliance

PA Ownership in Arizona

A medical practice in Arizona may be owned by a professional corporation, a professional limited liability company or certain other types of entities. Arizona law permits PA ownership of such entities or co-ownership with physicians.

A corporation may elect professional corporation status for the purpose of rendering professional services within two or more categories of professional service, unless the combination of professional purposes is expressly prohibited by a licensing law of the state applicable to one or more of the professions in the combination or by a licensing authority with jurisdiction over one or more of the professions in the combination. No such limitation exists precluding PAs and physicians from co-owning a professional corporation. Similar rules apply to professional limited liability companies.

Under recent revisions to Arizona corporate statutes, up to 49% of the shares of a professional corporation or of the equity interests in professional limited liability companies may be owned by non-licensed persons or entities.

Creating a Business Plan

Do you need a “Formal” business plan?

Check with your bank first, it’s free advice

SBL , SBA, Chamber of Commerce – free resources

Incorporating 5 Common Mistakes

1. Incorporating without getting the advice of a good CPA

2. Thinking the corporate veil gives you unlimited liability protection.

3. Operating without proper local business licenses

4. Not filing periodic paperwork or taxes as required

5. Incorporating without sufficient capital or revenue stream

Options for Incorporation

S-Corp

• Single tax – Individual only

Pass through entity

Pass-through taxation means that income of the corporation is not assessed corporate taxes. 

Instead, the income or losses of the corporation are distributed among the individual shareholders in direct proportion to their ownership or investment in the company. 

Income or loss is then claimed on the individual tax returns of the shareholders as personal income, and it is taxed at a much lower rate than the Corporate tax assessment.

Options for Incorporation

C-Corp

• Taxed at two levels – “Double Taxation”o Pays tax on its corporate income o Then, distributes profits to stockholders who

pay income tax on those dividendso For companies looking to go public

Options for Incorporation

Limited Liability Corp (LLC)

• Better for smaller businesses • More flexible than Corporations • May be owned by non-US citizens • May be owned by a Corporation or

another LLC • Unlimited shareholders • Different levels / classes of ownership • Less taxation (individual assessment only)• Offers more asset protection – “limited”

Options for Incorporation

Limited Liability Partnership (LLP)

• Separate legal entity • May own property – sue / be sued • Liability Protection for all General Partners from

claims against the LLP • Liability Protection for the LLP from claims

against a General Partner • Partner dividends are reported on the partners’

personal tax returns • No date of termination is required in the

Partnership Agreement

Incorporating

• Why should you incorporate?o To bill Medicareo Tax benefitso Liability – asset protection

• When should you incorporate?o Personal income level above $150,000 -

$200,00

advantages vs. obligations & cost

Tax Benefits

25% of income tax deferred into; SEP-IRA max $49,000 / year 401K max $54,500 / year • 50yo “catch up provision”• Able to borrow up to 50% of value• More structure & cost to establish & maintain

Independent Contractors, 1099 can also deduct Must offer other employees same• Can require three year eligibility

Tax Benefits

Vehicle paid for by corp. Lease VS Purchase

Meals with employees & contractors 100% deductable Otherwise 50% deductable

Other Expenses – (some have caps) Legal, travel, malpractice, office, marketing,

advertising, promotions, events, FUN!

Independent ContractingDefinition

1099 / sole proprietor - interchangeable terms

True independence? Who dictates hours / schedule? More than one revenue source? Multiple clients? State law requirements? Stand alone – biz cards, sub-contractors,

multiple locations?

Tax Obligations

Independent Contractors, Sole Proprietor, 1099 must pay their own portion of FICA (Social Security & Medicare) 5.65%

FICA 5.65% is paid by each side (employer & employee)

0.5% Modified business tax

0.08% Federal Unemployment $7,000 / year cap

3% state unemployment $27,700 / yr cap (Nevada)

Add 11% to your compensation to offset

Distributions = profit i.e. taxable income (shell game myth)• Payroll Yourself; W2

Pay your taxes

Follow the rules & be careful looking for loopholes

Corporate Compliance - Obligations

Business license Annual corporate filing – list of officers Annual officers meeting & minutes State sales tax – file the forms (zero out)

Work comp insurance - $500 / yr for 2 people

self? home office? 1099 contractors? travel? provide - federal posters, background checks, safety manuals,

other ancillary services

OSHA

safety manual annual log of accidents injury report (C4 form)

Sales & Marketing

Monday Morning Tools

Like leads to trust

Trust leads to new business

Laughter leads to new business

First impressions strike an emotional cord

Video – is sales really this simple and fun?

Making a connection with your audience

Facebook Fans Increase

Sales Increase

Procter & Gamble stock rises

Be yourself, be likable

How do you make the connection?

Harvard Business Review Rule of 6

Create encounterso Frequency is what matterso Repeated exposures

No pressure Be yourself Reason to return

Building the relationship is the goal, not sales or referrals

Make the connection

Sound bite (30 seconds or less)

Initial presentation• Keep it simple and to the point• Frequency of information, not volume

o TV commercial

Questions, concerns, & objections• All are signs of interest

Leadership

Strengths Engagement TrackBenchmark study of 65 high performing

teams

Journal of Applied Psychology

Dr. Jim Harter, Gallup OrganizationDr. Frank Schmidt, University of Iowa

Employee Engagement

Top 10%Bottom 10%

0

200

400

600

800

1000

Employee Turnover

847

42

Employee Engagement

Top 10%Bottom 10%

05

1015202530

Number of Accidents Per Year25.56

0.00

Strengths Engagement Track

Performance Outcomes

Productivity Profitability Customer satisfaction Employees turnover Safety measures

Building a productive and engaged team

Communication is key

Do you know what is expected of you at work?

Do you feel that your opinions count? Do you feel someone at work cares

about you?

Strengths Engagement Track

Changing Course

Identify Change Grow

Communication

“Seek first to understand, then to be understood.”

~ Stephen R. Covey

The 7 Habits of Highly Effective People

SummaryGet started

Incorporate Enjoy tax advantages and follow the rules

Sell your idea Develop sound bite Be likeable Create encounters

Foster communication Engage and empower your organization & your people

Post-test question #1Physician Assistants can bill Medicare

“independently,” and be paid directly from Medicare, ONLY using their;

A. Social Security number B. TIN of an approved corporate entityC. PA UPIN NumberD. Through their physicians UPIN

Post-test question #2A “distribution” from your corporation does not

need to be reported to the IRS as income?

A. TrueB. False

Post-test question #3Which type of corporation is “double taxed?”

A. S-CorpB. C-CorpC. LLCD. LLP

Resources Available on our Website

www.PAassist.net