As a primary care physician, your're probably also a business person, with at least some responsiblity for managing your practice's finances—and all the responsibility for managing your own. But the demands of caring for your patients make it easy to think less about money than may be good for your practice, or yourself.

Medical Economics asked some of our financial experts about ways they have helped physician clients correct money mistakes or solve financial headaches in their practices. These examples of creative solutions they devised may aid your, and your practice's, bottom lines.

LITTLE THINGS = BIG DIFFERENCE

Lawrence Keller, CFP, CLU, ChFC

The easiest way to provide the required documentation, Keller says, was via the doctor's income tax returns. "In reviewing my client's income tax returns, before submitting them to the insurance company, I noticed that he had $115,436 in capital gains income, a substantial amount relative to the length of time he had been in practice. I asked him what he did to have such a large capital gain. He told me that his unearned income was nowhere close to that amount and immediately called his accountant."

It turned out that the $115,436 was the total amount of the client's investments. His actual capital gain, after the tax return was amended, was $303. As a result, the client's unearned income was overstated by $115,133, which led to an overpayment of taxes of $39,856. This amount subsequently was refunded to him. "Had the client reviewed his tax returns prior to signing and sending them to the IRS, most likely he would have caught the error," Keller says.

CREATIVE SOLUTIONS SOLVE MULTIPLE PROBLEMS

James Seramba, CIMA, CFP, MBA

"The doctor wasn't very far from retiring, but he had not done a very good job of accumulating the assets he would need," Seramba says. "At the same time, he wanted to bring in a much younger partner to whom he would eventually sell the practice. But the younger doctor had a family, loans to pay, and practically no money."

Seramba fashioned a three-step plan that addressed both problems:

• The office building that housed the practice, and which the practice owned, was spun off into a separate limited liability company (LLC), which then leased space to the practice. After 5 years, the younger doctor would buy the building, providing the older doctor with cash to fund his retirement.
• The practice had just purchased some very expensive equipment that also was moved into an LLC, from which the practice leased it back. The funds used to pay the lease now are being used to further build the older doctor's nest egg. After 5 years, the equipment will be sold to the practice for its residual value.
• The practice established a cash balance plan in combination with its existing 401(k) profit sharing plan. The younger doctor took a lower salary from the practice and used what would have been his additional salary to fund the cash balance plan. "So in effect, we allowed the younger doctor to buy the practice by using cash flow from running the business to pay the older doctor," says Seramba. "Even with the lower salary, he was able to pay off his student loans and live fairly comfortably."