It’s that time of year when resolutions abound. The tradition of making New Year’s resolutions dates back more than 4,000 years, but with all that practice we still can’t seem to get it right. About half of all Americans make at least one resolution each year, but more than a third of us break that resolution before the first week has expired.
One of the often-used reasons for breaking a resolution is, “I just don’t have the time.” Jonathan Citrin, CEO of the Michigan-based financial advising and planning CitrinGroup
, says physicians use that reasoning often, especially when it comes to financial resolutions.
“The first point of resistence I hear is ‘I’m so busy,’” Citrin explains. “I think physicians have to realize that [keeping financial resolutions] is a process that is going to take some time up front, but it’s going to save them a ton of time later.”
Citrin suggests that a good place to start your financial resolutions is by taking an honest inventory of your current investments and future needs. However, he does not recommend that physicians tackle that job alone. “It’s very hard for anybody to be unbiased,” he points out. “The work [physicians] should do up front is not on the inventory itself, but put in the legwork to find somebody who they can can trust who will do that work for them. It will pay off ten-fold in the end.”
In that search for an unbiased professional, Citrin recommends finding someone who is not only astute on the investment side of the equation, but the risk side as well. More specifically, the risks of investments. He points out that too many investors chase returns and only see the rate of a return on their investment. What they overlook is the risk of an investment. As such, he recommends not just looking at returns when assessing which assets to buy in 2010, but making sure to examine the risk adjusted return as well.
Asset protection is a huge issue for physicians, so as a New Year’s financial resolution, consider these resolutions offered by Joe Spada, CFP, managing director of New Jersey-based Summit Financial Resources, Inc.
He suggests retitling your residence in your spouse’s name, maximizing contributions to credit-proof accounts such as a 401(k), and separating lines of business so that a lawsuit against one entity does not impact the revenue of the others. “Any investment real estate,” he notes, “should be held in an LLC to further insulate the asset from the claims of creditors.”
Paying off debt should also be at the top of a physician’s resolution list. With the recent developments in the debt market and the clamping down on debt, Citrin advocates to physician clients that they eliminate as much debt as possible, with an eye toward interest rates and refinancing. “It’s definitely a good time to be looking at your debt and making sure that you’re not exposed in ways you shouldn’t be,” Citrin says. “Make sure you’re working with a financial professional who can analyze your situation and help you make the right decisions.”
Taking care of business
Stefanie Herron, with Cirrus Consulting Group
, which specializes in real estate strategy, management and strategic healthcare consulting, says physicians should make a resolution to intricately examine one of their largest overhead expenses—their office lease. A poorly constructed lease, she notes, can cause unexpected expenses for a medical office during the course of a year. Most importantly, the Assignment provision in a lease, if poorly worded, could interfere with retirement plans by making it difficult to transfer the lease.
The Florida-based CPA firm of Morrison, Brown, Argiz and Farra LLP suggests that physicians make a resolution to receive all the revenue they’re entitled to. According to the firm’s Winter 2009 newsletter, adhering to that resolution means paying attention to details. That includes keeping staff members current with ICD-10 and CPT coding, which change regularly. In addition, when patient appointments are made, make certain the scheduler checks personal and insurance information to catch anything that may have changed since the patient’s last visit.
The firm also reminds physicians that their practice is a medical facility, not a financial institution. If a patient with a past-due account shows up for an appointment, a designated collection person should remind them of what they owe and request payment—even a partial one to get the ball rolling. And when accounts remain unpaid for more than 60 days, consider implementing stronger measures such as charging late fees or interest. Sending the account to a collection agency should be used as a last resort.
“To bring this full circle,” Citrin says, “make the commitment to find someone you can trust; somneone you can work with, and let them do all the fact-finding up front work for you. It will be invaluable.”