Session # V608

WHAT CAN YOU LEARN FROM

?

Contact Information

Mark J. McGaunn, CPA/PFS, CFP®

Managing Member

McGaunn & Schwadron, CPA’s, LLC75 2nd, Avenue, Suite 425Needham Heights, MA 02494-2897

main (781) 489-6651direct (781) 348-9227e-fax (781) 479-5985e-mail mark@mcgaunnschwadron.comweb: www.mcgaunnschwadron.com.com

Discussion Points

• Protocols• Multi-Branding Strategies• Standards of Accreditation• Professional Certifications• Cost Segregation Study• Balanced Scorecard/Benchmarking

Protocols

Different professions have their own definition.

From Houghton Mifflin Dictionary, defined as:– Forms of ceremony and etiquette observed by

diplomats and heads of state, – Code of correct conduct: safety protocols;

academic protocol, etc., or– Plan for a course of medical treatment or for a

scientific experiment.

Why, Why, Why?

• Franchise business owners know their success came easier as someone prior to them took the time to IDENTIFY and DOCUMENT each and every business process to secure success.

• Written protocols protect against the bus coming!!!

The Protocol Process

1. Identify the processes in areas of practice responsibility.

2. Break each process into smallest pieces.

3. Solicit team member input.

4. Document/Revise/Follow/Improve

5. Repeat 3 and 4 continuously

RETAIL MANAGEMENT TRAINING PLAN

– Brand Training & Orientation – In-Store Evaluation – Integrated Brand Training (Combo/Trombo) – “Servsafe “– Cake Decorating – Production Training – Shift Leader Training & Certification – Basic Management Training – Human Resource Training – Store Management Training – Franchisee Business Course

Symptoms-rapid HR >150 bpm with A-Flutter/A-Fib on 12 Lead EKG.

Treatment-If patient hemodynamically unstable with decreased LOC:

• Sedate with Diazepam, 2-5 mg increments, SIVP as appropriate up to a total dose of 0.2 mg/kg).

• If Atrial Fibrillation-Synchronized cardioversion at:Standard 100 joules; proceed to 200, 300, 360 joules.Zoll Biphasic 30 joules; proceed to 50, 75, 100, 120, 150,

200 j.• If Atrial Flutter- Synchronized cardioversion at:

Standard 50 joules; proceed to 100, 200, 300, 360 joules.Zoll Biphasic 10 joules; proceed to 20, 30, 50, 75, 100, 120,

150, 200 joules.• If patient is hemodynamically stable w/severe CP or SOB see Chest Pain/CHF protocols.

Albuquerque Paramedic Protocol AC-4 for Atrial Fibrillation & Atrial Flutter treatment:

Multi-Branding Strategies

The process of incorporating two or more partners in a location.

Examples in the franchise food industry:

1. Bain Capital’s Dunkin Donuts, Baskin Robbins ice cream stores, and Togo’s sandwich stores. 53% of all new Dunkin Donuts locations are multi-branded units.

2. YUM! Brands varies combinations of Taco Bell, Pizza Hut, KFC, A&W and Long John Silvers

Multi-Branding Benefits

• Consumer perception of satisfaction greatly improved when multiple brand choices under one roof

• Two brands occupying same location save on facility purchase and occupancy costs.

• Multi-branded restaurants in YUM! family have higher average unit sales volumes and cash flow than singles

• Multi-branding in the franchise arena experiences greater local capture when each brand has a complementary “day-part” (breakfast, lunch, dinner) orientation.

Multi-Brand Challenges

• A sacrifice of identity and possible confusion when different brands share locations.

• Duplication of equipment/staffing=higher costs.• Staffing difficult if both brands share employees.• Some brands are just no meant to go together.• Multi-branding cannot be used to hide

operational, brand or menu problems.

Services work in vet practices!Multi-branding strategies can consist of complementary ancillary services owned by separate, unrelated entities sharing the same physical location such as:

• Kennels, boarding, grooming, day/”date” care• Veterinary pharmacies (compounding focus)• Specialty medicine• Rehabilitation facilities• Alternative therapy practices• Retail facilities• Crematorium (rather “funeral home”)• Diagnostic imaging• Obedience training• Behavioral Counseling

National Examples• Some retail providers have employed a multi-

branding strategy• But usually one predominant entity in the strategy• Ancillary service providers are subject to

significant operating restrictions.

Practice owners who enter into multi-branding agreements should strive to have equal representation for optimal functioning.

Standards of Accreditation

• Companies of all sizes strive for recognized accreditations for growth.

• ISO’s (International Organization Standards) are voluntary technical agreements which provide the framework for compatible technology worldwide. Manufacturing businesses spend significant time, effort and money to obtain ISO 9000 and ISO 14000 certifications.

• Enables them to better participate in international trade.

Franchise Example

Dunkin Donuts uses their own internal, proprietary accreditation models to evaluate store compliance with company financial, operational, and customer service objectives. The parent entity regularly reviews a franchisee’s:

1. Written systems in place covering all areas of business operations (customer service, HR, training, management)

2. Formal Business Plan (historical and projected)

3. Growth Plan (territory additions, outside expansions, etc)

1. “A” –company allows you to do whatever you wish within territory & provide you with CEO’s cellphone #

2. “B” –company places a “development hold” on any growth plans and CEO places a block on his cellphone number

3. “C” –company forces franchisee into a transition phase of improvement or else they change the locks on your door!!!!

Not many second chances are given…

Dunkin Donuts Rating System

• Joint Commission on Accreditation of Healthcare Organizations (JCAHO) evaluates and accredits 15,000 health care organizations and programs in the US.

• Independent and predominant accrediting body in U.S. health care. Organizations must undergo on-site survey by a JCAHO survey team at least every three years.

• May make unannounced evaluation visits (by request or complaint).

• High 5’s Project:  Established in 2007 to implement innovative, standardized operating protocols for 5 patient safety solutions over 5 years. Leverage solutions that would have broad impacts in preventing avoidable catastrophic adverse events such as death or serious injury in hospitals.

• Prevention of patient care hand-over errors • Prevention of wrong site/wrong procedure/wrong

person surgical errors • Prevention of continuity of medication errors • Prevention of high concentration drug errors • Promotion of effective hand hygiene practices

American Animal Hospital Association (AAHA)

• International association of more than 33,000 veterinary care providers who treat companion animals.

• AAHA Standards of Accreditation are benchmarks of excellence to raise the care levels provided. Over 3,000 veterinary hospitals voluntarily participate in AAHA hospital evaluation program. (but only 15% of US and Canadian total practices)

AAHA Benefits

• Standards are not a punitive measure but a set of guidelines to raise, maintain, and improve veterinary care to or above accepted practice standards

• Tools are already in place to assist vets

• Evaluations and care guidelines are an easy way to obtain advice on designing protocols and a framework for operations (see Hazardous Materials, Imaging, Dental Care Guidelines)

AAHA Perspective

• Practices that choose to become AAHA-accredited typically want an objective, third-party review of their practice to ensure that they are meeting or exceeding high standards of medical delivery, utilize cutting-edge management, and recognized as such.

• Dr. John Albers, former AAHA Executive Director, “Just let us come in to see if what you say is really going on truly is.”

AAHA Problems?

• Within a 50 mile radius of my office, there are only 51 AAHA-accredited practices (including 2 in Boston).

• One complaint-public does not recognize, or even know about, the differentiation factor among haves & have nots.

• Some fault attributed to practices themselves for not using all kinds of patient contact (ads, video, DVM and staff) to publicize the AAHA standard.

• Some may be institutional-”Build it and they will come.” (but who will come?).

Professional Certifications

In certain fields of professional study, there are individual achievements that denote technical competence. For example:

• DVM (Doctor of Veterinary Medicine)• MD (Doctor of Medicine)• CPA (Certified Public Accountant), and• JD (Doctorate of Jurisprudence)• CFP® (Certified Financial Planner™)

Professional Certifications

• But once you or your staff attain a certain level or designation, are you all “educated out”?

• Franchisees in different industries have a multitude of distance learning and on-site programs to keep regular, third-party training in force (as opposed to “train-the-trainer” approaches)

• See how some franchise operators keep up in their own industry

• Nation's largest retail provider of prescriptions operating 7,008 pharmacies and 560 Minute Clinics in 43 states to fill over 1 billion prescriptions annually.

• Employs 20,000 pharmacy technicians who serve as primary contacts daily for hundreds of thousands of customers. CVS pharmacy technicians:

1. verify insurance and billing information

2. note customer medication/product preferences

3. direct customer inquiries to pharmacists,

4. handle many among other duties.

Training Problems

• Pharmacy technician training materials were not used consistently by each location.

• Most instruction given via unstructured “OJT”• CVS/Caremark centralized and standardized its

pharmacy practices and workflow, including using the THINQ Training Server Learning Management System (LMS), a web-based, distance-learning format integrated with CVS/Caremark’s testing and assessment information.

• Huge success, promotes uniform & regular training schedules.

• Beats a 100% “lunch and learn” program hands down!

John Deere’s InitiativeProblem Lack of qualified personnel who could take charge and lead a John Deere Dealership.

Result Formation of the John Deere Dealership Management Program, a cooperative partnership between John Deere and the University of Missouri’s College of Agriculture, Food and Natural Resources.

Learning paths on John Deere University’s web-based program provide a blueprint for continuing education in each functional area and are divided into five training courses:

– Core (i.e. Hydraulic Certification)– Selling & Marketing (i.e. Partnering for Customer Value)– Resource Utilization (i.e. Service Advisor Certification)– Product Application (i.e. Air Conditioning Systems)– Management

Advanced & Master Certifications are given-need 16 credits (4 days) for annual recertification

Other Certifications You’ve Seen?

The Funny Ones• CBT (Certified Bagel Technician-yes, on Cape Cod)• CASIT (Certified Auto Sound Installation Technician)

The Elusive Ones• 106 AVMA diplomates in Dentistry• 48 AVMA diplomates in Pharmacology (+5 since 2004)

DVM Specialty DesignationsOnly 9,826 AVMA recognized board-certified diplomates as of December 2009. Great achievement, the combining of various specialties can only bring patient care geometric dividends.

Anesthesiologists 185Behaviorists 46Dentists 106 Canine & Feline Practitioners 459Internal Medicine Small Animal 1,022 Emergency and Critical Care 293Pharmacology 48Radiologists 365Veterinary Surgeons 1,279Animal Behaviorists 46Nutrition 54

New Certification IdeasOther areas for veterinary practitioners to acquire knowledge themselves or to have staff gain talents:

– UC Davis School of Veterinary Medicine has a one-year residency in clinical veterinary pharmacy that provides practical training in the principles of animal medicine for graduates of accredited human schools of pharmacy.

– Some veterinary practices are now employing human pharmacy-trained technicians to staff their own veterinary pharmacy in a fully-dedicated model patterned after human pharmacies.

– Practices could form joint “training” ventures among area practices to upgrade training and share ideas.

Cost Segregation Study

• A comprehensive engineering-based analysis of the total cost or value of building and site improvements.

• Allows building owners to re-allocate Code Sec. 1250 (real property depreciated over 39 years) to Code Sec. 1245 (personal property depreciated over 5 to 15 years).

• Results in increased depreciation deductions.• Generally, the more specialized and unique an

asset is, like a veterinary practice facility, the greater the tax benefits derived.

Kudo’s Judge Billing Learned Hand!

(January 27, 1872 – August 18, 1961) • Cost Segregation results need to be disclosed to

the IRS by the taxpayer filing Form 3115 (Change of Accounting Method).

• IRS Revenue Procedure 2004-11 allows property owners to retroactively catch-up on missed depreciation on assets owned back to 1987 with a one-time catch-up provision under an IRC Section 481(a) adjustment, precluding preparation of amended tax returns.

Saved by 1997 Tax Court Case!

Hospital Corp. of America v. IRS Comm’r

• Defines the nebulous “permanence” issue regarding tangible personal property.

• Court concluded that property, which qualified as tangible personal property for investment tax credit purposes under pre-1981 case law also qualifies as tangible personal property.

• Different tests are used to determine whether an asset is an inherently permanent structural component or tangible personal property.

3 Essential Steps…

IRS specifies:

1. written "cost segregation study" for legal basis

2. "logical and objective measure" to support "tangible personal property”

3. study not based upon "non-contemporaneous records, reconstructed data, or taxpayer estimates or assumptions that have no supporting records."

Overview• What is a cost segregation study (CSS)?

Engineering-based analysis of property investment

Accelerate depreciation deductions- Typically from 39-year to 5, 7, 15 lives

Interior elements include special-use electrical, cabling, plumbing and HVAC systems, front desk, cabinetry and other millwork, some wall coverings and floorings, animal cages, sound systems, etc to 5-year

Outdoor components normally include paving, sidewalks, curbing, lighting, fencing, signage, landscaping, water detention, retaining walls, some utilities, etc to 15-year lives

2 Types of Cost. Segs

1. Free-standing facilities which average 18% reclassification from 39 year to 15 year property and 20% from 39 year to 5 year property. Projected tax benefits average $81,000.

2. Large retail practice facilities (mall locations) which average $650,000 in build-out costs. 35% of costs can be reclassified from 39 year to 5 year property generating $52,325 in estimated tax benefits.

One Dunkin Donuts Location

Cost segregation plan for $1.3 million facility purchase shows $346,000 allocation to 5yr and 15yr assets

CY Depreciation Deductions:

Pre-study $ 17,000

Post-study $ 48,000

add’l deduction $ 31,000

% Impact on Asset Base0%

0%

58%

42%

5 Year 15 Year 39 Year Land

11%

16%

31%

42%

5 year 15 Year 39 Year Land

Now 27% of total assets are reclassified to 5 & 15 yr property!

Tax Strategy-Fed & State

• Reallocated: $1,245,671 (44.6%)• 1st Year Tax Savings: $77,000+• 10-Year Tax Benefit: $286,000+*

*represents the 10-yr. NPV savings using an 8% discount rate.

Veterinary New Construction

Cost of $2,793,471

Depreciation Before & After Cost Segregation

Do Cost Segregation Studies When??

• Best performed:

Preferably immediately after new building construction

New acquisition of property (or change in estate)

Look-back – owned property for years but now in position

Following major capital improvements (including leaseholds)

• Buildings placed in service after 2000

• Look-back to “missed” depreciation – HUGE first year benefit

• Property basis at least $750,000

• Should not do when property to be sold less than 2 years after study.

• Client is profitable and could benefit from a large tax deduction.

Balanced Scorecard/Benchmarking

• Franchise owners and chain management have utilized benchmarking to highlight financial strengths and weaknesses in store-to-store and intra-store measurements.

• But the true progressives utilize intra-entity benchmarking and metrics to measure their progress.

• Financial metrics are typically only a component.• Customer Service is measured in all aspects.• But how can we be cutting edge?

Balanced Scorecard• Robert Kaplan and David Norton developed a

technique called the Balanced Scorecard in 1997.

• Process integrated strategy execution, performance management, and facilitated organization learning.

• Kaplan argued traditional benchmarking based on production and financial indicators provided limited insight into business’s key strategies and that comparisons were generally made to the average of a group of practices.

• Perfect for situations such as lack of focus or direction, a new strategy, or a need to achieve organizational alignment to a common vision.

Balanced ScorecardA Balanced Scorecard approach helps practices develop primary goals directly from a mission statement, practice vision, and defined critical business strategies to implement your practice vision. The approach takes a pulse of:

– the financial and non-financial measures of your practice,

– its leading and lagging indicators, – employee and patient satisfaction, and– short- and long-term strategy.

Kaplan’s approach utilizes a strategy map (the “Scorecard) to develop a practice’s key strategies. The map shows cause and effect linkages between the various parts of the strategy.

Sample Scorecard

ObjectiveKey

Performance Measure

Target Initiatives

Encourage compliance with

AAHA dental screening

recommendationsover current 30%

standard

Percentage of patients

compliant with semi-annual screenings

100% DVM recommended (PMS review)

ComplianceYear 1-45%Year 2-60%Year 3-75%

-Implement PetCare TV dental

programs in waiting areas-Document!!!-Develop staff

communication plan (DVM, tech, kennel, recept.,

other)

Key Points To Incorporate

• Develop strategic objectives incorporating each of the following perspectives: Financial, Customer, Internal Process, and Learning and Growth.

• Team members directly affected by the vision should be involved.

• Develop both leading and lagging indicators for each of the above strategic objectives, agreed to by team members.

• Responsibility s/b assigned to someone for completion of the initiative developed.

• Provide regular progress reports (charts, graphs and reports)• Provide meaningful feedback to employees on

accomplishment with incentives to reward achievement.

A special thanks to Elizabeth Bellavance, DVMfor her expert knowledge on the Balanced Scorecard!

Thank You!

谢谢 Merci

Danke Schon

Grazie

ありがとう 당신을 감사하십시오

Obrigado

Gracias

Contact Information

Mark J. McGaunn, CPA/PFS, CFP®

Managing Member

McGaunn & Schwadron, CPA’s, LLC75 2nd, Avenue, Suite 425Needham Heights, MA 02494-2897

main (781) 489-6651direct (781) 348-9227e-fax (781) 479-5985e-mail mark@mcgaunnschwadron.comweb: www.mcgaunnschwadron.com.com