Transition and succession A structured planning ensure a ... · Lisa Hickey and Adrian Zoppa,...
4
Lisa Hickey and Adrian Zoppa, leaders of Hood Sweeney’s Health team, highlight the key considerations when it comes to transition and succession planning. If you are buying in, or exiting a medical practice, or perhaps looking to expand your practice, the content of the following interview will give plenty of food for thought. What is transition and succession planning? Adrian: Quite simply it is about planning for the future. Succession generally refers to developing a plan for who is going to take over your practice or your patients once you have retired. Transition is broader and can relate to new doctors joining a practice, or existing doctors leaving a practice. Either way, planning for what we refer to as an “entry or exit” event is critical to ensuring a smooth process and a positive result. Doesn’t succession only need to be considered when you are almost retired? Adrian: Succession should be considered as part of an overall retirement plan and generally 5-10 years before you actually plan to stop practising. We know doctors who have no succession plan other than selling their share in the premises from which they consult and maybe their patient list. That may be fine for sole practitioners where there is a willing purchaser, however things can get much more complicated in, for example, a multi- GP practice. In this case, it is essential to have a succession and transition model that allows junior doctors to progressively move into the practice without having to buy out 100% of the exiting partner. We are finding that many younger doctors are unwilling to make such a substantial financial commitment early in their career. Transition and succession planning A structured approach will help ensure a successful outcome ACCOUNTING & BUSINESS ADVISORY CONSULTING & PERFORMANCE COACHING FINANCIAL PLANNING TECHNOLOGY SERVICES FINANCE
Transcript of Transition and succession A structured planning ensure a ... · Lisa Hickey and Adrian Zoppa,...
Lisa Hickey and Adrian Zoppa, leaders of Hood Sweeney’s Health team, highlight the key considerations when it comes to transition and succession planning. If you are buying in, or exiting a medical practice, or perhaps looking to expand your practice, the content of the following interview will give plenty of food for thought.
What is transition and succession planning?Adrian: Quite simply it is about planning for the future. Succession generally refers to developing a plan for who is going to take over your practice or your patients once you have retired. Transition is broader and can relate to new doctors joining a practice, or existing doctors leaving a practice. Either way, planning for what we refer to as an “entry or exit” event is critical to ensuring a smooth process and a positive result.
Doesn’t succession only need to be considered when you are almost retired?Adrian: Succession should be considered as part of an overall retirement plan and generally 5-10 years before you actually plan to stop practising. We know doctors who have no succession plan other than selling their share in the premises from which they consult and maybe their patient list. That may be fine for sole practitioners where there is a willing purchaser, however things can get much more complicated in, for example, a multi- GP practice. In this case, it is essential to have a succession and transition model that allows junior doctors to progressively move into the practice without having to buy out 100% of the exiting partner. We are finding that many younger doctors are unwilling to make such a substantial financial commitment early in their career.
Transition and succession planning
A structured approach will help ensure a successful outcome
ACCOUNTING & BUSINESS ADVISORYCONSULTING & PERFORMANCE COACHINGFINANCIAL PLANNINGTECHNOLOGY SERVICESFINANCE
And how should you go about planning for succession and transition – it seems very daunting?Lisa: Our succession model works well in ensuring that all the key elements are considered.
■ Communication: Having the conversations openly and early so that everyone is aware of each other’s intentions is the critical first step to developing a succession plan.
■ Structure: Transition objectives and succession strategies can be thwarted by an inappropriate corporate structure. We have seen some pretty ordinary taxation structures resulting in unnecessary double stamp duty payment upon entry and exit, as well as practitioners not making full use of payroll tax exemptions and other tax effective strategies.
■ Legal: What occurs in the practice on a daily basis is often different to what the Partnership Agreements and other legal documentation states. This can be a problem as you start trying to bring in new partners.
■ Funding: Having sources of funding other than an overdraft can help younger doctors join the practice. In addition, any succession strategy should include equity (as well as group life insurance) which helps to minimise financial distress to the practice in the event of an unintended exit of a partner through sickness or death.
■ Valuation: How the practice is valued varies widely and can be a source of great conjecture. A clear methodology that is aligned with all of your other legal documentation is helpful.
■ Individual requirements: Practitioners should ensure that their own personal affairs are in order. There is no point having a brilliant succession plan for the practice that conflicts with your own retirement or wealth creation strategy; or worse, you don’t even have a retirement or wealth creation strategy!
What have been some of the areas of best practice you have seen with succession planning?Adrian: A specialist practice that we work with has developed an induction handbook that contains all the relevant information and documentation around the entry and exit of practitioners. This is provided as soon as the practitioner starts out so that they can clearly see the processes and timeframes. It clarifies expectations from the outset which helps smooth the transition.
What advice would you suggest for new doctors looking to join a private practice?Lisa As you would expect, our response is “get a good accountant”. But seriously, we often see doctors who have ended up paying much more tax then they needed to, and not creating a plan for their own personal financial situation. Getting yourself set up right from the start with some sound advice can save you thousands of dollars in the long term.
Our industry alliances.
Australian Medical AssociationAs the AMA(SA)’s preferred provider of accounting services in South Australia, we offer AMA(SA) members exclusive discounted rates.Email: [email protected]
Royal Australasian College of SurgeonsAs the key partner to the RACS in South Australia for accounting and financial planning services, we offer members special benefits.Email: [email protected]
Australian Dental AssociationAs the ADA(SA)’s exclusive provider of accounting services in South Australia, we offer ADA(SA) members exclusive discounted rates.Email: [email protected]
Pharmaceutical SocietyAs an alliance partner to the PSA in South Australia for accounting and financial planning services, we offer PSA(SA) members special discounted rates.Email: [email protected]
Adelaide University Surgical SocietyThrough this association, we help support students preparing for a future in healthcare and offer discounted rates.Email: [email protected]
Hood Sweeney’s Health team helps individuals and businesses with a full range of services, including:
■ Financial and management accounting ■ Taxation advice and business structuring ■ Taxation compliance and reporting ■ Budgeting, cash-flow forecasting and financial
modelling ■ Succession planning ■ Governance and business performance
improvement ■ Personal financial planning ■ Self-managed superannuation ■ Protecting you and your family.
For further information on taxation and legal structures, business advice or financial reporting in the medical and healthcare sector, please contact:
Lisa HickeyDirectorAccounting & Business [email protected]
Adrian ZoppaDirectorFinancial [email protected] Authorised Representative No. 239866 Hood Sweeney Securities Pty Ltd AFSL 220897
TL:S
ucce
ssio
npla
nnin
g:he
alth
:1510
14FA
ACCOUNTING & BUSINESS ADVISORYCONSULTING & PERFORMANCE COACHINGFINANCIAL PLANNINGTECHNOLOGY SERVICESFINANCE
