Financial Rx for Medical Practices

Success in the medical profession takes long hours, a sizeable dollar investment and years of education, often in a specialized field. Because patient care is their first priority, doctors often have little time for the business of managing their practice and their personal finances. Medical professionals — whether they own practices or simply need guidance managing personal wealth — can benefit from calling in financial specialists.

“Physicians don’t have a lot of time,” says Yvette Taylor, a senior private banking relationship manager at Northern Trust. “They need someone to quickly help them navigate through their banking and financial planning needs.”

And according to Monique Brinkman-Smith, managing director of the Northwestern Financial Center, focused on meeting the needs of high net worth clients and medical and dental professionals for Northern Trust, “Health professionals are focused on service and convenience, probably more so than professionals in other fields.”

From their offices at Northwestern Medical Center in Chicago, both she and Taylor interact with physicians daily. That firsthand exposure provides a unique vantage point on the market, which they use to tailor solutions for their clients.

Cash Flow Cures

Cash flow issues top the list of problems facing most medical practices. Many struggle to bridge the gap between insurance receivables and practice expenses, because reimbursements from third-party payers take anywhere from 30 to 90 days. Medical practices need solutions to help maintain liquidity, including lines of credit with customized terms.

“Cash flow is critical,” Taylor says. “Doctors have to be able to pay their employees and provide benefits. But that’s difficult if collections are lagging disbursements.”

To help accelerate collections, Northern Trust offers tools such as remote deposit capture, which allows staff to scan and clear checks immediately. And sophisticated lockbox services help speed the receipt, deposit and clearing of receivables, while providing efficient online account management and reporting tools.

Diagnosing Capital Needs

“Day-to-day operations at a large practice can be quite complicated — like running any other type of business,” says Taylor. “Sudden growth can create capital challenges as well. Physicians may need loans for build-outs to accommodate new patients, financing for new equipment or letters of credit to rent larger offices.” Taylor helped one such client expand by developing a flexible line of credit with interest-only payments for the first year.

“Using this strategy, the client could use the line of credit to pay contractors and architects and not worry about paying back the principal until after she moved into the new space,” Taylor says.

A Wealth of Resources

When clients work with Northern Trust, they’re able to draw upon a broad range of specialized services. For instance, wealth strategists may counsel group practices on asset management and custody services for employee benefit programs.

Besides banking services, physicians have access to full brokerage capabilities, comprehensive financial planning and a broad range of mortgage and refinancing options. And as the economy has spurred a rise in the number of group practices as physicians look for ways to manage increasing costs, Northern Trust can help customize loans to help doctors buy in to partnerships.

“Physicians work hard to stay at the top of their field, and they value the fact that Northern Trust has partners who are experienced in their fields,” Brinkman-Smith says. “Based on each client’s needs, we pair up specialists to help address the individual’s entire financial picture.”

Relationship managers must also address the unique needs of physicians on a personal level. While younger doctors pay down student debt and look to purchase their first homes, more established physicians plan for children’s college costs, retirement or second homes. But regardless of age or the stage of their career, all medical professionals want to build and protect their legacies.

“In this market, income levels have gone down and malpractice costs have skyrocketed. So they’re looking at margins that have been significantly impacted and trying to figure out, ‘How do I preserve my assets?’” Taylor says.

“We work with them — it’s seldom a cookie-cutter approach,” Brinkman-Smith says. “We sit down with physicians, look at their needs and try to put together the best plan of action.”