Practice Management

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  • 1.  Loan Forgiveness

    Posted 06-13-2019 13:16
    Our group is talking internally about alternate compensation models for new physicians. One of my physicians indicated that a loan forgiveness plan should be considered to assist our new hires with their medical school debt. I presume such a plan would simply move money from up front compensation into loan forgiveness, but I really don't know how that is much different from offering a higher salary. Are any practices employing such models? Would love to hear your thoughts.

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    Sheila Witous MBA, CPA, CGMA
    Chief Administrative Officer
    Radiology, Inc.
    South Bend IN
    (574) 258-1100, ext. 205
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  • 2.  RE: Loan Forgiveness

    Posted 06-13-2019 13:30
    Sheila,

    We did not get involved with medical school debt.  However, we have forgiven loans in the past as follows:

    1) The recruit signed a contract with us during their training. 
    2) We advanced them some money during their fellowship year (or end of their residency).
    3) Our contract indicated that we would forgive the loan during their first year of employment with our group.
    4) Each month during the first year of employment, 1/12th of the loan amount plus accrued interest was forgiven and added as taxable income to their paycheck.
    5) If they chose not to work for our group after they completed their training, the contract included wording about repaying the loan to our group with interest. 

    I can provide you with the wording of our loan agreement / advance if you would like it. 

    Please contact me via email or at 417-894-0878 if you have any questions. Thanks and have a wonderful day. 

    Jay Smith, CPA, MBA 
    Executive Director
    Litton & Giddings Radiological Associates, P.C. 
    P.O. Box 14049
    Springfield, MO 65814 

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    Original Message


  • 3.  RE: Loan Forgiveness

    Posted 06-13-2019 14:19
    Sheila, Remain cognizant of the tax implications. I'm fairly sure this will not be a tax free transaction from the perspective of the new partner. But, that's for your Tax Advisor to determine.
    MBohl

    Mike Bohl

    Sent from my phone; please excuse typos.




    Original Message


  • 4.  RE: Loan Forgiveness

    Posted 06-20-2019 11:13
    You are right Sheila in that my understanding is there is no tax advantage to this...in essence it is simply equivalent to giving them a higher salary.  We have had to shorten our time to shareholder track with many of our recent hires and in some cases offered signing bonuses as well to make our offers more attractive.​

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    Joshua Dorsey
    Chief Executive Officer
    Radiology Associates of Northern Kentucky
    Crestview Hills KY
    614-284-1597
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    Original Message


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