RISE OF THE DOCTORPRENEUR - Private Practice
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SPRING 2013
The quarterly management magazine for health care professionals
THE GIFT OF GIVING
How to establish a charitable foundation
GOOGLE GLASS
Wearable technology to change
the face of medicine
YOUR PEOPLE
The right staff will save time,
money and energy
RISE OF THE
DOCTORPRENEUR
Medicine + business
can change the world
CONTENTS
Click on titles to go
directly to each article
4 The Editor’s Welcome
6 Upcoming Courses & Workshops
8 The Private Practice Events
12 Economics & Markets
12
Chris Caton’s take on the economy
14 Accountancy
Acquiring property within super
16 Medical Defence
Mitigating a range of risks
20 Estate Planning
An overview of philanthropic options
32 24 Finance Product
A credit card with medical benefits
26 Medical Billing
Getting to grips with Telehealth
32 Technology
A close look at Google Glass
38 34 Design
Five steps to renovation success
38 Insurance
Trauma insurance and your options
42 Staff
The importance of good hiring
48 Property
42 Key considerations for investors
53 Succession Planning
Selling your practice at the right price
Cover image: Dr Sam Prince, Chairman and Founder
54 Technology of One Disease at a Time.
Big Data and the healthcare sector
Published by The Fintuition Institute
Editor: Steven Macarounas
60 Marketing Managing Editor: Lisa Doust
Getting down to website specifics
48
Art Director: Lisa Reidy
Advertising: Steven Macarounas
64 Protection editor@theprivatepractice.com.au
Who owns your cyber assets? Tel. 02 9362 5050
The Private Practice eZine is published four times per year. ISSN 1838-4331
66 Wining & Dining All rights reserved. No part of this publication may be reproduced in any
manner without prior written permission from the publishers. Opinions
Putting the spotlight on Bar H expressed in this publication are not necessarily those of the publisher or
editor. Every effort is made to ensure the accuracy of information in the
publication. However the publishers assume no responsibility for errors or
70 Property omissions or consequences in reliance on this publication.
All representations and information in this publication are made in good
How to avoid investment headaches faith and are of a general nature – they do not purport to be specific advice.
66
Individual needs or other considerations have not been taken into account,
72 Wellbeing thus information contained herein should not be relied upon as a substitute
for detailed advice. Information in this publication is current as at
The power of the placebo effect 12 September 2013 and may be subject to change.
2 theprivatepractice.com.au
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Rise of the
Doctorpreneur
Thank you to our growing community of development, mineral rights and mining
medical colleges, societies and associations, issues, Great Lakes global security issues and
course and workshop delegates, magazine the rural digital divide.
and newsletter subscribers, and Facebook • Matt Jameson Evans is a British doctor
friends. Your overwhelming support and the co-founder of HealthUnlocked.com.
galvanises our resolve to do everything in His background is in Orthopaedic surgery
our power to help make healthcare-centric and medical politics. He trained in London
education in business, financial and lifestyle at Guy’s, Kings College and St Thomas’
management easily accessible across the hospitals, and at the Royal National
Australian healthcare community. Orthopaedic Hospital. In 2006 he co-founded
Really, we’re all about awakening Remedy UK, a pressure group representing
the business person – or dare I say, junior doctors, and quickly generated a
entrepreneur – within. Apart from making following of 15,000 British doctors, lobbying
your life (and the lives of your family and medical issues in the Houses of Parliament
co-workers) easier, running your practice and throughout the United Kingdom’s
and financial life like a ‘well-oiled machine’ mainstream media.
will help you to become the best doctor or In 2008 Dr Evans co-founded
healthcare provider you can be – multiplying HealthUnlocked with business partner Jorge
exponentially the ‘good’ you signed up for. Armanet. This health technology company
I repeat this over and over at our partners with patient organisations,
education events. While it’s true to say that, healthcare providers and industry. It
by and large, most healthcare professionals uses online tools to support patients and
are pretty hopeless at running a business healthcare providers, and generates real
and managing their money, some of the world data regarding the effectiveness of
world’s finest entrepreneurs have come from clinical services and treatments.
medicine, for instance:
• Thom Van Every trained at the
• Dr Amy Lehman is the founder of University of Birmingham Medical School
Lake Tanganyika Floating Health Clinic, an and graduated in 1995. He worked as a
international organisation whose mission is junior doctor in London, Jersey and Cape
to address the problem of healthcare access Town before specialising in Obstetrics and
and education for isolated communities Gynaecology. He was awarded his MRCOG in
in the Lake Tanganyika basin/Great Lakes 2000 and then left full-time clinical medicine
region of Central Africa. to study an MBA at London Business
In her role, Amy has become School. After receiving his MBA he worked
knowledgeable in multiple ancillary fields, for Deloitte Consulting before setting up
including water security, food security, DrThom.com and co-founding PatientChoice,
environmental conservation, rural a private medical insurance company.
4 theprivatepractice.com.au
EDITOR’S MESSAGE
DrThom was purchased by to advance education and eradicate providing the infrastructure and
the national pharmacy chain disease across the globe. opportunities for disadvantaged
Lloydspharmacy in 2011, where Dr Prince established Zambrero, young people across the globe to
Thom is now Medical Director, with a Mexican grill franchise, at the age empower themselves through good
responsibility for its online doctor of 21, while studying medicine. He health and quality education. Sam’s
service, www.lloydspharmacy.com/ has since grown Zambrero to over success in business derives from an
doctor. PatientChoice was sold to 15 outlets across the country, and unusual ability to visualise practical
Westfield Health the same year. counting. In 2010, the business, which solutions to seemingly vast problems,
Thom also sits on the healthcare panel employs 170 staff and brings in over and to drive these to implementation
of several venture-capital companies. $10 million in revenue, was recognised through a calculated approach and by
He remains very interested in by Business Review Weekly as the force of willpower and inspiring others
disruptive innovations that improve fastest-growing franchise in Australia. to believe in his vision.
the delivery of healthcare. Paying homage to his parents’ He believes aid work should be run
• Dr Alexander Finlayson is modest origins in rural Sri Lanka, Sam with the same rigour as business, and
Head of Research at London’s King’s has set his will towards democratising has demonstrated the outcomes that
Centre for Global Health, Deputy healthcare and education for young can be achieved when this is applied.
Director of the INDOX research people, in Australia and across the In our Summer edition we will
network at Oxford University and globe. Off the success of his rapidly be talking to Dr Prince about how
CEO of MedicineAfrica Ltd. He expanding Zambrero group, Sam
he juggles medicine and business,
has previously held positions as a created the Emagine Foundation in
and the importance of applying
researcher with Dr Bryan McIver at 2007. To date the foundation has built
entrepreneurial skills and framework
The Mayo Clinic, a Kennedy Scholar and equipped 15 IT learning centres
to his big-picture healthcare projects.
in systems biology and genetics at in rural Sri Lanka, ensuring children
in these areas are not prevented from While we are not all motivated by
Harvard University and an Academic
Clinical Fellow in Cancer Medicine at accessing the education required to the same ideals, nor aspire to be global
Oxford University. better their lives simply by virtue in the influence of our work, thinking
MedicineAfrica is an attempt to of their geographical location and big and having sound business
address the mismatch between the socioeconomic circumstance. There principles underpinning our practice
global burden of disease and the global are plans for 100 centres by the end and personal ‘operations’ will, most
clustering of healthcare expertise. of 2014, along with expansion to certainly, greatly expand our positive
It provides real-time mentoring, Cambodia and Vietnam. impact on our family, our community,
tutoring and clinical support to Dr Prince is also founder and our country and the world.
isolated healthcare workers in low and Chairman of One Disease at a Time Thanks again for your support.
middle-income countries, specifically – an aid organisation that We hope you enjoy our eleventh
Somaliland, Ghana, Palestine and aims to systematically eliminate offering of The Private Practice eZine.
Tanzania, with Rwanda, Uganda, infectious diseases from Australia Happy reading!
Sierra Leone, Zambia and Zimbabwe for good, one at a time. This leads
soon to be included. him to work much closer to home,
• Dr Sam Prince is a shining to improve the health of remote
example of the Doctorpreneur on indigenous communities where
our own shores. By applying business children suffer from the parasite
rigour to development and healthcare, scabies in epidemic proportions.
the 27-year old entrepreneur, medical Through his work, Dr Prince Steven Macarounas, Editor
doctor and philanthropist intends intends to achieve his dream of editor@theprivatepractice.com.au
The Private Practice Spring 2013 5
Courses &
Workshops
The Private Practice prepares doctors for the challenge of establishing and
managing a successful medical practice that supports their desired lifestyle.
‘Best Practice’ Business Programs Topics of discussion include:
Our program includes education events that • Practice Set-Up and Management
range from half-day briefings to three-day • Practice Audit & Review
‘comprehensive’ courses convened as part of • Medical Practice Business Planning
a medical college’s scientific meeting or as • Leadership & Team Building
stand-alone events. • Cultivating Referrals
Our speakers are industry leading experts • Accounting, Taxation &
predominantly (if not exclusively) working Business Structures
with medical professionals. Programs are • Financial Decision Making
tailored to address the specific issues facing • Medical Billing and Medicare
doctors at different stages of their personal • Banking and Finance – Products & Strategy
and practice lives. • Estate Planning & Asset Protection
• Investment Planning
• Superannuation Strategy
• Real Estate
• Personal Risk Management & Insurance
• Medico Legal & Practice Risk Management
• Recruitment & Employment Contracts
• Human Resource Management
• Working With Pharmaceutical
& Device Companies
• Media & Communications Training
• Marketing
• Social Media & Medical Practice
• Practice Design & Construction
• Information Technology –
Hardware & Software
• Day Surgery Development
• Strategies for Work/Life Balance
• Retirement & Lifestyle Planning
• Practice Succession Planning
6 theprivatepractice.com.au
COURSES &
WORKSHOPS
The following events are either already scheduled or in preparation stage. We welcome your
participation and invite you to express your interest by following this link to our website
http://theprivatepractice.com.au/contact
The Private Practice The Private Practice The Property Symposium
Comprehensive Marketing Workshop • Becoming a Medical
For senior trainees and recent fellows • Branding, Positioning & PR Property Landlord
seeking knowledge and guidance in • Websites, SEO & • Practice/Day Surgery Development
their transition to private practice. Appointment Scheduling • Project Management –
• Ethics-Based Social Media Strategy Process & Strategy
The Private Practice • Patient Satisfaction Surveys • The Latest Investment
Symposium • Referrer Education & Property Hotspots
For established practitioners and Loyalty Program • The Role of Superannuation
practice managers wishing to review • Patient & Referrer Events in Practice & Investment
and benchmark their current systems, • Practice Design Property Ownership
procedures, arrangements and • Creating a Marketing Plan + more • Funding – Product & Debt
knowledge of practice and financial Management Strategy
management.
The Private Practice Spring 2013 7
EVENTS Private Practice ‘Comprehensive’ 26-28 July 8 theprivatepractice.com.au
The
smoothest
The
operation
smoothest
you’ll ever
operation
perform
you’ll ever
perform
Buy a car or equipment with your
card and take a holiday sooner
Buy a car or equipment with your
card and take a holiday sooner
It takes a specialist bank to create a credit card for specialists
Investec has come up with a card specially designed for the medical profession.
It’s quite clever: for instance, buy a car or equipment on your Investec card
and you can earn Qantas Points on that eligible purchase and then roll it over
It takes a specialist bank to create a credit card for specialists
into a lease with Investec. You can also pay off your new and existing equipment
Investec
or fit-out has come with
contracts up with
youra card
card to
specially designed
earn even for the Then
more points. medical profession.
all you have to
It’s
do isquite
startclever: for your
planning instance, buy a car or equipment on your Investec card
next holiday.
and you can earn Qantas Points on that eligible purchase and then roll it over
into a lease with Investec. You can also pay off your new and existing equipment
Take a look
or fit-out at investec.com.au/medical
contracts with your card to earn even more or call Michelle
points. Then allGianferrari
you have to
on
do is0414
start475 012 your
planning to find
nextout how she can help.
holiday.
Take a look at investec.com.au/medical or call Michelle Gianferrari
on 0414 475 012 to find out how she can help.
O u t o f t h e O r d i n a r y™
O u t o f t h e O r d i n a r y™
Home loans | Car finance | Transactional banking and overdrafts | Savings and deposits | Credit cards | Foreign exchange | Goodwill and practice purchase loans
Commercial and industrial property finance | Equipment and fit-out finance | SMSF lending and deposits | Income protection and life insurance
All finance products are issued by Investec Bank (Australia) Limited ABN 55 071 292 594, AFSL 234975, Australian Credit Licence No. 234975 (Investec Bank). All finance is subject to our credit assessment criteria.
Terms and conditions, fees and charges apply. Information contained in this document is general in nature and does not take into account your personal financial or investment needs or circumstances. We reserve
the right to cease offering these products at any time without notice. You should obtain independent financial, tax and legal advice, as appropriate.
Qantas Points are earned in accordance with the Investec/Qantas Terms and Conditions available at www.investec.com.au/card. Points are earned on eligible purchases only. You must be a member of the Qantas
Home
Frequentloans | Car finance
Flyer program in order to |earn
Transactional banking
and redeem points. Qantasand overdrafts
Points | Savings
and membership and deposits
are subject to the Qantas| Frequent
Credit cards | Foreign
Flyer program Termsexchange | Goodwill
and Conditions. Full detailsand practice
are available purchase loans
at www.qantas.com/terms.
Commercial and industrial
Investec Bank recommends property
that you finance tax
seek independent | Equipment andoffit-out
advice in respect the tax finance | SMSF
consequences lending
(including fringeand deposits
benefits tax, and |goods
Income protection
and services and
tax and life insurance
income tax) arising from the use of this product or
from participating in the Qantas Frequent Flyer program or from using any of the rewards or other available program facilities. Insurance products are offered by Experien Insurance Services (Representative No. 320626) ,
thefinance
All preferred supplierare
products of issued
insurance productsBank
by Investec to Investec Bank.
(Australia) Limited ABN 55 071 292 594, AFSL 234975, Australian Credit Licence No. 234975 (Investec Bank). All finance is subject to our credit assessment criteria.
Terms and conditions, fees and charges apply. Information contained in this document is general in nature and does not take into account your personal financial or investment needs or circumstances. We reserve
EVENTS Business Planning Workshop 3 August 10 theprivatepractice.com.au
Thoracic Society of Australia and New Zealand Focus Group Dinner 9 August
ECONOMICS &
MARKETS
FACT & FICTION
As Chris Caton highlights, there’s no time like an election to keep consumers
on their toes regarding what’s really going on with the Australian economy.
The Australian share market rose by 1.6% got to manage the commodity-price boom
in August, bringing its year-to gain to while the Labor government got to deal with
10.5%. For once, the domestic market the GFC. Who is to say that if the roles had
out-performed the US share market, which been reversed the results would have looked
registered a fall of 3.1% in the month, very different?
leaving its year-to gain at 14.5%. The plain fact is that most of what
The dominant influence on markets determines how the Australian economy
continued to be the likely tapering of performs has little to do with the government.
quantitative easing by the US Federal The rest of the world matters a lot, monetary
Reserve. I discussed this recently, and policy is independent and the private sector
suggested that there was no need for goes about its business every day. In Hamlet’s
markets to fall when the tapering began. words, there’s a divinity that shapes our ends,
Given that markets are forward-looking, any rough-hew them how we will. The Federal
likely effect has probably already happened. Government does the rough-hewing.
This is clearest in the bond market. This is not to argue that government
Quantitative easing is designed to lower makes no difference. Indeed, both sides
long-term interest rates. It certainly did should be given credit for the bipartisan
this, with the 10-year bond rate reduced to a approach to economic reform that dragged
paltry 1.63% in early-May but back at 2.78%
the Australian economy into the 20th
in recent days. The market is effectively
century in the 1980s and 1990s. The days of
doing the Fed’s work for it; in its view,
bipartisanship are, unfortunately, long gone.
QE has already ended.
Election campaigns are frustrating for
The tapering will probably begin on 18
economists because they see their discipline
September, after the next FOMC meeting.
misused time and time again. Here there is
Expect some volatility in markets (what’s new)
bipartisanship; both sides are equally guilty.
but there is no need for any depressant effect.
One of the biggest distortions is this
BAD ECONOMICS endless hammering away at the idea that
Did anyone else notice that there was an Australia (or rather the Labor government)
election campaign going on? Now that the has amassed this huge pile of government
expected result has come in, it is likely that debt that will, somehow or other, impoverish
business confidence will be lifted, which us or our children (or perhaps their children).
should be positive both for the economy The plain and simple truth is that, measured
and for financial markets. relative to the size of our economy, Federal
We are told frequently that economic debt is less than a quarter of the average for
management is a – perhaps the – key issue in the developed world.
the election. What is interesting about this One could legitimately argue that the
Chris Caton is Chief is there is no clear evidence that one side is Budget should be closer to balance, but not
Economist of BT a more competent manager of the economy that it has left us with a major debt problem.
Financial Group. than the other. In recent times, the Coalition The phobia about debt is not without
12 theprivatepractice.com.auconsequence; the day that a country international obligations. GFC. If it hits 6%, expect a further
succumbs to it is the day it begins to Then there is the carbon tax. If it rate cut.
under-invest in infrastructure. is, as we have been told, “a great big I thought I made a mistake,
There is also an apparent tax on everything”, how can it be that
but I may have been wrong…
assumption, on both sides and scrapping it saves the Budget money
In mid-June, when the ASX200 stood
certainly in the media, that the state because the compensation paid to
of the Budget is the most important business is more than the revenue at 4739, I cut my end-of-year forecast
indicator of the economy (and of the collected by the tax? from 5300 to 5100. This after having
Government’s ability to manage). It Strange days indeed! raised it from 5100 to 5300 in early-
is not; the unemployment rate is a far March! Now either forecast looks
better candidate. We have lost sight ON A FINAL NOTE
equally plausible. Perhaps I should just
of the fact that the Budget is there to The Australian dollar fell marginally
settle for a range of 5100-5300!
serve the purposes of the economy in August, from 90.7 US cents to 89
cents. This leaves it above fair value. Trumpet blowing…
and not the other way around.
Economists (at least most of them) During the month, the Reserve Bank In July, the Fairfax press awarded
also find perplexing the sudden focus characterised it as still high, and I me the ‘Palme d’Or’ for being the
on foreign investment, particularly share that view. The downward move most accurate forecaster (among
in agricultural land. For the past may not be over! economists) of the share market for
200 years, Australia has benefitted In early August, the RBA cut the the financial year 2012/13. This was
hugely from the influx of foreign cash rate to a record low of 2.5%, a
on the basis of a forecast I had made
capital. We will continue to need the move that was “fully passed on” in
mortgage rates. Financial markets 12 months earlier when the share
latter for as long as we don’t save
enough domestically to finance our remain convinced that there is a market was around 4100.
own capital needs. We already have further cut out there. I’m less certain; I believed at the time that concerns
a Foreign Investment Review Board the RBA would probably like to think about Europe (and particularly about
whose job it is to assess large-scale that it is finished. The key for a further a Greek exit from the Eurozone) were
purchases with an eye to the national cut is the unemployment rate. It’s overstated, and hence that the market
interest, and there is no evidence that currently 5.7%, which is relatively low
was clearly cheap. My forecast for
this process is broken. by international standards. But it was
30 June this year, of 4750, actually
In addition, foreign investment in 5% as recently as April last year and
agriculture is relatively small; less than the trend is ominous. If it continues, turned out to be low, given that the
2% of the total. Finally, raising new unemployment will soon be higher market finished the year at 4803.
barriers runs the risk of flouting our than it was at the worst point of the Every lottery has a winner!
The Private Practice Spring 2013 13Adding to
your assets
Aiming to acquire property within your self-managed superannuation fund?
Anna Carrabs outlines the important questions to be asked before you
proceed with signing on any dotted lines.
Recent years have seen a significant increase Which property types can my
of individuals moving their retirement SMSF purchase?
savings from larger retail funds to a self-
Broadly speaking, an SMSF can acquire two
managed superannuation fund (SMSF). One
types of property for market value:
of the key benefits of moving to an SMSF is
that it provides an individual with greater • Commercial property: Commonly referred
flexibility regarding the types of assets that to as ‘business real property’, commercial
are funding his or her retirement benefits. property includes property which is ‘wholly
Another advantage of using an SMSF and exclusively’ used in one or more
is the ability to move assets already businesses (whether carried on by the
owned by the individual from outside the SMSF or not). The property merely needs
superannuation environment and into the to be used in ‘a’ business in order to be
concessionally taxed environment within business real property, so this may include
property which you use in your business.
the SMSF (with earnings being taxed at a
Note: This article
There is no restriction on who the seller
maximum rate of 15% within a complying
is intended to be
of business real property is (i.e. it could
SMSF). Assets held for longer than 12
general in nature and be an unrelated third party, or even the
months by the SMSF get a discount of one
should not be relied individual). An added benefit of business
third (i.e. taxed at 10%).
upon by any person real property is that it can be leased to
Also, where the SMSF members start
without seeking advice the individual or a related party. However,
a pension on retirement, the earnings on
concerning their own the lease must be on arm’s length terms.
assets supporting the pension in the SMSF
circumstances. (as well as any capital gains on the sale of • Residential property: There are a
those assets) may not be subject to tax at all. number of restrictions that should be
With changes to superannuation considered before acquiring residential
legislation over recent years, there has property in your SMSF. Unlike business
been a rise in the number of real property premises, your SMSF cannot acquire a
acquisitions within SMSFs. In certain residential property from yourself or a
circumstances, this may include the transfer related party. Furthermore, the residential
(or contribution) of business premises that property cannot be leased or rented to
you already own to your SMSF. you or any related party of the SMSF
This article explores some of the key tax
and superannuation aspects that should be Can I transfer a property I
Anna Carrabs is a considered before acquiring property already own into my SMSF?
Director at William Buck. within your SMSF. When it comes to transferring property that
14 theprivatepractice.com.auACCOUNTANCY
you already own, only business real Property Can the SMSF Example
property can be acquired by the SMSF. expense use the borrowed
Where the business real property money?
is held by an individual member or Maintenance Yes Repainting house to prevent deterioration
members of the SMSF, the property
Repairs Yes Replacing broken window
can be contributed into the SMSF
– this is commonly referred to as an Improvements No Substantial renovations to the property
‘in-specie’ contribution.
A word of warning: Each member quite complex. In essence, the SMSF Are there any hidden
is subject to annual contribution can borrow under an instalment costs or issues?
limits depending on a number of warrant arrangement, such that the
factors, such as age, income levels and Usually, stamp duty will be payable on
lender has limited recourse over the
meeting specific working conditions. the property acquisition and will vary
property (and no other asset of
For example, it is possible for an from state to state. However, where
the SMSF). the property is acquired by the SMSF
individual member who is between While under the limited recourse
the ages of 60 and 65 (and subject to from an individual (who is a member
borrowing arrangement, the property of the SMSF), concessional rates of
other conditions) to contribute up to must be held on trust for the benefit
$485,000 to superannuation in one stamp duty may apply. For example,
of the SMSF. Additionally, the SMSF in NSW there is a concessional stamp
financial year. With mum and dad must only use the borrowed money for
in the SMSF, this could equate duty rate of $50, subject to meeting a
the property alone, and cannot use the number of conditions.
to $970,000. borrowing to improve the asset.
Where the business premises Importantly, when transferring
An advantage of the limited or selling property you already own
are used in the individual’s own
recourse borrowing arrangement is into the SMSF, you should consider
business, the member may also have
that the SMSF trustee doesn’t have to the tax cost, namely capital gains tax.
the opportunity to utilise what is
borrow from a bank and third party However, where the premises are used
referred to as a ‘CGT cap’ under the
lender. In fact, the SMSF can borrow in the member’s business, it may be
small business CGT concessions,
from a related party of the SMSF. possible to access small-business
contributing up to an additional
However, before taking out a CGT concessions.
$1.315 million (for the 2013/14
limited recourse borrowing within Acquiring property in your SMSF
financial year).
the SMSF, you should consider is often a complex transaction and,
An added bonus of contributing
the costs of doing so – including importantly, you should consider
the property into a SMSF is that the
establishment costs, legal fees, stamp both the advantages and costs of
property can continue to be leased to a
duty considerations and ensuring that doing so. It is strongly recommended
related party of the SMSF, provided it
there will be enough superannuation that you seek the advice of a tax and
is on commercial terms.
contributions or rent received by the superannuation professional before
What if my SMSF needs SMSF to fund loan repayments. entering into the transaction.
to borrow?
Property Residential Commercial
An SMSF is permitted to borrow but
there are a number of very strict rules
What property can my SMSF purchase? Yes Yes
governing what the borrowed money
can be used for. Loans of this nature Can the SMSF acquire a property already owned No Yes
by the member?
are commonly referred to as a ‘limited
recourse borrowing arrangement’. Can the SMSF lease the property to a related party? No Yes
The rules surrounding limited
Can the SMSF borrow to acquire the property? Yes Yes
recourse borrowing arrangements are
For more information on how you can acquire property in your SMSF, speak to a William Buck advisor.
Visit www.williambuck.com to locate your nearest office.
The Private Practice Spring 2013 15RISK
REDUCTION
As Chris Mariani explains, seeking expert advice on insurance is key to
mitigating the various risks associated with being in private practice.
Medical practices are exposed to a variety practitioners hold medical indemnity
of complex risks every day, with the obvious and, where required (such as in group
major risk being an allegation of medical practices), most practice entities hold
negligence against either the practitioner, medical indemnity covering the entity and
Chris Mariani is Director
practice entity or staff. practice staff. While medical indemnity is
of Medical and General As medical indemnity insurance is undoubtedly a key risk, there are a number
Risk Solutions. required under medical registration, most of other risks that are often overlooked.
16 theprivatepractice.com.aumedical defence
REVIEW YOUR RISK their product, and won’t tell you
One of the best risk-management if there is a more suitable product
strategies is to seek advice from available from another insurer).
an insurance broker. Insurance is • Allows you to focus on your
complex, particularly for medical business: A good broker will save
practices, and a broker can help you you time and money – they will get
identify your key risks and then put in to know your business and do the
place an insurance program to protect running around for you. They should
your assets and liabilities. be part of your extended support
Engage a broker to visit your team, along with your lawyers,
practice and ask them: accountants and financial planners.
• What do you see as my major risks?
• Back-up: Should you ever need to
• What strategies do you recommend
claim, the broker is in your corner
I put in place to reduce my risks?
to ensure the insurer lives up to
• Which insurances should I consider, their promise to pay valid claims.
and what will they cover and cost?
• Which insurances am I required GET SPECIFIC
to hold by law or contract? Which insurance does the ‘average’
• What insurance expertise medical practice hold? No two
do you have in the medical practices are the same, so the
sector and what are your insurances needed will depend on
qualifications and experience? the individual circumstances of the
• Which services can I expect from practice. When I meet with clients to
you and what are the fees involved? understand their business, I talk about
the ‘Five insurance pillars’ to consider
An initial review will generally be
as a starting point. These are:
free of charge. A broker is generally
paid commission from the insurer 1. Medical Indemnity – Doctor
and/or the broker may charge you a 2. Medical Indemnity – Practice entity
fee for their advice and placement of 3. Business Package (including
the policies. public liability, property, business
Some of the advantages of dealing interruption and other covers)
with a broker can include:
4. Management Liability
• Personal service: A single point of
5. Workers’ Compensation
contact for all your insurances
(rather than call centres or This list is not exhaustive and there
dealing online). are often other risks that may require
• The broker’s duty is to you: insurance cover. I have also only
The broker can provide personal focused on key business risks and not
advice based on your circumstances, ‘personal’ risks (such as life insurance,
and as brokers access multiple income protection, trauma/total
insurers, they will find the right and permanent disability, and other
policies at the most competitive policies to cover key persons).
premiums (if you deal with an The following table summarises
insurer direct, they can only sell you some common risks in private practice.
The Private Practice Spring 2013 17Key risk area Common risks
1 Medical risks • Civil claims alleging medical negligence against doctors.
• Civil claims alleging medical negligence against the practice
entity and/or practice staff.
• Related ‘medico’ risks – i.e. medical board investigations,
coronial, Medicare audits, etc.
2 Practice premises & • Patient and visitor slips/trips (public liability).
business risks
• Product risks (particularly where you are the manufacturer or
importer).
• Physical loss or damage to premises, fit-out, IT equipment,
plate glass, etc.
• Machinery/electronic breakdown (and spoilage of vaccines or
other cold-storage goods).
• Business interruption cover (loss of revenue and increased
costs following physical loss, say from a fire or water damage
that prevents or reduces trading, or requires you to rent
temporary premises).
3 Management & • Responsibilities as a director or officer of the company.
employment issues
• Employment practices liability (discrimination,
unfair dismissal, etc).
• Crime (employee theft).
• Statutory fines and penalties (e.g. OH&S fine).
• Tax audits.
• Injury to workers (Workers’ Compensation)
4 Cyber risks • A growing area of risk. Policies are now available to cover
for example cyber extortion (including costs to manage the
event as well as any loss of revenue) and third-party liability
(i.e. privacy claims resulting from a breach of patient privacy
following a cyber event).
5 Other risks which may • Business travel.
require cover
• Business motor vehicles.
• Fit-out or construction of premises (contract works insurance).
• Transit insurance or goods away from the practice premises.
• + Others.
18 theprivatepractice.com.auALTERNATE INSURANCES and indemnities sections. and time-consuming litigation to
The following two forms of insurance Management Liability successfully defend any allegation.
are commonly overlooked: Management liability is another For a medical practice with gross
Public Liability Insurance overlooked policy and is made up of a turnover between $1-3 million
Many practitioners mistakenly believe package of covers that include cover for: annually, expect to pay circa $1700
their medical indemnity policy will • Directors and Officers Liability total premium for a $1 million main
(and Organisational Liability) policy limit (or circa $2100 for a $2
cover public liability claims. For
example, several years ago a specialist • Employment Practices Liability million policy).
who operated in a private hospital (eg. An allegation of unfair There is often some overlap
as a VMO accidently caused bodily dismissal or discrimination) between management liability and
injury to a nurse during an operation. • Crime (theft by employees) other insurances you may hold. For
The employed hospital nurse lodged a example, some medical indemnity
• Statutory Liability (fines
workers’ compensation claim and the insurers provide cover for disputes
and penalties)
workers’ compensation insurer then with employees (such as an unfair
• Internet Liability (operating
‘subrogated’ against the specialist dismissal allegation), but generally if
a website)
seeking to recover their costs. cover is provided, it is limited to legal
• Kidnap, Ransom & Extortion costs only (not the compensation
The specialist discovered the
(including cyber extortion) awarded), and the employing entity
matter was not covered by their
medical indemnity policy, as it was a • Tax Audit and a range must be wholly owned by you – which
public liability matter. The specialist of other covers. obviously would not be the case in
did not have public liability cover, The policy is designed to protect a group practice owned by multiple
which he or she could have easily both the company and the directors doctors. A management liability policy
purchased (a $10 million policy for and officers (e.g. the management fills in these cover gaps.
a single doctor would be less than team) against liability as a result of
$500 annually). a ‘Wrongful Act’, committed while
Be aware that public liability carrying out the duties of directors
insurance is often a requirement in and officers. Claims can be brought
contracts such as in lease agreements, from many sources, such as regulators
independent service contracts or (e.g. ACCC, ASIC, ATO), employees,
VMO contracts. Check any contracts competitors, customers/suppliers and
you have entered into (there is shareholders, particularly minority
normally a section titled ‘Insurance shareholders.
Requirements’). Better still, send the An allegation may be completely
contract to your insurance broker to without merit, but without cover you
review the insurance requirements leave yourself exposed to expensive
Medical and General Risk Solutions is a Corporate Authorised Representative of Insurance Advisernet Australia
Pty Limited, Australian Financial Services Licence No 240549, ABN 15 003 886 687. Authorised Representative
No 436893. Chris Mariani, Authorised Representative No 434578. The information provided in this article is of
a general nature and does not take into account your objectives, financial situation or needs. Please refer to the
relevant Product Disclosure Statement before purchasing any insurance product.
If you have any questions or would like to arrange an obligation-free discussion and review, contact Chris Mariani
on 02 9905 7005 or 0419 017 011, email chris@mgrs.com.au or visit www.mgrs.com.au
The Private Practice Spring 2013 19The gift
of giving
Want to know how you can establish a charitable foundation during your lifetime?
Ivana Bosio outlines your philanthropic options.
If philanthropy is a priority for you during consider your nomination, the trustee makes
your lifetime, rather than making a series of the final decision about the distribution of
charitable donations it might be appropriate funds. You will not have any input in the
to consider establishing a long-term giving investment strategy of the fund.
structure that can perpetuate your long-term A CEF would be appropriate if you want
philanthropic intentions. to establish a long-term charitable giving
While you are alive, there are two program but do not have a desire to be
long-term giving options available to you: involved in the investment management
• You can set up an account within a or decision-making process.
charitable endowment fund (CEF). WHAT IS A PRIVATE
• You can establish your own ANCILLARY FUND?
private ancillary fund (PAF).
A PAF is a private fund into which tax-
In determining the most suitable option deductible donations can be made. It allows
for you, you should consider matters such you to build an investment portfolio of
as how much you would like to give and how carefully selected assets for the purpose of
involved you want to be in the process of supporting philanthropic causes that have
giving, as well as the reasons that drive your significant meaning to you. This fund is
philanthropy. Ask yourself if you would like appropriate if you want to apply a significant
to be engaged and involved on a long-term amount of your wealth to charitable purposes
basis, if you would like to leave a significant and be involved in the ongoing decision-
sum of money, or if you would like to leave making and application of that money.
a legacy and involve future generations A PAF has several benefits over short-
of your family. term giving. Instead of a one-off donation,
the perpetual structure of a PAF allows you
WHAT IS A CHARITABLE to create a long-term giving strategy for your
ENDOWMENT FUND? nominated charities that will provide funding
Ivana Bosio specialises
in the areas of taxation This is a public charitable fund in which you in your (or your family’s) name forever.
and philanthropy at can establish an account. You can nominate the Using a perpetual structure also means
Australian Executor charity or charities you would like to benefit that you can give your trustees discretion
Trustees. from your donation. While the trustee will as to how the PAF is managed. This ensures
20 theprivatepractice.com.auESTATE PLANNING
that, if necessary, the trustees can
redirect funds to where they are most
needed in order to fulfil the purpose
of the PAF.
HOW DOES A PAF
OPERATE?
In the PAF deed you can specify the
causes you wish to benefit from the
funds, as well as giving your trustee
the discretion to decide how the funds
are to be applied. This gives your
trustee the flexibility to respond to
things such as medical advancements,
which can give rise to many areas of
research requiring funding today that
would not have been thought possible
50 years ago.
The trustee of a PAF must be a
corporation. The directors of the trust
must include at least one party who
meets the definition of a ‘responsible
person’ and is actively involved in
the decision-making of the PAF. The
‘responsible person’ cannot be the
founder, a major donor or an associate
thereof. The trustee of a PAF is subject
to both the common-law principles of
trust law and the Trustee Act of the
state or territory in which the
PAF operates.
The Private Practice Spring 2013 21There are also major tax advantages that PROFESSIONAL ASSISTANCE
come with establishing a long-term giving At Australian Executor Trustees (AET), we can
program, as the income and capital gains work with you and your adviser to establish
earned within this type of structure are your PAF and put in place the necessary
Note: This document exempt from tax. documents and governance structures so it
provides general This also means these funds can attract will operate smoothly and efficiently in the
advice only and its a refund of franking credits attached to future. We can provide a trustee solution,
recipient should seek
dividends received, which can further acting as a trustee and overseeing the
professional advice
enhance the amount available for investment of funds held in trust.
before relying on its
distribution to beneficiaries. These tax Our company directors are highly
contents. AET believes
concessions mean these long-term giving experienced in trust management and
this information to be
structures often generate income and fiduciary services, and will ensure your
reliable as at date of
capital faster than the same portfolio held PAF meets the active ‘responsible person’
issue but excludes all
in any other way. In addition, the PAF is a requirements at all times.
liability to the extent
deductible gift recipient (DGR), meaning As the fiduciary, AET takes on the risk
the law allows.
contributions made to the PAF are and ensures the compliance and daily
tax-deductible. management of the PAF are taken care of.
Consider a one-off donation of $1 million This allows your investment adviser to focus
compared to the establishment of a PAF on the investment management and you
with the same amount. If you establish a to focus on engaging with philanthropic
PAF, which distributes 5% per annum and organisations and finding worthy programs
generates capital growth of 5% per annum to fund.
(assuming constant annual returns), after 20 The Australian Taxation Office has issued
years the PAF will be worth more than $2.5 strict guidelines that must be adhered to
million and will have distributed close to when establishing and managing a PAF, and
$1.6 million. may penalise the directors of the corporate
This is a simple illustration but there trustee for failing to comply with prescribed
are many real examples of PAFs established guidelines. By utilising professional services,
many years ago that now have a significant you can be sure that your PAF will be
capital sum and have distributed millions of established correctly and managed prudently
dollars to benefit the community. and efficiently into the future.
Australian Executor Trustees Limited (AET) is part of the IOOF group (ABN 84 007
869 794; AFSL No 240023). AET provides a range of professional estate planning,
superannuation, trustee and investment services to clients across Australia. AET assists
clients in drafting wills, preparing an effective power of attorney and providing all the
specialist professional services required in estate administration. For more information on
establishing a Private Ancillary Fund, call 1800 882 218 or visit www.aetlimited.com.au
22 theprivatepractice.com.auVALUE ADDED
With an Investec credit card you can boost your Qantas Points and have
access to a range of exclusive services.
One of the golden rules of any business Gianferrari adds. “It could also be of huge
is to ensure it is operating as efficiently benefit if the client is taking a well-earned
as possible to maximise the return from holiday and they have enough points to
every dollar spent. How attractive, then, upgrade their flight.
is the option to make big-ticket business “But the value of adding to the balance
equipment and asset purchases such as of Qantas Points is not all about flights.
motor vehicles on your credit card and earn For those who are not interested in flying
Qantas Points in the process? there are also retail store vouchers and
That’s exactly what’s on offer with an merchandise that can be redeemed using the
Investec Visa credit card. points on the Qantas Store. We have clients
“We had one client who recently that use them to buy end-of-year gifts for
purchased equipment for $400,000 on their patients and staff!”
Investec card, and that meant they earned a
YOUR CHOICE
sizeable number of Qantas Points as we offer
one point for every $1 of eligible spend, with Clients can choose between two credit cards:
no cap on how many points you can earn,” • The Investec Signature card offers one
explains Michelle Gianferrari, a Financial Qantas Point for every $1 of eligible spend
Note: The information Specialist at Investec. in Australia, and two Qantas Points for
contained in this “What we then do is simply convert that every $1 of eligible international spend.
article is general in card transaction into a finance contract with • The Platinum card offers one Qantas
nature and has been Investec, which pays off the purchase from Point for every $2 of eligible spend in
provided in good faith, the credit card. Additionally, we allow the Australia, and one Qantas point for every
without taking into $1 of eligible international spend.
client to make their monthly repayments for
account your personal
that contract on their Investec credit card so In addition to Qantas Points, every
circumstances. While
they can earn even more points – generally return ticket purchased on an Investec card
all reasonable care has
at least twice as many points as the purchase is automatically covered by up to 90 days of
been taken to ensure
alone would earn. travel insurance, protecting the safety of not
that the information is
“This is a service not available through only the cardholder but also their spouse and
accurate and opinions
most other financial organisations, but we dependent children, if travelling together.
fair and reasonable,
make it easy for our clients as we facilitate Other benefits for primary signature
no warranties in this
the whole process for them.” cardholders include a Priority Pass
regard are provided.
Investec recommends
Clients can then redeem their points on membership, which opens doors for the
that you obtain the Qantas website. client and a guest to over 600 VIP lounges
independent financial “This can be a significant benefit for in 300 cities, as well as providing access to
and tax advice before clients in terms of taking care of their travel Visa Concierge and the Visa Luxury Hotel
making any decisions. needs for the future, all by doing something Collection for services at a selection of
as simple as using your Investec credit card,” superior hotels.
24 theprivatepractice.com.auFINANCE PRODUCT
BONUS REWARDS
PARTNERS
Investec is a specialist financial service
provider for medical and dental clients
and has a bonus partner reward
program for a range of suppliers within
the medical and dental industries.
“So, even if you use the
Investec Visa card to buy business
consumables, through this deal with
the specific partners, you can further
enhance your Qantas Points balance as
well,” Gianferrari says.
“If people can earn rewards that
enable upgrades or free tickets or
merchandise, and they can do all that
by just using their credit card, then it
is a pretty easy way to travel for free.
“We are striving to deliver value to
our clients, with minimum fuss. Our
clients see a real value in these points
as it opens up so many possibilities
with regards to business and personal
banking, and they only need to carry
one card – the Investec card.”
Investec Bank (Australia) Limited ABN 55 071 292 594, AFSL and, Australian Credit Licence 234975 (Investec Bank).
All finance is subject to Investec’s credit assessment criteria. Terms and conditions, fees and charges may apply.
Investec reserves the right to cease offering these products at any time without notice.
The Private Practice Spring 2013 25Access All Areas While Telehealth is a rational approach to addressing specialist shortages in rural
and remote parts of the country, Margaret Faux says there are complex issues
for all practitioners to get to grips with.
Telehealth – the delivery of a specialist facilities and aboriginal medical services, so
video consultation through the Internet – indigenous people and residents in nursing
is recognised as being an ideal medium to homes have access to telehealth at all times.
improve accessibility to specialist medical There are two ends of the service to
services in rural and remote Australia. consider – the (usually rural) patient end
Numerous telehealth success stories were and the (usually metropolitan) specialist
trumpeted at the recent Health Informatics end. From 1 November 2012, these two ends
Society of Australia (HISA) conference
must be at least 15 kilometres apart. The
in Adelaide, together with real concern
specialist-end service must be an eligible
over recognised barriers to using the new
service (meaning a rebate is available).
technological system. Among the barriers
Questions relating to telehealth claiming
was the dearth of knowledge about the
arise in a variety of contexts, some of which
Medical Benefits Scheme (MBS) and how to
correctly bill for these services. are quite straightforward – such as questions
The new MBS telehealth items were first concerning referrals and aftercare. All
introduced on 1 July 2011 and include both requirements for valid referrals (which you
specialist and patient-end rebates, which can read about in the Winter 2013 edition of
are claimable for outpatient services in The Private Practice eZine) apply to telehealth,
‘telehealth eligible’ areas. An eligible-area as do the aftercare rules – so, no rebate for
exemption applies to all residential aged-care aftercare, real or virtual.
TELEHEALTH CLAIMING ESSENTIALS
• The threshold question is always related to the patient, not the provider.
Margaret Faux is • All usual Medicare requirements, such as referrals and aftercare, apply.
Managing Director • The specialist service must be claimable before the patient-end service becomes claimable.
of Synapse Medical • Both services do not have to be claimed but must be claimable.
Services.
26 theprivatepractice.com.auYou can also read
