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Newsletter – December 2017

December 28, 2017 By CFO Consulting Partners

Physician Practices: The Future is Changing

John DeLorenzo, MBA, CFO Consulting Partners LLC

The United States possibly has the most complex healthcare system in the world. The American healthcare system regulates the industry at both the federal and state level. It is paid for by private health insurance as well as from the government under its Medicare and Medicaid programs. Healthcare services are provided by the private sector; however, the government also provides services directly through the Veterans Administration. All of this, in a population with disparate levels of wealthy and poor citizens, leads to highly chaotic distribution of care and a complex payment system.
While half of all Americans receive healthcare coverage through their employers, most plans are subject to regulations both federally and at the state level. Those Americans receiving healthcare coverage through Medicare and Medicaid, subject the provider to lower reimbursements. As a result, some providers are less willing to take on Medicare and Medicaid patients, leading to a shortage of providers for that patient base. Patients that are not covered by their employer or a federally provided healthcare program are required to seek private insurance. However, because of the Patient Practice and Affordable Care Act (PPACA), patients are generally provided less options then employer plans, and those options may restrict their choices regarding providers.
Because of a more recent development, a totally different method of reimbursement, from fee for service or volume payments, to outcome based reimbursements or Value Based Care (VBC) is being encouraged by both Centers for Medicare and Medicaid (CMS) and by private insurers. Essentially, fees for services under VBC are paid based on case outcome and the payment must be shared by all providers in the continuum. VBC reimbursement was originally introduced by the CMS. Both CMS and now private insurers are moving in the direction of value based reimbursement and providing incentives to providers to participate. What is essential to succeed in the VBC method of reimbursement lie in integration of providers and the ability to aggregate data.
Even prior to the movement to VBC, the PPACA is requiring all practitioners to utilize Electronic Medical Records, (EMR) which is costly in both software acquisition as well as implementation. While a burden to small practitioners and groups, EMR will ultimately allow groups to operate, integrate and bill more efficiently.
As new requirements continue to be heaped on single physician practices and small groups, they have been dwindling as more groups consolidate to gain scale and integration. Also, there is a significant trend toward physician groups selling their practices to hospitals as hospitals are a significant cog in the VBC wheel.
Sole practitioners and practice groups need to assess their situations and determine if they are positioned to continue independently or should they align with a network of providers or sell to a larger group or hospital.
Viability in the changing healthcare delivery model for practice groups will require a significant change in how a practice operates, will require investments in information technology, possibly require upgraded staffing as well as the development of relationships with other providers in the continuum.
CFO Consulting Partners healthcare practice is here to help you. We can assist you to access your current situation and help you create and implement a plan forward. We can also assist you should you decide to align with a network or sell or consolidate with another group or hospital.

 

Filed Under: Featured, Mark Sloan, Newsletters

Newsletter – November 2017

November 30, 2017 By CFO Consulting Partners

Are You Ready for the New Revenue Recognition Standard?

Oliver Brooks, CPA, CFO Consulting Partners LLC

INTRODUCTION

On May 14, 2014 the FASB issued the standard ASC 606 Recognition of Revenue from Contracts with Customers. The FASB issued an Accounting Standards update to the Standard (ASU 2016 -10) in April 2016.

The implementation date for the standard is:

  • For public business entities, certain not-for-profit entities, and certain employee benefit plan
    • Reporting periods beginning after Dec 15, 2017
  • For all other entities
    • Reporting periods beginning after December 15, 2018

ASC 606 will have a major impact on the reporting of revenue for all entities, public and private that enter into contracts that promise the exchange of goods and services to their customers with a relatively minor impact on some costs associated with fulfillment of the contracts.

The standard is both complex and far reaching. Consequently, implementation is likely to require considerable effort and expertise.

Entities that plan to report GAAP financials would be well advised to consider moving quickly to initiate a thoughtful plan of action to comply with the standard.

 

OVERVIEW OF THE STANDARD

The following recaps the author’s view of the key guidance in the standard.

Performance obligations

The basic economic transaction is the contract between an entity and its customers. The standard address the accounting for the promises embodied in the contract, which it refers to as performance obligations.

The core principle of the standard is that an entity recognizes revenue when goods and services are delivered or fulfilled.

To achieve the core principle the standard promulgates a series of actions that an entity must undertake are:

  1. Identify the contract with the customer
  2. Identify the distinct performance obligation(s) in the contract
  3. Determine the transaction price
  4. Allocate the transaction price to the distinct performance obligations in the contract
  5. Recognize revenue when (or as) the entity satisfies the performance obligation(s)

Disclosures

ASC 606 requires considerably more disclosures about revenue. In general, the intent of the disclosures is to enable the reader to understand the nature and amount of the revenue being recognized and the uncertainty of the related cash flows.  More specifically the entity shall disclose:

  • Contracts
    • Disaggregation of revenue
    • Contract Balances
    • Performance Obligations
    • Transaction price allocated to remaining obligations

Other

The standard provides guidance on several other situations that can arise in the administration of contracts.  For example  (Not a complete recap)

  • Measurement of progress completion
  • Change in estimate
  • Right of return
  • Contract modification
  • Bill and hold arrangements
  • Cash and non cash consideration

 

IMPLEMENTATION

Given the complexity of this standard and its impact on revenue, it is incumbent on entities to have a well thought out implementation and transition plan. Some key issues that the plan should address include:

  • Financial: Determine the revenue streams that are impacted. Assess the need to review all customer contracts, possibly cataloging them and detailing their performance obligations.
    • Review the methodology in place for recognizing revenue and devise an intervention whether interim or final, systematic or manual, that brings revenue recognition into line with the standard
  • If the plan envisions significant manual effort be aware of the increased probability of errors and mitigate it with adequate quality control
  • Information System: Ascertain the need and /or feasibility of reconfiguring the ERP system to seamlessly produce financial information in compliance with the new standard
  • Organization: Communication to internal and external stakeholders. Determine the need for revised guidance to organization units that interface with customers or suppliers with regard to entering into, structuring of and reporting on contracts.
  • Transition: Decide on and prepare for full retrospective or modified retrospective presentation for financial statements presented after the implementation date. I.e.
    • Full retrospective: Apply the new standard as of the implementation date and, for the prior comparative periods, restate all contracts on the same basis
    • Modified retrospective: Apply the new standard as of the implementation date and, for the prior comparative periods, the data is not recast but instead apply a single adjustment to equity at the beginning of the initial year of application.

Companies are advised to begin the process early to ensure compliance. For complex revenue recognition issues, the company may want to consider outside professional resources to assist in the analysis.

More detailed information may be viewed here.

Filed Under: Featured, Newsletters, Oliver Brooks

“FMS Member Spotlight Featuring Larry Davis, CPA”

November 2, 2017 By CFO Consulting Partners

FMS Member Spotlight Featuring Larry Davis, CPA

Filed Under: Featured, Larry Davis, News & Events Tagged With: Larry Davis

Scott Magill Joins CFO Consulting Partners to Head Finance Transformation Practice

April 30, 2017 By CFO Consulting Partners

Scott Magill has joined CFO Consulting Partners as a Director and Head of the Firm’s Finance Transformation practice. Scott has over 25 years of experience in financial services, advertising and accounting. He as a strong background in financial management, reporting, planning & analysis, process improvement, data management and system selection/implementation. As a former CFO, Scott applies that experience to our engagements, ensuring that Finance function of our clients is not only efficient and effective but also acts as a key business partner to the CEO and Board.

Scott spent most of his career at Citibank, managing the Planning and Analysis group for Citi’s International Consumer business, as a CFO for Citi’s consumer businesses in Hong Kong and South Asia and as systems lead for Citi’s global Finance Transformation efforts. Scott lead the implementation of Citi’s Global Financial and Management reporting system, projects that covered 85 countries and had more than one thousand staff involved. Prior to Citi, Scott worked at J Walter Thompson, at the time the world’s largest advertising agency. Among his achievements at JWT was the development and implementation of advertising specific ERP system to support JTW’s international offices.

Scott has an MBA from the University of Chicago and a BA from Lafayette College.

PR Newswire also featured this article: http://www.prnewswire.com/news-releases/scott-magill-joins-cfo-consulting-partners-as-head-of-finance-transformation-practice-300434479.html

Filed Under: Featured, News & Events, Scott Magill

Implementing a New Accounting System – What it Takes (Video with Scott Magill)

January 19, 2017 By CFO Consulting Partners

Video with Scott Magill, Director, CFO Consulting Partners

Filed Under: Featured, Resources, Scott Magill Tagged With: new accounting system

Listen to Allan Tepper’s webinar on Understanding Financials is a Boardroom Essential

December 9, 2016 By CFO Consulting Partners

Learn about financials from Allan Tepper’s webinar to Women in the Boardroom

understanding-financials-eseential

CLICK HERE to view this webinar

Filed Under: Allan Tepper, Featured, Resources Tagged With: boardroom, understanding financials

CFO Consulting Partners is a proud sponsor of the Financial Management Society of Philadelphia Chapter.

August 11, 2016 By CFO Consulting Partners

Pat Mulloy from RSM, Larry Davis from CFO Consulting Partners, and Jamie Fisher from Axalta Coating Systems participated in the 2016 golf outing of Financial Management Society of Philadelphia Chapter.
Pat Mulloy from RSM, Larry Davis from CFO Consulting Partners, and Jamie Fisher from Axalta Coating Systems participated in the 2016 golf outing of Financial Management Society of Philadelphia Chapter.

Filed Under: Events, Featured, News & Events Tagged With: Financial Management Society, golfing, Larry Davis

CFO Consulting Partners was a proud sponsor of the 2016 golf outing of the Boys & Girls Club of Garfield

June 9, 2016 By CFO Consulting Partners

CFO Consulting Partners was a proud sponsor of the 2016 golf outing of the Boys & Girls Club of Garfield. Allan Tepper is a board member and head of the Finance Committee of that Club.

Golfing-for-garfield

Filed Under: Allan Tepper, Featured, News & Events

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