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September 10, 2015

On Thursday, October 22nd the Kansas City CFO group will host the fourth quarter breakfast series event at CBIZ MHM Kansas City, which will feature a panel of local Private Equity experts. This panel will focus on the Private Equity landscape in Kansas City and will address a variety of questions prepared by a moderator including: what equity investors are looking for (both for targets and from a financial statement standpoint), how the private equity market currently looks in Kansas City, and much more!

To register, visit: https://kccfoseriesprivateequity.eventbrite.com

September 1, 2015

Several of our past articles have focused on hospital employment of physicians and the related issue of physician compensation.  As we are all aware, any compensation arrangement between a hospital and physician must meet a litany of regulatory constraints, mainly those implicating the Stark Laws, the Anti-Kickback Statute, and the IRS regulations of not-for-profit entities.  Often, hospitals find the easiest way to avoid problems with Stark and the Anti-Kickback Statute is to meet the employment exception.   However, we have encountered a number of situations where a traditional employment model does not meet the needs of the physicians or the hospital.  In this article, we will discuss an alternative to traditional employment of physicians, a Professional Services Agreement ("PSA").  A PSA relies on the personal services exception and is gaining popularity for reasons discussed below.

Overview of a PSA Relationship

A PSA model allows a physician practice to remain intact, while assigning to the hospital the right to bill and collect professional fee-for-service revenue. The hospital then compensates the physician practice for the clinical services at a Fair Market Value rate.  As a result, the hospital becomes the practice's sole source of professional revenue and the hospital is then responsible to negotiate contracts and collect payments from third party payors and patients.

Typically, all clinical providers (physicians and non-physician providers) remain employed by the physician practice. The structure of the PSA payment can be customized to the needs of the parties, but is generally based upon work relative value units ("wRVUs") and a defined conversion factor, as agreed upon by the parties. It is important to consider what items will be reflected in the wRVU conversion factor. The rate can be set to include only compensation for professional services rendered, or can be "built up" to include consideration of benefits such as payroll taxes, retirement benefits and malpractice. 

In addition to professional clinical services, the hospital may choose to contract for support services and overhead from the physician practice. Support services and overhead can be structured in a variety of ways to allow the necessary resources to provide clinical services.  For any such services or costs contracted through the physician practice, we typically see a Management Services Agreement or other contract.

The hospital has the option of purchasing hard assets from the practice, or leasing them, at fair market value.  Likewise, the hospital can either employ the non-clinical staff directly, or lease them from the physician practice. In addition, the hospital can directly assume overhead expenses, such as rent, utilities, billing fees, supplies and malpractice, or reimburse the physician practice for appropriate expenses. Such expenses can be reimbursed based upon actual invoice cost, set at a "not to exceed" reimbursement, or can be paid directly by the hospital. Any expense that will not be directly controlled by the hospital should be addressed in an agreed upon budget and reviewed annually. 

Reasons to Consider a PSA

Many physicians are reluctant to enter into a full employment agreement for a variety of reasons. Some physicians find that PSAs are advantageous because they are able to keep their physician practice entity and maintain some level of control over the following:
• Distribution of physician compensation
• Retirement benefits and other discretionary expenses/benefits
• Leverage from other physicians and mid-level providers

In addition, similar to employment, the risk of collections is transferred to the hospital and the physician practice is insulated from payor contracting, payor mix and indigent or charity care.

Hospitals benefit from a PSA model because it allows them the opportunity to align with physicians in situations where employment has not been a viable option.  Hospitals often view the PSA model as a transitional model, with the hope of future employment. 

Compliance and Fair Market Value

Due to the numerous regulatory constraints discussed above, in addition to Fair Market Value considerations, it is critical to include legal counsel and valuators during the transaction process.

The PSA model is one of many alignment strategies available to physicians and hospitals. PSAs can take many forms, and contemplating the appropriate structure is complex. However, when appropriately structured, implemented and administered, PSAs may serve as a good alternative to traditional physician employment.

In future articles, we will expand on various strategies in aligning hospitals and physicians in the ever-changing, complex and highly regulated world of health care delivery.

The CBIZ Kansas City Healthcare group has more than 100 years of combined experience helping Hospitals and Health Systems form strategic relationships with their physicians. Our experience enables us to work with our clients considering the goals of the various constituents, in light of the regulatory constraints such as Stark, the Anti-Kickback Statutes and the IRS.

August 31, 2015

July 8, 2015

Cautious optimism about the future is the overarching theme of the technology and life sciences survey conducted by CBIZ and Mayer Hoffman McCann P.C. The majority of respondents said they plan to hire more employees and expand domestically in the next 24 months. Additionally, most companies cite growth as the end goal for their company, and less than a third plan to exit in the next three years.

Download the full report here.

July 2, 2015
Whether it’s big or little game, encouraging and celebrating new business success is crucial! CBIZ MHM celebrates five individuals who brought in new business over the last month. They have certainly made their presence known in the field and these hats are a symbol of that – you can’t miss them!

June 25, 2015

Today CBIZ MHM, LLC and the Kansas City CFO Group hosted their second quarter breakfast event featuring Karen R. Glickstein. Glickstein is a Shareholder at Polsinelli and focuses her practice on assisting employers with all types of human resources and employment law issues.

Today, Glickstein focused on the top employment law issues that may affect the bottom line, including social media, whistleblowing and more! To view the presentation from today’s event, click here.

To learn more about Karen R. Glickstein or to contact her directly, visit her web bio.

If you are a CFO or owner and would like to receive more information on future Kansas City CFO Breakfast Series events, join our group on LinkedIn.

June 10, 2015

The Kansas City CFO Group invites you to join us on Thursday, June 25th for our second quarter event featuring Karen R. Glickstein. Karen is a Shareholder at Polsinelli and focuses her practice on assisting employers with all types of human resources and employment law issues. On the 25th, Karen will focus on the top employment law issues that may affect the bottom line, including social media, whistleblowing and more!

When: Thursday, June 25th | 7:30 AM - 9:00 AM (continental breakfast will be available)
Where: CBIZ & Mayer Hoffman McCann P.C. Kansas City | 700 W. 47th Street, Suite 1100, Kansas City, Missouri

Register now!

June 4, 2015

In 1997 Joyce Farris, Managing Director and current leader of our Kansas City Construction Industry group authored an article which appeared in the May - June edition of The Builders Association publication, Modern Builder. Her article contains helpful information for those considering starting their own construction company, then and 18 years later. Following is her original article – “A Few Basics for the Start-Up Company”.
So, you’re thinking about starting your own construction company. You have lots of great ideas and the technical capabilities, but what now? To some it may sound as easy as hanging out a sign and opening the office doors, but unfortunately, there are a few more behind the scenes items for you to think about.

Develop A Cash Flow Plan:
Developing a cash flow plan should be your first objective when considering a new company. Cash flow is merely cash coming in to the business and cash going out of the business. There never seems to be a problem with figuring out how to spend cash in a start-up company – the need for supplies, hiring of personnel, leasing office space, phone lines, utility deposits, etc. The problem is where to get the funds to start with. A decision should be made on how much of your personal savings you will need to invest in the company and whether you will also seek outside financing.

Before you can seek outside financing you will need to develop a business plan or a cash flow projection. A projection is a tool for mapping out when you will be required to expend cash in relation to when you will receive cash for the work performed. As you estimate cash inflows, consider seasonality of your work, sales history of similar businesses, and the overall economy. In determining the cash inflows and outflows, remember that you may have to spend the money to do the job before you can bill anyone and expect to receive payment. The major issue in developing a projection is to be realistic.

There are several sources for outside financing from friends, family, banks to the Small Business Association. Regardless of whom you reach out to, you will need to demonstrate that you have a sound business plan. Know “how much” you will need, “how long” until you would be able to start repaying the borrowed funds and “for what” the borrowed funds will be foremost on any lender’s mind.

Seek Advice From Your Accounting and Legal Advisors:
Now that you’ve developed your business plan it is time to consider what type of legal and tax entity would best fit your needs: an S-corporation, C-corporation, Partnership, LLC or Sole Proprietorship? The differences in the entities mainly involve the method for reporting and payment of tax and the business liability that you as the business owner are willing to accept. A discussion with both your accounting and legal advisor will provide you with the best options for your situation.

Once the entity type is decided, your advisors will draft and file articles of incorporation for the company, if necessary, and file for federal and state I.D. numbers. The I.D. numbers are a company’s equivalent to an individual’s social security number. The I.D. numbers will be required for  opening bank accounts, filing payroll and sales tax returns, and filing federal and state income tax returns.

Develop a Financial Information System:
Financial information lets you track the profitability of the company and the cash flow requirements. Accurate financial information is essential for you to make management decisions and is imperative if you intend to continue to borrow money or bond jobs.

At first, you may wish to have outside accounting company prepare the payroll and payroll tax returns or to perform all of the accounting functions. This type of arrangement is termed “outsourcing”. Outsourcing is well suited for start-up companies as it allows for accurate and efficient accounting records to be maintained while allowing the company to hire limited accounting and administrative personnel.

However, if you prefer to hire the administrative personnel and prepare the financial information in-house, then you will need to select an accounting system to fit your needs. As you select a system, leave room to grow and consider any special information tracking you require (i.e. job costs). In addition, you will need to consider the information that you will need to supply to the users of your statements – bankers, bonding companies, investors.

Develop Relationships With Other Professional Advisors:
Throughout the stages of your company, you will have a need for insurance or bonding and a good insurance advisor can help you determine how much coverage you need, when you need it and how to pay for it.

Other advisors, such as marketing consultants, may be needed at some time during the life of your business. In choosing any professional advisor, consider someone who understands your industry and who understands your needs as a start-up company.

Now that you have administrative basics out of the way, it’s time to open the doors.

June 2, 2015
Spring weather brings increased growth across the Construction industry. The April 2015 Construction industry vital statistics show a spike in Permits and Starts, leading to a 2% decline in unemployment for the sector. View full infographic here.

May 7, 2015

Although the 2015 tax deadline has passed, based on the increase of tax return fraud seen this year, Phil Zaman, based in Kansas City and Director of the CBIZ National Tax Office, recently shared some advice to mitigate risk of falling victim to these scams in future years.

“An increasingly successful technique used by scammers is filing fraudulent tax returns earlier than the average tax payer,” he told MainStreet. “The IRS generally assumes it’s valid, though they do have some [detecting] algorithms now,” continues Zaman.  If you are filing a paper return, it normally takes six weeks before being processed, “because of this, when the actual taxpayer goes to file their return, they won’t know until long after they file – when they get a notice that the IRS has bounced their return – that they have fallen victim to tax return identify theft,” warns Zaman. 

Read the full article about how to detect tax ID fraud here.


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