KSM News

Katz, Sapper & Miller's Transportation Services Group and Baker Donelson's Transportation Group will host our first Trucking Owners Business Roundtable. The event will be held in Baker Donelson's First Floor Events Center from 7:30 a.m. - 11:00 a.m. on Wednesday, June 5, 2013. The roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses. Detailed agenda to come.

Seating is limited, so please RSVP to rsvp@bakerdonelson.com by Wednesday, May 29, 2013.

A block of rooms has been reserved for the night of June 4 at the Homewood Suites Nashville Downtown for a rate of $179 and at the Hilton Nashville Downtown for a rate of $249. Please ask for the Baker Donelson/Katz, Sapper & Miller Trucking Owners Business Roundtable when making your reservation. The deadline to reserve your room at these discounted rates is May 4, 2013.

Come for the roundtable and consider staying for Nashville's annual CMA Music Festival!

Co-sponsored by Katz, Sapper & Miller’s Transportation Services Group, KSM Transport Advisors and Scopelitis, Garvin, Light, Hanson & Feary, the most recent Trucking Owners Business Roundtable held in Indianapolis on Feb. 6 featured Thom Albrecht managing director of BB&T Capital Markets, who provided his 2013 economic forecast for the trucking industry. And Katie Feary-Gardner of Scopelitis, Garvin, Light, Hanson & Feary provided an overview of the Patient Protection and Affordable Care Act.

Additionally, a panel of health insurance experts discussed implementation issues related to the Patient Protection and Affordable Care Act.

As part of an ongoing series, the roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses.

To view a video replay of the roundtable and/or download the presentation slides, please click here.

Mike Heaton, of KSM's Healthcare Resources Group, and his co-panelists discuss how a major influx of newly insured patients could affect access to a relatively fixed number of physicians at the Indianapolis Business Journal's recent Power Breakfast Series on Health Care & Benefits.

To view other videos from the event, visit the IBJ's website.

Recently Lisa Curry and Amber Moore, both of Katz, Sapper & Miller’s Healthcare Resources Group, presented a Healthcare Tax Update at the HCAA Spring Conference in New Orleans, LA. 

Highlights from their presentation include: 

• passive vs. active income as it relates to physicians’ ownership in ambulatory surgery centers and other ancillary joint ventures;
• retirement planning;
• changes affecting tax planning as a result of recent physician integrations with hospital systems; and
• tax planning opportunities for situations ranging from the need to make large capital purchases to the various tax effects of the sale of a C-corporation

 View Lisa and Amber’s complete presentation below.

For more information, contact Lisa or Amber at 317.580.2000.

As part of an ongoing series co-sponsored by Katz, Sapper & Miller's Transportation Services Group (KSM), KSM Transport Advisors and Scopelitis, Garvin, Light, Hanson & Feary, KSM recently hosted a Trucking Owners Business Roundtable.

The roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses.

In their presentation to attendees, Thom Albrecht, managing director, BB&T Capital Markets, and Mark Davis, partner and senior analyst, Cleveland Research Company discussed the 2012 economic forecast for the trucking industry. Time was also spent discussing the results of a recent benchmarking survey.

 View a video replay of all of the presentations here.

As part of an ongoing series co-sponsored by Katz, Sapper & Miller's Transportation Services Group (KSM), KSM Transport Advisors and Scopelitis, Garvin, Light, Hanson & Feary (Scopelitis), KSM recently hosted a Trucking Owners Business Roundtable.

The roundtable is an opportunity for owners of some of the country's top trucking companies to learn about and discuss current issues that present challenges and opportunities for their businesses.

In their presentation to attendees, Tim Wiseman, Jack Finklea, Todd Metzger and Greg Ostendorf of Scopelitis provided a Transportation Law Update; and Jason Miller, Mark Flinchum and Donna Niesen of KSM provided Accounting, Tax, and State and Local Tax Updates.

View a video replay of all of the presentations here.

Trucking Owners Business Roundtable - Jason Miller - September 2011 from Katz, Sapper & Miller, LLP on Vimeo.

Trucking Owners Business Roundtable - Mark Flinchum - September 2011 from Katz, Sapper & Miller, LLP on Vimeo.

Trucking Owners Business Roundtable - Donna Niesen - September 2011 from Katz, Sapper & Miller, LLP on Vimeo.

A number of states provide a variety of sales and use tax exemptions to Interstate Motor Carriers (IMCs). The types of exemptions vary from state to state, but generally apply to the acquisition of tangible personal property used by IMCs in transportation operations. Common exemptions include the purchase and lease of rolling stock (tractors and trailers), repair parts for exempt rolling stock, property that becomes part of rolling stock (GPS type devices), and fuel. 

IMCs may benefit by scheduling periodic reviews of purchase invoices to ensure these exemptions are being taken. To the extent that an IMC is not currently able to take advantage of such exemptions, there may be opportunities to adjust a company’s operations to maximize the use of these exemptions.

What Is an IMC? 

The definition of an IMC and who qualifies for transportation-related exemptions varies from state to state. Exemptions are generally afforded to companies operating in interstate commerce. States may determine eligibility based on an evaluation of time spent, or miles traveled, while operating in interstate commerce. In addition, a state may follow the interstate activity of the product hauled. A review of driver logs, mileage reports, and other relevant information pertaining to products moving in interstate commerce are common audit procedures. To the extent the requirements for an exemption are not met, sales tax exposure results. It is important to understand the eligibility requirements of the state(s) where sales tax exemptions are taken, in order to ensure compliance and preserve the exemptions. Modifying dispatching efforts may assist in achieving the best sales tax result.

To the extent that transportation-related sales tax exemptions are available to a company, the following are common action items that may maximize these benefits:

·          Implement a policy that all schedulable repairs are to be performed in a state that offers an exemption for repair parts and labor.

·          Modify operations to maximize potential benefits. If a company’s “home state" taxes the purchase of tractors/trailers, the business may want to consider a terminal/location in a state that offers an exemption for these purchases. This location could pay for itself and will most likely appreciate over time. For example, if a company typically purchases 10 tractors per year for $100,000 per vehicle at a sales tax rate of seven percent, then the annual savings on the purchase of the vehicles would be $70,000.

·          Educate and incentivize drivers to purchase fuel in states that offer an exemption on the purchase of fuel. For example, a company’s fleet is located in the state of Illinois next to a truck stop just a few miles from the Indiana border. While the company’s  drivers enjoy the convenience of being able to fuel at an Illinois truck stop, the same driver could fuel a few miles further away in Indiana and save significant tax dollars by purchasing the fuel exempt from sales tax. If one were to multiply this per tank savings by the number of times a fleet fuels per year, the tax savings could become significant in a short period of time.

In an environment where a business’ cost-cutting measures may dictate the company’s ability to survive, some businesses cannot afford to pay more taxes than the law requires. Company programs and processes to identify these savings, restructure operations and review purchases could result in potential refund opportunities.

This article was excerpted from Truck Times.

Shaun Tipton is a manager in KSM's Transportation Services Group. For more information, contact Shaun at 317.580.2152 or stipton@ksmcpa.com.

Propane used to power forklifts at truck terminals may be eligible for an enhanced $.50 per gallon tax credit. When President Barack Obama signed the Tax Relief, Unemployment Insurance Authorization, and Job Creation Act of 2010, the fuel tax credit, which was to expire at the end of 2009, was revitalized. The credit is extended through Dec. 31, 2011 and made retroactive to 2010. The credit could be extended beyond its current sunset date.

All taxpayers are allowed a credit of $.183 per gallon for the use of propane fuel to power forklifts. Taxpayers that file Form 637 and become a registered Alternative Fueler are granted the enhanced $.50 per gallon credit. An Alternative Fueler is defined by the Internal Revenue Service (IRS) as the person that is liable for the tax on alternative fuels. In providing further guidance, the IRS made clear that forklifts fit the definition of an off-highway business motor vehicle and the end user, namely the forklift operator, is entitled to apply for the fuel credit. 

The fuel tax credit is generally taken by filing Form 4136 with the taxpayer’s income tax return. The registration number applied for on Form 637 must be listed on Form 4136 or the enhanced credit may be denied. The credit is refundable, which means that even if the trucking company is in a taxable loss for the year, the IRS will issue a refund check providing for immediate benefit. Transportation companies have other opportunities to receive a credit with this form, including the off-highway use of fuel to refer units, auxiliary power units and other equipment that uses a separate motor.

This article was excerpted from Truck Times.

Troy Hogan is a manager in KSM's Transportation Services Group. For more information, contact Troy at 317.580.2193 or thogan@ksmcpa.com.

Yesterday Randy Biernat presented “Fair Market Value of Compensation – Appraisal Theory and Applications” in a webinar sponsored by the CPA Leadership Institute and National CPA Health Care Advisors Association. Randy’s presentation addressed both the regulatory aspect of compensation valuation and the actual preparation of fair market value analyses for a variety of common arrangements.

Highlights of his presentation included:

·          Healthcare Market Overview

·          Overview of Common Hospital-Physician Arrangements

·          Appraisal Process Overview

·          Regulatory Environment

·          Common Methodologies

·          Case Studies

The webinar was attended by valuation and healthcare professionals looking to expand their knowledge regarding current valuation theory and application in compensation issues; and hospital financial managers involved in transactional matters.

To view a portion of the webinar, click the video below. You may also visit the program website to purchase the full recording.

KSM Webinar Preview from Katz, Sapper & Miller, LLP on Vimeo.

For more information, contact Randy Biernat, a director in Katz, Sapper & Miller’s Healthcare Resources Group. 

In the past year, the Financial Accounting Standards Board (FASB) has issued a number of exposure drafts aimed at converging U.S. Generally Accepted Accounting Principles (GAAP) with the International Accounting Standards Board (IASB). Below are a few of the exposure drafts that could impact trucking company financial statements.

Leases

As discussed in the last issue of Truck Times, the FASB issued an exposure draft on lease accounting in August 2010. The objective of the project is to not only create common lease accounting requirements to ensure leases are recognized on the balance sheet, but also provide users of financial statements with useful and complete information about leasing transactions. 

In summary, some of the key items in the exposure draft that would likely affect many trucking companies include:

·          Substantially all long-term (greater than 12 months) equipment leases would be recorded as capital leases. 

·          Accounting for independent contractor agreements could be impacted (depending on the terms of the agreements). If the trucking company is deemed to have exclusive rights to the use of the independent contractor’s equipment and the right to control that equipment, then the agreement may contain a lease. 

·          Existing operating leases at the date of implementation would not be excluded (i.e., no grandfather clause). 

The FASB is expected to issue the final accounting standards update by the end of 2011, with implementation likely expected in 2013. 

Revenue Recognition

In June 2010, the FASB issued an exposure draft on revenue recognition. The exposure draft would replace the FASB’s current revenue recognition rules (Topic 605 of the Accounting Standards Codification), which were derived from a number of sources, and include specific guidance developed over time to address the peculiarities of different industries and transactions. The FASB intends to have a single revenue recognition model that can be applied to all contracts with customers over all industries.

The definition of contract in the exposure draft is broad but includes purchase orders, verbal agreements and signed agreements. Companies would be required to identify, and account for separately, all “performance obligations” in each contract. Revenues would be recognized upon satisfaction of each performance obligation, as evidenced by the  customer obtaining control, or having the ability to use or receive benefit from the related goods or services in each performance obligation.

The exposure draft will likely not have a significant impact on most trucking companies. Currently, revenue from the transportation of freight is generally recognized upon the delivery of that freight to the customer. The exposure draft likely would require no change to the current revenue recognition policies for freight delivery services. 

The greatest impact for trucking companies will likely be when the trucking company also provides warehousing, cross-docking and other value-added services. As currently proposed, the exposure draft would require the company to identify, and account for separately, all performance obligations associated with the value-added service.

Due to the amount of feedback received, the FASB is expected to re-expose the exposure draft in the third quarter of 2011 for a comment period of 120 days.

Goodwill

In April 2011, the FASB issued an exposure draft on testing goodwill for impairment. The objective of this proposed update is to simplify how an entity is required to test goodwill for impairment. Currently (Topic 350 of the Accounting Standards Codification), an entity is required to test goodwill for impairment on at least an annual basis, using a two-step approach, by comparing the fair value of a reporting unit with its carrying amount, including goodwill (step one). If the fair value of a reporting unit is less than its carrying amount, then the test must be performed to measure the amount of the impairment loss (step two), if any.

The proposed amendments would permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. An entity would not be required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount.

The exposure draft comment period ended on June 6, 2011. If approved, the proposed amendments would be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after Dec. 15, 2011. Early adoption would be permitted.

This article was excerpted from Truck Times.

Jason Miller is a director in KSM’s Transportation Services Group. For more information, contact Jason at 317.580.2045 or jmiller@ksmcpa.com.

A fuel surcharge is a fee that can be added to the freight charges that allows a carrier to be reimbursed for incremental or excessive fuel costs. While most companies understand the mechanics of a fuel surcharge (FSC) and the need for incremental fuel expense recovery, few carriers quantitatively measure the effectiveness of their FSC programs. This article is about how to measure FSC recovery effectiveness.

History and Purpose of Fuel Surcharge

FSC first appeared in response to the 1973 oil crisis with the goal of reimbursing carriers for the unusual spikes in oil prices. On Feb. 7, 1974, the Interstate Commerce Commission (ICC) promulgated Special Permission No. 74-2525, denominated "Emergency Fuel Surcharge for Line Haul Transportation Charges and Other Charges Motor Common Carriers." Paragraph one of that order authorized carriers to increase their freight rates by surcharge, up to six percent (at the time). Fuel surcharges became a permanent part of carrier pricing again in the mid-90s when prices reached a high around $1.15 per gallon; $1.10 to $1.20 became the baseline price for most carriers in establishing their fuel surcharge programs at the time and remains basically unchanged today.

In general, little has changed in the surcharge calculation mechanics. Each Monday, the Department of Energy (DOE) collects data from a representative group of approximately 350 retail diesel outlets then issues the national average diesel price for that week. Most carriers use the national average or components of it to calculate their fuel surcharge. The surcharges are still generally calculated using one or two popular methods (i.e., cent per mile and/or percent of line haul rates). Despite alternative approaches, such as the Fuel Surcharge Index and computation aids like the phone app, PocketFuelCal, the basic formula used by the most carriers is: FSC per mile = ((DOE self-serve diesel fuel price average) - (carrier’s baseline price)) / (miles per gallon (MPG)).  

The effectiveness of the surcharge to meet its intended objectives varies widely from carrier-to-carrier primarily due to calculation nuances and the inaccuracies inherent in using weekly averages. Many carriers have known for a number of years that this effectiveness can and must be managed. There are several ways to approach the analysis of fuel expense recovery. One approach is to evaluate total fuel expense compared to total revenue, specifically and theoretically related to fuel. Focusing on the effectiveness of the surcharge, however, requires a comparison of the incremental fuel surcharge revenue with incremental fuel expense. A primary management metric developed to monitor the FSC effectiveness is the FSC Recovery Percentage, or simply the Recovery %.

The Recovery % may be calculated several different ways, but the objective is to compare the incremental shipper revenue associated with fuel to the carrier’s incremental fuel cost. One formula used to calculate the Recovery % is as follows: Recovery % = Incremental fuel expense / incremental fuel related revenue

Where:

·          Incremental fuel expense = ((DOE self-serve diesel fuel price average) - (carrier’s baseline price)) multiplied by gallons purchased and consumed during the period

·          Incremental fuel revenue = fuel surcharge revenue + base rate revenue related to abnormally high fuel prices

Like the basic fuel surcharge, the recovery formula is simple, but the “devil is in the details.” Typically, the carrier baseline price is the starting point for its fuel surcharge table of $1.10 to $1.20. As a practical matter, however, most carriers will have a number of shipper required surcharge programs with different starting points. It is also difficult to match or determine the exact number of gallons purchased and used to generate the fuel surcharge revenue in a period. Which DOE price to use also presents choices. Further complicating the computation is the assertion that some base freight rates include an incremental fuel component.

Despite the analytical imperfections, a consistently applied methodology will provide a meaningful tool to focus management’s attention on the components affecting any differential. Focus can lead to accountability, which provides the incentive to improve results. With typical recovery percentages of 65 percent to 75 percent, it is not surprising that carriers fully engaged in managing the effectiveness of their recovery programs have developed responsive  solutions, including improving their fleet MPG while using static numbers in the surcharge computations, applying the surcharge to all miles (not  just loaded), updating the FSC amounts daily instead of monthly or weekly, managing out-of-route miles, and finding ways to increase the differential between the DOE and company average fuel price.

To quote the old adage, “What gets measured gets done,” start measuring Recovery % and join the large number of carriers who understand the benefits of making this a key business management metric.

This article was excerpted from Truck Times.

Bruce Jones is president of KSM Transport Advisors, LLC, the trucking industry's leading M&A, profit improvement and capital funding resource. For more information, contact Bruce at 317.580.2324 or bjones@ksmta.com.

Positive Attitude + Positive Actions = Positive Financial Results

This is a new concept in team building. It ensures that teams become profit teams that strive toward profit goals, not self-serving goals. In addition, this type of environment improves communication and positive attitudes to improve the bottom line.

For years, a paradigm in the business world was to create positive attitudes. Books on this concept hit the best-seller list in the 1950s. The concept became another business fad because Ivy Leaguers preached it as the new wave of “enlightened” management. The purpose of a positive attitude was to avoid conflict and facilitate cooperative action. It became acknowledged that hammering staff members was not an effective way to manage.

Since that time, positive attitude evolved to: Do not object – ever. Objecting does not mean that someone is negative; it means there could be a better alternative. Team players are thought of as those who are proactive in promoting positive attitudes. This can be destructive to trucking companies in the long run because it develops teams of “yes people” concerned about not rocking the boat, even though it may be in the best interest of the company.

Have any of the following issues ever been observed: waste, inefficiencies, poor business decisions, inadequate staff, ineffective corporate policies, unnecessary procedures and other profit-wasting ideas? Often employees feel compelled to close their eyes to these issues to be considered team players with positive attitudes. It is foolish to waste precious company profits, but this is often the outcome. Too often people are promoted because they are team players, but they are unwilling to step up to the plate and dare to make the suggestion that certain ideas may not be in the best interest of the company.

This article was excerpted from Truck Times. For the full article, click here. To read the full text of the newsletter, click here.

Tim Almack is partner-in-charge of KSM’s Transportation Services Group. For more information, contact Tim at 317.580.2068 or talmack@ksmcpa.com.

In today's increasingly complex trucking environment it is more important than ever to ensure management teams have sharp problem-solving skills. If an evaluation of these skills has not been done recently, now may be the time.

• Today’s complexity is only expected to rise, and more than half of the CEOs doubt their ability to manage it.
• Creativity is the most important leadership quality, according to the CEOs.
• The most successful organizations co-create products and services with customers and integrate customers into core processes. Customer intimacy is their No. 1 priority.
• Better performers manage complexity on behalf of their organizations, customers and partners. They do so by simplifying operations and products, and increasing dexterity to change the way they work, access resources and enter markets.

One CEO in the survey stated that “Creativity means new ways of solving tough problems. Many challenges require innovative thinking.” Another stated, “The management environment is rapidly becoming more complex. In these uncertain times, the need for effective and swift decision making is more important than ever.”

Recently, Harvard Law School realized they do an incredibly good job of training the best analytical minds in the world, but reading and interpreting the law is not what the typical lawyer faces each day in law practice. They decided that a Problem-Solving Workshop was needed to equip lawyers with another important skill set that would include creative thinking and teamwork. They launched this unique workshop the winter term of this past year.  

With problem-solving skills being so critical in this increasingly complex world (i.e. CSA 2010, hours of service, etc.), how do trucking companies begin to train and evaluate their management team on these skills?

This article was excerpted from Truck Times. For the full article, click here. To read the full text of the newsletter, click here.

Tim Almack is the partner-in-charge of KSM’s Transportation Services Group. For more information, contact Tim at 317.580.2068 or talmack@ksmcpa.com.

The face of healthcare is changing. "Accountable Care Organization" is becoming a common term in the industry. What exactly is an accountable care organization? On March 23, 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act, which empowers the Secretary of Health and Human Services to create a shared savings program to promote accountability of patient care through Accountable Care Organizations (ACO). As defined by the Centers for Medicare and Medicaid Services (CMS), an ACO is an "organization of healthcare providers that agrees to be accountable for quality, cost and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.” Ultimately, Medicare is trying to create an incentive program to reduce its costs while increasing the quality of care provided to patients.

The regulations regarding ACOs are still in proposed form and 427 pages in length. At a very high level, these proposed regulations provide the following requirements of ACOs:

·          Provide care for at least 5,000 Medicare beneficiaries (based on their primary care physician)

·          Participate in the program for three years, beginning Jan. 1, 2012

·          Self-report 65 quality measures to the CMS

·          Meet various anti-trust regulations

Under the proposed rule, Medicare would continue to pay healthcare providers for specific services under the Medicare payment systems. The ACO would then receive a share of the cost savings based on their Medicare patient population spending compared to benchmarks determined by CMS. The concept is that by better coordinating patient care between the primary care physicians and the specialists, there will be more information sharing and quality of service will increase, thus reducing costs.

The proposed regulations require ACOs to notify their patients about their participation in an ACO. If they choose, the patients will have the ability to opt out of sharing their protected health information with the other ACO healthcare providers. Therefore, do not be surprised if you receive information in the mail or notice signs in your doctor's offices announcing their participation in an ACO.

Although ACOs, as defined in the Patient Protection and Affordable Care Act, only affect Medicare patients, it will have an effect on the entire healthcare system. Currently, many physician groups and hospitals are weighing the pros and cons of forming an ACO. CMS estimates there will be 75 to 150 ACOs formed by Jan. 1, 2012. Even with this relatively small number, a huge change in patient care is expected as a result of this Act.

Ellen Ferringer is a director in Katz, Sapper & Miller’s Healthcare Resources Group. For more information, contact Ellen at 317.580.2013 or eferringer@ksmcpa.com.

To address the lack of fee transparency in the defined contribution market – 401(k), profit sharing and 403(b) plans – the Department of Labor (DOL) has taken the position that the plan sponsor, as a plan fiduciary, must understand how much is being paid for each service performed, that the services are appropriate, and that the amounts are reasonable.

This article was exerpted from The Advisor. For the full article, click here. To read the full text of the newsletter, click here.

In a recent webinar presented by Business Valuations Resources (BVR) titled “Valuing Management Services Contracts between Physicians and Hospitals” Randy Biernat, a director in Katz, Sapper & Miller’s Healthcare Resources Group, shared with listeners the checklist he uses when starting these types of valuation engagements: 

1.     Determine FMV requirements

2.     Document jurisdictional exceptions to FMV

3.     Identify parties to agreement

4.     Document purpose of arrangement

5.     Identify method of compensation

6.     Consider and select valuation methodology

7.     Evaluate transaction from management services company perspective

8.     Evaluate transaction from hospital perspective

9.     Reconcile FMV findings

10. Provide conclusion of FMV range of compensation

Biernat documents the first five points in the engagement letter and processes points 6 -10 after receiving the information from the client. “The availability of information may limit the appraiser’s ability to complete each of the above steps,” he warns. “If we can’t assess some of these points we will work with counsel to identify those issues and come up with a reasonable course of action to account for information we can’t get access to.”  Biernat recognizes that appraisers frequently get bad data from hospitals and/or physicians.

The webinar training pack, filled with Biernat’s expertise on valuing physician management services contracts is available through BVR. To read this article and the full current issue of BVR's newsletter, click here.

For more information, please contact Randy Biernat.

Even though lease arrangements (aka, professional services agreements, or PSAs) for some specialists make financial sense for the individual MDs, an important challenge is figuring out how to integrate these arrangements in a multi-specialty setting. The issue is that the overhead a specialty pod absorbs typically is not compensated for by the hospital partner in a lease/PSA. The reason for this is that the hospital has certain obligations that frequently require it to take over some administrative and supervision functions.

One option that can help is to have the payments roll directly into the physician entity as opposed to directly to the individual physicians. This can help create a situation where it is easier for the practice to hold back a piece of the payment for overhead and the direct support it continues to provide. It can also help to try to expand the PSA to include other services flowing from the practice to the hospital. These items can include billing, scheduling and registration and other administrative items. This can help absorb the excess capacity that can occur as a result of the PSA and/or create a revenue stream to make the arrangement more palatable to the overall organization.

As always, the payments made in both directions must represent fair market compensation.

For more information, please contact Randy Biernat, a director in Katz, Sapper & Miller’s Healthcare Resources Group.