BUSINESS: How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them.

By Karen Caffarini — Posted Aug. 5, 2013

irsConstructing a new medical facility or hiring new employees might seem like a daunting and expensive undertaking for many physicians. But those tasks could become a little more feasible if they take advantage of the many federal, state and local incentives available to help developers, including physicians, substantially reduce taxes and slash their building, equipment and hiring costs.

In some cases, getting financial help can be as easy as filling out a form and building in the right location. Obtaining other financial incentives, such as tax abatements from local communities, can be complicated and time-consuming, often requiring a lawyer or other adviser to help wade through the political and bureaucratic waters.

The trick is to know where to look, whom to talk to and when to act. Some programs have specific deadlines. Others have limited funding.

“Incentives are only granted as long as there’s money for them,” said Carol Kokinis-Graves, a senior state tax analyst in the Chicago area. “You don’t want to go through the process only to discover the money’s gone.”

There was a time when few doctors thought to ask for incentives, and not many incentives were offered as municipalities looked primarily to lure manufacturing and high-tech companies.

Some local and state medical associations hoped to change that and conducted studies showing the economic impact private medical practices have on an area. A 2008 study by the Medical Assn. of Georgia, delivered to the state Legislature, found that practices accounted for more than 180,000 jobs, $10 billion in wages and nearly $20 billion in economic activity in the state that year. In addition, each private-practice physician in Georgia supported 13 additional jobs, $640,000 in wages for those jobs and almost $1.5 million in total economic activity.

“As we put this study forth to legislators, we said, ‘Yes, doctors make communities healthy,’ ” said Donald Palmisano Jr., CEO of the medical association. “But in some rural areas, they’re also the largest employer.”

The study was used mostly as a tool to bring about reform at the state legislative level. But thanks in part to such studies, governments are recognizing physicians’ economic benefits.

The right place to work

In some instances, medical practices can get state and federal incentives just by locating in certain areas and hiring certain people. Financing options vary from state to state, and some states are more receptive than others. Check your state’s economic development department website for a list of available incentives, forms to fill out, and phone numbers and contacts to call to get them.

The first place to go if you’re thinking about building in Illinois is the state’s Dept. of Commerce and Economic Opportunity, said Mark Huddle, a Chicago attorney specializing in municipal and state government matters. (There are equivalent government agencies in other states.)

“It has a whole staff that can put together an economic package for you,” he said. “How many jobs are at stake? The more at stake, the more incentives the state will provide.”



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