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Author: pdomas

2017 Tax Reform and Its Effects on Healthcare

Over the past decade, the Healthcare Industry has been accustom to being center stage in political debates, but while medical providers and facilities did not have a prominent role in the latest political drama, the far reaching effects of the Tax Cuts and Jobs Act of 2017 (the “Act”), will impact almost everyone delivering healthcare goods and services. In addition to the reduction of personal tax rates, the following provisions will likely be most applicable to Healthcare providers: Reduced Business Tax Rates The tax rate for businesses taxed as corporations was reduced from 35% to 21%, and entities taxed as a partnership, S corporation, or sole proprietorship may now be entitled to a Pass-Through Entities Deduction of 20% of domestic “qualified business income.” The Pass-Through Entity Deduction, however, is complicated and has significant limitations. For example, select services entities, such as physician practices, have low upper limits for the availability of the deduction ($415,000 for married taxpayers and $207,500 for single taxpayers). As a result, this deduction may benefit only a limited number of healthcare providers. Action Steps There has been significant speculation as to whether there will be (or should be) a rush for S-Corps to revoke their designation, or for LLCs (PLC’s) to elect a C-Corp tax status to take advantage of the reduced corporate tax rate. While some for businesses (such as capital intensive high growth...

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Blessings in Disguise: Hidden Opportunities in Health Care Bankruptcies

In 2016 alone, 21 hospitals were closed across the United States because of unsustainable financial performance1, and the trend has continued with 7 additional hospitals and 18 other hospital departments closing in just the first half of 20172. Financial challenges facing many entities in the health care industry are not limited to hospitals, or even a particular geographic region. From surgery centers to family practice groups, behavioral health providers to nursing homes, rural, urban, for-profit and non-profit alike, numerous health care organizations are struggling to survive as the health care industry undergoes a metamorphic shift in economics and operations. The financial struggles of these health care organizations have continued despite a long history of industry growth far in excess of the broader rate of national economic growth. For example in 2016, spending on health care increased 6.2 percent3, while the rate of growth across all industries increased by only 1.5 percent4. While the myriad of changes to the health care industry over the past 10 years, in the form of a regulatory, financial reimbursement, technology, and patient demographics, have no doubt contributed to the challenges facing the health care industry, they do not in and of themselves, explain why, in an industry that is still growing four times faster than the rest of the economy, so many health care organizations are facing such daunting financial distress. The answer most...

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The Health Law Blog is published by Dickinson Wright PLLC to inform the public of important developments within the firm and practice areas. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered in this blog.