Locating incentives: Thinking of your practice as a small business

Physician practices may be able to tap into local and state tax breaks and other enticements available to larger businesses. It doesn't hurt to ask.

By Bob Cook, AMNews staff. Jan. 29, 2007.

Matthew Johnson, MD, and major manufacturers have something in common. When they looked for a new place to locate, they asked local governments if they could offer any sort of incentive or tax break in exchange for setting up shop in their city. And they both received an answer of yes.

It might seem strange, and rather brassy, to hear of a solo family physician asking a municipality for financial breaks. It's not as if Dr. Johnson were opening a plant with 500 employees. But there are state and local tax breaks physician practices could get and don't because they don't know they're eligible, and they haven't asked how they can.

Even if they aren't relocating, physician practices could be eligible for property tax breaks based on their location, or tax relief based on the equipment they buy, or the employees they hire, or even the light bulbs they install. But the breaks can go beyond what might be written into state law or local ordinance. Physicians might find local officials willing to come up with something special to make sure the doctors come in or stay put.

"It's just their very presence," said Martin Moll, director of the health care division at the Portland, Ore., accounting firm of Aldrich Kilbride & Tatone. He has assisted doctors in negotiating with local economic leaders to get financial incentives. "They're acting as a catalyst for economic development by having people on the payroll, by renting a building," he said. "It's amazing what a vibrant physician practice can do to a community."