Podiatrists make excellent R&D candidates.
If you make changes to care based on patient examinations, modify your care process (upgrading technology and/or materials), and evaluate case outcomes in an effort to improve,
then you are in the process of research and development.
Odds are, the answer is a definite and often expensive yes. The next question is, why? The answer:
you thought it would be best for your patients, and/or
you thought it would make your practice run smoother, and/or
you thought it would boost the profitability of your practice.
We certainly hope your new technology checked all the boxes. Did you know it probably checked another one as well? That's the R&D Tax Credit box. When you purchased these pieces of equipment, you were already knee-deep in a process of research and development.
Yes. You likely learned about an improved technique or process that could be achieved by introducing a novel piece of equipment into your armamentarium. You reviewed the process by attending CE, doing some online research, contacting manufacturers, discussing the pros and cons with learned colleagues, and evaluating the benefits of the different and competing products.
From there, you evaluated the expense and whether the benefit justified additional overhead. You also considered training and available in-office time to provide the service attached to the piece of equipment - we call that workflow evaluation and design.
All of these steps, whether formal or informal, once identified and reported correctly, generally satisfy the research requirement of Tax Code Section 41, often called the Research and Development Tax Credit. Now on to the next step.
make excellent R&D tax credit candidates
The tax credit is a factor of attributable staff W2 wages and supplies used up "in the carrying out" of the identified project.
The more focused your innovative procedures, the easier it is to identify treatment protocols that allow for adequate recognition of your development efforts. Here's a case example:
One of our podiatrists is devoted to wound management and care. Almost 50% of his time and staff time is spent in the process of wound care. This doctor spoke about the differential he initially created to identify wound severity. It was a product of experience and research. Recently, he had changed a few steps in the wound care process, including PCR bacterial identification, adding lasers, ultrasound, and ozone treatment.
In the process of research and delivery, he had developed his own differential for the appropriate process of delivery. He would evaluate the outcomes. Those outcomes helped to continually form and improve his differential and protocol. He modified his care protocols as he discovered techniques that improved outcomes. He also found that pre- and post-operative education and follow up was essential .
We helped him identify protocols pre-operatively, intra-operatively, and post-operatively which contributed to the improved outcomes. His R&D process was titled "Clinical Practice Guideline Development of an Improved Wound Care Technique to Improve Post-Operative Outcomes". It was accompanied by a 40-page+ supporting document (created by Dr. Tax Credit) to validate his processes.
And the benefit? We were able to identify all the staff time and supplies that accompanied the development of this process. The doctor recognized a Federal R&D tax credit of over $40,000.
Yes, with a little assistance, you are in the process of satisfying the development requirement as well. Tax Code IRC Section 41 describes this four-part test for development. Take a look at how it works:
The goal: integrate this new (or improved) care component to positively impact the quality of care. This step is called the permitted purpose step. Permitted purposes include enhancing function, reliability, performance, or quality. Translated into healthcare language: The component should be undertaken in an effort to improve patient outcomes.
Science is integral: Part two in the four-part test is the easiest to satisfy. It merely states that the component has to be based in the hard sciences, specifically computer, biological, medical, and/or engineering.
Nothing is 100%: you started your project recognizing that there was a chance it could fail – especially when considering staff training, additional costs, patient acceptance, etc. Part three demands that your activity must be intended to reduce uncertainty. You can do this by addressing the method of implementation or the appropriateness of the final design.
You probably didn’t get it quite right on the first go. You'll go through a process of refinement as you deliver your improved process. You'll find some things just weren't explained well or your patient outcome experiences indicate that a different delivery protocol is better. This process is called experimentation. The final step in the four-part test requires that you complete a process of experimentation. Specifically, simulation; evaluation of alternatives; confirmation of hypotheses through trial and error; testing and/or modeling; or refining or discarding of hypotheses.
Look around on the website a little and you'll discover that there is tax credit value in this process. Our team takes a unique approach that provides a few other benefits to our doctors as well. Visit our contact page to set up a short consultation.