Since 2020, a large share of practicing physicians in Idaho and Utah have added a telehealth line to their calendar. Patients in the next state over now show up on the schedule alongside patients across town. From a clinical and licensure standpoint, most physicians already know they need a license in the patient’s state to see them.

The tax question is separate, and it is one most practice owners have not worked through. State medical licensure and state income tax filing answer two different questions, and a physician can be perfectly legal on the clinical side and still owe an unfiled return in a neighboring state. Here is how the tax side works when patients cross state lines.

How States Source Physician Income

Every state that has an income tax has its own rule for where a service is “sourced.” For a physician, the two live options are provider location (where the doctor sat when the encounter happened) and patient location (where the care was received). Most states default to provider location, which is why in-person medicine has always been simple: the visit happens in your office, and the income belongs to that state.

Telehealth pulls the two apart. A physician sitting in Idaho Falls treating a patient in Wyoming raises the question again. Some states have adopted patient-location sourcing for telehealth explicitly. Others still lean on provider location. A few have not answered the question at all and rely on the general “market-based” sourcing rule that applies to services generally. Because the rules are not uniform, a telehealth practice that treats patients in five states can end up with five different sourcing outcomes for the same encounter type.

Idaho, Utah, and Neighboring States: What to Watch

Idaho generally sources service income to where the service is performed, meaning provider location for most encounters. Utah has moved toward market-based sourcing for many services, which raises questions for a Utah-based physician seeing patients in Idaho, Wyoming, Nevada, or Colorado. Wyoming has no state income tax, which simplifies one direction. Montana, Oregon, and California all have their own rules and are worth checking before adding a patient panel in any of them.

These rules change. Before you add a new state to your telehealth panel, confirm the current sourcing rule with that state’s Department of Revenue guidance, not last year’s summary.

Nexus for the Practice Entity, Not Just the Individual

A physician earning income in another state is one issue. The practice entity itself, whether a PC, PLLC, or S corporation, is a separate taxpayer with its own nexus question. Once a practice entity has enough activity in a state to trigger nexus (economic nexus thresholds are common, and physical presence is not required), the entity may need to register to do business, file a state return, and in some cases collect a state franchise or gross receipts tax.

The entity-level filing is often overlooked because the physician-owner’s personal return is the one they see every April. A practice can accumulate an entity-level filing obligation in three or four states without the physician ever noticing.

Resident and Nonresident Credit Math

The physician does not pay double tax on the same income. If Idaho and Utah both claim the right to tax a piece of income, the physician’s resident state generally allows a credit for income tax paid to the nonresident state, capped at the resident-state rate on that same income. The math is not always in the physician’s favor. If the nonresident state has a higher rate, the credit only covers the resident-state portion, and the incremental cost belongs to the nonresident state.

The mechanics work only if returns get filed in the correct states in the correct order. Missing a nonresident filing does not just mean owing that state; it also means the resident credit for that tax is unavailable.

When to File a New State Return

Three signals should prompt a serious look at a new state filing:

• Repeat telehealth encounters with patients in that state throughout the year
• Any in-person presence in the state, even occasional consulting or continuing education
• The practice entity billing an insurance carrier in that state

Any one of these can be enough to trigger a filing obligation. All three together almost certainly do.

Telehealth is a real growth path for rural Idaho and Utah practices, and the tax rules should not be a reason to avoid it. They are a reason to look at the states you actually see patients in and get the filings right the first time. Cooper Norman’s healthcare accounting team works with physicians across Idaho and Utah on multi-state sourcing questions, and our tax planning team can run the resident-credit math before you add a new state to the panel. This overview is general information, not tax advice for your specific practice. Talk with a Cooper Norman advisor about how these rules apply to yours.

Occupational fraud rarely announces itself. When a medical practice loses money to internal fraud, the losses accumulate quietly, often for years, before an inconsistency shows up during a staff transition, an audit, or a tax notice. The average practice loss when fraud is finally discovered is materially higher than most owners expect, and the delayed discovery is what makes it so.

Three patterns account for most of the fraud that hits small and mid-sized medical practices: cash-pay and refund manipulation, payroll and ghost-employee schemes, and vendor kickbacks or inflated purchase orders. This piece walks through how each one works, the red flags a physician-owner in Idaho or Utah should learn to spot, and the five internal controls that prevent most of it.

Cash-Pay and Refund Schemes

Cash-pay medicine (fees collected at time of service outside insurance billing) is a real target for asset misappropriation. Staff who handle cash have access to it, and if the practice’s controls do not require reconciliation between service, invoice, and deposit, cash can leave without a trace.

The common patterns:

• Skimming: a portion of a cash payment is pocketed and the encounter is either not recorded or recorded at a lower amount
• Refund manipulation: a refund is issued to a patient who did not request one, and the “refund” is intercepted by the staff member
• Voided transaction schemes: an encounter is entered, the cash collected, then the transaction is voided in the system with no matching cash return

Practices with a growing cosmetic, aesthetic, or membership-medicine cash line face the highest exposure. A cash-line practice with weak controls is one of the easier fraud targets in health care.

Payroll and Ghost-Employee Schemes

Payroll fraud typically works through three variations:

Ghost employees. A fictitious employee is added to the payroll and the paychecks are diverted to an account the perpetrator controls. Works most easily when the person running payroll also has access to add new employees to the system.

Rate or hours manipulation. A real employee’s hours are inflated by the person entering them, or a rate change is entered without proper authorization. Small overpayments compound over months and years.

Unauthorized bonus or reimbursement claims. Expense reimbursements or bonus payments are processed for the perpetrator or a co-conspirator, disguised as ordinary payroll.

The single control that stops most of this is separation of duties: the person who enters payroll should not be the same person who approves the payroll register or reconciles the bank statement.

Vendor Kickbacks and Inflated Purchase Orders

Vendor-side fraud usually involves a staff member with purchasing authority and a vendor willing to participate:

• Kickback arrangements: a vendor pays a portion of each invoice back to the buyer, in cash or gifts
• Shell vendors: a fake vendor is created that bills the practice for services never delivered
• Overbilling: a legitimate vendor bills more than the agreed rate and the buyer approves the inflated invoice
• Inflated purchase orders: quantities or specifications are inflated, and the excess is diverted or resold

Medical supply vendors are the most common vector because most practices have several of them, monthly invoices are common, and no single physician-owner is reviewing every line item.

Red Flags Every Owner Should Watch For

Five patterns show up in most fraud cases well before discovery:

• An employee who refuses to take vacation or refuses cross-training on their tasks
• Vendor payments that consistently round to convenient numbers or come slightly under approval thresholds
• Unusual write-offs, adjustments, or refunds concentrated with one staff member
• Bank reconciliations that consistently require corrections in the same categories
• A rising A/R aging on cash-pay balances while insurance A/R stays clean

Any one of these deserves a conversation. Two or three together deserve a look.

The Five Controls That Prevent Most of It

Internal controls do not need to be elaborate. Five controls, consistently applied, stop the majority of medical-practice fraud:

Separation of duties. No single staff member should have access to cash, the ability to enter or void transactions, and the ability to reconcile the bank statement. Any two of the three is manageable; all three is a control failure.

Daily reconciliation. Cash collected each day should reconcile to encounters recorded that day, before the deposit hits the bank. Reconciling only monthly gives fraud room to hide.

Mandatory vacation coverage. Any staff member handling money should be required to take at least one continuous week off each year, with their duties fully covered by someone else. Most embezzlement schemes require constant attention and cannot survive a week of another person’s eyes on the same records.

Vendor list review. Quarterly review of the active vendor list, with an eye for vendors the owner does not recognize or has not authorized. A fraud vendor rarely survives this review if it happens routinely.

Owner review of monthly bank statements. Not a summary from the bookkeeper. The actual bank statement, checked against the general ledger, with unusual items questioned.

Cooper Norman’s healthcare accounting team reviews internal controls and runs fraud risk assessments for medical practices across Idaho and Utah. To review your current controls before you need to, talk with a Cooper Norman advisor.

Overhead ratio is one of the most common metrics used to size up a medical practice and one of the most casually misapplied. A 55% overhead ratio can be excellent in one specialty and alarming in another. A single practice can even calculate two different overhead numbers depending on which formula it uses, and both can be technically correct.

For a physician-owner in Idaho or Utah trying to make sense of where the practice stands, understanding how overhead is really calculated, which specialties structurally run higher or lower, and when a “normal” ratio is still hiding a problem, matters more than chasing a single benchmark number. This piece walks through the calculation, the ranges across specialties, why some specialties run higher, when a normal ratio can still be a problem, and the levers that move overhead fastest.

How to Calculate Overhead the Right Way

The most common overhead formula is total operating expenses (excluding physician compensation) divided by net collections. This is the number most benchmarking data sets use, and it is the one worth comparing to peers.

A second common formula includes physician non-clinical compensation in the numerator (partner draws, admin time, management stipends). This produces a higher ratio and is sometimes what internal management wants to see.

A third formula uses gross charges rather than net collections in the denominator. This produces a lower ratio that is not comparable to anything real, because gross charges are not collectible dollars. Avoid it.

Whichever formula the practice uses, use the same one consistently, and know which one the benchmark data uses when you compare.

Overhead Ranges Across Specialties (High Level)

Overhead ratios differ meaningfully by specialty. Rather than repeat specific figures from paid data sources, the directional picture is:

• Surgical specialties (orthopedic, ophthalmology, ENT) tend to run lower overhead ratios because per-encounter revenue is high
• Procedural specialties (cardiology, gastroenterology, dermatology) tend to run in the middle
• Primary care, pediatrics, and family medicine tend to run higher overhead ratios because per-encounter revenue is lower and staff-intensive workflows are still required
• Dentistry runs a specific pattern of its own driven by supplies, lab, and equipment intensity

Within each band, individual practices vary widely. The band is a starting point.

The Structural Reasons Some Specialties Run Higher

Three structural factors drive most of the between-specialty differences:

Revenue per encounter. A specialty producing $350 per visit has a much easier time hitting a low overhead ratio than one producing $110 per visit, even if the two spend identically on staff and space.

Staff intensity. Procedures and surgeries can be run with a lower staff-to-provider ratio than primary care, which relies heavily on nursing and front-desk staff for high visit volume.

Supplies and equipment. Injection-heavy or equipment-heavy specialties carry a higher supplies-and-consumables load than office-only specialties.

These factors are not fully within a practice’s control. Reading overhead against a specialty-appropriate benchmark, not a universal one, is the first step to reading it usefully.

When a “Normal” Ratio Is Still a Problem

A practice at the median for its specialty can still have a real problem. Two situations to watch:

The trend is bad. A practice at 58% overhead for its specialty (perfectly normal) that was at 52% three years ago is drifting in the wrong direction. The absolute number is fine; the change is not.

The mix inside overhead is wrong. Two practices at 58% overhead can be spending very differently. One might be at 32% payroll and 26% everything else. The other at 40% payroll and 18% everything else. The staffing-heavy practice has less flexibility to absorb revenue shocks. Reading the composition, not just the headline, is where real insight lives.

Levers That Move Overhead the Fastest

Practices looking to bring overhead down have three main levers, in rough order of impact:

• Revenue lift. Because overhead is a ratio, growing net collections without proportionally growing cost is the fastest lever. Better payer mix, higher clean-claim rate, and improved denial management all lift the denominator
• Staffing efficiency. Not headcount cuts but role optimization: cross-training, workflow redesign, and reducing time spent on tasks that could be automated or eliminated
• Vendor and occupancy reviews. Not usually the biggest lever, but the easiest to execute. A payment processor review, a supplies vendor renegotiation, or an occupancy right-sizing can move a percentage point or two

Cutting staff to hit a number rarely produces sustainable overhead improvement. The revenue side of the ratio is usually where the more durable answer lives.

Cooper Norman’s healthcare accounting team works with practices across Idaho and Utah on overhead ratio analysis and the specific levers that would move theirs. To review your own overhead composition and trend, talk with a Cooper Norman advisor.

Two medical practices in the same specialty, in the same town, with the same visit volume can post very different net incomes. The single largest reason is almost always payer mix. A cardiology practice sending 55% of its claims to commercial carriers takes home materially more than an identical practice sending 30% commercial and 55% Medicare, even when both are working the same number of encounters.

Most practice owners know payer mix matters. Fewer have looked at their own recently, and fewer still have run the math that connects it to owner take-home. This post covers what payer mix actually measures, how to compute it honestly, why contribution margin by payer is the real number to watch, and when a contract renegotiation is worth the fight.

What Payer Mix Actually Measures

Payer mix is the share of a practice’s business coming from each payer category. The categories usually break down as commercial insurance, Medicare, Medicaid, self-pay, and workers’ comp or auto medical. There are two ways to compute the mix, and they tell different stories.

Mix by visit count answers “who walks in the door.” Mix by revenue answers “who is paying the bills.” A primary care practice can be 45% Medicare by visit and only 30% Medicare by revenue, because Medicare reimburses less per visit than commercial. The two views are complementary. The revenue view is the one that drives profitability.

How to Compute a Real Payer Mix Report

Pull twelve months of net collections (not gross charges) by payer. Group the categories consistently, especially Medicare Advantage plans, which many practices misclassify as commercial. Medicare Advantage sits between commercial and traditional Medicare on reimbursement and should be its own line if the volume is meaningful.

Run the same report by CPT code family or service line, not just at the practice level. A general orthopedic practice may have a heavy Medicare mix on joint injections and a heavy commercial mix on sports medicine, and the two lines behave very differently at the margin. The service-line view is what a valuation analyst will build if you sell.

Contribution Margin by Payer, Not Just Revenue Share

Revenue share tells you where the money comes from. Contribution margin tells you what is left after the direct costs of serving that payer. A commercial payer paying $180 for a visit that costs $85 in direct provider time and supplies contributes $95. A Medicaid payer paying $62 for the same visit contributes negative $23 once patient overhead is allocated fairly.

Most practices never run this math. When they do, one or two payer relationships often turn out to be losing money on every encounter. The correct response is rarely to drop the payer, since fixed overhead needs a volume base. The correct response is to understand what those encounters cost and either renegotiate, reduce the volume, or price the mix into the practice’s decisions about hiring and expansion.

When Renegotiating a Commercial Contract Is Worth the Fight

Commercial payers negotiate. Not always well, and not always in the practice’s favor, but the door is open. Three conditions make a renegotiation worth pursuing:

• The practice is a meaningful share of the payer’s local network (specialty and geography matter)
• The current fee schedule is materially below the local commercial median for the same service
• The practice has clean utilization and outcomes data ready to present

Without the third condition, most practices lose the negotiation before it starts. Data is not optional. A rural Idaho or Utah practice that is one of two or three options for a payer’s local members has real leverage; the same practice needs to be able to prove its value with numbers, not narrative.

The Payer Mix Shift That Signals Trouble Early

Payer mix drifts. Most drifts are slow and hard to see month over month. Two drift patterns deserve immediate attention.

The first is a rising Medicare share driven by aging in place. This is not bad news; it is a demographic reality for many Idaho and Utah practices in rural counties. It is a planning signal that revenue per visit will compress unless volume rises to compensate.

The second is a growing Medicaid share without a corresponding growth in Medicaid contracting capacity. If the volume is going up but the payer’s fee schedule and administrative burden are unchanged, the contribution margin math will get worse each quarter. Left unchecked, this is how practices go from profitable to break-even without a visible cause.

Cooper Norman’s healthcare accounting team builds payer mix and contribution margin reports for practices across Idaho and Utah, then connects them to the practice’s cash flow and hiring decisions. To see your own mix at the revenue and margin level, talk with a Cooper Norman advisor about a payer mix review.