Financial Institutions and

COVID-

19

This article is part two of a series to help businesses navigate trade strategies amidst tariff changes. Part one discussed Transfer pricing and tariffs: Strategic considerations for businesses. Next up: First sale declarations.    

In today's globalized economy, businesses face an ever-changing landscape of tariffs, trade policies, and international supply chain challenges. For companies navigating these complexities, foreign trade zones (FTZs) present a strategic opportunity to reduce costs, improve logistical efficiency, and enhance overall competitiveness. 

Understanding FTZs 

FTZs are specially designated areas under the supervision of US Customs and Border Protection. These zones exist outside the formal US customs territory for tariff purposes, allowing businesses to import goods without immediately incurring duties.  

Within an FTZ, companies can store, process, assemble, or manufacture products, postponing duty payments until the goods officially enter the US market. If products are re-exported instead, businesses may bypass US duties altogether. By leveraging FTZs, companies can exert greater control over their financial obligations, minimize risk, and streamline operations. 

Why should manufacturers consider FTZs? 

The benefits of utilizing an FTZ are particularly pronounced when dealing with volatile trade conditions, high tariffs, or complex customs procedures. Businesses operating in an FTZ can take advantage of several key benefits: 

• Duty deferral and reduction: Since duties are not paid until goods leave the FTZ, businesses can improve cash flow and allocate resources more effectively. Additionally, if goods undergo a manufacturing or assembly process within the zone, companies may pay reduced duties based on the finished product’s classification rather than the individual component costs. 
• Streamlined customs processing: FTZs offer logistical efficiencies by enabling businesses to consolidate shipments. This can result in expedited customs clearance, reduced paperwork, and overall smoother trade facilitation. 
• Re-exporting without US duties: Companies that import goods for re-export purposes can avoid US duties entirely, allowing them to maintain a competitive edge in international markets. 

In an era of uncertain trade policies, FTZs provide an essential tool for businesses seeking flexibility, predictability, and cost savings. 

How BerryDunn can help 

While the advantages of FTZs are compelling, the process of establishing operations within an FTZ requires careful planning and compliance. Regulations governing FTZs involve detailed application procedures, inventory tracking requirements, and operational best practices. 

Our team can help guide businesses through the FTZ approval process, ensure compliance, and maximize the full benefits these zones offer. From initial consultation to implementation and ongoing management, we help companies optimize their supply chain strategies while remaining compliant with US trade laws. 

Let’s talk strategy 

Trade policies fluctuate, and tariff changes can significantly impact business operations. Taking a proactive approach to mitigate these risks is essential. Foreign trade zones provide a critical advantage, turning potential obstacles into opportunities. 

If your company is looking to enhance efficiency, manage costs, and strengthen global trade operations, exploring FTZ solutions could be the right move. Contact us today to discuss how we can help your business navigate complexities and unlock valuable savings. 

Hospitals across the country are facing mounting financial pressures in delivering primary care services, often shouldering annual losses of 5–7%. Primary care providers are essential for the health of the community and for the financial health of the hospitals to which they refer patients for services. As hospitals strive to balance their budgets and sustain primary care, there are options for hospitals to take that could ease financial burdens while preserving provider presence in the communities they serve. This article explores actionable models and strategies to reimagine primary care delivery in a way that benefits both patients and hospital systems.

The current landscape of primary care in hospitals

The national shortage of primary care providers has disproportionately impacted rural communities, leading to worsening access gaps. In addition, many small practices have struggled with mounting administrative burdens, burned-out physicians weary from long hours, and concerns over sustainable revenue. These challenges have driven hospitals to step in, offering indispensable resources such as EHR systems, IT support, malpractice insurance, and HR administration. Additionally, hospitals have benefited from enhanced reimbursement opportunities through provider-based billing and critical access hospitals through Method-II billing. Some of these benefits, like Medicare’s ongoing push to site-neutral payments and increased Medicare managed care, are eroding the benefits hospitals once enjoyed through and employed physician model.

However, the reality has often been more complex than anticipated. Physicians employed by hospitals increasingly seek work-life balance, leading to declines in the daily patient volumes. At the same time, patient appointments are backing up due to the complexity of cases and ongoing public health crises such as substance abuse epidemics. Commercial payors and employees are also steering patients toward less costly ancillary providers, further eroding the advantage of containing patients within the walls of the hospital through their primary care network. With fewer openings for new patients, communities have turned to urgent care centers and emergency departments for their primary care needs, further straining healthcare systems and exacerbating costs.

Exploring innovative models for primary care

The traditional model of employing primary care providers is not sustainable for many health systems. The costs, recruitment challenges, decreased reimbursement, and other pressures are forcing hospitals to evaluate other options. Not having a robust primary care network is not an option for hospitals and the communities they serve. The pendulum of employing as many primary care providers as possible is swinging due to the above-mentioned challenges and hospitals are starting to explore other partnerships to strengthen their financial health and communities access to primary care services.

One approach, for communities with Federally Qualified Health Centers (FQHCs), is to forge a new relationship. These federally funded clinics offer robust reimbursement for Medicare and Medicaid services, grants to support their operations, and behavioral health payments that are not available to hospitals. While hospitals cannot directly own FQHCs, innovative partnerships can form mutual win-win relationships for both the FQHC and hospital. FQHC partnerships are particularly effective in serving underserved populations, making them a strong option for hospitals aiming to achieve both financial stability and community health goals.

Our team works with a Maine health system that is an example of a hospital/FQHC partnership. The FQHC employs all primary care in the community. The two share many resources, like executive leadership and IT support. Through collaboration and partnership, each organization is able to focus on what they do best and what is best for the community.

Hospitals might also consider establishing FQHC Look-Alikes, which offer similar reimbursement advantages without formal federal funding. This model allows hospitals to maintain primary care access while sidestepping ownership restrictions. Successful implementations show that this approach can bridge gaps in underserved communities while helping to ensure operational feasibility.

For hospitals located in rural areas, Rural Health Clinics (RHCs) present another option. RHCs are designed to provide care through mid-level practitioners and can deliver targeted services that address the needs of specific rural populations. However, while RHCs enjoy favorable Medicare and Medicaid reimbursement rates, their scope is limited to rural areas, potentially excluding urban hospitals from reaping similar benefits. On the other hand, Critical Access Hospitals (CAHs), which receive cost-based reimbursement from Medicare, offer a more expansive opportunity for sustaining primary care in rural settings. Leveraging Method-II billing within CAHs can provide additional financial uplift.

The path forward for employed physician models

While alternative models like FQHCs and RHCs take time to establish, many hospitals may find value in retaining employed physician models and optimizing them to minimize losses. This could include:

• Streamlining coding and charge capture processes to prevent revenue leakage.
• Implementing scheduling templates to reduce appointment delays and ensure optimal utilization.
• Enhancing patient access through strategic no-show reduction initiatives and better liability collections.
• Revising compensation structures to align physician incentives with quality metrics and financial performance.
• Continuing to explore accountable care models
• Enhancing physician compensation models to reward both outcomes and productivity
• Reducing costs by eliminating unnecessary overhead and leveraging technology that decreases costs and improves access and productivity

Primary care is the heartbeat of any community-focused healthcare system, yet hospitals face mounting pressure to sustain these services without absorbing perpetual financial losses. Whether through partnerships with FQHCs, leveraging CAH designations, or refining employed physician models, the path forward requires creativity, collaboration, and a commitment to both fiscal and social responsibility. By understanding the unique needs of their communities and exploring innovative strategies, hospitals can strike a balance that ensures improved access, higher quality care, and minimized financial strain.

BerryDunn’s healthcare team understands the unique challenges that healthcare organizations are facing. From labor shortages to regulatory changes and financial viability, our team of audit, tax, clinical, and consulting professionals is committed to helping you meet and exceed regulatory requirements, maximize your revenue, minimize your risk, improve your operations—and most importantly—facilitate positive outcomes. Learn more about our team and services.

In today's rapidly evolving business landscape, boards of directors are more than just stewards of governance—they are the strategic compass guiding an organization toward enduring success. As the challenges facing companies grow increasingly complex, from disruptive technological trends to shifting societal expectations, the board's role has never been more critical. 

This series is designed to empower board members with the insights and tools necessary to navigate change with confidence. Our experts, each a leader in their respective field, will share real-world examples, practical frameworks, actionable advice in a Q&A format, and lessons learned from their personal and professional journeys.  

Employee well-being: The key to a productive and healthy workforce 

Our board leadership series begins with BerryDunn’s Workforce and Well-being practice lead, Vienna Morrill, who shares insight on how well-being programs can contribute to a thriving workforce.  

Q: What’s the most important thing that boards need to know about employee well-being?  

A: A culture-first approach is essential—well-being programs and benefits are less meaningful unless employees feel empowered to use them. Leadership commitment is critical; having a visible leader championing well-being helps normalize it as part of the workday rather than as an afterthought. Manager engagement is equally important, as managers must understand the value of well-being and take responsibility for fostering it within their teams. Importantly, well-being cannot be just an HR initiative; it requires active participation from leaders, managers, and employees themselves. An organization’s well-being strategy should integrate well-being into every aspect of the employee experience, with multi-dimensional benefits that address physical, mental, social, financial, and career needs, and be aligned with broader initiatives related to employee engagement and experience. A maturity model—such as assessing your organization’s current well-being program—can further help boards identify gaps and drive continuous improvement. 

Q: How do you ensure that well-being initiatives are inclusive and accessible to employees with different needs, backgrounds, and work styles? 

A: Organizations need to know their people and seek input. By developing and maintaining psychological safety in the workplace, organizations are better positioned to get meaningful feedback from employees about their well-being needs and programming preferences. Psychological safety begins with an environment where people feel comfortable showing up as themselves. In today’s fast-paced world of work, this often requires greater intention around creating opportunities for people to get to know each other, develop connections, and build a sense of community.  

Additionally, if you have employees or teams who are actively involved in specific diversity and inclusivity initiatives, it’s important to include them in the well-being planning process. Often, these initiatives can work hand-in-hand and be mutually beneficial. If budgets are limited, it’s best to focus on embedding well-being into the overall employer brand and employee experience before focusing extensively on “above and beyond” programs, resources, and benefits. Building a culture where well-being is viewed as a normal, expected part of work naturally supports inclusivity, helping to ensure every employee has access to the resources and support they need. 

Q: For those organizations that continue to have a large remote or hybrid workforce, what are some ways to support the work-life balance of all employees? 

A: The physical workplace offers valuable opportunities to showcase your well-being strategy and reinforce the culture you want to cultivate. However, when much of your workforce is remote, frequently traveling, or outside a traditional office environment, your approach should be anchored in location-agnostic programming to ensure broad reach and inclusivity. For example, focus on delivering consistent, organization-wide messaging that highlights your commitment to employee well-being, and establish clear feedback channels to surface needs and guide continuous improvement.

One of the largest challenges for remote and hybrid employees is often the blurring of boundaries between work and life. Organizations can set clear boundaries for work hours by encouraging practices such as logging off from collaboration platforms after hours and establishing norms around calendar sharing and personal time. For those in the office, creating a healthy physical environment reinforces the overall commitment to well-being. Additionally, encouraging remote employees to take stretch breaks, engage in local professional communities, or visit the office periodically for meaningful engagement can help maintain a healthy balance.

Q: How do you incorporate movement and exercise into the daily routine of employees who work at desks for long hours? 

A: Encouraging movement is vital for desk-bound employees, as opportunities to step away from screens, stimulate circulation, and refresh focus are essential for physiological and psychological health. This is an area where leaders and managers can be particularly influential by modeling that it’s okay to step away from your desk – whether by openly sharing that they are taking a break for physical activity, inviting others to join them, or speaking to its importance. Organizations can promote the idea of taking assignments offline—such as walking while brainstorming or listening to podcasts during breaks—to integrate exercise into the workday. Allowing flexibility so that employees can take planned, consistent breaks to move can not only improve time management and clarity of thought but also counteract the negative effects of prolonged sitting. 

Q: What are some common financial challenges employees face, and how can employers support them through education or benefits programs? 

A: Financial well-being starts with ensuring fair and competitive salaries that address factors like pay equity, cost of living, and benefits affordability. Employers can further support their teams by offering resources, tailored education, and benefits that assist with managing debt, saving for the future, and mitigating financial stress. A holistic approach might include personalized financial counseling, credit and debt management resources, and incentives such as matching student loan repayments through 401(k) contributions. Additionally, employers should make sure that employees are aware of and know how to access online tools and resources integral to their existing benefit platforms, empowering them to make informed financial decisions. 

About Vienna 

Vienna has long valued well-being, a passion born from early struggles with focus, fatigue, and depression that spurred her to explore how lifestyle habits impact both physical and mental vitality. Through a journey of personal growth, she discovered that nurturing the body with proper nutrition, hydration, sleep, and exercise could transform everyday energy and resilience. Over time, her perspective broadened to include the importance of community, meaningful relationships, and living authentically in alignment with one’s values. In her previous work as an IT Management Consultant, she observed that even routine technical challenges carried deep human implications, reinforcing her belief that employee well-being is a dynamic, personalized pursuit. Combining personal insights with professional experience, she has become a strong advocate for fostering holistic well-being in the workplace, convinced that a healthier team is the key to sustained business success. 

BerryDunn partners with organizations to create work environments where business success and personal growth coexist and where people are confident knowing their workplace positively contributes to their well-being. We take a comprehensive approach to our workforce and well-being work, considering how business needs, organizational capacity, and the employee experience work together to drive your business forward. Learn more about our team and services. 

Nonprofit audit committees play a pivotal role in maintaining transparency and accountability. Their responsibilities include financial oversight, compliance, reporting guidelines, risk management, external audits, internal audits, and ethical standards. Have you ever wondered what kinds of questions the audit committee should be asking of management and each other? Consider the following list of sample questions as a starting place.

Sensitive areas

Audit committees must ensure ethical standards and financial integrity across all aspects of the organization.

• Executive compensation: Is it reasonable and compliant with IRS guidelines?
• Travel and expense approvals: Are there any questionable items?
• Loans and related-party transactions: Are these legal and appropriate?
• Conflict of interest policies: Are they robust and effective?

Accounting and financial reporting

A strong financial framework requires thorough oversight of internal controls, reporting accuracy, and audit recommendations.

• Internal controls: Are they adequate, especially in managing contributions?
• Auditor recommendations: Are they being implemented?
• Financial statements: Are there significant changes or new revenue sources?
• Budgeting practices: Are all liabilities recorded accurately?

Program activities

Nonprofits must ensure that their resources are effectively allocated to fulfill their mission and serve community needs.

• Expense allocation: What percentage of expenses goes to program services?
• Unit costs: How do they compare to similar organizations?
• Community needs: Are they reassessed periodically?

Fundraising

Sustainable funding is key to a nonprofit’s success, requiring well-managed donor outreach and revenue diversification.

• Solicitations: How many are sent to donors?
• Cost-effectiveness: Are fundraising efforts efficient?
• Funding sources: Is there a diversity of funding sources?
• Board contributions: Do all board members contribute to fundraising campaigns?

Investment management

Managing investments wisely ensures financial stability and mitigates potential risks.

• Return on investments: How does it compare to market indices?
• Risk management: How are market fluctuations and potential losses managed?

Tax and regulatory matters

Compliance with IRS regulations and maintaining tax-exempt status are essential for nonprofit credibility.

• IRS compliance: Is the organization compliant with IRS regulations?
• Unrelated business income: Are potential liabilities assessed?
• Tax-exempt status: Is it properly maintained?

Nonprofit environment

External factors such as economic conditions and reputational risks can impact long-term stability.

• External factors: How do demographic trends and economic conditions affect the organization?
• Reputational risks: What strategies are in place to mitigate these risks?
• Insurance coverage: Is it adequate against various liabilities?

External auditors' relationship

Maintaining independent auditors and transparency strengthens credibility and financial reporting.

• Independence: Are external auditors independent?
• Transparency: Are audit fees and potential conflicts disclosed?

Internal audit oversight

Regular internal audits ensure financial accountability and effective risk management.

• Audit plans: Are they approved and effectively overseen?
• Enterprise risk management: Is it robust and comprehensive?

By addressing these questions, audit committees can help safeguard the nonprofit organization's integrity and financial health, ensuring it continues to serve its mission effectively.

As auditors and consultants to nonprofits of all sizes throughout the US, BerryDunn's not-for-profit team has a clear understanding of industry best practices. We provide the vital strategic, financial, and operational support necessary to help you fulfill your missions. Learn more about our team and services. 

How often does a new category of lending open up for the banking industry? This could happen if Congress ends federal tax exemptions for interest earned on municipal (“muni”) bonds. While a final decision has not yet been made, Congress is debating this option as they decide how to handle expiring provisions of the 2017 Tax Cuts and Jobs Act.

Doing so would put banks in the position of lending a substantial amount of funds directly—more than $500 billion in new bonds were issued in the last 12 months. To lend in this arena successfully, bank boards and executives will need to be familiar with not only the opportunity, but also the unique risks posed by lending to municipalities.

How municipal bonds work

Municipal bonds are issued by state and local governments to fund a variety of long-term projects, such as roads, bridges, parks, and public buildings. Money for the project is raised when bonds are sold to investors. The issuing municipality repays the investment, with interest, out of tax revenue and fees. Investors receive certain tax exemptions on the interest income generated by their investment. The tax exemption acts as an incentive for investors, whose stated rate of return is often lower than prevailing market rates. Without this incentive, municipalities may struggle to get enough investors to fund their project(s), creating an opportunity for banks to provide direct financing for these state or local government projects.

To understand the level of new muni bond issuances in your lending area, refer to the Municipal Securities Rulemaking Board (MSRB)’s 2024 Municipal Market Facts. This document includes a US map with the dollar amount of bond issuances displayed in each state, as well as a chart of dollar values of bonds by type of project and tax-exempt status.

Credit risk considerations for lending to municipalities

Banks have provided some direct financing to state and local governments in the past, which poses some unique challenges. Financing the types of projects typically handled via bond issuance raises new risk considerations. Additionally, such lending activity may expose banks to those risks for longer periods of time than has been their experience, historically. To help ensure your institution is ready to make the most of this potential opportunity, here are just a few of the key questions and areas we recommend bank leaders consider:

• What does it mean to have a state, city, or town as a legal borrower?
• How will the bank establish, evaluate, document, and monitor the credit worthiness and financial condition of the municipality?
• Is the municipality willing to increase taxes if needed to cover bank loan debt obligations on these longer-term projects?
• What is the collateral for public works projects? How will the bank establish lendable value and perfect its lien position?
• How will the bank handle cases of default and bankruptcy? What would the foreclosure process look like?
• How will the bank establish and monitor loan loss reserve levels on these projects?

It is likely that a bank’s borrower due diligence practices will need to be more robust and customized to understand the municipality’s unique dynamics. Transparency and disclosure may be limited, so asking the right questions is important.

Banks should be aware that municipalities generally cannot guarantee debt, may withdraw support from a project, and can file for bankruptcy protection. When the source of repayment is tax revenue, new metrics must be evaluated and considered—such as trends related to the municipality’s tax base, taxpayer population, and tax revenue. If municipalities must balance their budget annually, they may have to borrow or restructure debt to do so, and banks should consider this in their monitoring practices. Gaining an understanding of the nature and type of expenses is also essential as these may not be effectively or quickly cut—for example, union contracts and pension obligations.

Our team of financial institution experts is here to help you navigate change and evaluate opportunities. Please visit our Ask the Advisor page any time to connect with us or submit questions.