Credit Risk

Posted on February 25, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding Company Specific Risk

By Julia O’Neal; MA, CPA  

 

There are several kinds of investing risk, for example:

  • Credit or company specific risk refers to the firm’s business and financial risks.
  • Business risk is the risk inherent in the nature of the business.
  • Financial risks are those in addition to business risk that arise from financial leverage [credit or debt].  

Business Risk Example 

An example of high business risk would be a computer component manufacturer whose product demand is highly sensitive to macroeconomic activity and who has small profit margins.  

Assessment 

A company’s unique business risk would be increased by adding debt to an already unpredictable business. 

Conclusion 

Can you appreciate that credit risk is associated with a firm’s ability to meet financial obligations on the securities [bonds, notes and obligations, etc.] it issues?

More importantly, do you invest with this risk in mind? 

More info: http://www.springerpub.com/prod.aspx?prod_id=23759 

Individual: http://www.jbpub.com/catalog/0763745790/ 

Institutional: www.HealthcareFinancials.com 

Terms: www.HealthDictionarySeries.com

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Explaining MS-DRGs

Posted on February 25, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

New CMS Healthcare Finance Rules for Fiscal 2008

By Dr. David Edward Marcinko; MBA, CMP™

Publisher-in-Chiefdr-david-marcinko

The Centers for Medicare & Medicaid Services (CMS) just released the final Inpatient Prospective Payment System [IPPS] rules for fiscal year 2008. The lengthy official version was published in the Federal Register on August 22, 2007.

The good news is that overall Medicare payments to hospitals should increase by an average of 3.5%. The bad news is a plethora of additional compliance regulations. 

A Brief Review 

And so, since it has been said that brevity is the surest route to perusal, the most important of these new payment and policy provisions include: 

  • A 3.3% market basket increase
  • Additional hospital quality measure reporting requirements in 2008 in order to qualify for the full market basket update in FY 2009
  • Final implementation of phase-in changes begun in FY 2007 to base DRG relative weights on estimated hospital costs rather than hospital charges
  • A high cost outlier threshold of $22,650, down from $24,485 in FY 2007
  • The launch of 745 new Medicare-Severity DRGs (MS-DRGs) which replace the current 538 DRGs over a two-year period; and “behavioral-offsets” reduce payments by 1.2% to account for expected coding change practices
  • Require hospitals to report on eight preventable admission conditions that would not be paid at a higher rate unless present on admission in 2009
  • New ownership disclosure requirements for physician-owned specialty hospitals (Stark III)
  • New hospital disclosures requirements on how to handle emergency medical situations when no physician is present. 

Enter the MS-DRGs 

Perhaps the biggest changes relate to the revisions of certain long-term care hospital policies, including the transition to the MS-DRG system over two years, refinements to the relative weights for the DRGs, and application of a budget neutrality factor to the annual rate update (but not the “behavioral- offset” that will apply to acute hospital payments). 

Assessment 

Therefore, let all related information in our two-volume print subscription publication Healthcare Organizations: [Financial Management Strategies] guide your leadership decisions with alacrity. 

Conclusion 

How will the above new rules and regulations affect you and/or your healthcare institution? Your cogent thoughts, and informed opinions, are always appreciated.

Speaker: If you need a moderator or a speaker for an upcoming event, Dr. David Edward Marcinko; MBA – Editor and Publisher-in-Chief – is available for speaking engagements.

Contact him at: MarcinkoAdvisors@msn.com

Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

Order the Premium Print Guide: http://www.stpub.com/pubs/ho.htmThe subscription print guide includes up to four annual quarterly updates. Now, enjoy a 30-day risk-free trial as a two-volume guide in a unique loose-leaf binder format. Special introductory price: $525/yr. Call 1-800-251-0381. More information:  www.stpub.com/pubs/ho.htmTo email purchase: email: orders@stpub.com 

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