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eMR Military Speech Recognition Technology

HIT in Military Medicine

By Staff Reporters

Did you know that physicians are using speech recognition tools to enhance patient electronic Medical Records [eMR] in the military?

Assessment

It’s true! According to Information Week, and by 2011, the Defense Department expects its integrated, interoperable electronic medical records system to be in place at 500+ military medical facilities worldwide.

More info link: www.informationweek.com/1188/ehealth.htm

Conclusion

Your thoughts are appreciated?

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Alternative Lifestyles and Physician-Partners

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A Top-Ten Checklist

[By Staff Writers]

The Gay and Lesbian Medical Association [GLMA] represents the interests of more than 70,000 gay, lesbian or transgender [GLBT] physicians and medical students. GLMA was founded in 1981 as a network to combat homophobia within the medical profession www.Gay.com

And, gay rights advocates had reason to celebrate on both coasts recently, with New York set to recognize same-sex marriages performed elsewhere, and California preparing to begin issuing marriage licenses to gay couples in June.

Link: http://www.msnbc.msn.com/id/24857315

Partnership Checklist

And so, the top-ten financial planning issues listed below should be discussed with all domestic partners contemplating marriage or even co-habitation.  

Moreover, the physician partner of a gay/lesbian couple should consult a financial planner, and attorney, with experience in alternative lifestyles when appropriate.

1.   Wills

A.   Is any property jointly held?

 

 

 

B.   Are there any children? If so, are the children from the domestic partnership or previous partners/spouses?

 

 

 

C.   What bank accounts and investments should be considered?

 

 

 

2.   Life insurance

A.   What type of policy or policies is appropriate for the couple?

 

 

 

B.   Does the couple own a home and have a mortgage to protect?

 

 

 

C.   Do the families of each person approve of the relationship? If not, should “crossover policies” be obtained?

 

 

 

3.   Bank accounts

A.   How are the banking and bill-paying set up?

 

 

 

B.   Are any changes needed?

 

 

 

4.   Trusts

A.   Is a trust appropriate?

 

 

 

B.   Does the couple have an estate problem?

 

 

 

C.   Are there joint assets that should be split between beneficiaries?

 

 

 

5.   Deductions

A.   Who is entitled to the itemized deductions?

 

 

 

B.   What percentage does each partner pay?

 

 

 

C.   Is one partner eligible to be the dependant of the other?

 

 

 

6.   Capital assets

A.   Were there any sales of jointly held capital assets?

 

 

 

B.   Under whose Social Security number are the gains reported?

 

 

 

C.   Is a nominee Form 1099 necessary?

 

 

 

7.   Durable powers

A.   Medical (file with all doctors)

 

 

 

B.   Financial (file with tax professional and investments)

 

 

 

8.   Pensions

A.   Who is the beneficiary?

 

 

 

9.   Asset ownership

A.   How is the title held?

 

 

 

10.  Children

A.   Dependents—who gets the deduction?

 

 

 

B.   Head of household considerations

 

 

 

Conclusion

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Wal-Mart Health Care

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Healthcare’s New [Old] Innovative Disruption

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]dem2

So, the American Medical Association [AMA] couldn’t or wouldn’t do it; nor could/would the American Osteopathic Association, American Podiatric Medical Association, American Dental Association or any combination thereof.

Neither could/would Hillary Clinton in 1992, nor the US Congress, US Senate, Insurance Association of America [“Big I”], AARP, or plethora of other national organizations, medical trade unions and/or policy-makers.

One is not even sure the current crop of presidential candidates can “do it.”

What it is?

So, what am I talking about?

Why, free-market driven, non-universal [government sponsored] healthcare competitive reform; of course!

And maybe; just maybe; Wal-Mart can do-it?

The Wal-Mart Way

Look, clinics in giant wholesale stores are not new. The optometrists have been there for decades, nobly triaging and providing basic eye-care, but with a certain disdain from “real-doctors” and some patients.

But, all that is fading with the dearth of family practitioners, and rise of on-site and walk-in retail clinics staffed with nurse practitioners, Doctor-Nurse Practitioners [DNPs] and the like. The movement is both gaining traction as well as gravitas. And, the medical kiosks are increasingly being staffed by physicians.

Moreover, with the economy flagging, cheap generic drugs available, convenient hours and locations in many stores, electronic medical records, consumer directed health plans with high-deductibles and private paying patients; Wal-Mart may just have the marketing power to provide some modicum of basic healthcare for many of our nation’s uninsured, or under-insured.

And, imbued with the belief that capitalism always finds a way to wring out marketplace excesses in any industry – albeit slowly – I call the initiative “a perfect-storm of market-place reform.”

Vilfredo Pareto – ReDeux

Perhaps, by being so huge, Wal-Mart understands Pareto’s Law and realizes that many patients get better because-of, or in spite-of, the doctor’s intervention. This was the original promise of managed care that went awry; differentiating and treating the trivial many ills – from the vital few serious diseases.

The Pareto principle (also known as the 80-20 rule, the law of the vital few and the principle of factor scarcity) states that, for many events, 80% of the effects come from 20% of the causes. Business management thinker Joseph M. Juran suggested the principle and named it after Italian economist Vilfredo Pareto, who observed that 80% of income in Italy went to 20% of the population. It is a common benchmark in business; e.g., “80% of sales come from 20% of clients.”

Wal-Mart has studied the market and knows where the price and break-points are.

And, when 80% of healthcare expenditures are spent in the last 12 months of life, maybe there really is a better way; The Wal-Mart Way.    

Assessment

And Wal-Mart isn’t stopping here. In April, it opened the first of its walk-in health clinics in stores in Atlanta, Dallas and Little Rock, Ark. This joint venture with local hospitals will build up the almost 80 clinics already in place in Wal-Mart stores. The goal is 400 co-branded clinics by 2010.

Wouldn’t Sam, and I don’t mean “Uncle”, be proud of the above accomplishments?

Conclusion

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Medical Conflicts of Interest

Emerging Ethical Issues of Trust

By Render S. Davis; MHA, CHE

Crawford Long Hospital at Emory University

Conflicts of interest are not a new phenomenon in medicine.

In the older fee-for-service system [FFS], physicians controlled access to medical facilities and technology, and they potentially benefited financially with every order, test, procedure, surgery or prescription they wrote.

Temptation to Over-Treat

Consequently, there was an inherent temptation to over-treat patients. Even marginal diagnostic or therapeutic procedures were justified on the grounds of both clinical necessity and legal protection against threats of negligence. And, this temptation remains a viable siren-call today. 

Managed Care’s Influence

In managed care, the potential conflicts between patients and physicians take on a completely different dimension. 

By design, in health plans where medical care is financed through prepayment arrangements, the physician’s income is enhanced not by doing more for his or her patients, but by doing less. This phenomenon is especially acute with some capitation reimbursement contracts and settings.

Assessment

Today, patients, confronted with the realization that their doctor will be rewarded for the use of fewer resources, might no longer rely with certainty on the motives underlying a physician’s treatment plan.

Conclusion

Of course, as a consequence, it has been said that one inevitable outcome of the above is a decline in doctor-patient trust. And so, is this a real or perceived notion; please opine?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

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Determining Practice Economic Interests

Understanding Modern Valuation Science

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Much has been written, and much has been said about the goals, objectives, reasons, techniques and methodology of professional medical practice appraisals online at the Executive-Post.

In fact, the material on medical valuations and practice worth appraisals is consistently one of our most frequently viewed topics with its own separate category of posts.

But, with several thousand unique daily viewers searching this topic alone, and dozens of doctors and healthcare executives requesting additional information in the form of our white-papers, books, wiki’s, websites, blog-posts, emails, consulting and speaking engagements; its popularity is not surprising.

Of course, the most actionable information is presented in our premium institutional 1,200 pages, 2-volume print guide Healthcare Organizations [Financial Management Strategies] http://www.stpub.com/pubs/ho.htm

This quarterly subscription journal is modestly priced at $525/year and contains more than 200 pages devoted to many sub-topics of this fluctuating and important practice management and financial planning endeavor. And, increasingly such detailed material is needed in the changing healthcare economics milieu http://www.stpub.com/pdfs/toc_ho.pdf

And so, as a requested overview of how to determine medical practice economic interests, this checklist is an indispensable tool when pro-actively contemplating – or retro-actively reviewing – any medical practice appraisal engagement or practice worth analysis https://healthcarefinancials.wordpress.com/category/practice-worth 

How to Determine the Medical Practice Interest to be Valued?

 

 

Yes

 

No

What kind of medical practice business interest does the doctor own?

a.

Regular C or PC corporation?

 

 

 

 

b.

S corporation?

 

 

 

 

c.

Limited liability company?

 

 

 

 

d.

Partnership interest?

 

 

 

 

 

 i. General partnership?

 

 

 

 

 

ii. Limited partnership?

 

 

 

 

e.

Sole proprietorship?

 

 

 

 

 

What state governs the corporation, limited liability company, or partnership?

 

 

What kind of ownership interest in the medical practice business does the

doctor have?

a.

Voting common stock?

 

 

 

 

b.

Non-voting common stock?

 

 

 

 

c.

Preferred stock?

 

 

 

 

d.

Partnership?

 

 

 

 

 

 i. General partnership?

 

 

 

 

 

ii. Limited partnership?

 

 

 

 

e.

LLC

 

 

 

 

 

i.  Managing member

 

 

 

 

 

ii. Non-managing member

 

 

 

 

 

Are these interests controlling interests or minority interests?

a.

What level of control?

 

  i. Actual

 

 

 

 

 

 ii. Operational

 

 

 

 

 

iii. Liquidating control

 

 

 

 

b.

What size minority interest?

%

 

 

  i. Could the minority interest be considered a swing vote?

 

 

 

 

 

 

Is the doctor a “Key Person”?

 

 

 

 

             

Conclusion

Remember, this is only the minimum data for analysis. And, although there are many reasons to have your medical practice appraised, and three major types of valuation engagements to obtain, the end result matters little if it is not read and understood within the context of its’ enterprise-wide applications. Therefore, your thoughts, opinions and experiences are appreciated?   

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

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Stemming the Primary Care Exodus with DNPs

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Doctor of Nurse Practice – Filling the Void

Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]dr-david-marcinko

As the shortage of family doctors and primary-care physicians mount, and the domestic uninsured problem exacerbates to > 40 million uninsured Americans, the nursing profession is stepping up-to-the-plate by offering one possible solution to healthcare reform.

Cause and Effect

And, it is not happing because of managed care cost constraints, medical benefit rationing or reductions, or any other draconian or political machination. Rather, it’s happening because nurses are taking medicine back to its root-core constituency – patients. 

In fact, according to leading industry expert and adjunct professor of healthcare administration Hope Rachel Hetico RN, MHA, CPHQ, CMP™ of Atlanta, it’s more like a cause-effect relationship. “Patients with a problem – are seeking solutions; and it doesn’t get more basic than that”, says Hetico.

Not a New Concept

The “doctor-nurse” concept is not revolutionary by any means, opines Hetico. But, it is the “new formalized execution and marketplace acceptance that is very exiting.”  And, “the nurse-as-doctor concept is a natural evolution of the nurse practitioner-model which, after a slow start, is finally taking off to the benefit of patients and physicians, alike.”

The “growing success of retail and on-site medical clinics, increased pricing transparency, and related consumer directed health care plan initiatives was the real impetus; and now there is no looking back.”

The Future of DNPs?

For example, by the year 2015, the Doctor of Nurse Practice (DNP) program will be recognized by the accrediting body of the American Association of Colleges of Nursing (AACN), which oversees schools that offer advanced degrees to nurse-practitioners such as, nurse anesthetists (CRNAs), clinical nurse specialists and nurse midwives, etc.

And, according to Christopher Guadagnino PhD, of the Physicians News Digest, the National Board of Medical Examiners (NBME) will begin offering part of the United States Medical Licensing Examination (USMLE) – the physicians’ medical board examination – as certification proof of DNPs’ advanced training.

Passing that exam is “intended to provide further evidence to the public that DNP certification holders are qualified to provide comprehensive patient care,” according to the Council for the Advancement of Comprehensive Care (CACC); a consortium of academic and health policy leaders promoting the clinical doctoral degree for primary care nurses.

The Nay-Sayers

Of course, nurse practitioners (NPs) poised for expanded clinical practice opportunities inevitably raise concerns about medical quality and safety of care. And, some physician groups warn that blurring the line between doctors and nurses will only confuse patients and jeopardize care.

Still, that hasn’t seemed to have happened with other limited licensed medical specialists, like podiatrists [Doctors of Podiatric Medicine] who may prescribe medications, admit patients to the hospital, cover the emergency room and perform sophisticated bone, tendon and soft tissue reconstructive surgical procedures; after four years of college, post-baccalaureate matriculation in a 4 year podiatric medical school, with an additional 1-4 years of internship, residency and/or fellowship training.

The “entrenched traditional system is self-centered, bureaucratic and very patronizing in some cases. It just doesn’t want to share power or give patients much credit for their own care in the contemporary and collaborative healthcare zeitgeist”, says Hetico.

Nurses with doctorates may also use the imprimatur DrNP after their name, and the titular designation of “Doctor”, as well. Physician groups want DNPs to be required to clearly state to patients, and prospective students, that they are not Medical Doctors [MDs] -or- Doctors of Osteopathic Medicine [DOs] who seemed to have negotiated the nomenclature divide.

Changing the “Codes”

Reality may have outpaced the debate over these issues however, given the intensifying shortage of first-line primary care providers, family practitioners and internists. Moreover, the possible causes for the shortage are both obvious, and subtle.

As noted by industry analyst Brian Klepper, at Health Care Renewal, and Dr. Roy Poses, a Clinical Associate Professor at Brown University’s School of Medicine opine, economics may play a major role in the debate on the dearth of primary care physicians. Moreover, perhaps an overall re-assessment of the CPT® coding systems and the primary medical compensation system is even in order, and more than partially blamed as causative.

For example, there is often a financial conflict in the advisory relationship that the Center for Medical and Medicaid Services (CMS) uses with the American Medical Association’s (AMA’s) Relative Value Scale Update Committee (RUC). Essentially, according to Klepper and Poses, the RUC is overwhelmingly dominated by specialists, who have consistently urged CMS to increase specialty reimbursement at the expense of primary care.

Link: http://www.thehealthcareblog.com/the_health_care_blog/2008/05/more-on-physici.html

Questionable Specialists

Yet, if perception is reality, whether patients actually benefit from some highly-paid surgical specialists, and their elective interventions and surgeries, is certainly debatable.

As an example, the recent May 2008 lay article published in PARADE magazine by Dr. Ranit Mishori, suggested that more than a few surgeries like knee arthroscopy, certain back and sinus procedures are not only often un-necessary, but economically motivated. This is not an epiphany to those in the industry, or outside its realm, anymore. 

Why?

Therefore, is it any wonder why over the last five years the percent of medical school graduates entering family practice has dropped from 14 percent to 8 percent? Or, why only 25 percent of internal medicine residents now go into office-based practice; with the rest becoming hospitalists or sub-specialists.

Moreover, is another private insurance/Medicare paid knee scope really esteem-enhancing or self-actualizing for the operating surgeon? Or, is it demoralizing to perform same for mere “lucre.”

Now, ask the same question to a DNP treating a private pay diabetic patient, or an uninsured pediatric patient, or an elderly senior citizen.

Where is the “justice”, some may cry?

Thus, one can hardly blame the DNPs if Paretto’s 80/20 law of reason is pursed as at least partial help in the current healthcare insurance crisis conundrum. Perhaps, it really is better to treat 80% of the many patients appropriately with doctor-nurses; than 20% of the vital few patients inappropriately with super-specialty care?

Philosophical Considerations

Now however, based on the above thoughts, we are entering into the realm of philosophy, moral introspection, theology, ontology debate and – even religion – as these ruminations include many diverse points-of-view, like the following among others:

  • Utilitarians, who argue for medical resource distribution based on achieving the “greatest good for the greatest number of patients.”
  • Libertarians, who believe that recipients of medical resources should be those patients who have made the greatest contributions to the production of those resources – a free market approach to distribution.
  • Egalitarians, which support the distribution of medical resources based on the greatest patient need, irrespective of contribution or other considerations. 

Consequently, developing a system of access based on such “justice” is fraught with enormous difficulty.

Industry Innovation and Redemption

Disruptive innovations are often considered simplistic, and compared to toys when they first emerge (remember the first Apple computer?). But, there may be no stopping DNPs from making their healthcare services more collaborative, useful, convenient, electronic and affordable to the patient. 

Redemption, and dare I say it; salvation of the healthcare industrial complex depends on such innovation and change. And, the industry can be saved by those of this ilk, but change requires courage. Proponents of the DNP program exhibit the requisite courage, but do the rest of the industry? The lives of our patients, and more than 40 million currently under/uninsured Americans, may just depend on it.

Assessment

Today, patients, payers, employers and all web-enable and modern 2.0 healthcare workforce stakeholders demand collaboration between doctors, NPs, other medical professionals, and all physician specialists. In fact, it is becoming the rule, rather than the exception, in an increasingly transparent and accountable society.

So, what do you think about this increased market-competition in healthcare generally, and with DNPs in particular; please comment and opine?

Conclusion

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Doctors and Divorce Settlements

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Effects on a Physician’s Financial Plan

[By John R. Connell, MBA, JD, CPA / PFS]

Just because a physician or other couple is getting divorced, does not mean that all previous financial planning has become untenable. The parties’ goals and objectives may remain the same. However, even though assets are divided equally, income and expenses rarely follow the same pattern.

Therefore, savings rates may decrease from previously projected levels. Consequently, the main planning activity for divorcing doctors and spouses may be segregating goals and objectives and fine-tuning the previous financial plan. This is where a healthcare focused financial advisor may be very helpful.

The Advisor

It is likely that a physician focused financial planner will be called upon to provide specific advice related to the actual divorce settlement. Such advice generally includes strategies for disposition of assets, determining reasonable levels of maintenance, and tax and other considerations.

The Process

It is important for the financial advisor providing advice to a first-time divorcing couple to help explain the divorce process to them [doctor client and/or spouse]:

 

  1. Generally, the first step in a divorce is the service of summons and petitions. The petition briefly states what is being requested. The party that commences the dissolution is, in most cases, the Petitioner (unless both parties commence, in which case each would be called Co-Petitioner).
  2. The person answering the petition files a response and is known thereafter as the Respondent. The response indicates the requests of the Respondent. In no-fault states, no wrongdoing is necessary to obtain a divorce. In states which do not have a no-fault provision, fault is generally required to allow the parties to divorce. Also, jurisdictions may have waiting periods that must pass before the divorce can be finalized. Because many domestic court dockets are quite full, the chances are that most cases will not be heard within the 90-day waiting period.
  3. Discovery may begin at this time. Discovery is used to determine the assets of the parties. Once the assets are determined, each asset must be categorized as either marital or non-marital.

At this point, it may be possible to propose a settlement. In most cases, however, some time will pass before settlement discussions begin.

Temporary Orders

It may become necessary for the case to proceed to the stage of Temporary Orders. At this point many items may be considered, including use of the assets, payment of debts, payments of attorneys’ and accountants’ fees, custody of children, and temporary maintenance. Then the court will issue Permanent Orders, which permanently decide the questions of custody of children, division of assets and debts, and provisions for maintenance and child support.

Separation Agreement

When the parties are amicable, court appearances may not be necessary and the parties may be able to create a separation agreement outlining issues related to custody, maintenance, property, and debt. The financial advisor should feel free, with the client’s permission, to discuss the process with the attorney handling the matter. Because divorces are governed by jurisdictional statutes, each advisor must educate him-or-herself regarding the statutes of his or her individual jurisdiction.

Areas to Consider

A survey of the general areas of financial planning suggests that typical advisory engagements will include cash flow and budgeting, analysis of net worth, estate planning, tax planning, and risk management, including life insurance, disability insurance, property insurance, and umbrella liability insurance. In addition, a planner may be called upon to provide advice on funding for education and other goals.

Post-Marriage Changes

In almost all situations, cash flow is most significantly affected by a divorce. The net worth of the parties will generally be halved, the tax situation may be significantly different, insurance matters may change, estate matters will probably be quite different, and planning for education and other goals may be significantly affected.

As with all financial planning engagements, the planner’s first step should be to understand the assets of the parties and cash flow so he or she can assist the client in formulating realistic goals and objectives. The more focused the goals and objectives, the better the results of the process will be.

Unusual Events

In a physician divorce situation, the financial planner may be faced with certain unusual issues that must be considered. Such items will likely have a significant effect on the future lives of the parties. Major other considerations can include the disposition of the family residence, division of retirement plans (especially with use of a Qualified Domestic Relations Order [QDRO]), structuring of property settlements and maintenance, deferred income taxes and their effects on the property settlement, and analysis of partnership interest and tax shelters, etc.

Assessment

Other physician specific or medical practice management topics include practice valuations and appraisals, practice succession planning, buy-sell agreements and restrictive covenants, potential partner dissolutions and a host of other considerations depending on specific circumstances.

Conclusion

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HIT Congressional News

New CBO Report

Staff Reporters

Official congressional analysts just dealt a blow to the prospects of broad legislation to boost health information technology, by taking a skeptical view of the savings that would likely result.

Yet, iMBA Inc www.MedicalBusinessAdvisors.com – a sponsor of the Executive Post – took the opposite posture this past summer with release of the Dictionary of Health Information Technology and Security.

Link: www.amazon.com/Dictionary-Health-Information-Technology-Security/dp/0826149952/ref=sr_1_4?ie=UTF8&s=books&qid=1211753612&sr=1-4

The Report

In an analysis released this week, the Congressional Budget Office [CBO] discounted earlier projections of large cost savings that might result from the adoption of information technology, such as digital health and patient records, particularly questioning an estimate of $77 billion a year that appeared in a widely cited RAND Corporation analysis.

The CBO has an important voice in such debates because of its role in calculating how much legislation will cost the federal government.

Assessment

Although the CBO found savings potential under certain circumstances – particularly when information technology was combined with broader reforms – it found that the technology itself was unlikely to generate sizable financial benefits; according to the Wall Street Journal.

Conclusion

Is any practicing physician today surprised with this report; why or why not?

Related Information Sources:

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Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Pre-Noon Patient Discharges

Improving Emergency Department Flow
Dr. David Edward Marcinko; MBA, CMP™

Publisher-in-Chief

We all know that hospitals across the US are struggling to figure out how to get patients through the emergency department [ED] quickly, safely and efficiently.

In fact, this and related issues were eloquently and contemporaneously addressed by Dr. Robert Wachter of UCSF [Average Time of Discharge: Why a Hospital is Not a Hilton]. Link: www.thehealthcareblog.com/the_health_care_blog/2008/03/average-time-of.html].

I also opined as an occasional ED, but more frequent, hospital admitter [Of Hospitals and Hotels]. Link: https://healthcarefinancials.wordpress.com/2008/04/05/of-hospitals-and-hotels

The problem, of course, has been institutionally endemic for the past thirty years, or so.   

New Study

Now, a new study suggests that one way to get patients through the ED is to make more inpatient beds available by seeing that inpatients are discharged before 12 noon.

Much like the hotel industry, this is but one of several low-cost solutions recommended by the American College of Emergency Physicians [ACEP] to cut down on ED boarding.

Assessment

Duh! Like we didn’t think of that one before?

Conclusion

Your comments and experienced opinions are appreciated?

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Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Practice Valuation Report Reviews

Understanding a Medical Practice Appraisal

Dr. David Edward Marcinko; MBA, CMP™

By Hope Rachel Hetico; RN, CPH, MHA, CMP™

Much has been written, and much has been said about the goals, objectives, reasons, techniques and methodology used in professional medical practice appraisals, at the Medical Executive-Post.

And, even more actionable information is presented in our institutional 1,200 pages, 2-volume print guide Healthcare Organizations [Financial Management Strategies] http://www.stpub.com/pubs/ho.htm

In fact, this quarterly subscription journal, modestly priced at $525/year, contains more than 200 pages devoted to many sub-topics of this fluctuating and important practice management and financial endeavor. And, increasingly such detailed material is needed in the changing healthcare economic milieu http://www.stpub.com/pdfs/toc_ho.pdf

But, as a quick overview of a valuation report regardless of etiology, this checklist is an indispensable tool when pro-actively contemplating – or retro-actively reviewing – any medical practice appraisal engagement or practice worth analysis https://healthcarefinancials.wordpress.com/category/practice-worth

  

Valuation Report Review Checklist

Yes

 

No

 

Does the report contain the following minimum criteria?

 

 

 

 

1.

A clear description of the practice valuation assignment

 

 

 

a.

The medical practice assets being valued

 

 

 

 

 

  i.

A description of the practice or medical partnership

 

 

 

 

 

 ii.

The size of the holdings

 

 

 

 

 

iii.

The restrictions or rights attached to the assets

 

 

 

 

 

b.

The purpose and intent of the practice valuation

 

 

 

 

 

c.

The valuation date(s)

 

 

 

 

 

d.

The standard of value being used (e.g., fair market value, fair value)

 

 

 

 

 

 

 

2.

A description of:

 

a.

The healthcare entity or medical pratice

 

  i.

The form of the practice

 

 

 

 

 

 ii.

The history of the practice

 

 

 

 

 

iii.

The services, specialty, markets, demographics and patients

 

 

 

 

 

 

 

iv.

The practice’s management

 

 

 

 

 

 v.

The practice’s major assets [tangible and intangible]

 

 

 

 

 

b.

The health industry and the local and general economy

 

  i.

Outlook for the local economy and the health industry

 

 

 

 

 

 ii.

Sensitivity to seasonal, specialty or cyclical factors

 

 

 

 

 

iii.

Marketplace competition

 

 

 

 

 

3.

Financial analysis

 

a.

Analysis of the practice’s financial statements

 

 

 

 

 

b.

Adjustments to financial statements with explanations

 

 

 

 

 

c.

Assumptions used in preparing economic projections

 

 

 

 

 

d.

Comparison of practice performance relative to other specialties in its industry

 

 

 

 

 

 

 

4.

Valuation methodology

 

a.

Description of methodologies used and discussion of reasons for using them

 

 

 

 

 

 

 

b.

Description of uses of discounts

 

 

 

 

 

c.

Discussion of how capitalization rates and multiples of earnings were determined and used

 

 

 

 

 

 

 

5.

Assumptions and limiting conditions

 

a.

Statements of fact are true and correct

 

 

 

 

 

b.

The valuation is the appraiser’s personal, unbiased, professional analyses, opinions, and conclusions

 

 

 

 

 

 

 

c.

Statement by appraiser that he/she has no personal interest in the property being valued

 

 

 

 

 

 

 

d.

Statement by appraiser that he/she relied on information supplied and did not verify it beyond the given

 

 

 

 

 

 

 

e.

Valuation report is valid for the valuation date and purpose only

 

 

 

 

 

 

 

f.

Not contingent on the outcome or disposition of the valuation

 

 

 

 

 

Does the report contain a logical progression leading to a conclusion?

 

 

 

 

Is the report signed by the appraiser?

 

 

 

 

 

 

 

 

 

Does the report include the credentials of the appraiser?

 

 

 

 

 

Conclusion

Remember, this is only the minimum data for analysis. And, although there are many reasons to have your medical practice appraised, and three major types of valuation engagements to obtain, the end result matters little if it is not read and understood within the context of its’ enterprise-wide applications. Therefore, your thoughts, opinions and experiences are appreciated?   

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Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Professionally Managed Portfolios and Mutual Funds

Advantages and Disadvantages for Physician Investors

[By Staff Writers]

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The following briefly summarizes the advantages and disadvantages of professionally managed portfolios and mutual funds according to size and taxation factors.

Portfolio Size

A major factor that impacts the selection process is the size of the physician-investor’s portfolio. For example, is there a size at which it makes more sense to use managed portfolios?

Except for large portfolios [>$3 – 5 million dollars, USD], mutual fund portfolios can meet most physician investors’ needs. Investors who need substantial individual attention should also consider managed portfolios (perhaps in conjunction with funds or ETFs to add additional asset classes).

Income Tax Consideration

Professionally managed portfolios often offer the physician greater control over the timing of taxable transactions.

For example, at the end of the tax year, it may be appropriate to defer capital gains that would otherwise incur, or conversely, the doctor may wish to accelerate recognition of capital losses.

Mutual funds do not allow physicians or other individual investors to influence the timing of these types of transactions. On the other hand, private portfolio managers are often sensitive to a client’s specific income tax planning needs.

In addition, mutual funds are required to distribute 95% of capital gains recognized during the year. These gains are taxable to shareholders of record on the date of the capital gains distribution, even if the shareholder did not benefit from the gains.

For example, a doctor-shareholder who invests in a mutual fund near the end of the year may pay taxes on gains that were incurred earlier in the year when the fund manager was required to sell securities to raise cash for the purpose of redeeming shares of other investors.

***

***

Assessment

The problem is accentuated in long-term bull markets, where the recognized gains in one year result from an income tax basis to the fund that was established in past years, when the find manager bought securities at very low prices. Private portfolios have the advantage that clients normally are not penalized for events that occurred before they invested with a portfolio manager.

MORE: Vehicles

Conclusion

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INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

 

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Evidence Based Medicine

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Emerging EBM Trends

[By Prof. Hope Rachel Hetico; RN, MHA, CMP™]

Prof. Hetico

The next emerging trend in healthcare is evidence-based medicine. EBM offers the promise of improving the quality of clinical services and reducing costs.

Definition

Evidence Based Medicine may be defined as the use of any techniques from science, engineering, risk-management and meta-statistics analysis – to medical literature reviews and randomized controlled trials – in order to aim for the ideal.

According to healthcare economist and Assistant Professor Gregory Ginn PhD, MEd, CPA of the UNLV, this “ideal” represents the philosophy that medical professionals make “conscientious, explicit, and judicious use of current best evidence” in everyday clinical practice.

Historical Review

Some pundits argue that EBM is a trend that will prevail for the foreseeable future. In the past, standards of care were often set by panels of experts. Today, however, there is a greater demand for empirical evidence to establish the efficacy of clinical protocols.

Achievements

EBM can directly affect quality and financial performance because it facilitates the elimination of therapies that cannot be demonstrated to be effective.

For example, EBM can reduce a hospital’s prescription drug costs. Evidence-based medicine may also affect operations management if it shows that multiple approaches to treatment can be efficacious.

Of course, in order to accommodate different modalities of treatment, hospitals will need more sophisticated health information technology systems [HITS] that allow for data integration.

Assessment

EBM may also be used to support another trend, the development of alternative and complementary medicine.

Conclusion

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Patients Desperately Seeking EMRs

A New P4P Twist?

Staff Reporters

The Department of Health and Human Services [DHHS] recently received more than 30 applications from communities seeking to participate in a Medicare pilot program that uses electronic health records [EHRs]; according to CQ HealthBeat reports.

Pilot Program

Under the new experimental pilot program, DHHS and the Centers for Medicare and Medicaid Services [CMS] will recruit 100 physician practices in 12 communities to participate, with an additional 100 practices in the communities selected to serve as a randomized control study group.

Assessment

Physician practices that participate in the pilot program will receive bonuses of as much as $58,000 per physician – or as much as $290,000 per practice – after they implement EHRs and meet certain quality standards over a period of five years. This equates to about one thousand dollars, per month, per doctor.

Conclusion

DHHS will announce the 12 selected communities in June, 2008. But, for now, what is your current opinion of this controversial program? Or, is it just another twist on the P4P concept?

Please comment.

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Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact him at: MarcinkoAdvisors@msn.com  or Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

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Reimbursing Acute Care Episodes

A Proposed New ACE Payment Scheme

Staff Writers

Did you know that the Centers for Medicare & Medicaid Services [CMS] announced a planned demonstration project last week that would combine payments for both hospital and physician services for a select number of episodes of care? Its intent is to determine if such an approach will be more efficient and improve the quality of care.

The ACE Project

The project, called the Acute Care Episode demonstration, will test whether a global payment will better align the incentives for both types of providers leading to better quality and greater efficiency; beginning in January 2009.

Assessment

Currently, CMS pays the hospital a single prospectively determined amount under the inpatient prospective payment system [IPPS] for all care given to an inpatient. Physicians who provide other care to patients are paid separately – accordingly to the Medicare physician fee schedule – for each service they perform.

Conclusion
Loading story…

And so, CMS wants to test whether an approach of bundling payment for both hospital and physician services will work! What do you think; please opine?

Related Information Sources:

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Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Improving Patient Communications

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Managed Care Ethical Considerations

By Render S. Davis; MHA, CHE

In contemporary medicine, and managed care, ethical dilemmas in communications are increasingly common and may come in many different forms. For example:
  • Physician’s failing to communicate necessary clinical information to patients in terms and language the patients can truly understand;
  • Physicians’ offering only limited treatment choices to patients because alternatives may not be covered by the patient’s insurance plan;
  • Failures to disclose financial incentives and other payment arrangements that may influence the physician’s treatment recommendations;
  • Time constraints that limit opportunities for in-depth discussions between patients and their doctors; and,
  • The lack of a continuing relationship between the patient and physician that would foster open communications; etc.             

me-p

Assessment

Most so-called “gag clauses,” implemented by some managed care organizations to prohibit physicians from informing their patients about non-covered treatment alternatives have been declared illegal in most states. Nevertheless, does the physician’s duty to be fully truthful and informative in patient communications, remain under suspicion? Please opine with your experiences and how we might improve.    

Channel Surfing

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Conclusion

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CMS Shells Out to Compare Hospitals

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“You show me – I’ll show you”

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

The Centers for Medicare and Medicaid Services [CMS] just launched an advertising campaign to demonstrate how some patients get needed help … and how other hospitals give surgical patients antibiotics! Say what?

Site Traffic Quadruples

Yep! All told, the ads include more than 2,500 hospitals, according to the Associated Press. Of course, in true advertising fashion, the CMS wants patients to be intrigued enough by the marketing “teasers” to visit www.HospitalCompare.com when considering what hospitals to … and they used the word … “patronize.”

Publicity over changes made to the site in March 2008 helped quadruple traffic.

A Questionable Start

Reviewers and critics hale Hospital Compare with a solid enough start, but it still lacks real “quality outcome” measures.

Instead, the site measures procedures, or how well the facility follows standard guidelines. The site’s only mortality gauge for example – for heart attack and heart failure – lumps virtually all hospitals into the “normal” category, with just a handful ranked above or below them.

But, they are expected to show statewide averages for those benchmarks, sometime soon.

The Site

Hopefully, the site will begin to demonstrate the type of medical care quality review, severity rating adjustments and proper drill-down analysis that readers of the Medical Executive-Post have come to expect from the likes of our section-editor, the luminous Dr. Brent A. Metfessel MS, CMP™ (Hon). Until then, it may just be the best available information for now. And, can a Doctor Compare service be next? 

Assessment

Do you expect this type of hospital specific – and more general medical practice and industry – healthcare transparency to continue? Is it a help to patients – and providers – or just more marketing obfuscation [like being Valedictorian in your DUI school class]? Please opine.

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Physician’s Managed-Care Ethical Dilemma

Caring for [Retail] Patients -or- [Wholesale] Populations

By Render S. Davis; MHA, CHE

Crawford Long Hospital at Emory University

Atlanta, Georgia, USAbiz-book

In today’s health care environment, physicians face a myriad of dilemmas in their daily practice. Time constraints, diminished professional autonomy, declining incomes, explosive growth in technology, and deteriorating public trust combined with increasing public demands are only some of the most obvious problems plaguing practitioners. Although some who have been adversely impacted by these changes are quick to lay blame at the foot of “Managed Care Organizations (MCOs),” this anger may be, to some extent, misdirected.

Managed Care

While there are ample faults in managed care as it is currently practiced, its theory and principles are ethically sound. Healthcare should be “managed” – for continuity, quality, value, and optimal outcomes – regardless of the mechanisms by which the caregivers are paid.  Practicing medicine within managed care still entails obligations to care for patients and to respect their autonomy, but now providers have been placed in a disquieting role as resource managers, requiring a new approach to finding better, more cost-effective ways to meet these obligations, while being held accountable to a larger community to which the individual belongs (e.g. a health plan or employee group) for the costs incurred in delivering care. 

For example, an article in the Hastings Center Report, summed up this new approach by noting that managed care is based “…on the foundation of a philosophy of care that, however well or poorly articulated, responds to the needs of individual patients in the context of population-based mechanisms to assess needs and distribute resources…”

Current Examination

In light of the above ethical principles, an examination of the current practice of managed care reveals an uneven and troubled landscape that continues to be impacted by declining sources of revenue for non-profit managed care organizations and falling profits for the proprietary companies.

Across the board, both types of MCOs have been damaged by the precipitous drop in investment income in the wake of the stock market’s decline since 2000 and again more recently in 2007 and 2008.

Consequently, to maintain adequate services or meet shareholder expectations, managed care organizations have further restricted coverage and/or pushed up premiums to either employers or enrollees.

A Public-Good

Although MCO emphasis on health promotion and illness prevention is viewed as a public good, there remain many highly publicized instances where the health of individual patients has been jeopardized by apparently arbitrary policies and decisions made by managed care organizations, ostensibly in the name of cost containment.  Among especially notable issues have been: 

  • Delayed referral of patients to specialty physicians, or denials of access to specialized services, primarily based on resource allocation and cost considerations;
  • Rigidly enforced practice guidelines and programmatic standards that potentially penalize a physician’s exercise of his or her clinical judgment;
  • Crafting of incentives that encourage physicians to withhold clinically pertinent information from patients, and to discourage physicians from serving as advocates for their patients;  
  • Declining consumer choice of health plans and providers where consumers with health insurance are unwilling to demand improvements for fear of losing the coverage they have;
  • Failure of many MCOs, especially those operated as proprietary entities, to acknowledge an obligation to improve community health and broaden access to services to persons such as those with handicapping conditions, the poor, the disenfranchised, undocumented aliens, and others with legitimate, unmet, health care needs;
  • Subordination of quality access and treatments in favor of cost containment, etc.

But, these issues, according to John LaPuma MD, make managed care “morally vulnerable” and fraught with public suspicion regarding its core values. Consequently, physicians practicing medicine today are faced with very real dilemmas in such areas as patient advocacy, access to and scope of care, informed consent, conflict of interest, continuity of care, and patient choice.

“Double-Agency” Dilemma

In a speech given at Georgetown University some years ago, Marcia Angell MD, Executive Editor of The New England Journal of Medicine [NEJM], described the physician’s primary dilemma within the framework of managed care practice as one of “double agency,” where physicians are being asked to be “both advocates for individual patients and allocators of finite healthcare resources to the larger populations of enrollees of health plans.” 

This is a role that seems to impinge on the fundamental tenets of patient advocacy articulated in the Hippocratic Oath.  By the terms of many managed care insurance plans, a physician’s income is directly related to savings generated in the delivery of care, a tactic criticized by former Surgeon General C. Everett Koop, M.D. who wrote, “Something is wrong with a system that spends more and more each year to provide less and less service.”

ROI and Shareholder Value

Many of the proprietary (for-profit) managed care organizations acknowledge their primary business objective is the return of value to shareholders and increased ROI, with obligations to provide expanded access and broader health care coverage to plan enrollees a secondary consideration. Yet, as regular readers of the Executive-Post are aware, some non-profits are not much better!

While he was Speaker of the Oregon State House, former Governor John Kitzhaber (a physician) addressed this concern when he wrote of the “insidious problem permeating our health care system…the perverse set of incentives that leads health care providers to act as isolated economic entities focused on their own well-being, instead of viewing themselves as community resources whose primary role is – or should be – to promote the health of the nation.”

Conclusion

And so, in light of this troubled ethical and moral environment, please comment on some of the specific dilemmas confronting physicians in daily practice; and please include your solutions?

And, when Marcia Angell MD, of the NEJM, called today’s doctors – “allocators” – did she mean that physicians should now become healthcare economists, too?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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KISS Investment Strategies

Warren Buffett on Index Funds

Staff Reporters

Did you know that over 31,000 investors flocked to this year’s annual meeting for Warren Buffet’s Berkshire Hathaway – also referred to as “Woodstock for Capitalists?”

Assessment

And when a shareholder asked for the single-best specific investment idea that Warren Buffett could recommend to an individual in his 30s, Buffett said:

“I would just have it all in a very low-cost index fund from a reputable firm, maybe Vanguard. Unless I bought during a strong bull market, I would feel confident that I would outperform … and I could just go back and get on with my work.”  

Conclusion

What is your personal index fund strategy; do you even have one?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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External HIT Data Storage

Enter Cloud Computing

By Dr. David Edward Marcinko; MBA, CMP™

After a long time in development, Google publicly launched its free, Web 2.0 collaborative, online personal health records platform on Monday. It joins the likes of RevolutionHealth and Dossia. The operation first made headlines when Google announced it at the Healthcare Information and Management Systems Society [HIMSS] meeting a few months ago. Much like the “non-PHR” HealthVault initiative of the Microsoft Corporation, Google allows consumers to download records from its eight initial partners and store them for free.

A Minority of “in-vivo” EMRs

But, as readers of the Executive-Post know, only a few medical practices keep records electronically. The good news, on the other hand, is that Google has been thinking not just about EMRs, but also about the rest of data that’s most useful (Rx and lab results) and has some big players, such as Medco, Walgreens and Quest on its list of initial partners.

The bad news is that Google will also have to spend more time dealing with privacy zealots and storage space hogs.

Enter the Cloud

But, few health IT gurus talk about data storage in the web 2.0 cloud. And so, here is a list of technology leaders in the external disk storage, and data-recovery space. 

  1. EMC
  2. IBM
  3. HP
  4. Dell
  5. Hitachi
  6. NetApp

Assessment

Most of these firms take “data-snapshots” every fifteen minutes, so that if there is a blackout or other systems problem, no more than 14 minutes of data would be lost. And, there is no doubt that the need for more storage space will increase, going forward.

Conclusion

What do you think of these new HIT initiatives for personal EMRs; or the concept of cloud computing with data storage and recovery, in general?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact him at: MarcinkoAdvisors@msn.com  or Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

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Milliman Medical Index Components of Spending

Components of Medical Costs

Staff Reporters 

According to the just released Milliman Medical Index Components of Spending [MMICS], the total medical costs for a domestic family of four reached $15,609 in 2008, as allocated below.

 

2008 MMI Component of Spending

Total Medical Cost*

Percentage

Physician

$5,435

35%

Inpatient

$4,724

30%

Outpatient

$2,516

16%

Pharmacy

$2,302

15%

Other

$633

4%

Total

$15,609

100%

 

*Includes both the portion of the costs paid by an employer’s benefit plan and the portion paid by the family in the form of out-of-pocket cost sharing.

Full report: http://www.milliman.com/expertise/healthcare/products-tools/mmi/pdfs/milliman-medical-index-2008.pdf 

Conclusion

Your thoughts and comments are appreciated?

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact him at: MarcinkoAdvisors@msn.com  or Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

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Interest Rate Options

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Treasury Issues Options

[By William H. Mears; CPA, JD]

Interest rate options are usually options on Treasury instruments, Treasury bills, notes, and bonds. The face values used are $1 million for Treasury bills and $100,000 for T-notes and bonds.

Purpose

With these options, a physician or other investor will bet on the direction of interest rates. When interest rates decline, the prices of bonds increase. This phenomenon has been experienced in the United States for the most part since the late 1980s. If interest rates increase, bond prices decrease.

Assessment

The value of the underlying security (the bond itself) will determine the value of the option. The investors who believe that interest rates will increase and that bond prices will go down are bearish. As bearish investors, they will buy puts and sell calls. Bullish investors will sell calls and sell puts.

***

IRs

***

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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How to Study Medicine

Practice Management -or- “Sutures for Life”

Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

Although we are apostles of the still living Kenneth J. Arrow PhD – the Noble Prize winning health economist – we also remember David Cheever MD as much more than a surgical innovator.

http://nobelprize.org/nobel_prizes/economics/laureates/1972/arrow-autobio.html

And, like Arrow, his human compassion and true fiduciary character is revealed in the following passage from a lecture delivered before the Harvard Medical School class of 1871, entitled “How to Study Medicine.”

”If you seek for wealth you have mistaken your avocation. There must be something more and something higher. That something is a love of your profession; a passion for science for its own sake; a broad humanity, which covers all the sick with a mantle of charity. Never lose sight of that motive, for if it once takes flight, your profession is reduced to a trade, and there is absolutely nothing left …”

… “As long as you can keep alive the sacred flame of this early passion which first called you to embrace the medical profession, so long shall you be warmed, sustained, upheld amid disappointment, unjust treatment or reverses …”

Note: David W. Cheever MD served as Professor of Surgery Emeritus for HMS. He performed the first esophagectomy in the US at BCH.

Conclusion

Your comments and practice philosophy are appreciated.

Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact him at: MarcinkoAdvisors@msn.com  or Bio: http://www.stpub.com/pubs/authors/MARCINKO.htm

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Nobel Prize Medal

 

 

 

Hospital, Clinic and Physician Pricing

Emerging Medical Transparency Initiatives

By Prof. Hope Rachel Hetico; RN, MHA, CMP™

In 2007, federal and state legislatures first called for hospitals across the country to make their prices “transparent.” 

Definition

The term transparency was defined as the full, accurate, and timely disclosure of hospital charges to consumers of healthcare, as well as the process employed to arrive at those fees. Moreover, transparency does not merely involve publishing a list of prices and fees. 

Essentially, hospital CXOs and physicians must also be able to present their prices in a manner that is understandable to the general public and they must be prepared to explain the rationale behind their charges.

State of the States

Currently, at least 33 states have already proposed or passed legislation regarding publication of hospital charges.

For example, the average cost for a hip, knee or ankle joint replacement is $38,443; while a heart valve operation is $124,561and a back fusion is $60,406.  Torrance California based HealthCare Partners now notes on its Website that it charges $15 for flu vaccines, $61 for a chest X-ray, while a colonoscopy costs $424.

And, right here in Atlanta, Emory University at Johns Creek Hospital is now advertising its obstetrics, anesthesia, pediatric and childbirth delivery services in bundled financial packages for private pay patients, and those with HSAs, MSAs and HD-HCPs, etc. In fact, the program was promoted on TV this day, by it first-ever CEO. Located in the heart of the City of Duluth in North Atlanta; Emory Johns Creek is a 110-bed, all private room hospital. It features a comprehensive range of services from 24/7 ER, surgery using the latest stealth technology, 64 slice CT, MRI, nuclear medicine and interventional procedures. The “Birth Place” gives women and their families a high touch, luxurious alternative with the peace of mind of a Level III Neonatal Intensive Care Unit [NICU].

http://emoryjohnscreek.patientfinancialresource.com/CustomPage.asp?pagename=Home_Behavioral

Assessment

Such financial and economic initiatives demonstrate increasing industry competition with advancing patient empowerment, with other innovations like concierge medicine, onsite and retail medical clinics, etc.

Conclusion

What are your thoughts, experiences and comments on the above emerging issue of medical pricing transparency?

Related Information Sources:

Medical Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Product DetailsProduct DetailsProduct Details

What is a QDRO?

Physician Divorce Situation

Hello,

I am an internist who is in the midst of a divorce situation. My attorney is talking about something called a QDRO with respect to my retirement plan.

Question: What is a QDRO?

Thanks

Dr. Joseph Burton Rellim

Springfield, Ohio

***

Patient [Customer] Relationship Management

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What it is – What are it’s Goals

[By DeeVee Devarakonda, MBA]

Patient or [Customer Relationship Management] can help healthcare organizations and medical practices achieve their business objectives while addressing today’s increasing competitive challenges.

Conflicted Meanings

In the last few years P-CRM came to mean different things to different people. First CRM, and then P-CRM, became a general buzzword, which often meant an expensive initiative that costs thousands of dollars, with not so great, to non-existent-results. Not true!

Due to various reasons including lack of clarity around business, doctor vision, inadequate requirements gathering, inappropriate software, vendor selections, messy and expensive implementations, P-CRM acquired a negative image which need not have been the case; especially for the intimate relationships needed in the healthcare space.

A Business Philosophy

P-CRM is a medical business philosophy. It is a cultural mind set that healthcare organizations need to cultivate in order to design, develop and operate organizations around patients in a way that is mutually beneficial. This is the mindset needed for healthcare organizations today. It is as true for a two-employee privately held healthcare clinic or medical practice; as it is for a mega medial corporation spanning several states with multiple services and product lines.

P-CRM Goals

P-CRM allows you to:

  • Develop single and consistent view of your patients
  • Find and keep your best patients
  • Improve patient satisfaction and retention
  • Gain competitive advantage
  • Develop long lasting and profitable relationships with your patients
  • Improve sales and marketing effectiveness
  • Improve your downstream business operations and quality
  • Augment ROI

Assessment

P-CRM efficiently helps healthcare organizations differentiate themselves from their competitors through superior patient relationships and streamlined business operations with all stakeholders – patients, suppliers and partners. So, what is your P-CRM strategy and how have you implemented it?

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Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Product DetailsProduct Details   Product Details

 

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Put and Zero Coupon Bonds

Understanding Debt Puts and Debt Zeroes

[By Staff Writers]

Put Bonds

Put bonds are so-called because they allow doctor-investors and other bondholders to give bonds (put) back to the issuer at par on specified dates prior to maturity. Put bonds have either a fixed or variable interest rate and may have single or multiple tender dates.

Furthermore, they can be either mandatory (in which case the physician-investor has a specified period of time to keep the bonds at the new rate); or optional (in which case the physician-investor has a specified time period to tender the bonds).

Zero Coupon Bonds

These bonds are offered at a deep discount to par face value, and there are no coupon interest payments. Instead, the interest is reinvested and compounded semi-annually and paid to the physician-investor at maturity.

Muni Bond Underwriters

Conclusion

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Investing in Options

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An Appropriateness Summary

[By William H. Mears; CPA, JD]

Options trading involve a high degree of risk in that the physician or other investor may lose their entire investment when the option expires. As a result, options trading may not be suitable for all doctors or investors.

Suitability

All trading firms must have a procedure in place that requires a customer’s account to be approved for options trading prior to the execution of any options orders. The following steps must be taken before an option trade can be completed:

1. Completion of an Options Agreement. The Options Agreement attests to the client’s receipt of the Risk Disclosure Book, sent out by the broker.

2. Approval of the Options Agreement by a Registered Options Principal. The Registered Options Principal will ensure that the Risk Disclosure Form is sent and approves the client for options trading based on the client’s application.

3. Return of the Options Agreement to the broker/dealer within 15 days.

4. Receipt of Risk Disclosure Form by the customer. The most important step in the options account opening process is the client’s receipt and review of the Risk Disclosure Book.

Assessment

Generally, brokers send out the Risk Disclosure Form first, get approval for options trading by a Registered Options Principal (ROP), do the trade, and get a signed Options Agreement from a client within 15 days of the account approval.

So, have you ever invested in options; why and what were your results?

Channel Surfing the ME-P

Have you visited our other topic channels? Established to facilitate idea exchange and link our community together, the value of these topics is dependent upon your input. Please take a minute to visit. And, to prevent that annoying spam, we ask that you register. It is fast, free and secure.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners(TM)

The “Risky Business” of Web 2.0 Doctor Bloggers

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A Mashed-Up Opinion

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chiefdem2]

Today, after personally reviewing far too many blogs, and according to www.NPR.org, there are more than120, 000 health care forums on the Internet with opinions ranging from pharmaceuticals, to sexual dysfunction, to acne.

The same goes for commercial doctor blogs that promote lotions, balms and potions, diets and vitamins, minerals, herbs, drinks and elixirs, or various other ingest-ants, digest-ants or pharmaceuticals, etc. Link: www.MyFootShop.com

And, to other doctors, the blogging craze is a new novelty where there are no rules, protocols, standards or precise figures on how many “medical-doctor” or related physician-blogs are “out there.” Unfortunately, too many recount gory ER scenes, or pictorially illustrate horrific medical conditions, or serious and traumatic injuries. www.physicianspractice.com/index/fuseaction/articles.details/articleID/1136.htm

Of course, others simply are medical practice websites, or those that entice patients into more lucrative plastic surgery or concierge medical practices. Some are from self-serving/credible plaintiff-seeking attorneys wishing to assist patients. Link: www.FootLaw.com

Disgruntled Doctors

But not all physician blogs are geared toward practice information, marketing or medical sensationalism. In fact, just the opposite seems to be the case in extremely candid blogs, like “Ranting Docs”, “White Coat Rants,” “Grunt Docs”, “Cancer Doc,” “The Happy Hospitalist,” “Mom MD”, “Cross-Over Health”, “Angry Docs” and “M.D.O.D.,” which bills itself as “Random Thoughts from a Few Cantankerous American Physicians.” Link: www.thehappyhospitalist.blogspot.com 

According to some of these, they are more like personal journals, or public diaries, where doctors vent about reimbursement rates, difficult cases, medical mistakes, declining medical prestige and control, and/or what a “bummer” it is to have so many patients die; not pay, or who are indigent, noncompliant, etc.www.CrossOverHealth.wordpress.com

We call these the “disgruntled doctor sites.” Some even talk about their own patients, coding issues, or various doctor-patient shenanigans.

Privacy Issues 

But, according to psychiatrist and blogger Dr. Deborah Peel and others, the problem with blogging about patients is the danger that one will be able to identify themselves – the doctor – or that others who know them will be able to identify them.”  Her affiliation, Patient Privacy Rights, rightly worries that patients might tracked back to the individual, and adversely affect their employment, health insurance or other aspects of life.

And, according to Dr. Charles F. Fenton; III, JD and Dr. Jay S. Grife; Esq., MA, both frequent posters to this Executive-Post blog forum, it is certainly true that if a doctor violates a patient’s privacy there could be legal consequences. Under HIPAA, physicians could face fines or even jail time. In some states, patients can file a civil lawsuit if they believe a doctor has violated their privacy. Still, internet privacy issues are an evolving gray-area that if not wrong, may still be morally and ethically questionable. Link: www.patientprivacyrights.org

Opinions May Vary

Our colleague Robert Wachter MD, author of a blog called “Wachter’s World,” says it’s important for doctors to be able to share cases, as long as they change the facts substantially. On the other hand, the author of “Wachter’s World” and a leading expert on patient safety alternately suggests “You might say we as doctors should never be talking about experiences with our patients online or in books or in articles.”

But, he says that “patients shouldn’t take all the information on blogs at face value. Taken for what they are — unedited opinions, and in some cases entertainment — blogs can give readers some useful insight into the good, the bad and the ugly of the medical profession”. Link: http://www.the-hospitalist.org/blogs

Assessment

Well, fair enough! But, the above caveats are a big “if” according to Gene Schmckler of the Institute of Medical Business Advisors, Inc. Link: www.MedicalBusinessAdvisors.com

Eugene Schmuckler, PhD is a behavioral psychologist and stress management expert who opines that “doctors unhappy with their current medical career choice, or its modern evolution, should probably consider counseling or even career change guidance, re-education and re-engineering.” It is very inappropriate to vent career frustrations in a public venue. It’s far better for the blog to be private and/or by invitation only; if at all. Link: www.healthcarefinancials.wordpress.com/2007/12/03/physician-career-development-essay

In My View – Risky Business

I believe that a hybrid mash-up of both views can be wholly appropriate, or grossly inappropriate in some cases. Of course the devil is in the details; linguistics and semantics aside. Nevertheless; what is not addressed in electronic physician “mea-culpas” are the professional liability risks and concerns that are evolving in this quasi-professional, quasi-lay, communication forum.

For example, we have seen medical mistakes, and liability admissions of all sorts, freely and glibly presented. In fact,

“some physicians find that the act of liability blogging as a professional confession that is useful in moving past their malpractice mistakes. And, it is also a useful way to begin a commitment to a better professional life of caring in the future. It helps eliminate the toxic residue and angst of professional liability and guilt. Moreover, as they are unburdened of past acts of omission or commission, doctors should remember to also forgive those who have wronged them. This helps greatly with the process and brings additional peace.”

However, although some may say that this electronic confession is good for the soul, it may not be good for your professional liability carrier, or you, when plaintiff’s attorneys release a legion of IT focused interns, or automated bots, searching online for your self-admissions and scouring for your self-incriminations.

Of course, a direct connection to a specific patient may still not be made and no HIPAA violation is involved. But, a vivid imagination is not need needed to envision this type of blind medical malpractice discovery deposition query even now. www.jbpub.com/detail.cfm?TemplateName=alliedhealth&bc=3342-3&ThisPage=Table%20of%20Contents

Q: “Doctor Smith, I noted all the medical errors admitted on your blog. What other mistakes did you make in the care and treatment of my client?”

And so, the question of plausible deniability, or culpability, is easily raised. 

If you must journalize your thoughts for sanity or stress release; do it in print. And, don’t tell anyone about it so the diary won’t be subpoenaed. Then tear it up and throw it away.

Remember, with risk management, “It is all about credibility.” Don’t trash yours!

These thoughts may be especially important if you covet a medical career as a researcher, editor, educator, medical expert or something other than a working-class or employed physician.

Link: https://healthcarefinancials.wordpress.com/2007/12/07/122

Assessment

Remember, there are all sorts of new fangled risks out-there for the modern medical practitioner to consider; so beware!

Conclusion

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Health Plans Financially Squeeze Providers

Patients Squeezed, Too!

Staff Reporters

As regular readers of the “Executive-Post” know, several leading health plans have taken a profitability beating over the last several months. The reasons for the economic decline include operational issues, rising medical costs and financial market losses. For example, WellPoint, missed Wall Street’s estimates by a wide margin making financial analysts more than a bit nervous.

Raising Premiums

Now, hoping to calm watchers on the Street, industry leaders like UnitedHealthGroup and WellPoint are assuring investors that they plan to raise premiums enough to stabilize income–even if it means losing some members. As reported in the AMNews, “We will not sacrifice profitability for membership,” WellPoint President and CEO Angela Braly recently told analysts during a conference call.

Diminishing Reimbursements

At the same time, the plans are promising to use their muscle to get better deals from provider networks. This vow isn’t surprising, given that both the plans and analysts see medical costs as a critical factor in sapping industry profits this year.

Assessment

However, it’s not clear that plans like UnitedHealth-already known for extremely aggressive negotiations-can cut physician reimbursements any further.

Conclusion

Your comments are appreciated. Is anyone surprised over the above posture?

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General Obligation and Revenue Bonds

Understanding GOs and RBs

[By Staff Writers]fp-book2

General obligation bonds are secured by the taxing authority and are therefore considered safer than other municipals. The full faith and credit of the municipality ensures prompt payment of principal and interest.

Further more, most municipal bonds, including city, county, and school district issues, are secured by a pledge of unlimited property taxes (known as ad-valorem taxes), which further secures the bonds. If taxes are not paid, the property may be sold at a tax sale, at which the bondholder has a superior position.

Revenue bonds

Revenue bonds are payable from the earnings of a revenue-generating facility, such as water, sewers, or utility systems, toll bridges, or airports. The risk, however, is that the facility will not generate income sufficient to pay the interest, and therefore the yield is somewhat higher than for a general-obligation bond.

Revenue bonds are supported only by the revenue earned, so if the project does not produce revenues sufficient to pay the interest on the bonds, then the bonds go into default. Therefore, it is important to properly evaluate the municipality’s ability to tax and/or the assumptions used to project the facility’s revenue.

Conclusion

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Using Option Derivatives

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Why Options Investing?

By William H. Mears; CPA, JD

Although options can be used to raise cash from a long stock position that is not salable, individual physician-investors should use options primarily as a hedging mechanism. Individuals and doctors may want to hedge their portfolios to gain peace of mind by purchasing portfolio insurance to guard against major market declines or unpredictable events.

Many Different Uses

Options can also be used by physician-investors or other individuals to lock in profits where a stock has performed well and the investor would like to capture current market value in a stock (without triggering a sale). If an individual investor has a negative outlook on a stock, because of either a short-term economic view or a sentiment about a long-term bear market cycle, the investor can protect his or her portfolio against market movements, both short-term and long-term.

Options can be useful to manage risk in a single stock portfolio. The price for the use of an options strategy can be significant or relatively minor, so it is important to understand the risks, limitations and benefits of options strategies; and to understand this information when these instruments are used.

Traditional Personality of Discomfort

Individual physicians and investors have traditionally been uncomfortable with investments in options. The risk in these instruments is a function in part of the short duration for which they are generally purchased (e.g., three months, nine months). It is difficult to determine the direction of a market for a short time period.

Time-Risk Management

However, one of many ways to hedge the time risk is to increase the duration of an instrument. As the duration of an instrument is extended (to two years, for example), it is possible to determine with greater confidence that the market is likely to move through various cycles.

Long-term Equity Appreciation Options provide the investor with an opportunity to invest in options for up to two and one-half years. During the period of the option, the investor can liquidate the option position at any time, through either an exercise or a sale of the option itself. If the option is not exercised or sold prior to the expiration at the end of the duration, it will expire worthless.

Assessment

The physician investor who understands the vagaries of the markets—and can afford to take the losses if they occur—is the right client for a sophisticated investment strategy involving options. While there are no specific rules that define the characteristics of an option investor, a broker transacting in options for a physician-client is required to make sure that the client is appropriately aware of the risks.

Conclusion

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Understanding Municipal [Muni] Bonds

State and Local Debt Issues

[By Staff Writers]

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Municipal bonds are issued by state and local governments for building schools, bridges, hospitals, and other municipal facilities. These bonds depend upon their tax base to generate the income to pay the interest and retire the debt.

Tax-Exempt Status

The most important feature of municipal bonds is their tax-exempt status. While the interest earned is free from federal income tax, state and local governments may levy taxes on that income. Therefore, because of the tax advantage, municipalities can borrow at lower rates of interest than can corporations.

The physician-investor benefits because the tax advantages associated with the interest, albeit lower than that of corporate or government bonds, may provide a higher rate of return. Municipal bonds are usually sold in increments of $5,000, $10,000 or more, although municipal bond funds may have lower minimums.

Types

Municipal bonds are available in various types, depending upon whether the debt is paid by the issuing authority or by the revenue earned from the facility.

Conclusion

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The Options Clearing Corporation

Option Positions and Exercise Limits

By William H. Mears; CPA, JD

The Options Clearing Corporation [OCC] places certain limits on the number of contracts that can be outstanding on each side of the market for individual securities. These position limits vary from underlying security to underlying security. However, they range from 4,500 to 10,500 contracts. The number of contracts allowed will vary based on the volume and outstanding shares of each issue.

Limits

Additionally, there are limits to the number of same-side-of-the-market contracts that each physician-investor or other person can exercise within a three-or-five-consecutive-business-day period depending on market condition. Long calls and short puts are on the same side of the contract because they are both bullish strategies. Long puts and short calls are bearish strategies.

Covered options

—For a call seller to be considered covered, he or she must either own the underlying stock or convertibles or produce an escrow showing that the stock is on deposit at another brokerage firm and will be delivered if necessary.

—To be covered, a put writer must have cash on deposit with the brokerage firm equal to the aggregate strike price or be short in the underlying stock.

Uncovered options

—A minimum of $2,000 must be deposited in a margin account. Additionally, maintenance margin requirements may apply in the future.

Margin requirements

Options contracts are regulated by the Federal Reserve Board under “Regulation-T” and by the rules and regulations of each brokerage firm and exchange. Options must be fully paid for within seven days of purchase and are settled on a next-day basis.

Assessment

Generally, options cannot be purchased on margin, but occasionally firms will allow clients to do so. The margin requirements for covered options are different from those of uncovered options.

Conclusion

Do you use options and what strategies do you employ; please comment?

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Options and Market Price

In, At, and Out-of-the-Money

By William H. Mears; CPA, JD

A call option is in-the-money if the market price of the stock is higher than the exercise price of the option.

If the market price of the stock was the same as the exercise price of the call option, the option would be at-the-money.

If the market price of the stock was lower than the exercise price of the call option, the option would be out-of-the-money.

Examples:

On June 1, XYZ stock has a market value of $40. The physician-investor bought one XYZ call (representing 100 shares) with a $70 strike, expiring September 16 for $3.

On September 16, at expiration, consider the following:

1. Stock price: $47

Exercise the option, because the strike price is greater than the stock price. Pay $40 for 100 shares. The gain (loss) on position = ($47 – ($40 + $3) × 100) = $400.

2. Stock price: $35

Put option

On June 1, an investor sells XYZ for $40 a share. The investor also bought one put (representing 100 shares) with a $40 strike price and an expiration date of September 16 for $2.

On September 16, consider two scenarios:

1. Stock price: $47

Do not exercise the option, because the stock price is greater than the strike price. The investor would receive $40 for the stock worth $47 if exercised.

Therefore, allow the option to expire. Gain (loss) on the position is ($0 – $2) × 100 = $200.

2. Stock price: $35

Exercise the option, because the stock price is less.

Do not exercise the option, because the stock price is less than the strike price. The investor would have to pay $40 for the stock worth $35 if exercised. Therefore, allow the option to expire. Gain (loss) on position is ($0 – $3) × 100 = $300.

Conclusion

What has been your investing success, or failure, with options?

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Role of Retail Medical Clinics

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Transformation [Symposium on Innovative Healthcare Delivery: Mayo Clinic]

Reprinted: October 15, 2007

http://transformationsymposium.wordpress.com

With a million visits a year and a satisfaction rate of 97% to 100%, those patients who experience MinuteClinic (www.minuteclinic.com) seem to love it. But in the world of retail clinics, does more convenient care mean better care?

The CEO Opinion

Michael Howe, the CEO of MinuteClinic, believes it does. Nicholas F. LaRusso, Chair, Mayo Clinic Department of Medicine, talked with Howe, a speaker at last year’s Transformation Symposium, about his organization’s effort to transform the delivery of health care.

Howe explained, “The broadest perspective to start with is redefining the word ‘integration’ in health care. Typically when we think about integration in health care we think about it from the standpoint of bringing all the solutions to a single point, and as long as the patient comes to that location, providers can solve most, if not all, of their issues. MinuteClinic really looked at it the other way and asked how would you integrate high-quality, simple health care solutions into a consumer’s lifestyle. Our goal is to put access to health care professionals into the pathway of the consumer.”

Growing Concept

With 200 clinics around the country and plans to double that, Howe is well on his way. Found in CVS stores, MinuteClinic’s team of board-certified practitioners are trained to diagnose, treat and write prescriptions for a variety of common family illnesses for patients 18 months and older.

Accredited

But, it is not all about convenience for Howe. He points out that MinuteClinic spent a year and a half working with The Joint Commission to become fully accredited. And, though they are the only retail provider at this point to be accredited, he thinks retail clinics should seek accreditation to really define themselves at the highest level of care.

Best-of-Breed and EMRs

By building a health care service based on best-practice protocols for focused conditions and through leveraging their electronic medical record (EMR) to measure their providers’ adherence to these guidelines, Howe believes that the retail clinic model delivers higher-quality care at a lower price that is more accessible and more convenient for patients than traditional primary care practices.

Assessment

During the last symposium, Howe shared his vision of a truly integrated health care system and the retail clinic’s role within it.

Transformation: A Symposium on Innovative Healthcare Delivery Mayo Clinic. Nicholas F. LaRusso; Chair, Mayo Clinic Department of Medicine.

Link: http://transformationsymposium.wordpress.com/2007/10/15/the-role-of-the-retail-clinic-michael-howe/

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Secular Annuities

What Exactly is a Secular Hospital Annuity?

Your assistance is appreciated.

Thank you.

Anonymous Physician-Executive

Lake Worth, Florida

 

Query on Variable Annuities?

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Point-Counter Point Debates

Question:

Annuities are a controversial product in the financial services industry today; especially variable equity annuities. They are often touted as a solution to the retirement income question for medical professionals. Many sales consultants and financial advisors advocate their use; while others absolutely detest and abhor them. And, it has been said that annuities are often sold, but rarely purchased.

For example, insurance fee components are high, sales-loads are great, and most annuities are deferred, but few are annuitized. Some are even sold within qualified retirement plans by fear mongering salesmen/women.

And so, what is your opinion on this controversial subject and ever-evolving contentious financial product? Please omit the default “it depends on the client and situation” answer-of-choice; and clearly opine pro or con; and why.

Assessment

Parsing aside; will annuities remain a bane, or finally morph into a more transparent and efficient product in the future? And, what are some alternatives for physician investors and healthcare executives? Cogent, thoughtful and experienced repliers are appreciated; sales slogans and aphorisms are not. Please opine?

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High-Yield [Junk] Bonds

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Understanding Junk Bonds

[By Staff Writers]

High Yield Bonds [HYBs] are debt issued by U.S. corporations that carry less than investment-grade ratings. They are also referred to as “junk bonds.” For the purpose of high-yield bonds; below investment grade means Ba or lower; as ranked by Moody’s, and BB or lower by Standard & Poor’s.

The Market

The market for high-yield bonds is large. A high-yield security compensates the physician-investor for the added risk by offering a higher coupon [interest rate] than could be obtained from investment-grade corporate bonds.

Many Types

Several types of bonds fall within the high-yield sector, including zero coupons, split coupon, increasing rate, floating rate, pay-in-kind, first mortgage, and equipment trust certificates.

These are structured just like other bonds bearing the same name; the only difference is the investment quality of the corporation issuing the debt. Because of the higher coupon [interest rate], there is a potential for higher total returns to the bondholder or physician-investor.

Risk

Because of their inherent risk, these bonds are an alternative for more aggressive physicians and fixed-income investors. They may also be attractive to equity physician-investors who are willing to assume the risk of the lower investment quality. These investors recognize that as the underlying credit quality of the issuer improves, the value of its bonds should increase as well.

Conclusion

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Medical Quality Drill-Down Analysis

Finding Sources of Treatment Variation 

By Brent A. Metfessel MD, MS, CMP™ (Hon)

If a medical provider or healthcare facility is found to have a significant variance from the norm on a measure, such as economic cost, drill-down analysis is important to find the reason behind the variance. 

Episodes of care case-mix adjustment is naturally suited to this kind of analysis, but other population-based groupers such as DCGs also allow drill-down if the clinical categories that are precursors to the assignment of a risk score are used. 

The Concept

The conceptual idea behind drill-down is to obtain greater and greater detail on an area of interest.  Thus, if a provider is found to have a high overall cost variance or performance ratio, a user can select the provider and drill-down into emergency room usage, hospitalization frequency, types of illnesses seen, or procedures performed. 

Case-mix is useful even for the more detailed reports since if, for example, ER use or the utilization of specified procedures is not adjusted for illness burden the “my patients are sicker” argument can easily hold. 

However, if the procedures are related to illness classes, providers can be compared to their peers on procedure use for that illness class.

Example:

Dr. Jones is a family practitioner who had a high patient load from a single large health plan.  These patients under his care had a total of 450 episodes over a two-year period.  His case-mix adjusted performance ratio was 2.28 and cost variance was $157,400.  Dr. Jones requested a drill-down analysis to determine why his practice patterns showed such a high variance from the norm.

One area that the health plan data analysts found had high variance were patients he saw with tendonitis of the lower extremity.  He saw 30 episodes of care for this condition, having a total performance ratio for the illness class of 6.0 and a cost variance of $25,300. 

On further drill-down, the analyst found that the major cost center included the frequency of MRI scans of the lower extremity for the tendonitis patients.  His scan rate was 0.4, which means an average of 4 out of 10 episodes received scans, making a total of 12 scans in all.  His peers of the same specialty showed 0.1 scans per episode of tendonitis of the lower extremity.

Dr. Jones showed a performance ratio of 3.0 and a cost variance of $10,800.  On learning this information, Dr. Jones decided to alter his referral patterns so that his scan rate was brought closer to the norm.

Conclusion

What has been your experience, if any, with drill down analysis; helpful quality improvement adjunct or physician bane?

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Reverse Mortgages

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How They Work – When Best Used

[By Staff Writers]

A reverse mortgage is a loan that pays the mortgagor (doctor-client) cash and at the same time does not require a payment. Instead, the loan accrues interest until the loan term is complete. The only security the mortgagee (lender) has is the home itself. It has no legal right to any asset or income. To visualize a reverse mortgage, think of it as having rising debt and falling equity. When you take out a reverse mortgage, you still own your home and are responsible for the upkeep, taxes, and insurance.

Several Options

There are many different payment options available. A doctor-client can get a lump sum at closing, periodic payments, a line of credit, or a combination of these three.

Costs

The costs of a reverse mortgage are very similar to a regular mortgage. The physician-client will have to pay many of the following: origination fees, closing costs, servicing fees, interest, and risk pooling fees.

Risk-pooling fees are a new type of fee unique to the reverse mortgage. It allows the mortgagee to self-insure loan losses due to varying circumstances.

TLAC

According to expert Larry Fowler, CPA, CFP™, a great way to analyze the cost of reverse mortgages is to use the “Total Annual Loan Cost” (TALC) rate. The TALC rate is a rate equivalent to the amount of interest that must be charged on the cash received by the physician-client to grow the cash to the level of the final amount due at the end of the loan term. A physician needs to know three items to be able to calculate the TALC rate: the amount owed; the cash advances made to the borrower, and the term of the loan. The federal Truth-in-Lending laws now require lenders to give TALC rate projections for every reverse mortgage.

Left-Over Provisions

Most reverse mortgages have provisions that explain how the leftover cash is distributed in the event that the home owner moves, sells the home, or dies. These provisions can become very important if any of the previous three situations occur. For this reason, it is very important that these provisions be clearly understood.

winter-house2

Assessment

Reverse mortgages should be used when a physician needs extra money, plans to stay in his/her home for a long period of time, does not want to make payments, and does not want to sell his/her home and move to a different one. The reason a doctor should stay a long period of time is that the TALC rate is usually highest in the beginning of the loan and drops off in the latter part of the loan.

Conclusion

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Case-Mix Severity Methods

Measures and Benchmarks

By Brent A. Metfessel MD, MS, CMP™ (Hon)

In a previous Executive-Post, we asked readers if they knew of any case-mix severity measures other than those utilizing expected values.

The Black-Box

When an MCO or HMO analyzes provider practice patterns, it is imperative that the organization educate providers on the methodology and validation of the adjuster, since provider buy-in to the adjuster cannot be obtained otherwise. 

Such education may consist of readings provided with the distributed performance reports that explain the algorithm as well as evidence for the algorithm’s validity.  The MCO needs to be open to questions from providers and show willingness to open the “black box” as much as possible.

Further Considerations

There are further considerations that are relevant to providers when dealing with case-mix adjusted reports:

1. Are the reported performance measures adjusted by specialty? 

The rationale for the additional adjustment comes from the fact that even though a number of specialties may treat congestive heart failure, for example, an internist or family practitioner generally treats less severe cases than would a cardiologist. 

Thus, even if a report is case-mix adjusted by illness class, the adjuster may not fully account for the differences in patient acuity within the illness class.  Adjusting by specialty will enable a more “apples to apples” comparison and achieve greater provider buy-in to the process.

However, for less common illnesses the additional specialty adjustment may cause the cell sizes to become too small, causing the adjustment to lose meaning since there would not be enough patients in some cells for meaningful comparisons.

Overall, whether or not specialty should be added as an additional adjustment is an individual decision made by the health plan.  The larger the health plan, the less chance that cell group sizes may become too small and the greater the advantage of the additional specialty adjustment.

2. What are the exclusion criteria? 

After the case-mix adjustment is performed, it is important that prior to reporting there exists an outlier exclusion criteria.  Without such criteria, there is a much greater chance that a good provider may perform poorly on a performance report since a few high-cost outliers, which may occur due to no fault of the provider, can strongly skew the case-mix indices and lead to artificially high cost variances and performance ratios. 

Some methodologies exclude general catastrophic cases, such as members with costs above $25,000, or there may be a truncation calculation where catastrophic members are included in the reporting information but are truncated to the criteria amount.

Thus, if a patient has costs of $50,000, the costs will be truncated to $25,000 prior to reporting.  This has the advantage of including all patients but the disadvantage of not knowing the actual cost of the patient panel. 

What about Outliers?

Another way to exclude medical outliers involves excluding them at the case-mix class level.  This means that illnesses that generally use less resources will have different criteria – in this case a lower high outlier exclusion boundary – that would an illness class that typically has high resource use. 

If cost is used as the measure of interest, the distribution curve of cost for a particular illness is skewed to the high side and thus does not look like the bell-shaped normal distribution.  This makes developing proper exclusion criteria more complex. 

For greater accuracy, a “non-parametric” or “distribution-free” test is useful.  One such test was developed in 1993 by Sprent and consists of the following equation:

                                 (| Xi – M | / MAD) > Max                                   

Where Xi represents any value being evaluated for outlier status, M represents the median (the value for which 50% of sample values are above, 50% below) of the sample (such as all cases in a disease class) and MAD is the median absolute deviation.

To calculate the MAD value, first obtain the absolute value of the difference between each value and the sample median. Then, sort the difference scores in ascending order. The median of the difference scores is the MAD value. Max is then the criteria point for excluding outliers.

A reasonable value of MAD would be 5.  Both low and high outliers would be excluded based on this equation.

Assessment

Ironically, medical outliers may contain very useful information in themselves. Yet, even more ironically, they are often rejected.

Conclusion

Do you still report outliers separately since such patients, particularly high outliers, may in some cases be steered to case management protocols?

Related Information Sources:

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Financial Planning: http://www.jbpub.com/catalog/0763745790

Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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Seeking Chief Medical Officer [CMO]

Award Winning 560-Bed Hospital

By Lois Dister
ldister@cejkasearch.com


St. Luke’s Hospital, a prominent 560-bed hospital in Cedar Rapids, Iowa is seeking a Chief Medical Officer. St. Luke’s Hospital is part of the Iowa Health System, one of the top 25 integrated delivery systems in the United States.

St. Luke’s was named a Top 100 Heart Hospital and Press Ganey named St. Luke’s a 2007 Success Story for outstanding patient satisfaction results. Also in 2007, St. Luke’s received the Iowa Recognition for Performance Excellence silver award. This is Iowa’s premier award recognizing high performance management principles.

A Rich Opportunity

This CMO opportunity is rich with challenging and attainable priorities. As a member of the President’s Council, the CMO will be the liaison with the 400-physician medical staff comprised of employed physicians, private practice physicians, members of the Iowa Health Medical Group and contracted physician groups.

Qualifications include board certification, experience as a physician leader in a hospital environment, quality management, medical staff relations and an excellent clinical background.

This is truly an outstanding opportunity for a strong physician leader.

Learn more about this position; or to nominate a colleague, contact:
Lois Dister
ldister@cejkasearch.com

On Malpractice Award Caps

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Struck Down in Georgia

[By Staff Reporters]

The Atlanta Journal-Constitution recently reported that Fulton County Georgia, Superior Court Judge Marvin Arrington, struck down the cap on monetary awards in a medical malpractice case. It was a decision that if upheld on appeal, could undercut a major component of Georgia’s tort reform laws.  

Non-Economic Damages

The judge wrote that the legislative cap of $350,000 for non-economic damages, such as pain and suffering, was unconstitutional because it gave special protections to the medical profession.

Assessment

The case has not yet gone to trial, and Arrington’s decision does not apply to other cases. But, if appealed, it would give the Georgia Supreme Court a chance to overturn the caps in malpractice cases. In 2006, the Georgia Supreme Court stuck down another provision of tort reform when it ruled that defendants couldn’t decide in which county their medical malpractice case was tried. 

Conclusion

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Explaining Financial Options to Physicians

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A Misunderstood Derivative

By William H. Mears; CPA, JD

By David E. Marcinko MBBS DPM MBA

An option is either the right to buy or sell an asset, or the obligation to buy or sell an asset. Options are derivative instruments; i.e., they derive their value from the performance of the asset upon which they are based—the underlying asset or security. This can be a stock, an equity index, a futures contract, or a Treasury security. Types of options include:

  1. Equity options
  2. Stock index options
  3. Interest rate options
  4. Foreign currency options

Multiple Terms and Definitions

  • A call option contract gives the physician-investor or buyer the right, but not the obligation, to buy a stock at a specified price, subject to an expiration date.
  • The put option contract gives the buyer the right, but not the obligation, to sell a stock at a specific price, subject to an expiration date.
  • The right to buy or sell the underlying security is purchased for a price called the premium.
  • The right to buy or sell the underlying security occurs only for a period of time and at a specific price.
  • The time period of an option is called the duration.
  • The day that the option ends is the expiration.
  • The price at which the option can be exercised is called the strike price.
  • Therefore, the right to buy or sell a security under an option contract exists only for a specific period and ceases to exist at the expiration of the option period.
  • The seller of an option, the individual who has received consideration for granting to another a right, is obligated to perform under the option contract.
  • The seller of a call option, also called the writer, has sold the right to buy that stock.
  • The seller of a call option is obligated to sell the stock to the call option owner if the option is exercised.
  • The seller of a put option is obligated to buy the stock from the put option buyer if the option is exercised.

Option Components

Listed options are traded on an exchange and are packaged and available on stock markets and indexes with various durations at various strike prices.

Over-the-counter options are options that do not trade on an established exchange but are contractual arrangements between two parties.

Because these options are not prepackaged, they can be custom tailored as to strike price, expiration date, and manner of settlement, that is, cash settlement or settlement by delivery of stock.

All listed and over-the-counter options have an expiration date.

American-style options can be exercised at any point in time prior to expiration.

A European-style option creates the right or obligation only at the expiration of a term of an option.

When physician investors purchase or sell an option, they are interested in the cost of that option or the income generated by the sale of that option.

The option premium—the cost of the option—is comprised of the intrinsic value of the option plus its time value.

The intrinsic value of the option is the option’s in-the-money amount.

Options that are out-of-the-money are priced on the basis of time value only.

Option Market Price

The major factors that affect the market price of an option are:

  • The price of the underlying asset
  • The strike price of the option
  • The time remaining until the option expires
  • The prevailing interest rates
  • The expected volatility of the underlying asset

These factors work in the following manner:

1 As the price of an underlying asset increases, the call price goes up and the put price goes down.

2. As the strike price of the option increases, the call price goes down and the put price goes up.

3. As the time to expiration goes out, the call price goes up and the put price goes up.

4. As the risk-free rate of return on money goes up, the call price goes up and the put price goes down.

5. As the volatility in the underlying stock increases, the call price goes up and the put price goes up.

6. As the dividend payout rate of the underlying asset increases, the call price decreases and the put price increases.

When a physician-investor purchases an option, the underlying asset will have a market value. The investor may purchase a call option, which is available for exercise at the same market value (an at-the-money option), at an under-the-market price (in-the-money), or with an exercise price that is over the market value (in-the-money). The exercise price of these options is the strike price.

Option Volatility

The volatility of the underlying asset will also play a significant role in the pricing of an option. The more volatile a stock is, the more likely it is that its performance will be unpredictable and that the strike price will be reached or exceeded and, therefore, that the option will have value. Options on volatile stocks will have a higher premium.

Options contracts, once purchased or sold on an opening trade, can either be (1) traded on a closing trade or allowed to expire worthless or (2) exercised. If an option contract is traded, it will be treated like any other security that is traded. The contract will have proceeds of sale, a cost basis, and a holding period.

All options have a fixed expiration date. All listed equity options, regardless of their particular cycle, expire at 11:59 p.m. Eastern Standard Time on the Saturday following the third Friday of the expiration month. The option actually does not expire until Saturday, but customers must act by 5:30 p.m. on the Friday prior to the expiration date. As an option approaches its expiration date, it diminishes in value.

Managing a Stock Portfolio

Agreements

Options also allow individuals to act on the basis of a predetermined contractual agreement, regardless of market conditions for a specific period. Therefore, as the option approaches its expiration date, the option diminishes in value. It is during the early part of an option’s life that it is most valuable proportionately.

Option Contracts

An option contract will always trade in sizes of 100 shares. The description of an option contract will always contain the name of the underlying security first. The name of the security will be followed by the expiration month, the exercise price, the type of option, and the premium; for example, 1 XYZ MAR 5 call 2.

At maturity, a call option will have a value that will be the greater of zero or the strike price minus the strike price. At maturity, a put option will have a value of the greater of zero or the strike price minus the stock price.

If an option contract is allowed to expire worthless, it will be treated for tax purposes like any other security that has either no proceeds or cost basis. In either case, one leg of the trade will be zero. The position will either be closed in its entirety at a gain or be closed in its entirety at a loss.

If an option is exercised, the buyer of the contract decides that the contract will be exercised. After the exercise, the buyer of a call will own the underlying asset, and the buyer of a put will sell the underlying asset. If an option is exercised, the seller of the option is always obligated to act under the options contract.

Conclusion

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  Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

The Secular Trust

An Irrevocable Vehicle

By LaVerne L. Dotson; JD, CPA

A secular trust is typically an irrevocable trust designed so that creditors of a hospital employer, including bankruptcy creditors, cannot attach its funds.

Taxes

Consequently, the employer’s contributions to an irrevocable trust, often means the trust’s earnings are taxable income to the employee.

Benefits

Benefits are normally payable to the employee upon the occurrence of specific events, such as the passage of a certain number of years, retirement, disability, or death.

Assessment

Because they protect against a loss of benefits if the employer becomes insolvent, secular trusts may be preferred to a Rabbi trust by healthcare executives.

Conclusion

Your thoughts and opinions on the above are appreciated?

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Financial Planning: http://www.jbpub.com/catalog/0763745790

Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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Hospital Stock-Purchase Plans

What They Are – How They Work

By LaVerne L. Dotson; JD, CPA

A hospital employee stock-purchase plan qualified under Code § 423 allows eligible employees to purchase stock of an employer under special tax rules and favorable prices.

Intent and Purpose

An employee stock-purchase plan is intended to benefit virtually all employees, not just exceptional ones or limited groups.

Because the granting of options to purchase employer stock under an employee stock-purchase plan cannot discriminate in favor of key employees, usually the plan will appeal only to an employer who simply wants to provide, as a general benefit of employment, the right to buy employer stock, or believes that owning employer stock will act as an incentive to employees to perform well.

Requirements

A hospital employee stock-purchase plan must meet the following requirements:

  • Options may be granted only to employees of the employer corporation, or its parent or subsidiary corporations, to purchase stock in the employer, parent, or subsidiary.
  • The stockholders must approve the plan within 12 months before or after the date the plan is adopted.
  • The plan must provide that an employee cannot be granted an option if the employee, immediately after the option is granted, owns 5% or more of the total voting power or value of all classes of stock of the employer corporation, or its parent or subsidiary, computed using special attribution rules.
  • The plan must require that the options be granted to all employees on a nondiscriminatory basis. However, the options granted to different employees may bear a uniform relationship to the total compensation or the basic or regular rate of compensation of employees. The plan may also provide for a ceiling on the amount of stock to be purchased by any employee.
  • The exercise price must be at least 85% of the fair market value of the stock on the date the option is granted.

Wide Ownership

The broad participation requirements of employee stock-purchase plans mean that the stock is likely to be widely owned. Problems of marketing the employer stock and the securities problems inherent in issuing shares of stock to a number of employees will probably discourage employers who do not have an established market for their stock, and who do not want to face the securities problems related to public trading in their stock.

NQSOs and DSTs

Nonqualified stock options [NQSOs] and the direct stock transfers [DSTs] are both available to the employer as potentially less cumbersome means of obtaining the results of an employee stock-purchase plan.

Since a nonqualified plan is not subject to the restrictions of the qualified plan, normally the main reason for the employer choosing to implement an employee stock-purchase plan is to gain for the employees the favorable tax consequences of such a plan and thereby create a widespread base of company stock ownership among employees.

Taxation

On receipt of an option to purchase stock under an employee stock-purchase plan, the employee does not report any income, even though the exercise price of the stock may be less than the fair market value at the time; nor will the employee recognize income on the exercise of the option and acquisition of the stock at a subsequent date. Only on disposition of the stock will the employee recognize taxable income. As long as the disposition occurs two years or more after the date the option is granted to the employee, and the employee has held the stock at least 12 months after exercising the option, any profit will be treated as capital gains.

Assessment

There is a minor exception to this favorable tax treatment. Upon disposition of stock purchased under the plan, a portion of the gain will be treated as ordinary income equal to the discount of 0% to 15%.

Conclusion

Your comments and experiences with hospital stock purchase plans are appreciated?

Related Information Sources:

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Financial Planning: http://www.jbpub.com/catalog/0763745790

Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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Accredited Investment Fiduciary Analyst™

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One Opinion on the AIFA

[By Dr. Ron Miller; CFP®, AIFA®]

There are over 5,000,000 fiduciaries around the country responsible for other people’s money and sitting on boards and investment committees. Many have had no formal training on their duties and responsibilities as fiduciaries.

The AIF™ and AIFA™

The AIF and the AIFA designations deal mainly with reviewing the fiduciary issues of the investment process, especially for Trusts, pension plans and Institutional money. For example:

  • Is the money being managed according to the basic documents (Investment Policy Statements, etc)?
  • Are fees reasonable?
  • Are the investments being monitored on a regular basis?
  • What are the criteria for the fund or manager being put on a watch list or removed? 
  • Are there any conflicts of interest or self-dealings?
  • Are the fiduciaries to the portfolios aware of their responsibilities?

AIF and AIFA™ Designation

The AIF designation is designed to give investment stewards formal training on the fiduciary issues. The AIFA designation goes a step further and permits the designee to formally certify that the organization he is hired to monitor is following the fiduciary investment process with no deficiencies or areas for improvement.

More info: www.Fi360.com

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Conclusion

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Hospital Stock Appreciation Rights

The SARs Alternative to Stock Transfer

LaVerne L. Dotson; JD, CPA

An alternative to the actual transfer of corporate securities or shares to a doctor, nurse or other hospital employee is the issuance of so-called stock appreciation rights (SARs).

A Contractual Agreement

SARs are a contractual arrangement that, when exercised, entitles an employee to receive, in either stock, cash, or a combination of the two, an amount equal to the appreciation in the employer’s stock subsequent to the date the SARs were granted (or related to such appreciation, if the SARs are valued higher than the FMV of the stock when the SARs were granted).

Tax Consequences

The grant of SARs does not constitute the constructive receipt of income even though the option is immediately exercisable, because the exercise of the option means that the grantee will not get the benefit of additional appreciation of the stock on which the value of the SARs is based.

Any declarable income with SARs occurs at the sale, not acquisition.

Income received from the exercise of SARs is ordinary, and is equal to the amount of cash received or the value of the appreciated stock received. This amount will generally be reportable in the income of the employee in the year of receipt; however, if the SARs are exercised for stock and the stock is subject to a substantial risk of forfeiture, it will be subject to tax when the substantial risk of forfeiture lapses pursuant to IRC Code § 83, discussed in the Executive-Post previously.

Hospital or Medical Employer Deduction

When the SARs are exercised, a deduction is available to the hospital or medical corporate employer.

Assessment

The income from the SARs is also subject to withholding and employment taxes on the employer and employee. As a practical matter, if the individual is an employee at the time the tax is determined, there will often be very little additional payroll taxes to pay, because he or she will already have exceeded the Social Security taxable wage base.

Conclusion

Does the above information agree with your experience with SARs; please comment and opine?

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Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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The Rabbi Trust

Hospital Employee Perks

LaVerne L. Dotson; JD, CPA

To help provide security for an important or especially valued employee, and at the same time defer taxation, a hospital employer may establish a so-called Rabbi trust to hold certain assets set aside to meet its obligations under a deferred compensation arrangement.

Restrictions

Such a trust simply restricts the use of the funds solely to meeting its obligations to the healthcare employee, and rights to benefits under the trust cannot be sold, transferred, assigned, or otherwise alienated.

Assessment

However, if the hospital employer should become bankrupt or insolvent, the trust assets will be subject to the claims of the employer’s creditor; not the employee. To provide additional security for an employee will result in the arrangement being considered “funded” for tax purposes and therefore taxable to the employee when set aside; thus nullifying the trust.

Conclusion

As a hospitalist or healthcare employee, have you ever been offered the deferred compensation arrangement, known as a “Rabbi trust”; please comment?

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Healthcare Organizations: www.HealthcareFinancials.com

Administrative Terms: www.HealthDictionarySeries.com

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Case-Mix Indices and Expected Value

Quality Measurements, Benchmarks and Ratios

By Brent A. Metfessel MD, MS, CMP™ (Hon)

 

Once an expected case mix index value is calculated for a medical provider or facility, comparison of the provider’s actual practice patterns to the expected value can take place.

Benchmarks

In medical severity case-mix reporting, there are three basic measures that utilize expected values: 

  • Ratio of actual to expected (actual / expected):  This measure is terms a “performance ratio” or an “efficiency ratio”.  A value of about 1.0 would mean that practice patterns are close to the expected target or plan average.  For cost comparisons, a value of slightly below 1.0 might even be more ideal as long as the provision of high-quality care is maintained.
  • The difference between actual and expected values (actual – expected):  This measure is termed the “cost variance” and is very useful for looking at the cost impact of practice variation.  An additional advantage of this measure is it’s approximately normally distribution, unlike performance ratios which are skewed toward the high end.  This means that relatively simple statistics can be used to isolate providers or facilities with high positive cost variances for further analysis. Often, a z-score (number of standard deviations from the mean) of +2 or more is used as the approximate criteria for overly high utilization.  It needs to be noted that a highly negative cost variance can point to care problems as well, in particular problems with patient access to care or underutilization of services, so the reasons for very low cost variances also need to be discovered.
  • The ratio of the expected value to the unadjusted plan average (expected / average):  This measure is the “illness burden” of the provider and becomes a measure of the level of illness in the provider’s patient panel. A high illness burden means that the provider or facility treats patients that are more ill than the average provider or facility. A provider with a high illness burden and yet a reasonable performance ratio means that the provider is highly competent with complex patients and the health plan should give special attention to such providers to keep them as active as possible in the network.

Conclusion

Do you know of any other medical quality measures that utilize expected values; please comment and opine?

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Healthcare Organizations: www.HealthcareFinancials.com

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