CMS to Bonus Doctors for PQRI

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July – December 2007 Reporting Period

[By Staff Reporters]ME-P Logo.2

According to Anne Zieger, of Fierce Health Finance, the Centers for Medicare and Medicaid Services [CMS] will pay out more than $36 million in monetary incentives to medical providers who reported data on quality of care delivered between July 2007 and December 2007; as part of its Physician Quality Reporting Initiative [PQRI]. 

Physician Quality Reporting Initiative [PQRI]

Under the PQRI, healthcare providers who choose to participate get bonuses of 1.5 percent of their total CMS payments during the reporting period in which they reported quality data.

Assessment

Average payments for the most recent period range from $600 for individual physicians to $4,700 for groups. The largest payment CMS plans to make to a practice is more than $205,700. Solo physicians, physician group practices, and other PQRI-eligible professionals should receive their payments by August, according to the agency.

Source: CMS press release

Conclusion

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Baby Boomers Financially Unprepared

Potential Medical Disability Survey

Staff Reporters

According to findings from a recent Harris Interactive survey conducted on behalf of America’s Health Insurance Plans (AHIP) between April 25 – 29, 2008, baby boomers are financially unprepared if they themselves, or the primary wage earner in their household, suffered a medical disability and was unable to work for an extended period of time.

Survey findings:

  • More than half (55 percent) of baby boomers said that they are either not at all or somewhat unprepared financially should they themselves or the primary wage earner in their household became disabled.
  • One in five (22 percent) say they are “not at all prepared” if a disability occurred.
  • Conversely, only 15 percent report that they are very or extremely prepared for a potential disability.
  • More than half (55 percent) say that it is at least somewhat likely that they would tap into their retirement savings in the event that they or the primary wage earner in their household became disabled and could not work for an extended period.
  • Nearly a third (32 percent) reported that it is extremely/very likely/likely that they would need to tap into retirement savings.
  • Nearly one in five boomers (19 percent) reports that it is not at all likely that they would tap into retirement savings.
  • 17 percent report that they do not have any retirement savings at all.

Source: Harris Interactive Inc.

Assessment

What does this survey reveal to doctors, hospitals, financial advisors and the entire health insurance industry?

Conclusion

Please opine and comment.

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Life Insurance Policies and Trusts

Tax and Estate Planning for Doctors

Staff Writers

All subscribers to the Executive-Post know that carefully crafted arrangements may minimize estate and income taxes.

Life Insurance Policies

The simplest way for a medical or other professional to avoid estate tax on the proceeds from life insurance policy death-benefit, is having a properly drafted trust own the life insurance policy. The best approach is for the trust to purchase the policy, but if you already own it, you can transfer the policy to a trust. If the doctor survives the transfer by no less than three years, the proceeds will escape estate taxation [three year throw-back rule]. The settlor can retain the right to remove the trustee and appoint a successor, who is not related or subordinate to the grantor. Most grantors wish to retain such a right.

Periodic Gifting

Generally, the insured provides funds for the premium payments through periodic gifts to the trust. In most cases, the gift qualifies as a gift of a present interest (rather than future interest), qualifying for the $12,000 exemption.

By using a Crummey withdrawal power, the beneficiary is permitted to withdraw property whenever a contribution is made. The right usually is given each year with a specified period (30–60 days). If an affirmative election is not made, the power will lapse. This notice should provide reasonable time for the election and be in writing. Generally, the withdrawal right must be exercised affirmatively. In any event, if the beneficiary does not take action or respond to the letters, the Tax Court has previously indicated that 15 days is a reasonable period of time.

Minor’s Guardian

The Crummey power can be exercised by a minor’s guardian (parents). However, it is best if someone else can exercise the withdrawal right if the donor is also the parent. An unrelated guardian can always have the right to exercise the Crummey withdrawal power.

Last-to-Die Insurance

A popular use of insurance for physicians is the so called last-to-die insurance policy. Such insurance is payable upon the death of both the donor and his spouse.

For a Family Owned Business [FOB], this permits the owner to bequeath or gift the stock to the spouse free of transfer tax when the second spouse dies the insurance proceeds are paid to the trust and utilized to pay the estate taxes on the FOB stock. The insurance proceeds are free from both estate and income tax.

Conclusion

Your thoughts, opinions and comments are appreciated.

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Internet Drug Rx Abuse

NCASA Study

Staff Reporters

A large majority of 365 Internet sites that advertise or sell controlled medications by mail are offering to supply the drugs without a proper prescription, while the online trade is stoking the rising abuse of addictive and dangerous prescription drugs, according to a National Center on Addiction and Substance Abuse [NCASA] at Columbia University.

The Study

Federal and state efforts to crack down on Internet sales appear to have reduced the number of sites offering such drugs, from 581 last year, according to a New York Times report on July 9, 2008. Drugs offered online include generic versions of opiates like OxyContin, methadone and Vicodin, which are legitimately prescribed as painkillers; benzodiazepines like Xanax and Valium, which are prescribed for anxiety; and stimulants like Ritalin.

DEA Assessment

The Drug Enforcement Administration [DEA] found that 85 percent of all Internet prescription sales involved controlled drugs, compared with just 11 percent of those filled through regular pharmacies, suggesting that online sales often are destined for misuse.

Conclusion

Do you think the current eRx initiatives will drive or reduce this phenomenon; please opine and comment?

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

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Polish Chiropractic Association

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Alternative Healthcare in Europe

[By Anthony Robert Narushka; DC]

The first Polish Chiropractic Association [PCA] was recognized by the European Chiropractors’ Union (ECU) www.ecunion.eu and founded in June, 2008. The Polish flag is listed on the page of all members. 

New PCA BOD Members

New PCA BOD Members

  • Leszek Majowski DC attended Candadian Memorial.
  • Jane Hajduk DC, attended Parker Chiropractic College, TX.
  • Anthony Narushka DC, from Orlando, attended National University of Health Sciences, Ill.  

Ministry of Health

On July 1st 2008, Dr. Narushka and these Medical Executive-Post readers met with the Ministry of Health to discuss the legalization and regulation of Chiropractic, in Poland. Open discussion of how other European countries have formalized chiropractic health care into their national heath regulations was also discussed. We met with the Department Nauki i Szkolnictwa Wyższego – from the Ministry of Health.

Assessment

Also, a very important message from Mr. Hans-Gert Pöttering’s [President of the European Parliament] supporting the European Chiropractors’ Union was presented along with the recognition of the new members, Poland and Hungary, to the association. The video can be downloaded from the ECU website -Download Page and it is found first on the downloadable link list. http://www.ecuconvention.eu/default.asp?pid=114

Although all members of the nascent PCA are encouraged to visit, read and subscribe to the Medical Executive-Post; some physicians and other domestic medical practitioners are not always enamored with chiropractors or other alternative healthcare providers; despite the Healthcare 2.0 initiative of the modern era.

Conclusion

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“Loss of Chance” Liability

Judicial Court of Massachusetts

Staff Reporters

The Supreme Judicial Court of Massachusetts [JCM] recently ruled that doctors can be held liable for negligence that reduces a patient’s chance of survival, even if the patient’s prospect for recovery was already less than 50 percent.

“Loss of Chance”

The SJC recognized for the first time a legal doctrine known in medical malpractice cases as “loss of chance,”

Definition

LOC allows a patient whose odds of recovery are 50 percent or less to receive damages for any negligence that reduced those odds. The court also established a formula for juries to award damages proportionate to the reduced survival rate caused by the doctor’s negligence, according to the Boston Globe July 24, 2008.

Assessment

Some medical malpractice lawyers opine that the decision could help patients who previously had little chance of collecting damages from physicians.

Conclusion

Your thoughts and opinion are appreciated; please comment? 

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Prescription Quantity Survey

The IMS Health Data Study

Staff Reporters

Did you know that the number of prescriptions dispensed by pharmacies in the U.S. is growing at its worst rate in at least a decade, as consumers are squeezed by both a troubled economy and the growing burden of out-of-pocket health-care costs?

The IMS Report

Data from market researcher IMS Health and Wall Street analysts indicate that the rate of prescription growth has fallen steadily since early last year, with preliminary data suggesting the number of prescriptions actually fell in the second quarter, according to the Wall Street Journal on July 16, 2008.

Big Pharma Brands Collapse

The hit is coming at the expense of some of the industry’s biggest brands. For example, in May 2008, branded medicines accounted for 30.6 percent of treatments dispensed, down from 45.9 percent in 2003, the WSJ noted.

Assessment

Pills for such chronic conditions like cardiovascular disease are also vulnerable, since patients tend to think they can do without treatments for so-called silent diseases more easily than for conditions such as cancer, or HIV.

Conclusion

Your thoughts are appreciated. Have you seen this happening in your practice, clinic or hospital setting? Please comment and opine.

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Sacred Trust-Review

Book Review

By Gavin S. Sun

Sacred Trust [The Ten Rules of Life, Death, and Medicine] does an excellent job of describing Dr. Phyllis Hollenbeck’s experiences and lessons, and more importantly their importance in medicine.

The 128 page paperback, © 2005 by Book Publishers Network, blends humor and serious topics fluidly. Once I got started on it I could not put it down!

Thereafter, I had a better understanding of what to expect from the medical profession, and it gave me the confidence to demand it. I wish all my doctors (past, present, and future) would read this.

I intend on purchasing this book for all my friends in medical school.

Gavin S. Sun

San Francisco

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Culture Change in Nursing Homes

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Commonwealth Fund Survey of Nursing Homes

[Staff Reporters]

The “medical culture change” movement is working to radically transform nursing home care, and help facilities transition from institutions to home.

Survey Highlights

The following highlights just a few of the findings from the Commonwealth Fund 2007 National Survey of Nursing Homes report, released in May 2008:. 

  • Fifty-eight percent of culture change adopters allow residents to determine their own schedules, compared with only 22 percent of traditional nursing homes.
  • Nearly two-thirds (64%) of culture change adopters implement bathing practices that are more resident-centered, while only 37 percent of traditional nursing homes do so.
  • Seven of 10 culture change adopters reported that residents are involved in decisions about their facility, but only one-quarter of traditional nursing homes (27%) involve residents in such decisions. 

Source: M. M. Doty, M. J. Koren, and E. L. Sturla: Culture Change in Nursing Homes: How Far Have We Come? Findings From The Commonwealth Fund 2007 National Survey of Nursing Homes, The Commonwealth Fund, May 2008 http://www.commonwealthfund.org

Conclusion

In any case, early planning is the key to supporting both your kids’ futures and your retirement. Making logical college funding decisions, rather than emotional ones, creates a win/win for everyone.

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Physician Compensation Trends Query?

Tacoma / Seattle Washington Area

As compensation professionals, Certified Medical Planners [CMPs] and financial advisors [FAs], what kinds of trends are you observing in physician compensation for multi-specialty hospitals in the Tacoma/Seattle Washington state locations? 

Additionally, what innovations (in 2008) are observed in the manner doctors and hospital leadership are compensated?

Please e-mail ASAP, if possible to Kkyewu1@aol.com

Thank you ever so much!
Warm Regards.
Beverly Motley

 
 
 
 

 

Financial Advisors Not “Up” on Annuities?

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Results of a New Survey

[By Staff Reporters]

In the interactive June edition of Investment Advisor magazine, Savita Iyer-Ahrestani reported on a new study of annuities.

Of course, subscribers of the Medical Executive-Post already know that more and more Americans are counting on financial advisors to help them prepare for a secure retirement; rightly or wrongly. And, this includes physicians and medical professionals.

But, what if the “advisors” are not up to the task – or even just product salesmen – as reported by Iyer-Ahrestani?

The Spectrem Group Survey

Mitch Politzer, senior VP of Lincoln, Nebraska-based Ameritas Advisor Services, had a suspicion that might be the case, so he teamed up with Chicago-based market research firm Spectrem Group and put together a survey aimed at testing advisor know-how and opinion on the kinds of investment products available on the market today.

Results

“The results of the survey showed that most financial advisors are really very skilled at investing for their clients, as they’re driven by equity markets (and to a lesser degree bond markets) and a desire to outperform industry benchmarks,” Politzer says.

“This works for the accumulation phase of a client’s life, yet advisors are less skilled when they have to shift gears for the phase of a client’s life when they’re interested in income and sustaining their assets.”

Gun-Shy on Annuities

Most advisors, Politzer says, seem to have dated beliefs about various retirement products, are slow to innovate, and most are gun-shy when it comes to annuities. According to the survey, 70% of advisors are concerned about locking their clients into a long-term retirement income product, and if they do, they would prefer the product not be an annuity.

Assessment

This survey of professional advisors shows strength in the “accumulation-phase” that is not matched when it comes to income and asset preservation during the “distribution-phase.” www.MedicalBusinessAdvisors.com

And, are FAs really shy about annuity product sales with their traditionally high commission rates?

Conclusion

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1/3 of Medical Procedures Fail to Improve Health

A Startling Congressional Budget Office Report!

Staff Writers

Almost one-third of the procedures that doctors perform fail to improve a patient’s health!

Of course, this may come as quite a surprise to most citizens, but not so to readers of the Executive-Post, or the books, white-papers and dictionaries of its sponsor, the Institute of Medical Business Advisors, Inc [www.MedicalBusinessAdvisors.com]

Congressional Budget Office Report

Congressional Budget Office [CBO] Director Peter Orszag opined thusly to federal lawmakers in a recent special report. Mr. Orszag noted that the collective cost for these services top more than $700 billion each year, or roughly five percent of the nation’s total economy.

Misaligned payment, disparate health care costs and an overabundance of untested procedures have placed health care on a fiscally unsound path, which was likened to “running up credit card debt,” according to Modern Healthcare on June 18, 2008.

Assessment

Senate Finance Committee Chairman Max Baucus (D-Mont.) called on the CBO and Government Accountability Office [GAO] to study the potential development of an independent health reform board, possibly like the Federal Reserve Board [FRB] that would set health policy absent of political pressure.

Conclusion

Your thoughts and comments are appreciated. Do you believe the Orszag CBO report is more factually, or heuristically true; why or why not? Is it a startling report at all; or just medical de-rigueur?

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

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Consumer Health Plan Satisfaction Survey

New Deloitte Center for Health Solutions Survey

Staff Reporters

Nine out of 10 Americans are not completely satisfied with their health plans, according to “The Deloitte Center for Health Solutions 2008 Survey of Health Care Consumers.”

The Survey:

According to the survey of what more than 3,000 Americans thought about a variety of healthcare issues; these findings were reported:

  • 73 percent are interested in accessing information about quality or price from their health plans,
  • 78 percent would rather customize their insurance by selecting the benefits and features they value, rather than choose their plans from a few pre-packaged options,
  • 78 percent are interested in online access to medical records and test results,
  • 76 percent want e-mail communication with doctors,
  • 72 percent support online office visit scheduling, and
  • 46 percent would like a software program or web site [cloud computing] to create a personal health record.  

Assessment

Tommy Thompson, senior advisor at Deloitte and former secretary of health and human services in the Bush Administration, said dissatisfaction with health plans should serve as a wake-up call for health insurers to offer more quality and transparency information; according to HealthLeaders Media, June 20, 2008

Conclusion

Is there a disparity-gap in this study between provider and patient opinions; or is it more accurate than not? Please comment?

Related Information Sources:

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

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

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RAC Contractors to be Identified

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CMS Aims to Reduce Fraud

[By Staff Writers]

This month, the Centers for Medicare and Medicaid Services [CMS] will name the auditing firms that will review hospitals’ books for payment mistakes, while hospital officials say results in other states suggest the auditors will give priority to recovering overpayments.

The RAC Program

Under the so-called Recovery Asset Contractor [RAC] program, CMS pays auditors a fee based on the amount of improper payments discovered.

Hospital officials worry this “bounty hunter” approach – the second for CMS after medical practice audits – will create a bias in auditors to focus only on collecting government overpayments, reported the Pittsburgh Business Times on June 16, 2008.

Pilot Program Results

Some hospitals point to a pilot audit program in New York, Florida and California, which found $357.2 million in overpayments and just $14.3 million in underpayments. Medicare estimates its error rate at 3.9 percent in 2007, down from 9.8 percent in 2003, but still totaling $10.8 billion in improper payments

Assessment

Is this another instance of brute intimidation or just honest review?

Conclusion

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Economics of Variable Annuities

The “Ups and Downs” of Variable Investments

[By Staff Writers]

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The chief advantage of variable annuities is that investment income or gains are not currently taxable. However, when distributions are made, all gain is ordinary income, even if substantially all of the gains realized on the investment were capital gains.

Investments made directly by a Family Owned Business [FOB] member, for example, does not achieve tax deferral. But, assuming the dividends and other income are small (e.g., a growth portfolio), and all gains are capital gains taxed at the maximum rate, then direct investment may be a far superior method of investment.

Forbes summed it up, saying, “Don’t be a sucker!”

Despite Forbes’ warning, variable annuities are not necessarily an easy investment decision.

Sales Growth

Sales of variable annuities have continued to grow despite the reduction of capital gain rates in the recent years of the Bush Presidency, and the future is unknown. But, if the deferral is long enough, or if the portfolio throws-off ordinary income (e.g., a bond portfolio), then variable annuities may be desirable. However, doctors and medical professionals should exercise caution about variable annuities.

Fees and Expenses

Variable annuity fees vary widely from carrier to carrier but in many cases they are still high, putting such investments at a competitive disadvantage. If the fees are reasonable, and the medical professional client intends to invest in high yield bonds (also know as junk bonds), then a variable annuity can be attractive.

The same is true for traders who move in and out of funds and earn a large amount of short-term capital gains. In any event, all doctors should check the fees charged by the insurance company because they vary widely. Some funds that charge fees also have outperformed other funds.

Taxation

Investing in traditional equity can give rise to dividends of 1.5% (the average) that is subject to taxation. Variable annuities shelter the dividends, but at a cost often reaching 1.25%. This is not exactly an attractive investment trade-off.

Capital Gains

In addition, all capital gains derived from the portfolio are taxable as ordinary income when distributed; also not a good result.

Distributions upon Death

Assets held outright get a step-up in basis upon death. Variable annuity distributions are income-in-respect-of-a-decedent. Thus, there is no step-up in basis. This is harsh taxation, and the combined estate and income taxes can be 100% (e.g. the decedent’s estate may be is subject to a 5% surtax).

Thus, a 55-60% estate tax and a 35-40% ordinary income tax rate results in 100% taxation and confiscation. Counting the limitation on a deduction, the effective tax rate might be 42%, causing the combined taxes to exceed 100%. If the estate taxes can be deducted from the income taxes, the taxation of variable annuities is lessened.

Moreover, if a family business client has a charitable interest, using income-in-respect-of-a-decedent property to fund a gift to charity is a sound planning idea (the charity pays no income taxes and gifts to charities are not subject to estate taxes). Here, variable annuities may have one big advantage; they can prevent creditors from reaching assets. However, if this is a concern then the same results can be achieved by using an asset protection trust.

globe

Assessment

Tax deferral always appeals to medical and other clients, but in some cases, variable annuity tax deferral may not be a effective tax planning tool. In addition, postmortem planning can help to reduce the tax burden to children.

Variable annuities require clear analysis and discussion. Doctors, and their accountants and financial advisors should discuss this issue before investing in them. The reason, quite simply, is that most doctors do not like to pay current tax and they may leap at a variable annuity which can result in increased taxation. How ironic!

Conclusion

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Living Trust Myth-Busters

Reality Bites for Some Doctors

Staff Writers

Medical professionals are turning to living trusts in increasing numbers for their estate planning needs. But, two major trust myths need to be explored.

Myth 1:  Living trusts save taxes.

Reality: They do not. Income earned by a living trust is taxable to the physician or other grantor, and when he or she dies, the assets are includable in the estate for estate tax purposes. All traditional planning methods (i.e., marital deduction, estate tax exemption, charitable giving) are available to all estates—whether or not the assets are in a living trust.

Myth 2: Living trusts save probate expenses.

Reality: Living trusts do avoid probate, which makes them attractive to medical professionals, but the question is whether the costs of establishing and administering the trust outweigh probate costs. Living trusts are quite useful, however, when the grantor owns real estate in more than one state. The living trust avoids ancillary probate in other states, which can result in significant savings—especially if the investments are relatively modest because ancillary probate can cost more than the real estate is worth. Likewise, living trusts are helpful if a discretionary investment manager is used. Living trusts also result in faster estate proceeds transference.

Assessment

A living trust should be only a part of a physician’s estate plan. Currently, living trusts are commonly used in conjunction with wills www.MedicalBusinessAdvisors.com

Conclusion

What has been your experience with living trusts; pro or con? Comments are appreciated.

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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MD Compensation and Benchmarking Tools

MGMA and ValueSource Release Software

Staff Reporters

Free online compensation and productivity benchmarking tools for physician practices are now available from ValueSource Software and the Medical Group Management Association [MGMA].

Dashboards in the Cloud

The two web-based [internet computing] dashboards enable physicians and group practices to enter a few easy-to-find variables about physician compensation, and production and costs, and then compare themselves to national norms. Practice managers select their specialty from a pull-down menu, enter information about compensation, collections, gross charges, ambulatory encounters, surgery/anesthesia cases, and work RVUs, etc.

Assessment

The internet based cloud dashboards compare that data to national norms and produce a series of six gauges that measure physician performance in specific areas.

Conclusion

Please opine if you have used these new tools in your practice, clinic or hospital setting; and tell us what you think. Your review and evaluation is appreciated and will assist Executive-Post readers.

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Medical Cultural Disparity

A Real or Perceived Contemporary Concept?

Staff Writers

Question

Joseph R. Betancourt, MD, MPH, director of The Disparities Solutions Center at Massachusetts General Hospital [www.massgeneral.org/disparitiessolutions] was asked during a recent interview with Physician’s News Digest how he defined the emerging concept of “medical cultural competency.”

Answer

He replied that he viewed it as basically an “expansion of patient-centered care,” which he said is characterized by the physician’s awareness of and agreement with “the need to be attentive to the health beliefs, values and perspectives of the patient.”

Conclusion

And so, is this the same or different from participatory or collaborative Healthcare 2.0.

Your opinions and comments are appreciated.

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We’re Listening …

Executive-Post Collaborative Improvement Initiative

To provide you with the best possible communications forum that integrates medical practice management with personal financial planning and health economics, the editors of the Executive-Post would really appreciate hearing from you.

We want your honest opinion about the Executive-Post so that we can determine what we do right – and what we could do better. All topics and suggestions are appreciated.

Thank you

Hope Hetico; RN, MHA

Managing Editor

MarcinkoAdvisors@msn.com

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CRNA Salaries Rise – Exceed Some MDs

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Merritt Hawkins & Associates Study  

[Staff Reporters56399869]

Some nurses land higher salaries than primary care doctors, according to staffing firm Merritt Hawkins & Associates.

The Survey 

In the past year, nurse anesthetists recruited through the staffing firm Merritt Hawkins & Associates, landed salaries that averaged $185,000; compared to the pay for family practice doctors hired through the firm, who averaged $172,000; and internists, who averaged $176,000; according to a Wall Street Journal report, on June 18, 2008.

Assessment

The Merritt Hawkins figures for the nurses are higher than some other sources, like the Medical Group Management Association. The MGMA also tracks health care salaries and puts nurse anesthetists’ median compensation at $140,000 per year. The discrepancy may be because fewer employers go through recruiters to hire the nurses, and those who do are willing to pay top dollar.

Related Information Sources

Medical Assistant Job Description: Learn about the salaries of those who assist with medical procedures: http://www.medicalassistantschools.org/what-does-a-medical-assistant-do/

Conclusion

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Faux Healthcare 2.0 Collaboration for Terminal Patients?

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American Society of Clinical Oncology Study

[By Staff Writers]

Only one-third of terminally ill cancer patients said their doctors had discussed end-of-life care, according to a recent federally funded study presented at the American Society of Clinical Oncology conference in Chicago.

Study Results

According to the study, patients who had these talks were no more likely to become depressed than those who did not. Moreover, they were less likely to spend their final days in hospitals tethered to machines, avoided costly futile care, and with loved ones more at peace after they died, reported the Associated Press on June 15, 2008.

Assessment

The study was the first to look at what happens to patients if they are, or are not, asked what kind of care they’d like to receive if they were dying, according to lead researcher Dr. Alexi Wright of the Dana-Farber Cancer Institute in Boston. The study involved 603 people in Massachusetts, New Hampshire, Connecticut and Texas. All had failed chemotherapy for advanced cancer and had life expectancies of less than a year.

And so, is the emerging new concept of collaborative or participatory medicine – known as Healthcare 2.0 – fact, fiction or just plain hype?

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Conclusion

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Doctors Unite!

On the “Open Letter from America’s Physicians”

By Dr. David Edward Marcinko; MBA, CMP™

Publisher-in-Chief

As we have seen in this healthcare-charged election season, almost every form of political activism or debate has moved online. So, it is no surprise that a coalition of disgruntled physicians would electronically socialize and network together, as seen with www.sermo.com

About Sermo – Peer 2 Peer Doctor Network

First billed as a physician’s only online community, where 65,000 doctors around the nation exchanged the latest medical insights with each other to improve patient clinical outcomes, some portions of the Sermo community have morphed into a kind of political action committee [PAC] representing a particular flavor of zealot doctor activist.

Political Activism

And, not to miss out on a marketing opportunity, Sermo has allowed itself to be used as a vehicle for an open letter signed by physicians, decrying the state of domestic healthcare, that’s only going to get more public.

According to Mr. Matthew Arnold of Medical Marketing & Media, the letter is a physicians’ manifesto of sorts, composed by selected Sermo doctors demanding an end to intrusive insurers and overzealous regulators. To date it has garnered 5,200 signatures in the several weeks since it was posted on www.mmm-online.com

So, You Want a Revolution?

According to Arnold, “There’s a sense of revolution in this,” said Dr. Daniel Palestrant, founder and CEO of the physician social networking site, which boasts around 70,000 members. “It’s doctors coming together for the first time, voicing discontent with the representation they’ve had to date, and making it clear to the public that the quality of care is going to be suffering based on some of these outside forces.” http://www.mmm-online.com/Fed-up-Sermo-docs-draft-manifesto/article/112006

Doctors Unite

The “Open Letter from America’s Physicians,” hosted at www.doctorsunite.org blames “The insurance industry’s undue authority and oppressive control over healthcare processes,” “Excessive and misguided government regulation” and “The practice of defensive medicine in response to a harmful and costly legal environment” for America’s healthcare crisis, and vows: “We, the physicians of the United States, will no longer remain silent. We will not tolerate a healthcare system where those without medical expertise or genuine interest in our patients’ health have absolute control.”

Assessment

As almost every other form of political activism has moved online, don’t be surprised to see more websites, blogs, wikis or social e-communities like this. Of course, if the details get specific, it’s tricky to know whether the coalition of disgruntled doctors will stay together, and/or whether Sermo will emerge as representing a new breed of doctor “turned-political-pundit.”

Conclusion

And so, is political activism an appropriate initiative for the medical community; why or why not?

Might it be considered more self-serving; or more patient centric? Your thoughts and comments are appreciated.

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Key-Man Life Insurance Proceeds Ruling

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IRS Tax Exempt Treatment Ruling

[By Robert Whirley, CPA]

A recent revenue ruling has been issued by the Internal Revenue Service addressing the tax exempt treatment of life insurance policy proceeds on “key-man” policies of Subchapter S-Corporations; medical and/or otherwise. 

Excerpts

Revenue Ruling 2008-42 concludes that premiums paid by the S-Corporation on an employer-owned life insurance contract, of which it is directly or indirectly a beneficiary, do not reduce the S-Corporation’s AAA. Further, the benefits received because of the death of the insured from an employer-owned life insurance contract that meets an exception under Code Sec. 101(j)(2) do not increase its AAA.

Assessment

This may sound like Greek to some doctors. The affect is that life insurance proceeds on key-man policies in an S-Corporation are essentially trapped in the corporation. Any distribution of that cash to surviving S-Corporation shareholders – or to the estate of the deceased shareholder – triggers a taxable event.   

It is therefore vital for any doctor with a life policy paid by your medical practice, or other S-corporation, to discuss the tax policy and estate planning particulars with your accountant.

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Conclusion

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The Cure for Claims Campaign [CCC]

Reducing Healthcare Administrative Burdens and Costs

Staff Writers

To help reduce the administrative burden of ensuring accurate insurance payments for physician services, the American Medical Association [AMA] recently launched the “Cure for Claims” Campaign [CCC] and unveiled the first AMA National Health Insurer Report Card on claims processing.

Goals

The goal of the AMA campaign is to hold health insurance companies accountable for making claims processing more cost-effective and transparent, as physicians divert substantial resources – as much as 14 percent of their total revenue – to ensure accurate insurance payments for their services.

The National Health Insurer Report Card [NHIRC]

The AMA’s new National Health Insurer Report Card provides physicians and the public with information on the timeliness, transparency and accuracy of claims processing by health insurance companies. Based on a random sample pulled from more than 5 million electronically billed services, the NHIRC examines the claims processing performance of Medicare and seven national commercial health insurers: Aetna, Anthem Blue Cross Blue Shield, CIGNA, Coventry Health Care, Health Net, Humana and United Healthcare.

Study Results

According to the June 16, 2008 AMA study: 

  • There is wide variation in how often health insurers pay nothing in response to a physician claim (from less than 3 percent to nearly 7 percent), and in how they explain the reason for the denial. There was no consistency in the application of codes used to explain the denials, making it expensive for physician practices to determine how to respond.
  • Health insurers reported to physicians the correct contracted payment rate only 62 to 87 percent of the time. When health insurers report an amount that does not adhere to the contracted rate, it adds additional, unnecessary costs to the physician practice to evaluate the inconsistency.
  • More than half of health insurers do not provide physicians with the transparency necessary for an efficient claims processing system.
  • There is wide variation among payers as to how often they apply computer generated edits to reduce payments (from a low of less than .5 percent to a high of over 9 percent). Payers also varied on how often they use proprietary rather than public edits to reduce payments (ranging from zero to as high as nearly 72 percent).

Assessment

The use of undisclosed proprietary insurance claims edits, only serve to inhibit the flow of transparent information to physicians, adding additional administrative costs to reconcile their health insurance claim issues.

Conclusion

Your thoughts and comments are appreciated. Will likely outcomes of the CCC and NHIRC be real, or illusionary?

Related Information Sources:

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

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

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New Mid-Year Mileage Tax Rates

Automobile Business Deductions

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[By Robert Whirley; CPA]

The IRS has finally issued new mileage rates for deductible auto expenses.  After much pressure from the public and some law-makers, the new mileage rate is set at 58.5 cents a mile.  This is effective beginning July 1 through Dec 31, 2008.

AMT Developments

Additionally, changes are under way with an amendment to the AMT exemption levels.  This is an attempt to temporarily address the affects of the Alternative Minimum Tax on middle-class America. Of course, many physicians are affected by this tax. The AMT exemption would increase and, thereby, provide doctors some relief. 

Assessment

The bill that would create the change is only on the house floor, but is moving toward a vote.

***

Waxed Jaguar

***

Conclusion

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Perceptions of Electronic Health Records

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New Awareness Study

[By Staff Writers]

Kaiser Permanente, through independent market research company StrategyOne, conducted a nationwide survey between May 8-11, 2008 to gauge the awareness and perceptions of electronic health records.

Survey Findings:

  • 38 percent have used their insurance company’s online tools to learn more about their care, up from 29 percent in 2007.
  • 47 percent had a preference for doctors who use EHRs and 61 percent had a preference for insurance companies who employed EHRs.
  • 51 percent agreed that health IT should be a top priority for the next president to ensure that all Americans have access to their own personal medical records [PMRs] electronically.

Assessment

Americans continue to have concerns about privacy issues. Assurance is required, from all who store personal medical data, that patient information is secure.

Source: Kaiser Permanente, June 12, 2008.

Conclusion

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Meet an Executive-Post Sponsor

The Institute of Medical Business Advisors, Inc

July 7, 2008

PRESS RELEASE: iMBA, Inc

Atlanta, Georgia

The Executive-Post at www.HealthcareFinancials.com is now proudly sponsored, in-part, by the Institute of Medical Business Advisors Inc.

Since inception in 2000, iMBA Inc has become one of North America’s leading professional health consulting firms; and focused provider of textbooks, CDs, tools, templates, onsite and distance education for the health economics, administration and financial management policy space. Other consulting services include:

  • Medical Practice Valuations and Appraisals
  • Practice Management Solutions
  • Physician Focused Financial Planning
  • Health Economics and Financial Benchmarking
  • Health Information Technology
  • Wealth Policies and Investment Management
  • Fiduciary Second Opinion Evaluations
  • Litigation Support Services
  • Special Projects, etc.

As competition increases, and the cognitive demands of the global marketplace change, iMBA Inc is well positioned with offices in five states and Europe to meet the needs of medical colleagues, related advisory and corporate health clients today; and into the future.

For more information, please visit: www.MedicalBusinessAdvisors.com

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Getting IRS Answers

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Even When You Shouldn’t Ask

By Staff Writers

Our complex tax system has sparked moves toward a flat tax in 2008 and other efforts at simplification. But until such a change occurs—if it ever does—we are stuck with what we have. This means many doctors and all taxpayers will continue to be confused and uncertain about their tax situations, and they will have a lot of questions.

The IRS Source

According to many experts, the IRS, which should be the best source for doctor answers, does not come through nearly often enough. But, it does offer some options. Which one you choose depends on the complexity and nature of the problem. Some simple, straightforward questions may be readily answered by a phone call. But for questions that are more complicated, it might be better to do it in a letter—following IRS guidelines—and get a written answer. And, in some cases, you may be better off not asking the question in the first place.

Phoning the IRS

Getting through to the IRS can be difficult. Its lines are often busy, especially during tax season. According to a not-so-recent report by the General Accounting Office, only 20% of callers got through to the IRS on the first call during last year’s tax return season (50% eventually got through). The IRS itself says you should avoid calling during lunch hours or on Mondays. But more serious is the reliability of the information you get. And, as a rule, the IRS will not stand behind its oral advice.

Example:

—Emma and James Clarke called an IRS helpline and asked whether they would be taxed on funds they wanted to withdraw from an individual retirement account (IRA) to buy a home. The Clarkes believed that they were told the transactions would result in no tax. So they withdrew the funds. When the IRS taxed them on the withdrawals, the Clarkes went to the Tax Court. They argued that they should not be taxed because they had relied on the erroneous advice of an IRS representative.

The IRS said that the Clarkes had misunderstood. According to the IRS, its representative told them only that they would not face the 10% tax on early withdrawals since they were over age 59½.

The Tax Court had no way of knowing whether the Clarkes had misunderstood or had been given mistaken advice. But the court said it did not matter. The tax law calls for taxes on IRA withdrawals, and the IRS had to follow the law.

Note: The IRS is not legally bound by mistakes its agents may make.

Precautions

The risk of getting incorrect advice does not mean that you should never call the IRS. But you should do some things to protect yourself. In particular, after you get an answer to your question, ask the IRS representative if information on the subject appears in any IRS publication. Then order the publication from the IRS and check the answer you received.

For example, suppose you want to know whether you can claim your father as your dependent. Even if the IRS representative says you can, you would be smart to check the IRS’s Publication 17, Your Federal Income Tax, which sets forth all the requirements for claiming someone as a dependent. Even if the representative is knowledgeable, it’s easy in a conversation for one party to misunderstand the other.

The same basic principles apply if you visit a local IRS office and speak to an agent. You can then easily pick up the publications you need, too.

If you use your computer to surf the Internet, you now can get some forms and basic information from the IRS via the World Wide Web (www.irs.ustreas.gov). But you cannot yet ask questions and get tax help this way.

Writing for Help

You will get the most protection by writing to the IRS with your question, because it will have to send you the answer. Then, if you follow this written advice and it turns out to be wrong, penalties you would otherwise owe will be avoided.

Private letter rulings

—These are among the most common forms of IRS guidance. You would request a private letter ruling from the IRS National Office when you want to know the tax impact of some strategy or transaction you are considering. Such a ruling is like insurance. As long as you give full and accurate details of the proposed transaction, you can rely on the ruling. (You cannot rely on private letter rulings issued to other taxpayers, but you can study them for signs of how the IRS views particular transactions.)

A small medical business might seek a letter ruling to be sure, for instance, that fringe-benefit plans or corporate restructuring will be tax-free.

Example

—A company was engaged in two businesses, A and B. The company needed capital to finance B’s new technology product. It found a venture capitalist willing to invest in B, but not in A. So the company sought to spin off B to a new corporation. The IRS said that there would be no tax on the transaction.

If your transaction will achieve the desired results, the IRS may suggest ways you can fix it. If the IRS plans to issue a negative ruling, it may offer you a chance to withdraw your request.

Technical advice memos

—Similar to letter rulings, these also come from the IRS National Office but are most often requested when a technical question comes up during the course of an audit. IRS agents themselves regularly request them. But, as a taxpayer, you can request such advice yourself. Technical advice memos are usually retroactive, but you can request relief from retroactivity if it would hurt you.

Technical advice memos may be issued on some of the same matters as letter rulings. Typical memos deal with such issues as whether a medical office worker is an employee or an independent contractor, validity of pension plans, and use of accounting methods.

Example

—A repairman had worked in an auto body shop for several years. Originally, he was classified as an employee. Then the shop owner turned the business over to his son, who designated the worker as an independent contractor. But the worker’s job did not change. He worked eight to 10 hours a day at the shop, using some of his own tools—but also some of the shop’s tools and equipment. He was paid half of the total amount of the bill for the repairs he did. But receiving his pay did not hinge on whether the customer paid; he took no risk. The IRS ruled in a technical advice memo that the worker was an employee.

Example

—A company asked the IRS to rule on whether its pension plan was qualified for tax breaks. The IRS said yes. A year later, the IRS realized the plan violated the rules because it excluded some workers who put in more than 1,000 hours a year. In a technical advice memo, the IRS said that the company would have to amend the plan to comply with the tax law. But because the company had relied on the IRS ruling in good faith and had originally disclosed all of the facts, the change did not have to be made retroactively.

When Not to Ask

There is no reason not to call the IRS with a basic question so you can fill out your tax return correctly. You probably will not even have to give your name. But if you want a letter ruling, first weigh the pros and cons.

In some situations—for example, to change your accounting method—you must get an advance ruling. In other cases, an advance ruling may be desirable because you want to be sure of the tax consequences of a transaction. Moreover, as we said, the IRS may suggest ways to restructure the transaction to get the tax result you want.

However, sometimes it’s unwise to seek IRS advice. You may not have time for a ruling—they generally take two or three months. Or, if the transaction offers no chance for flexibility, you will be stuck if the IRS gives you a negative response. (You must attach the ruling—favorable or not—to your return.) The National Office will review all related issues and transactions when it examines your request. So you must also be sure such scrutiny will not create a problem for you.

Cost is another factor. Fees vary by type of ruling, but a typical one would be $500. Then you need professional assistance in preparing your request and responding to IRS questions.

Assessment

The IRS will not answer every question. It will not give you a “comfort ruling”—where the answer is clear or reasonably certain. And it will not rule in hypothetical situations.

Letter rulings are public information, but you don’t lose your privacy. The IRS will have you sign a deletion statement: You can tell it to block out items that would reveal your identity. Most all physicians and medical professionals should do this.

Conclusion

Your comments are appreciated. What has been your experience with IRS queries?

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

Physician Advisors: www.CertifiedMedicalPlanner.org

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“S” Corporation [Case Law] Tax Advantages

Family Owned Business [FOB]

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Some doctors understand the advantages that S corporations have over regularly taxed C corporations—and vice versa. But, an unfamiliar Tax Court decision, more than a decade ago, points up an advantage for S corporations that are sometimes overlooked.

Scenario

Suppose the owners of a family corporation are about to retire. Their children will buy their stock, giving them a note for the purchase price. The children will, of course, pay interest on the note.

Tax Difference

If the corporation is an S corporation, the younger generation will be able to write off their interest payments in full.

On the other hand, if it’s a C corporation, they may have few or no deductions.

Why the difference?

Because interest you pay to buy S corporation stock is considered “business” interest, and that’s fully deductible. On the other hand, interest paid to purchase C corporation stock is treated as “investment” interest. And the tax rules say that investment interest is deductible only to the extent of your investment income (dividends, interest income, etc.). If you don’t have any investment income, you get no deduction for your interest payments.

Naturally, that brings up another question: Why is the ownership of a C corporation considered an investment, while the ownership of an S corporation is treated as a business? For the answer to that, let’s look at the above mentioned Tax Court case.

Case Report

Three brothers, Milton, Leo, and Dale Russon, founded Russon Brothers Mortuary as a regular C corporation. The business did well, and the Russon brothers began training their four sons, Scott, Brent, Robert, and Gary, in the mortuary business.

Eventually, the four younger Russons were trained and actively involved in the business, and the older Russons were ready to hang up their hats. The younger Russons agreed to buy all the stock in Russon Brothers for $999,000. Each of the four younger Russons agreed to pay one-fourth of the purchase price, with 10% payable up front and the remainder to be paid in 180 equal monthly payments at 9% interest.

Agreement

The agreement gave the four younger Russons their right to exercise ownership rights, including “the right to all dividends from the stock,” subject to certain limitations. One of those limitations provided that the buyers could not “declare or pay any dividends or make any distributions” without written permission from the older Russons. After the sale, the four younger Russons continued to run the mortuary business, and their fathers retired.

On his tax returns following the sale, Scott Russon deducted the interest he paid on the purchase price for the Russon Brothers stock. However, the IRS denied the deduction on the grounds that the interest was subject to the investment-interest limitation.

Scott Russon countered that his interest should be treated as fully deductible business interest. After all, he bought the stock so that he and the other younger Russons could conduct the business full time and “earn a living.” Moreover, he contended that he couldn’t have purchased the stock as an investment since Russon Brothers had never paid a dividend in its entire history.

Tax Payer Loser

The Tax Court concluded that the Russon Brothers stock was “held for investment,” and the interest paid to acquire the stock was subject to the investment-interest limitation [Russon, 107 T.C. No. 15].

The court pointed out that property “held for investment” includes any property of the type which produces interest, dividend, or royalty income. And, in the court’s view, that means property that normally produces those types of income—regardless of whether it actually produces such income.

The tax law does not require corporate stock to pay a dividend before it becomes investment property. What’s more, the court pointed out that the definition of investment property is inclusive and applies uniformly to every taxpayer; it does not depend on a taxpayer’s mind-set when buying the property.

Finally, the court pointed out that the possibility of the Russon Brothers stock actually paying dividends was clearly contemplated by all the Russons when they drew up the sales agreement. The agreement gave the younger Russons the right to “all the dividends from the stock,” subject only to the written consent of the older Russons until the purchase price was fully paid.

S Corporation Advantage

If Russon Brothers had been an S corporation; it would have been a different story. The IRS has said that interest paid to buy an S corporation is treated as interest to purchase the corporation’s assets, not its stock [Notice 89-50]. Thus, the interest the Russons paid would have been treated as fully deductible business interest to the extent the assets were used in the corporation’s business [Notice 88-20]. And since virtually all of Russon Brothers’ assets were used in the active conduct of its mortuary business, Scott Russon would have been entitled to his deductions.

Assessment

There is one bright spot for astute doctors and other buyers of C corporations. You can switch. The IRS has ruled that once a C corporation is converted to an S corporation, interest paid thereafter will be treated as paid for the assets, not the stock. So your interest will become fully deductible business interest [Ltr. Rul. 9040066].

Conclusion

Of course, switching to an S corporation has other important tax consequences. So you will want to talk things over with your tax adviser before making a final decision. And so, 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

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Marital Dissolution, Buy-Sell Agreements and Practice Value

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Doctors, Divorce and Medical Practice Worth

[By Mark P. Gross; JD]

Determining how to value the business interest of each medical partner is a critical element of the buy-sell agreement.

Family law courts, however, have broad discretion about whether to accept or reject the validity and binding effects of the formula stated in these agreements. When assessing whether the formula is binding in the dissolution proceeding, the courts consider, in general: (1) the proximity of the date of the agreement to the date of the marital separation to ensure that the agreement was not entered into while contemplating a marital dissolution; (2) the existence of an independent motive outside of divorce for entering into the buy-sell agreement, (e.g., the desire to protect all shareholders against the affects of a business dissolution); and (3) whether the value determined by the formula used in the agreement is similar to the value produced by other methodologies.

Case Law

For example, in one case [Nichols v Nichols (1994) 27 Cal. App.4th 661, 671-672], these factors were enunciated. The attorney-husband became a partner shareholder and signed a stock purchase and sales agreement under which the price of the stock was determined by a formula based on the book value of all the firm’s assets, except its accounts receivable, goodwill and work in progress, etc. When the husband and wife began divorce proceedings, the husband’s expert valued the community interest of the husband’s stock according to the stock purchase agreement.

The wife’s expert valued the interest by the book value of the firm’s net assets including accounts receivable, goodwill, and work in progress. The dispute went to the family law court and the court ruled in favor of the husband. The appellate court upheld the decision.

The appellate court noted that the agreement was entered into eight years prior to separation and thus did not appear to anticipate the divorce. The firm had an independent motive for entering into the stock purchase agreement, (i.e., avoiding a major economic impact on the firm when a partner leaves). More importantly, the court found no evidence that the stock purchase agreement was designed to deprive the wife of any rights.

A Marital Settlement Agreement

In drafting the buy-sell agreement, the principals of any medical practice or business should view it as a marital settlement agreement.

In a separate divorce case [Slater v Slater (1979) 100 Cal. App. 3d 241, 245, 160], the asset being divided was the husband’s interest in his medical practice partnership.

During the parties’ marriage, the husband and wife both signed the partnership agreement which specifically provided that the partnership could buy back the husband’s interest upon his death, withdrawal, or expulsion. Under the agreement, the purchase price was to be the husband’s interest in the capital account plus the total of the accounts receivable [ARs] less than six months old.

The agreement further stated that “the partners agree that a portion of the purchase price as determined above includes the sale of their interest in the goodwill of the partnership, and in the event of their withdrawal or expulsion from the partnership, that they will not enter into the practice of medicine in that portion of Alameda County for a period of three years.”

Trial Court Proceedings

The trial court proceedings, in determining the value of the husband’s medical practice according to the partnership agreement, found it had a goodwill factor of zero.

The wife appealed claiming the trial court erred in setting a value of zero on the goodwill of the husband’s practice, pursuant to the withdrawal provision of the partnership agreement. The appellate court reversed the trial court’s decision with directions to value of the husband’s interest in the partnership. It rejected the husband’s contention that his wife was bound by the terms of the agreement—even though she had signed it. It found that the agreement was irrelevant because the asset being divided in the dissolution of marriage was not the husband’s contractual withdrawal rights; rather it was his interest in the partnership.

Therefore, the wife was not bound by the terms of the withdrawal provision, and the trial court was not precluded from valuing the goodwill of the husband’s practice. This is a troubling decision and probably an incorrect one.

Fair Market Valuation [FMV] Factors are Key

In order for a buyout plan to better withstand rigorous examination in the family law court, the buyout price should be related to fair market factors of the business and should not be intended to deprive the non-shareholder spouse of any community interest.

A formula should be used based on profitability instead of a fixed price (as in the actuarial business example), and an explanation for the formula should be developed. Having the spouse sign the agreement is probably a good idea.

Fiduciary Duty

Other issues in drafting a buy-sell agreement include breach of fiduciary duty.

California Family Code Section 721(b), for example, states that transactions between a husband and wife are subject to the general rules governing fiduciary relationships. Because the buyout provision is tantamount to an agreement disposing of a community asset, the rules governing fiduciary duties may apply and render the provision voidable or chargeable to the principal spouse for greater value. Therefore, a buy-sell agreement that too heavily favors the principal spouse may not be of any value in a dissolution proceeding.

Community Interest

Finally, when both parties in a divorce agree to the disposition of the community interest in the stock of a company upon dissolution of marriage, the rules governing disclosure apply, including disclosure of valuation. Neither spouse may dispose of community personal property for less than fair and reasonable value [FMV] without the written consent of the other, and each part has an obligation to fully disclose proper valuations of assets. In equitable distribution states, similar disclosure rules are applicable.

Assessment

Buy-sell agreements should be created early in the family-owned business. Once accomplished, unpleasant issues can be discussed before the emotional baggage weighs upon the parties’ sensibilities. It is much easier and more prudent to include the divorce scenario in the agreement up front instead of waiting until it becomes an issue (the agreement already deals with death, disability, and business dissolution). To ensure proper wording of the marital dissolution portion of the buy-sell agreement, a draft of the document should be reviewed by a family attorney prior to execution. With a solid plan in place in the event of divorce, the family business will be better able to weather the stormy events that can sometimes occur within a family.

What are your thoughts and opinions on this often contentious topic, from the spouse, doctor, legal and medical partner perspective? Your comments are appreciated.

About the Author: Mark P. Gross Esq. is a shareholder in the Encino, Calif., law firm of Alpert, Barr & Gross.

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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Events-Planner: July 2008

JULY 2008

Staff Writers

“Keeping track of important health economics and financial industry meetings, conferences and summits”.  

July 10-11: Health Reform & the 2008 Elections: What’s Ahead for Health Care Access, Delivery and Financing? Washington Court Hotel, Capitol Hill; Washington, DC | Phone: 800-521-4323

July 14: Medicare Advantage Special Needs Plans | Institute for International Research, Washington, DC.

July 15-17: 3rd Annual Achieving Return on Investment for Wellness; Hamilton Crowne Plaza Hotel; Washington, DC | Phone: 800-647-7600

July 15-18: Association of Medical Directors of Information Systems Symposium, Ojai Valley Inn, Ojai, CA | Phone: 530-596-4477

July 16: Medicare Marketing Compliance | Financial Research Associates, Chicago, Illinois.

July 21-22: Optimizing Managed Care Contracting for Hospitals; Boston, MA | Phone: 800-647-7600

July 21-22 Executive Forum on Rx Benefit Management for Employers and Health Plans; Las Vegas

July 22-23: The 3rd Annual World Congress Leadership Summit on the Road to Interoperability; Boston Waterfront Hotel; Boston, MA | Phone: 800-767-9499 

July 23-25: 2nd Annual Public Health Care Congress; Mandarin Oriental Hotel; Washington, DC | Phone: 800-817-8601 

July 24-26: Health Forum Leadership Summit; Manchester Grand Hyatt; San Diego, CA | Phone: 312-893-6897

July 25: SCF Arizona Medical Provider Seminars 2008; Worker’s Compensation, Sheraton Tucson Hotel | 602-631-2513 lbrott@scfaz.com  

July 29-31: Medicare Today & Tomorrow; Washington, DC | Phone: 800-647-7600

July 30-31: The 2nd Annual Leadership Summit on Process Improvement and Business Excellence in Healthcare; Hilton Suites Chicago Magnificent Mile; | Phone: 781.939.2410 

Please send in your meetings and dates for listing in the next issue of our Events-Planner: MarcinkoAdvisors@msn.com

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

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Alphabet Soup: Financial Designations & Certificates

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financial-designationsjuly

July 2008:

AUTHORS: Dr. David Edward Marcinko; MBA, CMP™ and Hope Rachel Hetico; RN, MHA, CMP™

POSITION: Publisher-in-Chief, and Managing Editor of the Executive-Post, respectively.

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TOPIC: Financial Designations and Certifications [Alphabet Soup of Industry Obfuscation and Self-Promotion, or Real Gravitas – You Decide?]

EXCERPT: “Until recently, most financial advisors were regulated by the NASD, the National Association of Securities Dealers. Now the Financial Industry Regulatory Authority or FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. It is a self-regulatory agency comprised of the nation’s brokerage firms. Upon completion of a required exam the FINRA will issue a variety of licenses. The most common are the Series 6, 7, and 24.

The Series 6 is essentially a license to sell packaged products, namely mutual funds. It is most commonly held by insurance agents and bank representatives. It is considered a very easy test. Holding such a license allows the holder to collect commission income through its member firm.

The Series 7 exam is a bit more difficult and includes issues relating to individual securities such as stocks, bonds and limited partnership interests. The pass rate is lower than the Series 6. The probable culprit is the extensive questioning on margin and options, topics most are unfamiliar with prior to entering the securities business.

The Series 24 covers issues of compliance and supervision and is required of Branch Managers of brokerage firms. All registered representatives (the proper name for a broker) must be supervised by someone with a Series 24, also known as a principal’s license.

Checking the background of a registered representative, a branch manager or a member firm is easily done through NASD and/or FINRA Regulation, Inc. NASDR/FINRA maintains the Central Registration Depository (CRD). The CRD can be checked for a description of a disclosed event by phone or by Internet. One should request information on an advisor’s firm as well as the individual. A reputable advisor at a disreputable firm has its own set of potentially dangerous implications.

Regardless of the above, these tests produce licenses to sell financial products. They are not educational achievements. There is virtually no academic barrier to entry for them. Stock-brokers today – hate the term – and prefer “financial advisor”; yet the term has no real meaning other than as a sales license.

Some are college graduates, and beyond; while some other experts argue that too many are not!”

Hence, the need to “raise the bar to fiduciary accountability with deep knowledge of healthcare modernity.”

For more info: http://www.CertifiedMedicalPlanner.org

READ JULY HERE: financial-designationsjuly

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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