The Healthcare Capital Budgeting Crisis

Posted on November 21, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

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Did you know that South Carolina’s Department of Health and Environmental Control [SCDHEC] will likely close some of its rural health clinics due to the state’s budget woes? It’s true; according to reports from The State of Columbia, SC. Moreover, the SCDHEC would also offer early retirement to its employees.

Hospital Bankruptcies

On another front, hospitals filing bankruptcy last quarter included: a two-hospital system in Honolulu; one in Pontiac, MI; Trinity Hospital in Erin, Tennessee; Century City Doctors Hospital in Beverly Hills, Lincoln Park Hospital in Chicago, and four hospital system Hospital Partners of America, in Charlotte. 

Private Medical Practice Impact

And, according to consultants from the Institute of Medical Business Advisors, in Atlanta [www.MedicalBusinessAdvisors.com], similar negative impacts have occurred in private medical practices, and clinics, as well.

Assessment

Will the current economic crisis have a chilling effect on your healthcare organization’s capital spending?

Conclusion

Please vote.

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.medicalbusinessadvisors.com/marcinkobio.asp and www.stpub.com/pubs/authors/MARCINKO.htm

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Filed under: Health Economics, Health Insurance, Healthcare Finance, Surveys and Voting, Uncategorized, Voting Polls | Leave a comment »

Home Ownerships versus Stock Ownership

Posted on November 21, 2008 by Dr. David Edward Marcinko MBA MEd CMP™

Understanding “Underwater” Differences

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Mark Cuban wrote an interesting piece on his website on November 11. On it, he asks; “so what’s the difference between being underwater on a mortgage and underwater on a stock?”

The Experts

According to Mark, the “experts” will tell you to hold the stock in hopes of it going up in value and then explain that those with homes worth less than their mortgages shouldn’t feel bad about breaking them and defaulting?

The Buy and Hold Scam

He thinks “Buy and Hold” for stocks is one of the all time great marketing scams. “Ignore it; always. “Buy and Hold” for your house is a mantra you should always live by; the difference?

You can live in your house. You get utility from your house. You may get a deduction for interest paid on your tax bill. You can develop a positive emotional attachment to a house.”

The Stock Difference

A share of stock … well you can … you can look up the price anytime you want if you think that’s fun. There is no utility for a share of stock beyond its financial value. The value of a house is that it is your home. Moreover, “the fact that you may be underwater in your mortgage is of no relevance if you can make the payments. If you can make the payments on your mortgage, it shouldn’t matter if your house is worth 10 pct of your mortgage. If you can make the payments, make them.”

Example:

Furthermore, as Mark recalls, “I remember being freaked out watching as my rate on my Adjustable Rate Mortgage went up and up as I watched the value of my house go down. For 2 years my rate went up, my house value went down. Fortunately, I liked living there. I wasn’t building any equity, in fact, I was negative, but I was going to have to pay to live somewhere. On top of everything, my credit was bad enough and I didn’t want to make it any worse. In fact, I knew that if I didn’t make the payments on my house, my chances of ever owning a house again were none and none. So I kept paying the note every month; in spite of the financial pain.”

Changing Times

Then, Mark says, a funny thing happened. Interest rates started to go down. I didn’t even know it until I got my annual notice saying that my mortgage payment would go down. The value of my house wasn’t going up, but for the next several years, my payments went down. It took years, but I actually built equity in the house; which is exactly the point!

Assessment

Finally, says Cuban: “Buy and hold works when it comes to the home you live in. Turning in the keys because you have negative equity is a fool’s game. If you do, you will never own a home; you will be a renter forever“. Your home has far more value than its mark to market price because you can live in it. Do whatever you can to stick it out. It will pay off for you in the long run.

Conclusion

Attention profligate doctors, and financial advisors, your thoughts and comments on this Executive-Post 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: www.stpub.com/pubs/authors/MARCINKO.htm

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