About RRs and RIAs

Understanding Financial Sales “Titles”

Dr. David Edward Marcinko; MBA, CMP™dr-david-marcinko1

Registered Representative

A retail or discount stock broker, regardless of compensation schedule, is also known as a registered representative [RR]. Other names include financial advisor, financial consultant, financial planner, Vice President, Wealth Manager, etc. Typically, the less than rigorous national test known as a Series #7 (General Securities License) test, and state specific Series #63 license is needed, along with Securities Exchange Commission (SEC) registration through the National Association of Securities Dealers (NASD) to become a stockbroker [now Financial Industry Regulatory Authority – FINRA]. Since a commission may be involved, and performance based incentives are allowed, be aware of costs.

Registered Investment Advisor

This securities license, obtained after passing the Series # 65 examination, allows the designee to charge for giving “unbiased” securities advice on retirement plans and portfolio management, although not necessarily sell securities or insurance products. An RIA is also usually a fiduciary, while a RR, financial consultant or stockbroker is not.

About FINRA BrokerCheck

FINRA BrokerCheck is a free online tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. It should be the first-line resource when a physician or other investor is choosing whether to do business with a particular broker or brokerage firm www.FINRA.org

 

Features of FINRA BrokerCheck include:

Assessment

Do you seek “professional” assistance with your investing endeavors, or are you a DIY physician-investor?

Conclusion

And so, as a former holder of all the above titles, your thoughts and comments on this Medical Executive-Post 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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Healthcare Organizations: www.HealthcareFinancials.com

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The Certified Physician Executive

CPE / CHE

Staff Writers

56400743

The Certified Physician Executive or Certified Healthcare Executive designations, from the Certifying Commission in Medical Management (CCMM: 4890 West Kennedy Blvd., # 200, Tampa, Florida 33609-2575 813-287-8944), may be earned by those physicians, or lay professionals, with the requisite requirements in education, and demonstrated special competence and professional experience in the field of medical management.

Requirements

Specific requirements for certification include: (1) current stature as a physician (MD/DO), or working lay professional; (2) completion of the American College of Physician Executive’s Graduate Program in Medical Management (GPPM), OR, completion of an accredited graduate management degree program (i.e., MBA, MHA, MPH, etc.), OR completion of 200 hours of management education with 120 hours of a core curriculum from the GPMM; (3) at least one year of medical management experience; and (4) completion of an approved week long CPE tutorial program.

Assessment

Upon receipt of the CPE designation, diplomate, fellowship and distinguished fellowship status may be sought.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Is this certification needed; or not?

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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The Total Return Trust

Uniform Prudent Investment Standards

ho-journal11

By Dr. David Edward Marcinko; MBA, CMP™

By Tom Muldowney; MSFS, CFP®, AIF®, CMP™

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

The physician-investor dichotomy, income now versus growth for later, is not unique. Trusts; that have the potential to span decades, usually place the interests of the income beneficiary at odds with the remaindermen.

Conflicting Goals

Historically, trustees invested these irrevocable trust assets in bonds so as to generate the necessary income for the income beneficiary.  But this led to conflicts…investing in bonds provides little growth of either the investment asset base or the income generated thereon.  Interestingly, this has also placed the interests of the remaindermen at odds not only with the income beneficiary but with the trustees who have been charged with the duty of stewarding these assets for the benefit of both generations.  This conflict of the generations has led to some surprising results both in practice and in the courts.

“Total Return Trust”

Income beneficiaries want current cash flow, remaindermen want growth and trustees want to minimize the exposure to liability.  Notice the subtle difference … rather than “income” (dividends and interest) income beneficiaries want cash flow. They generally do not care about the source from which the cash flow was generated. Recognition of this subtle but important difference has led to the development of Uniform Prudent Investment Standards and the introduction of the “Total Return Trust.”

Uniform Prudent Investment Standards

The Uniform Prudent Investment Standards (agreed upon by legislatures of all 50 states) identify that for a trustee to be a “prudent investor”, investments that are allocated across a broad spectrum of investment asset classes, provides the greatest protection from investment risk. But; because this allocation across a broad spectrum must – by definition – include stocks, the potential for income in its technical sense (interest and dividends) must be reduced. The use of a “Total Return Trust” addresses and solves this problem.

Combination of Assets

A total return trust thus allows a trustee to manage a portfolio of assets commensurate only with the volatility risk that the trustee identifies is appropriate for the trust.  This gives the trustee the ability to invest in a combination of assets that include stocks, bonds and other investment assets.  The purpose of the total return trust includes safety and protection of the assets with a reasonable growth rate, from which a periodic ‘unitrust’ cash flow may be withdrawn for the income beneficiary.  Unitrust cash flow is based on the recognition that a stated percentage withdrawal from trust corpus, each year, may be made to the income beneficiary without regards to the source of that cash flow, whether it be from income, or from corpus. The Unitrust cash flow recognizes that from time to time volatility in the equity marketplace will cause the trust corpus to fluctuate, sometime below that amount that was originally invested.

Cash Flows

Using this technique, as long as assets of the trust portfolio grow and the long term cash flow withdrawal rate is less than the long term growth rate, several benefits to all of the parties will inure: Cash flow to the income beneficiary will be maintained; cash flow to the income beneficiary will  increase as the asset base increases;  asset growth will satisfy the needs of the remaindermen; the trustee will be secure in knowing that he has satisfied his fiduciary duty to serve both the income beneficiary and the remaindermen.  A substantial side benefit for the income beneficiary is that the cash flow will include not only income (dividends and interest) but will also include distributions of long term capital gains (which enjoy a lower annual tax rate.)

MORE:

https://www.crcpress.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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Top 50 Health 2.0 Blogs

Offering Definitional Clarity [Maybe]

By Staff Writers55909808               

There is no concise-precise definition of Health 2.0 as it is a dynamic construct. But, according to Holt, Furst, Crespo, Marcinko, Hetico, www.HealthDictionarySeries.com, and many others; Health 2.0 may be defined as an amalgam of many ideas. Most notably, our best definition: 

“Health 2.0 is internet cloud enabled participatory healthcare model characterized by the ability to rapidly generate, share, classify and summarize individual health information with the goal of improving health care systems, experiences and outcomes via integration of patients and stakeholders. It is a modern concept about change in how patients, physician, payers, employers and all stakeholders relate to each other, and the industry, in a personalized manner using new technologies.”

Top 50 Health 2.0 Blogs

Alisa Miller, of nursing portal RNCentral.com, says that Health 2.0 embraces the idea of bringing health care into the community of physicians, patients, and those in the health care industry together with technology and the Internet to provide the best possible health care environment.

Assessment

What better way for the various parts of this community to share their thoughts and communicate ideas than through their blogs? From corporate blogs to blogs that are a part of social networks to individual blogs touching on technology or health care policy, these blogs will help bring you into the community, provide information and resources, and may perhaps help you find your voice as well.

Link: http://www.rncentral.com/nursing-library/careplans/top_50_health_2.0_blogs

Conclusion

Your thoughts and comments on this Medical Executive-Post are appreciated.

References:

Crespo, R. 2007. Virtual Community Health Promotion; Preventing Chronic Disease, 4(3): 75

Furst, I. 2008. Wait Time and Delayed Care. Accessed at http://waittimes.blogspot.com/ on 15/11/20008

Holt, M: www.TheHealthCareBlog.com

Marcinko, DE 2007. Dictionary of Health Information Technology and Security; Springer Publishers, NY

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Public Healthcare Cost-Shifting

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Joint Study Results

[By Staff Reporters]

The American Hospital Association, Blue Cross / Blue Shield Association, Premera Blue Cross and America’s Health Insurance Plans recently released a study on public and private health insurance payment rates prepared by the actuarial firm Milliman, Inc.

Findings-in-Brief

  • Hospitals lost $30 billion on Medicare and Medicaid
  • Hospitals earn $66 billion on commercial business
  • Hospitals lost $13 billion on uninsured patients

Privates Employers Hit

Private sector employers, employees and their families pay about 10-11% more than they would otherwise pay for health insurance – to fund the operating deficits created by Medicare and Medicaid.

Assessment

Specifically, Milliman indicated cost shifting is worth a $51 billion differential in hospital payments, and a $40 billion differential in payments to physicians.

Full report: http://www.ahip.org/content/default.aspx?docid=25216

Conclusion

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Introducing America Well™

Extending the New Health 2.0 Marketplace

Staff Reporters

America Well™ is a new healthcare marketplace where consumers and physicians come together online, to acquire and provide convenient and immediate healthcare services. Using the latest technologies in electronic communications and digital telephony, the company extends traditional healthcare services to the home setting www.AmericaWell.com

Origins

Based in Boston, Massachusetts, American Well was founded in 2006 by Drs. Roy and Ido Schoenberg. Previously, they successfully built and implemented three large-scale, mission-critical enterprise solutions for health 2.0 in both domestic and international markets.

Three Target Markets

According to its website, America Well is committed to supporting health plans in meeting consumer and employer demand for affordable, efficient and immediate access to quality care; by serving its three core market segments:

1] Patient-Consumers

Patients may talk to a doctor anytime, without leaving home or scheduling an appointment. Consumers may choose from a variety of specialties.

2] Physicians

Doctors can increase revenues and care for patients on their own terms. This introduces a new balance to the way medicine is practiced by offering medical services online for a fee.

3] Health Plans

Plans capture the value of consumerism by enabling online healthcare services and providing members appropriate access to physicians from home, the most convenient and least expensive care setting.

Assessment

For over 30 years, rising costs and increased demand have limited consumers’ ability to get affordable, quality health care. While other consumer industries have embraced Internet technology, bringing retail, travel, and entertainment services to consumers’ homes; healthcare delivery has remained unchanged – it is still delivered almost exclusively in physician offices and hospitals.

Conclusion

America Well™ aims to close this gap by offering real-time healthcare services through dependable and widely available communication channels. Using the Internet, digital telephony, and the latest interactive technologies, American Well helps consumers get the care they need, without ever leaving home. But, is this new service really a help – or hindrance – to its three core markets segments? Please comment and opine.

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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Superannuation Demographics and LTCI

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“PAYING TO AGE”

  • By Dr. David Edward Marcinko; MBA, MEd CMP™
  • By Thomas A. Muldowney; MSFS, CLU, ChFC, CFP®, AIF®, CMP™
  • By Hope Rachel Hetico; RN, MHA, CPHQ™, CMP™ 

According to the US Bureau of the Census, there were almost 49 million people in the United States who were over age 60 in 2001. There are approximately 4,000,000 people over the age of 85 living in the US and there are over 60,000 people older than age 100 estimated as of July 1st 2004. For every 100 middle aged people in the US there at present about 114 persons over the age of 65. This statistic will change as we move forward through time. In the year 2025, there will be about 253 people over age 65 for every 100 middle aged people. Today, there are more than 55 million over age 60.

The Ticking Clock

Beginning on January 1st, 2006 at midnight and every 12 seconds thereafter for fifteen years, a baby boomer will have a birthday and cross over the age threshold of age 60. In the next 30 years, the 60+ age group will more than double, becoming 25 percent of the total population, and will have to be supported by a proportionately smaller workforce.  Research published in June 2005 by AARP (based on data from 2002) estimates that: “In 2002, roughly $140 Billion was spent on nursing home and home health care, with 24% of these costs being paid out of pocket (O’Brien and Elias, 2004)

Baby Boomers

As the baby boom generation ages, their care needs will expand precipitously. Add to this, scientific and technological improvements in healthcare. These very same people will need more expensive healthcare, more expensive custodial care and they will need it for an even longer period of time. Who will pay for this expanded need is not so clear. What is clear is that it will take money and lots of it to make these payments.

Financial Variables

There are only three variables associated with the accumulation or preservation of money:  “Time, Money and Rate of Return.”  Time is reduced to the following two questions “How long until I will need my money?” and “How long will I live?” an uncertainty to be sure.  Rate of return is either a function of the financial markets or the successful maintenance of an LTC plan. Because of the volatility in the financial markets, the “money” question is equally as uncertain.  In order to accumulate sufficient assets a client must ‘tradeoff’ many other alternatives such as ‘lifestyle.”

Assessment

What is certain is this…financial planning is important.  More important is the implementation or funding of an accumulation strategy or a Long-Term-Care [LTC] investment strategy to overcome these hurdles.

Conclusion

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Certified Physician in Healthcare Quality

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About CPHQ

[By Dr. David Edward Marcinko; MBA, CPHQ, CMP™]dr-david-marcinko2

Mission

The mission of the National Association for Healthcare Quality (NAHQ) is to improve healthcare by advancing the theory and practice of quality management in healthcare organizations and by supporting the professional growth and development of Healthcare quality management professionals. The association has about 15,000 members and was established in 1976 www.CPHQ.org

Several Specialties

There are specialties in infection control, medical and staff records, nursing, risk management, utilization review and CQI/TQM. Annual educational conferences are available, along with integrated educational courses, the quarterly newsletter NAHQ News and the bimonthly publication, Journal for Healthcare Quality. The NAHQ certification program, confers the designation Certified Professional in Healthcare Quality to members, and is accredited by the National Organization for Competency and National Commission for Health Certifying Agencies. It has certified more than 8,000 individuals.

Assessment

The NAHQ has liaison relationships with allied organizations, such as the American Hospital Association, JCAHO, National Health Council and the National Association of Medical Staff Services. It has working relationships with the American Health Information Management Association, Healthcare Financial Management Association and the US Department of Health and Human Services. Corporate headquarters are at 5700 Old Orchard Road, first floor, Skokie, Illinois, 60077 (708) 966-9392

Conclusion

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D2C Drug Advertising Criticized

FDA Updates Some Standards

Staff ReportersME-P Logo.2

According to the Wall Street Journal, December 11, 2008, prescription drug makers updated their voluntary standards for direct-to-consumer advertising to make the ads more informative. But, the measures stop short of changes sought by government and industry critics.

The FDA and “Actors”

The companies said they will halt advertising that includes promoting prescription drugs for non Food and Drug Administration [FDA] approved uses; or using actors as physicians. The guidelines say celebrity endorsers shouldn’t say they use a drug – unless they actually use it.

PRMA Industry Trade Group

The Pharmaceutical Research and Manufacturers of America [PRMA], the industry trade group that issued the standards, reported their aim was to address the concerns of doctors, and Congress while continuing to keep patients informed about valuable treatments. Critics said the changes didn’t go as far as advocated by a panel on drug safety from the Institute of Medicine [IOM], including making company’s wait two years before advertising a prescription drug directly to consumers so that effects can be better understood. Critics also said that television ads should include the phone number at the FDA for patients to call to report side-effects.

Assessment

Under the voluntary standards, only print-ads would include the phone number.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Are these restrictions enough; or too much?

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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Physician Advisors: www.CertifiedMedicalPlanner.com

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Profits as Distribution – Not Wages

56371606Payroll Tax Strategies for Doctors

By Edwin P. Morrow; III, JD, LLM

[Staff Writers]

Any business, like a medical practice with employees, has to concern itself with payroll taxes.  This includes any C or S Corporation with a sole owner/employee. 

Payroll Taxes

Payroll taxes include: 1) income tax withholding for any employee for federal, state and local taxes; 2) the employer portion of federal social security and Medicare taxes (also called OASDI – old age, survivors and disability insurance); 3) the employee portion of federal social security and Medicare taxes; 4) state and federal unemployment tax [See IRS Publication 15, Employer’s Tax Guide]. These include a social security tax of 12.4% on earned income up to $106,800 (2009 number increases annually) and Medicare taxes of 2.9%. And, although there are not nearly as many tax “loopholes” with payroll taxes as with income taxes, impacting issues like this should be noted.

Distribution of Profits

And so, profits as distributions are a valid strategy for passive physician-investors not working in a business entity. If no work was done to earn the distribution and the profits earned based only on the owner’s capital contribution, then the distribution should not be subject to social security and Medicare taxes as wages. 

An Aggressive Strategy

However, this may be a more aggressive strategy for owners working in a business; or practice.  Yet, some tax practitioners are comfortable characterizing a certain amount of payment to owner/workers as a distribution of profits to owners rather than as wages, which could save up to 15.3% employment tax. 

Avoiding Wage Re-Characterization

This may be done through a partnership or S Corporation (this technique would lead to potential double tax in a C Corporation), though many practitioners feel treatment of S Corporation distributions is more likely to safely avoid re-characterization as wages due to older IRS proposed regulations that are more negative on this point to tax partnerships.  Proposed Regulation § 1.1402(a)-2(h)(2).  This regulation has not been passed and is not law, but is the closest thing to guidance on IRS thinking in this area.  The IRS will not likely subject a distribution of a tax partnership to self-employment taxes unless one of the following apply:

 

  • the partner or member has personal liability for debts of the partnership (common in a general partnership or LLP, but not in an LLC, and not for a limited partner in a LP);
  • the partner or member has authority to contract on behalf of the partnership (common in member managed LLP or LLC, but not for a limited partner in a LP or a non-managing member in a manager managed LLC); or
  • the partner or member participates in the business more than 500 hours a year.

As can bee seen, at least one of these criteria will often apply to many partners or owners of LLP or LLC interests, but will not apply to a limited partner or an LLC owner whose interest closely resembles that of a limited partner.  That said; some practitioners go beyond these regulations because they are not binding interpretations.  

A Warning

Remember the adage, however, that “pigs get fat and hogs get slaughtered”. If you try to declare everything you make as a dividend style distribution and not wages, the IRS will use the “reasonable salary” guideline to re-characterize the distribution as truly wages. The company or practice must pay its owner/employee a reasonable salary for work done based on the nature of the job.  Basically, what would it cost to hire someone to do what you do? 

Assessment

The IRS may be more successful in treating a distribution as wages where a company is primarily a service business, like a medical practice, and capital investment is not a factor in production of income, or where there are no other employees that one can claim as helping to produce the excess income.

Conclusion

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The Case Against Inter-Operable eHRs

Let the Conversation Begin

pruitt1

By Darrell Kellus Pruitt; DDS

If someone says computerization in dentistry is inevitable, remind them that the metric system is inevitable as well.  Sometimes inevitable takes a long time though – even when it makes sense.  Interoperable dental records don’t.

Contrary to what healthcare IT stakeholders promise to win financing from a newbie Obama administration, interoperable eDRs will increase my cost of providing care, increase my liability as a businessman and endanger my patients’ health and welfare. Those are just three of many reasons why I intend to firmly stand in the way of their adoption until security problems are resolved to my satisfaction. I dare not grow discouraged, for there are far too many depending on me. 

If my grandchildren are to benefit from the miracles of trusted Open Source Evidence Based Dentistry, we must not allow today’s temporary collection of reckless stakeholders to burn consumers’ trust in eDRs even once. 

It is for these reasons that I watch very closely for the mention of eHRs on the Internet.  I am particularly alerted to danger when someone tells lawmakers that they have their own special plans for my patients’ dental records – without first discussing them with me.  I’m funny that way about my Hippocratic obligations and I don’t care what anyone thinks.

The Professor and IT Advocate

Valerie Powell, PhD., a professor of informatics at Robert Morris University, began commenting about dentistry and eHRs on ModernHealthcare.com in April.  She has posted five comments.  Her most recent appeared on November 25, and it was in response to my counterpoint titled “Dentistry EHRs not necessarily inevitable.”

http://modernhealthcare.com/article/20081124/REG/311249951

I continued my point-by-point critique of her uninformed ideas right here on the Medical Executive-Post in an article titled “Dental eHR Controversy Continues.”

https://healthcarefinancials.wordpress.com/2008/11/28/much-more-on-dentistry-and-the-ehr-controversy/

Valerie Powell never returned a response.

www.HealthDictionarySeries.com

Today, Powell’s name popped up on my google-alert.  She was interviewed for an article posted on the Pittsburgh Tribune-Review, written by Allison M. Heinrichs and titled “Experts lobby to add key dental data to medical records.”

http://www.pittsburghlive.com/x/pittsburghtrib/s_603452.html

She and her lobby went over my head.  That was wrong, as well as foolish.

I must say this in defense of her courage, however. In the last two years, Valerie Powell PhD., is the only person in the US who is publicly pushing for interoperable health records in dentistry.  She continues to hopefully plod along even though there are no longer any dentists promoting them – from what I can tell.  The ADA long ago gave up on unwittingly pushing dentists to go paperless. In fact, because of the palpable resentment among membership over being misled about the NPI number, the ADA Department of Dental Informatics [ADA-DDI] no longer even suggests that members sign up for them.  Just ask the department for yourself at NPI@ada.org

Tell them I sent you. They know who I am.

Even the eHR debate that limped along on PennWell was seemingly unnoticed by not only representatives from the ADA Department of Dental Informatics [ADA-DDI] but also by software vendors whose very market awaited their responses.  There still must be a dozen or so unanswered questions about eHRs in dentistry featured on this thread.  Does it not seem strange to anyone else that dental software firms are not tripping all over each other to get the names of their products in front of thousands of dentists for virtually no cost?  Transparency on the Internet certainly beats traditional advertisement if a business can tolerate the matching accountability.

Other than Dr. Powell, why do you think healthcare IT stakeholders are so shy?  And when they do speak up, why do they continue to over-stretch worn out rationalizations rather than offer tangible reasons for eHR adoption in dentistry? 

For example, the lame Hurricane Katrina excuse for digitalization of dental records was stupid even before it was approved by some committee as a talking point.  For anyone here in west Texas, it sounds really, really silly.  Here is another almost extinct slow-moving talking-point I like to lampoon, “Someone can steal paper charts just as easily as they can steal digital records.”  Is there anyone in the nation who can argue that point successfully?  Please step forward; Your audience awaits. 

Recently, I heard a fresh, incredible reason why dentists should computerize – malpractice protection.  Someone who really should have known better told me with a straight face that there are not only more negligence lawsuits filed in dentistry than digital privacy breaches, but that if a dentist has a paperless practice, almost all malpractice lawsuits could be prevented.  I find it hard to believe that a dentist could be so naïve.  Or worse, that a dentist would assume a colleague is so naïve.

Regardless of bald lies mixed in with irrelevant talking points, some rationalizations for connectivity are better than others.  But that still does not mean dentists must computerize their practices to accomplish worthy goals.  For example, one thing Dr. Powell understands on a professional level is the importance of dental health in overall health.

“The research shows that there is a close relationship between diabetes and periodontal disease, also with stroke, respiratory disease, and kidney disease. Some research shows that certain oral diseases are associated with conditions that lead to low birth weight.  And yet dentists and physicians aren’t communicating. I really don’t believe we’re going to get an optimal improvement in clinical care until we take care of this problem.”

Valerie Powell, PhD [Piittsburgh Tribune-Review]

Dr. Powell’s goal is sound, and I cannot argue with her about the urgent need for better communications between all healthcare providers.  In fact, with the sudden downturn in the economy, it so important that we quickly gain control of the expensive and preventable chronic illnesses she mentions, that the nation cannot afford to wait until dentists are paperless.  That could be decades.  The $25 billion bailout that the healthcare IT industry is requesting will be squandered in part for political favors by members of Dr. Powell’s lobby.  I call that churning profits.  That was the old, inefficient way of doing things in dentistry.

We need something now and we need something that will cost virtually nothing.  We need a system for better communications that can be erected in less than six months and will allow taxpayers to keep their $25 billion.  Above all, in order to make this work, we must avoid HIPAA as much as possible.

I’ve put some thought to the serious problem that Dr. Powell describes.  I think I have found a hybrid solution that will not require dentists to become HIPAA-covered entities to communicate more effectively with physicians’ computers.  In fact, physicians also don’t have to be covered entities.  And no, it is not a person-to-person phone call – an increasingly underrated form of communication in my opinion that also does not require HIPAA’s involvement. 

Do you know what the solution is yet? 

Keep reading. There’s more. A solution?

My solution would allow e-prescribing to occur in dentistry, without the dentist having to “volunteer” for a dangerous NPI number.  This would help Glen Tullman, the shy CEO of Allscripts – a monster stakeholder in e-prescriptions.  Otherwise, poor Glen is fresh out of ideas.

http://community.pennwelldentalgroup.com/forum/topics/glen-tullman-ceo-of-allscripts?page=1&commentId=2013420%3AComment%3A22103&x=1#2013420Comment22103

Committees just do not creative thinkers make.

That’s not all! The hardware necessary already exists in most dental offices, and can be obtained for less than $200 at any electronics store.  And just wait until my solution is combined with state-of-the-art voice-recognition capabilities.  All communications with physicians and pharmacies could be done chair-side in the presence of the dental patient without having to store their identifying information digitally anywhere.  All that is needed is a universally acceptable paper format and an acknowledgement that paper is going nowhere soon – thank goodness. 

So what is the revolutionary idea?  It is so simple it will knock you down.

(Drum roll)…  Make eDRs and eMRs compatible with common fax machines as a requirement for ONCHIT accreditation.

Wow!  Now how difficult was that?

Assessment

I invite Dr. Valerie Powell, Dr. Franklin Din, or anyone else interested in finding a solution rather than funding, to discuss with me problems with my idea.  I happen to think it is a cheap, common sense solution that will give us all the benefits Powell promises without excessively endangering anyone other than dental software vendors looking for bailout money. Another difference is my plan has a chance in hell of working www.HealthcareFinancials.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. What do you think? What is your plan? Let the conversation begin.

Note: Dr. Pruitt blogs at PenWell and others sites, where this post first appeared.

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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MedPAC Seeks Rate Increase

Update for 2010

Staff Reporters

According to Modern Healthcare, December 5, 2008, the Medicare Payment Advisory Commission [MedPAC] just drafted recommendations to increase payment rates for inpatient and outpatient services at the full rate of inflation in 2010, concurrent with the implementation of a quality incentives program.

A Non-Specific Market Basket

Although the draft didn’t provide a specific increase for hospitals, the projected market-basket update in 2010 for hospitals is 2.7 percent. MedPAC revisited a proposal it has been trying to get Congress to approve for the past several years: to reduce the indirect medical education (IME) adjustment by 1 percentage point to help finance the quality incentives program for hospitals.

Related Payment Issues

On other payment issues, the commission mulled over a draft recommendation to increase Medicare physician payments by 1.1 percent in 2010, the same increase doctors will receive in 2009, while commissioners also discussed options to make positive payment updates for ambulatory surgery centers contingent upon the submission of cost data to HHS.

Assessment

The draft recommendations will be voted on in January, 2009.

Conclusion

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Retained Earnings and Employed Children

Payroll Tax Strategies for Doctorsdv2034034

By Edwin P. Morrow; III, JD, LLM

Staff Writers

Any business, like a medical practice with employees, has to concern itself with payroll taxes. This includes any C or S Corporation with a sole owner/employee. 

Payroll Taxes

Payroll taxes include: 1) income tax withholding for any employee for federal, state and local taxes; 2) the employer portion of federal social security and Medicare taxes (also called OASDI – old age, survivors and disability insurance); 3) the employee portion of federal social security and Medicare taxes; 4) state and federal unemployment tax [See IRS Publication 15, Employer’s Tax Guide]. These include a social security tax of 12.4% on earned income up to $106,800 (2009 number increases annually) and Medicare taxes of 2.9%. And, although there are not nearly as many tax “loopholes” with payroll taxes as with income taxes, impacting issues like these two should be noted.

1] Employ your children under 18

A sole proprietor physician may not be required to pay social security taxes on wages of his or her child under the age of 18.  This exception does not apply to an incorporated business IRC § 3121(b)

2] Understanding Retained Earnings

As some doctors are aware, earnings retained in a C or S Corporation and not distributed to shareholders are not subject to social security and Medicare taxes. This may be a substantial savings of 15.3% when you have owners working in the company. This technique is not as likely to work in a tax partnership and will certainly not work in a sole proprietorship.

Conclusion

And so, your thoughts and comments on this brief Medical Executive-Post 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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Understanding Payroll Taxes

Accounting Issues for Doctors56371606

By Edwin P. Morrow; III, JD, LLM

Staff Writers

Any business, like a medical practice with employees, has to concern itself with payroll taxes.  This includes any C or S Corporation with a sole owner / employee. 

Payroll Taxes

Payroll taxes include: 1) income tax withholding for any employee for federal, state and local taxes; 2) the employer portion of federal social security and Medicare taxes (also called OASDI – old age, survivors and disability insurance); 3) the employee portion of federal social security and Medicare taxes; 4) state and federal unemployment tax [See IRS Publication 15, Employer’s Tax Guide].

Non-Employees

A non-employee business or medical practice owner (which may be a partner in a tax partnership) must pay the equivalent of these taxes, called Self-Employment Taxes, in lieu of the above taxes  IRC § 1401. These include a social security tax of 12.4% on earned income up to $106,800 (2009 number increases annually) and Medicare taxes of 2.9%. Instead of income tax withholding, the owner doctor pays Estimated Taxes on a quarterly basis. A non-employee owner is unlikely to be required to pay unemployment taxes.

Impacting Issues 

Both the employer and the employee must pay a social security tax of 6.2% of wages up to $106,800, and a Medicare tax of 1.45% of all wages. This totals 15.3% of the first $106,800, and 2.9% of all wages above that. You will notice that when combined, the employee and employer tax rates equal the self-employment tax rates. 

Assessment

Although tax planners often only discuss income tax planning, payroll taxes may sometimes be greater than the corporate income tax (starting at 15%) or individual income tax (which may be as low as 0, 10 or 15%), and should be considered just as important in planning to avoid excessive taxation.  Unlike income taxes, there is no standard deduction, exemption or delayed starting point for these taxes. The tax starts on the first dollar.  Although there are not nearly as many tax “loopholes” with payroll taxes as with income taxes, impacting issues should be noted.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post 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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Unsafe Emergency Rooms

Join Our Mailing List

Brutal New AEM Report

[By Staff Reporters]

Hospital emergency rooms are not safely designed or managed, and improvements in working conditions are needed, according to a new study in the Annals of Emergency Medicine [AEM].

AHRQ

According to the Agency for Healthcare Research and Quality [AHRQ], December 9, 2008, the study surveyed 3,562 emergency medicine clinicians in 65 hospitals to examine their perceptions about their emergency department’s safety.

Incriminating Findings

The study found that:

  • Nearly two-thirds of emergency departments reported insufficient space for patient care.
  • One third said the number of patients consistently exceeded ER capacity for safe care.
  • Forty percent reported insufficient physician staffing to handle busy period patient loads.
  • Two-thirds reported insufficient nursing staff to handle patient loads during busy periods.
  • Only a third reported frequent patient waiting-room monitoring.

Suggestions

The researchers recommend the following improvements:

  • Increase or redesign emergency department space.
  • Increase staffing during periods of high demand.
  • Improve information sharing between clinicians by reworking team processes.
  • Improve patient transitions between ER and inpatient areas of the hospital.
  • Provide more computer workstations and access to eHRs.

Assessment

Recently, there has been a plethora of corroborating reports.

Conclusion

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About CDC’s Epi Info Community Edition

An Open Source Health IT Release

Staff Reporters

fiber-optics1

According to John Moore of Government Health IT, the Centers for Disease Control and Prevention [CDC], here in Atlanta, just released an open-source version of its software for epidemiological analysis. 

 

History of Epi Info

CDC’s Epi Info originated as a disk-operating system [DOS program] in the 1980s, when epidemiologists sought a PC-based tool to analyze disease outbreaks. The open-source, pre-beta version, named Epi Info Community Edition, marks the beginning of a rewrite of the Epi Info tool suite in the C# programming language. The open source edition also aims to cultivate a wider community of developers www.HealthDictionarySeries.com

Assessment

The CDC has made Epi Info Community Edition available via CodePlex, Microsoft’s open source project hosting Web site.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post 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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iMBA Inc, Secret Shopper Service

For Healthcare Consulting Practices56400711

Staff Writers

Are you worried about what your insurance agents, accountants, RIA Reps, attorneys, benefits managers, RRs, 401[k] or 403[b] administrators, or stock-brokers are telling potential lay and physician clients? [sins of commission]. Or; worse-yet – not telling them? [sins of omission].

If so, why not use our Secret Professional Client-Shopper Services so you can breathe easier?

Our staff is available to attend seminars and to pose as potential clients and customers. Services range from walk-ins, to in-depth BD compliance investigations. 

Contact

Just email Ann for more information: MarcinkoAdvisors@msn.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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Long-Term Versus Custodial Healthcare

Understanding the Domestic Model of Medical Care

By Dr. David Edward Marcinko; MBA, CMP™

By Thomas A. Muldowney; MSFS, CLU, ChFC, CFP®, AIF®, CMP™

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

cloudy-mtn-auto-bahn

Doctors, nurses, economists, insurance consultants and financial advisors [FAs] increasingly make a distinction between “healthcare” and “custodial care.” Too often for patients however, health and custodial services are combined and confusingly referred to as health services. The problem with this is that people often focus only on health problems and not on the serious long-term physical and financial consequences associated with these different conditions.

US Model of Care

The US medical model tries to have patients “get well” soon. Typical medical services are often “medically necessary”; short term; acute; and may include hospital stays, major operations, some skilled care to recuperate and other ongoing skilled treatment, and medications.

Dementia and Impaired Cognition

In contrast, many elder health problems are incurable and chronic. These conditions require custodial care. Seniors who have chronic or disabling conditions need full-time live-in assistance, instead of the standard short visits by care providers.

For example, today in the United States, there are about 4 million people with Alzheimer’s or other dementia who are suffering from what is referred to as cognitive impairment. Cognitive impairment is one of the major risks of aging and a source of concern for many seniors. Other conditions that limit a senior’s ability to perform activities of daily living (ADLs) include accidents, blindness, cancer, diabetes, dialysis, emphysema, heart disease, osteoporosis, Parkinson’s disease, rheumatism, strokes, or a combination of these conditions.

Assessment

The gerontologists and hospitalists were perhaps the first medical professionals to appreciate this distinction; years ago.  Nevertheless,people with these conditions may need many years of LTC services.

Conclusion

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Re-formatting an Irrevocable Trust

UPIS and the Passage of Timecycle-of-life-2

By Dr. David Edward Marcinko; MBA, CMP™

By Tom Muldowney; MSFS, CFP®, AIF®, CMP™

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

Many trusts, written long ago for physicians, were established when interest rates were substantially higher, certainly higher than they are today. The passage of time and the re-call or maturity of those higher yielding bonds have left bond investors scouring the investment field for anything that will produce a decent income flow … Short of taking a lot of bond risk, they are found lacking.  Thus, these old ‘irrevocable’ income trusts face substantial hurdles in generating the necessary income flow for the income beneficiary and the necessary growth for the remaindermen.

Uniform Prudent Investment Standards [UPIS]

With the acceptance of the Uniform Prudent Investment Standards, many of the several states simultneously implemented trust standards that allow beneficiaries/remaindermen and trustees to request the ‘re-formation’ of these trusts from “Income’ trusts to “total return” trusts on (at least) a statutory basis. By ‘statutory basis’-  we mean that the trustee can reformat the trust and begin making cash flow payments made from total return. This ‘re-formation’ process minimizes or eliminates the problem of ‘income for the beneficiary’ versus ‘growth for the remaindermen.’

Available QTIP Election

How, then, can a physician-investor evaluate a situation in which a QTIP election is available?

The matters to be weighed will include the age and health of the surviving spouse; the projected size of the surviving spouse’s gross estate with and without the inclusion of the QTIP trust corpus; the amount of available unified credit; whether the decedent’s trust includes any precatory language that is intended to guide the trustee in balancing the rights of the surviving spouse with the rights of the trust remaindermen (‘precatory’ language is to provide guidance only…it does not have the force of law) for example, language allowing the trustee to favor the lifetime income beneficiary when making investment decisions); the amount of income that the surviving spouse needs or wants to have generated from the QTIP trust; the relationship between the surviving spouse and the remainderman of the trust (particularly as that relates to the amount of income that the surviving spouse would like to have generated by the QTIP trust and the pressure that would be put on the fiduciary to generate such income); and the likely asset allocation decisions that the trustee would make under the circumstances, given that there is not a single formula that must be applied but that a range of decisions probably are appropriate as the bank or trustee seeks to fulfill its fiduciary duties. In any event, when the long-term view is taken, the most appropriate QTIP election to make is a difficult decision and is best determined by examining a range of alternative outcomes for both the surviving spouse and the remainderman.

Assessment

Of course, this decision is easier if both spouses die before the estate tax return for the spouse who died has been filed (but not all participants are so willing to cooperate.) It has been suggested that with every case, to file an extension of time request for filing the estate tax return in order to delay making the election until the latest possible date.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post 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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White House Office of Health Reform

Dual Role for Health and Human Services Secretary

Staff Reporters

capital

According to the Associated Press, December 11, former Senate Majority Leader Tom Daschle will play two roles in the new Obama administration. He will serve as HHS Secretary and also oversee a new role as Director of White House Health Policy Office.

Deputy Director Well Known

Jeanne Lambrew, who helped Daschle write a book on health care reform, will serve as deputy director of the new White House health policy office. Lambrew worked on health care reform issues at the White House during the Clinton administration and currently serves as a senior fellow at the Center for American Progress, a liberal think tank.

Assessment

Leaders of health advocacy groups have described Lambrew as one of Daschle’s most trusted advisers on health issues. She will oversee planning efforts.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Do you think this important new role deserves a full time advocate; or not?  

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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Health Entity-Related Tax Credits

Some Unique Tax Basics for the Industry

By Edwin P. Morrow; III, JD, LLM

Staff Writers

In addition to the usual business deductions, medical professionals and those in healthcare should be aware of certain unique investment related tax credits. Much like personal credits, most of these credits are non-refundable, but may be allowed as carry forwards to the next year, or carry backs to prior years. 

Welfare to Work Credit

This credit is for medical employers who hire long-term family assistance recipients. It may be for up to 35% credit on applicable first year wages and 50% credit on second year wages. [See Form 8861] “Welfare to Work Credit”, for more details

Increased Research Expenditures Credit

This credit is applicable to health entity owners and startups. Research expenditures eligible for this credit must be to discover information that is technological in nature and intended for development of a new or improved business component. The research must relate to new or improved function, performance, reliability or quality. [See IRS Form 6765] “Credit for Increasing Research Activities”, for more details 

Disabled Access Credit

This credit is for eligible small medical and health entities that make a business accessible to disabled people. The credit may be 50% of qualifying expenditures. To be eligible, a small business must have gross receipts of $1 million or less, or have had no more than 30 employees during the preceding tax year. Eligible expenditures may include physical changes to the building, changes to the communication system, providing interpreters, acquiring or modifying equipment, or other accommodations for disabled access. [See Form 8826] “Disabled Access Credit”, for more details.

Empowerment Zone Employment Credit

This credit is to encourage employment in “empowerment zones” established by the Secretary of Housing and Urban Development (HUD) and the Secretary of Agriculture. [See Form 8844] “Empowerment Zone Employment Credit”, for more details.

Indian Employment Credit

A credit of up to 20% of applicable in wages and health insurance benefits paid to qualified health employees who are enrolled members of an Indian tribe or their spouses.  Substantially all of the services performed must be within an Indian reservation and the employee must live on or near the reservation [See Form 8845] “Indian Employment Credit”, for more detail

Orphan Drug Credit

This credit is for qualified clinical drug testing expenses.  This credit may be for up to 50% of expenses incurred [See Form 8820] “Orphan Drug Credit”, for more details.

Assessment

What credits did we miss; please advise?

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Have you used any of these tax credit strategies in the past?

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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Hospitals On-Cue™ to Improve Operations

Innovative Healthcare Informatics

Staff Reportersstk127209rke

Allocade Inc, a developer of innovative healthcare informatics solutions, just announced that it has installed its first commercial On-Cue™ system at Peninsula Medical Center in Burlingame, Calif. The company began selling its commercial product in January 2008, and the installation at Peninsula Medical Center was the first of seven sites Allocade completed by the end of 2008.

The Problem

Hospitals spend millions of dollars on solutions designed to shave minutes off of procedures. RIS, PACS, EMR, etc are all designed to improve the workflow of physicians, to enable quicker turnaround time for diagnosis. Most of these solutions focus on improving efficiency “post procedure”.

Human Resources Issues

In contrast, hospital staff is expected to track patients, coordinate between departments, handle real time disruptions, improve quality of patient care, etc using mostly manual processes. Limited tools are available to help technologists, nurses, transport, physicians, and even patients, more effectively navigate through the “chaos” characterized by most hospitals. Investment in “pre-procedure” tools and solutions has been limited, resulting in a sub-optimal use of expensive capital resources.

Focused on Helping Hospitals

And so, www.Allocade.com suggests the following benefits may be derived from using On-Cu™ to improve operating efficiencies: 

  • Manages the real time disruptions and “chaos” that occurs when in-patients, out-patients, ER cases, add-on’s, and unexpected delays all collide while competing for the same shared resources like a CT, MRI, US, IR, or ORs, etc.
  • Re-schedules patients in real time to more optimally manage resources.
  • Coordinates the numerous activities that must occur prior to a scan actually being completed, i.e. all the precursor tasks which require constant and real-time coordination between the radiology techs, nurses on the floor, the ER, transporters, and the referring offices.

Assessment

On-Cue™ is a software solution that claims to enable hospitals to reclaim un-used operating capacity.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Anyone out there a user – or convert?

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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Avoiding Medical Practice Valuation Mistakes

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Top Ten Appraisal Blunders to Avoid

By Dr. David Edward Marcinko; MBA, CMP™dr-david-marcinko

The science of the modern medical practice valuation can be traced to the Estate of Edgar A. Berg v. Commissioner (T. C. Memo 1991-279). In this case, the Court criticized CPAs as not being qualified to perform business valuations, failing to provide analysis of an appropriate discount rates, and making only general references to justify their   “Opinion of Value.”  In rejecting accountants, the Court accepted IRS economists because of background, education and training, as well as discount rate calculations and reproducible evidence applied to the assets being examined. This marked the beginning of the Tax Court leaning toward the side with the most comprehensive appraisal. Previously, it had a tendency to “split the difference.” Now, some feel the Berg case launched the valuation profession; especially for contemporaneous health economists.

But, it was not until after 1995 that the IRS issued guidelines for the valuation of physician practices. As a result, the Uniform Standards of Professional Appraisal Practice [USPAP] requires that a blended constellation of three recognized valuation approaches (income, market, and cost approaches) be considered when estimating fair market value.

Operative Valuation Definitions

When pursuing any discussion of medical practice worth, two key elements must be understood: (1) the valuation process, and (2) fair market value.  According to the Dictionary of Health Economics and Finance http://www.HealthDictionarySeries.org

1. Practice valuation is the “the formal process of determining the worth of a healthcare or other medical business entity, at a specific point in time, and the act or process of determining fair market value.”

2. Fair market value [FMV] is “a legal term generally meaning the price at which a willing buyer will buy, and a willing seller will sell an asset in an open free market with full disclosure.”  IRS Revenue Ruling 59-60 clearly states that FMV “is essentially a future prophesy and must be based on facts available at the required date of appraisal”

Unfortunately, the value of a medical practice cannot be directly observed by activity in thinly traded private markets. Perhaps this is why we continually observe the following valuation blunders? They are committed by both sellers and buyers who are pursuing opposite objectives; sale price maximization versus price minimization?

Top 10 Blunders:

1. Not Understanding What a Medical Practice Valuation Is and Is Not

  • Valuations are not source document fraud audits.
  • Valuations are material representations providing a range of transferable worth.
  • Valuations are reproducible estimates based on economic assumptions.
  • Valuations are not “back-of-the envelope multiples” using specious benchmarks.
  • Valuations are defensible and “signed-off” attesting to USPAP/IRS formats.
  • Financial accounting value [book-value] is not fair market value.
  • Professional valuators represent only one party at arm’s length; not both sides.
  • Engagement solicitor and/or valuation payer is the client.
  • Unbiased valuators do not provide financing or equity-participation schemes.

2. Not Understanding Engagement Types and Levels

Although not standardized, the Institute of Medical Business Advisors, Inc uses the following three levels that approximate engagement types for the industry [www.MedicalBusinessAdvisors.com]:

A] A Comprehensive Valuation is an extensive service designed to provide an unambiguous Opinion of Value range. It is supported by all procedures that valuators deem relevant with mandatory onsite review. This “gold-standard” is suitable for contentious situations like divorce, partnership dissolution, estate planning and gifting, etc. The written Opinion of Value is applicable for litigation support activities like depositions and trial. It is also useful for external reporting to bankers, investors, the public and IRS, etc.

B] A Limited Valuation lacks additional suggested USPAP procedures.  It is considered an “agreed-upon-procedure”, used in circumstances where the client is the only user [i.e., updating a buy-sell agreement, or practice buy-in for a valued associate] and not for external purposes. No onsite visit is needed. A formal Opinion of Value is not rendered.

C] Ad-Hoc Valuation is low level engagement that provides a gross and non-specific approximation of value based on limited meters by involved parties. Neither a written report, nor an Opinion of Value is rendered. It is often used periodically as an internal organic growth / decline gauge. 

3. Not Observing Industry Standards, Rules and Regulations

Specifically, in USPAP transactions involving physician practices, the IRS implied: 

  • Discounted cash flow (DCF) analysis is the most relevant income approach and must be done on an “after-tax” basis.
  • Practice collections must be projected based on reasonable assumptions for the practice and market; etc.
  • Physician compensation must be based on market rates consistent with age, experience and productivity.
  • Majority premiums and minority discounts are to be considered.

4. Not Understanding the Value of Personal Goodwill

Goodwill represents the difference between practice purchase price and the value of the net assets.  Personal goodwill results from the charisma, skills and reputation of a specific doctor. Its attributes accrue solely to the individual, are not transferable and can’t be sold. It has little or no economic value as it “goes to the grave” with the doctor.  

5. Not Understanding the Value of Practice Goodwill

Transferable medical practice goodwill has value, may be transferred, and is defined as the unidentified residual attributes that contribute to the propensity of patients and managed care contracts (and their revenue streams) to return in the future (Schilbach v. Commissioner, T.C. Memo 1991-556).  

Even the Goodwill Registry however, a classic source used to determine the average percentage of revenue contributed to practice goodwill, may be dated for some specialties leading to abnormally high values. We therefore prefer the more recent data, structure and representations contained within the quarterly print periodical: Healthcare Organizations [Financial Management Strategies]. It is a more useful; yet still imperfect guide.*  

And so, one must also appreciate the: (i) impact of a changing environment; (ii) practice transfer in a local market which can augment or blunt goodwill value; and the (iii) determination of whether patients or HMOs return because of true goodwill, or are mandated by contractual obligations; among many other multi-variable determinants.

Now, to further confuse the issue, how each kind of goodwill is allocated in situations like divorce depends on state law. For example, some courts include both kinds of goodwill to be apportioned – some exclude both – and others pursue a case-by-case approach. 

6. Not Understanding “Excess Earnings Capitalization”

Another way to determine goodwill value is through “excess earnings capitalization.” This economic method looks at the difference between salary, and what you’d have to pay a comparable doctor replacement.

As an example, when you subtract the numbers, and divide the result by 20%, an important percentage referred to as the Capitalization Rate emerges. The final number gives a dollar value for practice goodwill. Courts seem to prefer this method in divorces because it tends to reflect a practice’s current value.

7. Not Understanding the Present Compensation versus Future Value Paradox

Regardless of practice business model, physician compensation is inversely related to practice value. In other words, the more a doctor takes home in above-average salary, the less the practice is generally worth, and vice versa; ceteris paribus

8. Substituting Benchmarks and Formulas for Practice Specificity

In the stable economic past, industry benchmarks might have been used as quick and inexpensive substitutes for professionally prepared valuations.  Muck like preparing one’s own income tax return today – while legal – it is a fraught with peril if challenged. The Courts seem to frown on this simplistic and dated methodology.

Moreover, generic benchmark formulas assume a financial statement reporting standard that just does not exist in public accounting.

Therefore, most every competitive issue that impacts value should be addressed with each practice engagement. This includes, but is not limited to contemporary dislocations by third parties, Medicare and commercial payers; retail clinics and changes in supply/demand and specialty trends; rise of ambulatory surgery centers and specialty hospitals; outsourced care and medical tourism, alterations in resource based-relative value units, APCs, DRGs and newer MS-DRGs; the Medicare Modernization Act, HIPAA, OSHA, EEOC, Sarbanes-Oxley and US Patriot Acts; among other regulations.

Current employee trends to high-deductible health care plans [HD-HCPs] and private concierge medicine must also be considered, as well as demographic and employer shifts to defined contribution plans – from defined benefits plans – to name just a few more complicating issues. 

9. Not Aggregating or “Normalizing” Financial Information

Employees may be interviewed and financial information must be gathered before a medical practice can be properly valued. The following data, for the most recent three year period, serves as a starting point:

  • Practice (corporate) tax returns.
  • Equipment / automobile leasing and/or tax depreciation schedules.
  • Accounts Receivable aging-schedule.
  • Practice consolidated financial statements (P&L, Cash Flow, Balance Sheet and Retained Earnings).
  • Prior Buy-Sell and/or non-compete agreements, and;
  • Sample medical record chart review is increasingly being demanded.
  • It is especially important to eliminate one-time, non-recurring practice expenses. These are adjusted for excessive or below normal expenses on the profit and loss statement. Such “normalization” can produce a big surprise for benchmark proponents and formula-driven advocates when a selling doctor runs personal expenditures through the practice that a buyer [or Court] wouldn’t consider legitimate.  Of course, such shenanigans are less noted using professional USPAP/IRS guidelines.

For example, we recall one doctor who painted his personal residence and wrote it-off as a valid business expense. Deleting other major expenses such as country club memberships, make a practice look more profitable—good news if you’re selling it, bad news if you’re getting a divorce.

Conversely, you may have to defend legitimate business expenses that an appraiser may seek to normalize. For example, doctors may pay for a vehicle through their practice, but if used to travel between multiple offices and hospitals, the expense may be legitimate. 

Realize too, that the appraiser may also add expenses that have not been incurred; like an office manager’s salary if your spouse is in that role for free. This produces a lower appraised value and is common in small medical practices. Honoraria are another example that does not figure into value calculations.

Of course, normalization is a sophisticated and time-intensive process. But, it is where the expert earns his/her professional fee, and defends the resulting valuation range when challenged.

10. Selecting the Wrong Valuator and Not Understanding Professional Fees

The most important credential to look for is fiduciary experience, specificity and independence. Some doctors mistakenly turn to those who may have never appraised a practice before. And, just because an appraiser has initials behind his name, doesn’t mean he understands the peculiarities of medical specialties, especially podiatry. We believe that only an independent health economist, who will be your advocate under Securities Exchange Commission [SEC] fiduciary [not lower “suitability”] guidelines, should be selected.

Moreover, look-out if the valuation not done at an-arm’s-length and independent manner; or worse still, if it is performed for both parties simultaneously.

Of course, it is almost impossible to answer concerns regarding fees without specific information. The cost of a valuation can range from $0 (benchmarks-rule of thumb) to $50,000 for an onsite team of experts for behemoth practices and ambulatory surgery centers. Keep in mind that in most cases you want to ensure the value determination will stand up to IRS scrutiny, so the $0 rule-of-thumb is not an option

However, most reputable firms use a blended fee-schedule of fixed and hourly rates (plus expenses). So, doctors should expect to spend approximately $5,000-10,000 for an average sized – limited appraisal – that is completely suitable for most internal activities.

External appraisals, or poorly aggregated financial information, onsite reviews and litigation support services incur additional costs; yet most doctors find the money well spent. Expect to pay a retainer and sign a formal professional engagement letter.

Finally, once practice price is mutually agreed upon, sales contract terms and agreements present a plethora of financing challenges for both involved parties to consider [bank loan payment rates and length, personal promissory guarantees, down-payment offsets, earn-out arrangements, Uniform Commercial Codes-1 asset guarantees, etc] in their due-diligence efforts.

Assessment

ho-journal9

Don’t be surprised if a sales-broker does not consider the above issues as the modern health era emerges. Most agent-appraisers are predominantly concerned with earning commissions by working both transaction parties, and may not represent your best interests. And, they are usually not obliged to disclose conflicts-of-interest and don’t provide legal testimony.

But, it is a fait accompli that medical practice worth is presently deteriorating. As the population ages and third-party reimbursements plummet, doctors are commoditized and traditional retail medicine is replaced by more efficient wholesale business models like workplace health clinics. The recent sub-prime mortgage de-fault fiasco, potential tax-reform law expiration and the political specter of a nationalized healthcare system, only adds fuel to the macro-economic fires of uncertainly.

As a result, a good medical practice is no longer necessarily a good business; and retiring doctors can no longer automatically expect to extract premium sales prices. Moreover, uninformed young physicians should not be goaded to over-pay. Regardless of your dismay – or delight – in the changing healthcare milieu, always be foreword thinking and remember the admonition, Trust-but Verify, for any business transaction.

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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Physician Travel Expenses

Some Tax Basics for Medical Professionals

By Edwin P. Morrow; III, JD, LLM

Staff Writers

Astute financial advisors and healthcare focused accountants know that there are simple and overlooked strategies that can significantly add to the bottom line of any business or medical practice; as much as increasing practice revenues or reducing expenses. Physicians and medical professionals themselves should also understand some basic accounting and simple tax strategies that do not require five figure consulting fees or excessive risks of audit. Here are some basic deduction concepts of financial accounting to know.

Business Expenses

Expenses incurred while traveling away from home in the pursuit of medical business activities are deductible, but require good record keeping IRC § 162(a)(2).  This may include reasonable transportation costs such as airfare or taxi service, meals and lodging, telephone and fax, rental car or other costs. This may also include gratuities and tips.

Personal Side-Trips

But, if a personal side trip is taken, those expenses are not deductible, but the airfare and other expenses taken for the business part of the trip may still be deductible if the primary purpose of the trip is business.  Even dry cleaning and laundering, which would not be a deductible expense at home, are deductible if incurred on a business trip.

Spousal Issues

Expenses for a non-employee spouse are not directly deductible, but expenses such as a hotel room or rental car that may be shared might still be deductible if required for the employee.  Deductions for conventions, seminars or meetings held on cruise ships are subject to more stringent limitations, as are conventions or seminars held outside of North America (which includes much of the Caribbean, Canada and Mexico) IRC § 274(h). Expenses for travel outside of the United States for more than one week are also subject to more limitations if combined with a personal trip IRC § 274(c).

Assessment

Physicians and all taxpayers should keep records showing the nature of the expense, when it was incurred, the amount, and the business purpose.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. How have you used these strategies in the past?

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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ARs and the Fair Accurate Credit Transactions Act

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“Red Flags” and the Discrepancy Rules

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By Hope Rachel Hetico; RN, MHA, CMP

Medical professionals and healthcare organizations of all stripes have been looking for help to better understand, secure and collect their outstanding accounts receivable [ARs], and comply with the new “Red Flag” and “Address Discrepancy Compliance Regulations” from the Federal Trade Commission (FTC).

The FACTS

These news rules were just issued pursuant to the older Fair and Accurate Credit Transactions [FACT] Act of 2003. The initial purpose of the Act was to curb identity theft in the United States and required most hospitals and healthcare organizations to submit a written program to identify and manage ‘red flag’ accounts by November 1, 2008.

FTC Grants a Delay

However, the Federal Trade Commission recently suspended enforcement of the new “Red Flags” rule until May 1, 2009, to give patient creditors, and healthcare institutions additional time in which to develop and implement written identity theft prevention programs.

Assessment

This recent announcement and the release of an Enforcement Policy Statement [EPS] do not affect other federal agencies’ enforcement of the original November 1, 2008 deadline for institutions subject to their oversight to be in compliance.

Let us know what’s on your mind with a post, opinion or comment on this topic. Don’t we already have the Patriot Act [PA] for this sort of thing?

Conclusion

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PPO Pharmacy Benefits Survey

Managerial Results for 2007 – Just Released

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[By Staff Writers]

  • In 2006, the average number of eligible employees in PPOs that used managed care pharmacy programs was 203,768, up 7.2% from 190,097 the previous year.
  • For the sixth straight year, the share of PPOs that used PBMs for drug utilization review (DUR) services fell, to 62.7% from 66.1% in 2005.
  • The percentage of reporting PPOs that followed drug formularies increased fractionally in 2006, to 98.6% from 98.3% the year before, the sixth consecutive annual rise.
  • For the fifth consecutive year, the percentage of reporting PPOs that contracted with mail-service pharmacies grew, to 98.9% in 2006 from 98.3% in 2005.
  • Between 2005 and 2006, the overall share of PPO prescriptions filled with brand name drugs fell modestly, to 53.8% from 55.4% the previous year.
  • The average number of contracts between PPOs and hospitals jumped 18.9% in 2006, to 145 from 122 the year before.
  • The percentage of PPOs using a pharmacy benefit manager (PBM) was 99.2% in 2006, up slightly from 98.6% the year before, and the highest such share since this Digest began tracking this measure.
  • In 2006, PPOs contracted with an average of 38.9 ancillary providers per 1,000 eligible employees, up 28.4% from 30.3 the previous year, and the highest such number since 2002 (41.4).
  • At PPOs with at least 1 million eligible employees, the average number of hospital contracts per plan climbed a notable 14.2%, to 1,804 from 1,579 in 2005.

*Acknowledgements

The editors acknowledge Verispan LLC, Yardley, Pa., as the research and reporting source for this data, reprinted with permission and based on information gathered by mail and telephone surveys gathered and effective as of December 31, 2008, unless otherwise noted.  It was commissioned, sponsored and underwritten in an arm’s length fashion by the Managed Care Digest Series of sanofi-aventis, Bridgewater, NJ, and developed and produced by Forte Information Resources, LLC, Denver, Colorado.

Conclusion

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About PatientsLikeMe.com

Empowering Health 2.0 Social Networks                                       stk178277rke

According to its website, www.PatientsLikeMe.com was founded in 2004 by three MIT engineers whose collective experience spanned from running the world’s only non-profit biotechnology laboratory – to large scale online commerce applications. Today, PatientsLikeMe is a privately funded company dedicated to making a difference in the lives of patients diagnosed with life-changing diseases.

A Personally Generated Idea

A personal experience with ALS [Amyotrophic Lateral Sclerosis] – Lou Gehrig’s Disease – was the inspiration to create this on line social community of patients, doctors and organizations that informs and empowers individuals. The firm has committed to providing patients with access to the tools, information and experiences they need to take control of their disease. Currently, it has signed-up 23,000 participants and membership is growing 35% per month.

The Promise

The promise of PatientsLikeMe is to provide a better, more effective way to capture valuable information and share it with patients, healthcare professionals and industry organizations trying to treat the disease.

The Goal

To reach its goals, the site created an internet based platform for collecting and sharing real world, outcome-based, patient data and is establishing data-sharing partnerships with doctors, pharmaceutical and medical device companies, research organizations, and non-profit organizations. And, since the HIPPA statutes don’t mute patients themselves, a regulatory escape clause – of sorts – enables the virtual dialog.

Cost Coverage

Operating costs are covered by partnerships with healthcare providers that use anonymous data from, and permission-based access, to the PatientsLikeMe community to drive treatment research and improve medical care. The site shares anonymous data with trusted partners and all patient information is kept safe and secure [to the extent possible].

Assessment

Traditionally, physicians, organized medicine and groups like the ALS Association [ALSA.org] assumed [or abrogated] the role of treatment and thought leadership in niche spaces like this. But, the social networking phenomenon, known as Health 2.0, could fundamentally change the practice and business model of all medicine. For example, related concept models include:

*SugarStats.com for diabetics,
*Oncolink.com for cancer patients,
*Eurodis.org for rare diseases,
*Vitals.com to rate physicians,
*Trusera.com for general medical information sharing, and
*Disaboom.com for the disabled; etc

And, many more demonstrate the growing trend of patient empowerment.

More info: Business Week, page 58, December 15, 2008.

Conclusion

What do you think? Let us know with a post, opinion or comment on this topic; either as a doctor, patient, payer, employer, economic or financial advisor, politician or healthcare social engineer.

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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Accounting Deductions for Physicians

Some Tax Basics for Medical Professionals

By Edwin P. Morrow; III, JD, LLM, and ME-P Staff Writersfp-book1

Astute financial advisors and healthcare focused accountants know that there are simple and overlooked strategies that can significantly add to the bottom line of any medical practice; just as much as increasing practice revenues or reducing expenses. Physicians and medical professionals themselves should also understand some basic accounting and simple tax strategies that do not require five figure consulting fees or excessive risks of audit. Here are some basic deduction concepts of financial accounting to know.

Commuting and Local Transportation Expenses 

Normally, standard commuting expenses to and from the home are personal expenses and not deductible. You cannot deduct the cost of your daily commute to work. There are exceptions, however. Commuting expenses to a temporary location outside of the normal business metro area may be deductible; such as the hospital or ASC. Expenses traveling from one medical office business location to another are also deductible. 

Life Insurance

Payments for life insurance are generally not excludible from income unless part of a medical group term life insurance policy with face amounts up to a maximum of $50,000 IRC § 79. Amounts of insurance greater than this amount will be taxable income to the employee (also subject to employment taxes).

Political Contributions

Political contributions in the recent elections cycle, for example, and lobbying expenses are not deductible, even if you can substantiate a direct medical business interest.

Professional Dues

Dues paid to professional organizations, like the AMA, ADA, AOA or APMA, are generally deductible. However, you may notice a disclaimer on some dues notices that indicate a portion of the dues used for political lobbying purposes, which are not deductible.  Dues to country clubs, athletic facilities, etc … will not be deductible, unless eligible for the 50% entertainment deduction mentioned earlier.

Assessment

Physicians and all taxpayers should keep records showing the nature of the expense, when it was incurred, the amount, and the business purpose.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. How have you used these strategies in the past?

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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Hospital Length-of-Stay Forecasting

An Often Inaccurate Medical Effectiveness Meter

Staff Reporters

According to Gregory O. Ginn; PhD, CPA, MBA, MS, and Assistant Professor in the Department of Healthcare Policy and Administration from UNLV, substantial day-to-day variation in hospital occupancy may lead to increases in costs.

Forecast Accuracy

Accordingly, hospitals may be able to improve their financial efficiency by preparing more accurate forecasts of stay length, and thus of their utilization of capacity. For instance, the accuracy of predicted length of stay can be improved by using multiple-regression. The patient’s characteristics (age, gender, ethnicity, marital status, admission type, and admission source) and clinical indicators for their diagnosis-related groups [DRGs] are significant predictors of length-of- stay [LOS].

Assessment

The effectiveness of medical interventions is often measured by length-of-stay. However, this is a crude measure that is contaminated by the inclusion of all days in the hospital even if they were not preceded by some type of intervention.

More info: www.HealthcareFinancials.com

Conclusion

Other experts suggest an approach that views only the slice of time after a medical intervention to measure the effect of the intervention on LOS. This may be a more precise method that can improve the accuracy of forecasting. What do you think?

As always, your thoughts and comments on this Executive-Post 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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The Rural Hospital

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Understanding Hospital Types

By Calvin W. Wiese; MBA, CPA

ho-journal8

According to Healthcare Organizations [Financial Management Strategies], the parameters of rural hospitals are determined based on distance

A Distance Definition

A rural hospital is defined as a hospital serving a geographic area ten or more miles from the nexus of a population center of 30,000 or more

More specifically, a rural hospital means an entity characterized by one of the following:

·Type A Rural Hospital — small and remote, has fewer than 50 beds, and is more than 30 miles from the nearest hospital.

·Type B Rural Hospital — small and rural, has fewer than 50 beds, and is 30 miles or less from the nearest hospital.

·Type C Rural Hospital — considered rural and has 50 or more beds.

Conclusion

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Collecting Medical Accounts Receivable

Doctors are Not Bankers

By Dr. David Edward Marcinko; MBA, CMP™

By Hope Rachel Hetico; RN, MHA, CMP™

Collecting accounts receivable (ARs) is one of the most important elements in maintaining the financial health of any medical practice. Your practice is not a bank and an effective billing system should be complemented by an efficient collection system. Accordingly, we often address this issue with our clients, as follows. 

Setting your AR Policy 

An AR collections policy that is too conservative may results in poor collection rates while an aggressive policy may be counterproductive and increase liability. Have collectors call early and often. Waiting encourages patients to pay late. Use the 80/20 rule and concentrate on your biggest accounts first. Get non-performing receivables off the books. Accounts over about 120 day should be turned over to third party agents. Out-sourcing to collection agencies however, varies significantly in terms of quality and results.  Most charge from 20 to 50% of what they collect.

Using Proper Protocol

According to human resources managerial expert, Rachel Pentin-Maki; RN, MHA of our firm www.MedicalBusinessAdvisors.com and John Broderick, an executive staffing consultant from New York, the following protocol should be considered when selecting a collection agency or using in-house personnel:

  • Assertiveness and Analytical Skills: Collectors should be able to break a billing problem into component parts and aggressively pursue each part without being unduly tactless. 
  • Creativeness and Curiosity: Collectors should keep abreast of new computer and software technology and pursue innovative philosophies related to the billing process.
  • Empathy and Communicativeness: Collectors should be able to communicate with both patients and doctors, yet still be able to put themselves in others’ shoes to view problems from each perspective. 
  • Perspective and Stability:  Collectors should be able to see the patients entire economic picture and maintain an emotionally objective and neutral attitude toward the collection process.
  • Integrity and Tenacity: Collectors should have steadfast attitude and still earn the trust of clients, relative and the doctor employer. Collections should be in immediately since waiting. 
  • Salary: An entry level full time office billing collector should be familiar with most States laws regarding the collection process and be paid in the low 30s per annum.  If not, after some time he or she may take their experience and training to another office for considerably more compensation.

About Going to Court

Remember, small claims court is the last avenue for payment. Often a decision has to be made whether to forgive or “write off” a patient’s balance if indemnity insurance coverage is maintained and this decision is best made on an individual basis. Unfortunately, malpractice claims have resulted by pursing past due accounts too aggressively. This is especially true with surgical patients and it is best to pursue payment diplomatically, gently and often forgivingly. Also, think about potentially adverse community public relations.

Assessment

You could be losing money if your medical practice is still using a traditional checking account for its daily cash activities. One-way to make your cash work more effectively is to open a cash management account with a brokerage firm. This will ensure that your practice’s money is earning a much higher rate of interest; even in today’s low interest rate environment.

More info: www.HealthcareFinancials.com

Conclusion

Let us know what’s on your mind with a post, opinion or comment on this topic. How do you address the medical AR problem?

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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Introducing MyMedLab

Direct to Consumer [D2C] Laboratory Services

Staff Reporters

MyMedLab began as a regional lab provider in Missouri in 1993. The company was created to allow patient-consumers to make informed care choices. In 2004, the company aimed to partner with industry leading providers and the power of the Internet to take the company and its electronic interface national.

Health Information Innovation

According to their website www.MyMedLab.com, this new business model created an innovative approach that dramatically lowered costs and gave patient-consumers direct access to the same health information once only available to doctors. Leveraging more than 20 years of laboratory experience, MyMedLab was able to create one of the first “direct to consumer” [D2C] laboratory services in the country.

Mission

From inception, the mission of MyMedLab was to provide consumer-patients with an affordable and convenient way to privately learn about their health. When combined with an annual exam, their screenings create a foundation for health care of the future, one focused on prevention and early detection.

Smart Patient-Consumers

Smart patient-consumers receive this information privately, outside their permanent medical records, and then share results when it enhances their care. Knowing what is important and what questions to ask maximizes the time and money spent with personal physicians. The MyMedLab process combines transparent pricing with the services of a board certified physician in every state. This unique combination eliminates the cost and inconvenience of a doctor’s visit just to order routine testing. It provides essential physician oversight throughout the entire process while still guaranteeing complete privacy.

Purchased Testing

Testing can be purchased 24 hours a day. Tests are listed both individually and in groups called Wellness Profiles based on age, sex and family history. For patient-consumers with testing ordered by their doctor, MyMedLab provides an easy way to purchase the same testing at a cost 50%-80% less than in their doctor’s office or local hospital lab.

Electronic Medical Records

MyMedLab customers purchase testing online, or by phone, and then visit one of nearly 2,000 local Patient Service Centers (PSC) in their neighborhood. Once samples are drawn, results are securely uploaded to their private personal health record (PHR) within 24-48 Hours. A notification email is sent when results have been released and are ready for review. Patients then simply log into their PHR account at MyMedLab to view their results. Each result includes a brief explanation and a direct link to the National Library of Medicine [NLM] for more detailed result information.

Assessment

Everything done at MyMedLab is designed to put the patient-consumer back in control. Since “knowledge is power in health care”, their vision of the future is to continually introduce new technology and services, to enhance the consumer-patient experience, and to transform the way we all learn about our health.

Conclusion

As always, your thoughts and comments on this Medical Executive-Post are appreciated. Does this D2C laboratory model empower or denigrate the physician-doctor relationship in the era of Health 2.0?

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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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The Specialty Hospital

Understanding Hospital Types

By Calvin W. Wiese; MBA, CPA

ho-journal6

According to Healthcare Organizations [Financial Management Strategies], a specialty hospital is a type of healthcare organization with limited focus to provide treatment for only certain illnesses, such as cardiac care, orthopedic or plastic surgery, elder care, radiology/oncology services, neurological care, or pain management cases www.HealthcareFinancials.com

Physician-Investor Owned

These organizations are often owned by physicians who refer patients to them. In recent years, single-specialty hospitals have emerged in various locations in the United States. Instead of offering a full-range of inpatient services, these hospitals focus on providing services relating to a single medical specialty or cluster of specialties.

Assessment 

Product DetailsProduct DetailsProduct Details    

Conclusion

What do you think? Let us know with a post, opinion or comment on this topic; either as a doctor, patient, payer, employer, economic or financial advisor, politician or healthcare social engineer.

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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The Next Financial Crisis?

Your Opinion Counts

Staff Reporterslifeguard-warning

The effects of the current financial meltdown are well-known to all citizenry. And, the next economic crisis is still wholly unforeseen. However, research conducted by the Institute of Medical Business Advisors Inc, suggests it may come from one, or more, of the following sectors:

  • Pension Benefit Guarantee Corporation
  • Home/Commercial Real-Estate Mortgages
  • Medicare and Medicaid
  • Hedge Fund Collapse
  • Social Security Administration
  • Autos, Airlines, Manufacturing, etc
  • Global Financial Catastrophe
  • Terrorist Attack
  • Something else?

Assessment

For more info: www.MedicalBusinessAdvisors.com

Conclusion

What do you think? Let us know what’s on your mind with a post, opinion or comment.

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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Investing Recipe for Physician Riches

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The Small Cap – Value Equity Hybrid Model?

[By Staff Reporters]

Modern physician-investors are aware of the financial research that suggests a “small-firm effect,” which shows that stocks of smaller companies may outperform both large firms and the overall market. This seems true, in a stable economy, even after adjusting for the additional risk. The Research also supports buying inexpensive, out-of-favor companies whose returns also significantly exceed the overall market. But, how about combining the two strategies to turbo-charge returns in the modern unstable era?

The Initial Thesis

This was the thesis of an article by Lawrence Creatura and Alyssa Ehrman, entitled “Finding Treasure in Small-Cap Value Stocks” [NAPFA Advisor, back in October 1996, pp.1-10, National Association of Personal Financial Advisors.

The authors explained how value stocks are created by money managers driven by clients to focus on stocks currently in favor and by investors failing to recognize a difference between a “good company” and a “good stock.” Of course, the stock of many good companies is down today, and researchers have demonstrated that “star companies” have underperformed a portfolio of “un-excellent” companies with virtually the same level of risk by some 11% per year; until now!

Small Cap Stocks

Small-cap stocks tend to be undervalued because generally Wall Street does not bother monitoring them and, accordingly, broadcasting positive events to potential investors. Also, managers of large portfolios are virtually excluded from the small-cap stock market because of the minor effect they could have on those portfolios. Most investors tend to shy away from small stocks that trade less frequently than large stocks and which can cause a lack of liquidity; or exacerbate same today.

Small Cap – Value Hybrid

Research on combining the disciplines of small-cap stock investing and value stock investing is still in its infancy. Of particular note is the Fama/French study conducted in 1992, which showed that small, low price-to-book value stocks outperformed larger, higher valued counterparts from 1963 to 1990. They also concluded that size and value do a better job of explaining variation in stock returns than more traditional methods. The authors expanded on the simplistic price-to-book ratio used to identify value stocks by weeding out firms with symptoms of financial weakness. By so doing, they were able to generate annual returns during 1976–1994 in the 18–27% range.

Assessment

All of the above is fine, but what about today? Investing in small, unknown companies selling at discount valuations is not for every physician-investor. But, the potential returns may be worth the effort – and only time will tell.

Conclusion

What do you think? Let us know what’s on your mind with a post, opinion or comment. Is this really a recipe for success, or investing failure? And, 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.

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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 Details  Product Details

The Acute Care Inpatient Hospital

Understanding Hospital Types

ho-journal5

By Calvin W. Wiese; MBA, CPA

According to Healthcare Organizations [Financial Management Strategies], an acute care inpatient hospital is a healthcare organization or “anchor hospital” in which a patient is treated for an acute (immediate and severe) episode of illness or the subsequent treatment of injuries related to an accident or trauma, or during recovery from surgery www.HealthcareFinancials.com

Complex and Sophisticated

Specialized personnel using complex and sophisticated technical equipment and materials usually render acute professional care in a hospital setting. Unlike chronic care, acute care is often necessary for only a short time. Measures of acute healthcare utilization are represented by three separate rates:

· rate of admissions per 1,000 patients;

· average length of stay per admission; and

· total days of care per 1,000 patients.

Assessment

http://www.HealthDictionarySeries.org

Conclusion

What do you think? Let us know with a post, opinion or comment on this topic; either as a doctor, patient, payer, employer, economic or financial advisor, politician or healthcare social engineer.

 

Product DetailsProduct Details

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Eight Fallacies of Managed Care

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A Startling iMBA Inc., Report on Small Medical Practices

caduceus

[By Dr. David Edward Marcinko; MBA, CMP™]

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

[By Ann Miller; RN, MHA]

Webster defines a visionary as: “one who is able to see into the future”. Unlike some pundits, prescience is not a quality we claim to possess. To the purveyors of small medical practice gloom however, the future for physicians is a bleak “fate’ accompli”. If you are of this philosophical Ilk – we politely but firmly disagree. In fact, during a recent brainstorming session at the Institute of Medical Business Advisors www.MedicalBusinessAdvisors.com we arrived at some startling conclusions that challenge contemporary information. Therefore, “ceretas paribus” – all things being equal – these findings impute conventional wisdom and are called: The Eight Myths of Managed Medical Care.

MYTH 1: “Solo and Smaller Private Practitioners Will Die”

Economies of scale and prevailing Health Information Technology (HIT) systems may indeed force some smaller allopathic, podiatric or osteopathic practices, as well as some “surgical” specialists, into group or non-equity based practices.  New “one-stop medical malls” are desirable to HMO’s because of their urgent or emergent care availability, myriad of provider types and quality assurance mechanisms. This will even happen in non-procedure based family practices, with internists and in currently spared rural areas as Integrated Systems Digital Networks (ISDN), Regional Health Information Organizations [RHIOs] and related computer transmission technology becomes more available and less expensive. But, routine medicine is ideally suited for the repetitive task orientation philosophy of many of HMO’s.

MGMT. TIP: If you want to remain a private or solo practitioner, re-engineering one’s office activities (cost drivers) to reduce steps that do not add value to your services is perhaps all that is needed to increase efficiency and net margins. Strive to reduce duplicated activities and redundant data transmissions and people tasks. Delegate responsibility and lower the decision making threshold to a need-to-know basis. Empower appropriate employees and make them accountable for their decisions, but do not give them responsibility without authority. As time progresses, steps to reduce variable and then fixed costs, can be implemented to further increase profit. Additionally, solo office practice is very amenable to out-sourcing onerous chores such as human resource management and accounting needs.

MYTH 2: “All Small Medical Practices Will be Purchased by Larger Companies”

This may be true for some aspects of comprehensive medical care. Fortunately, primary care has never totally been given its due and esteem by the medical community or AMA, and smaller practices do not appear to be corporate “takeover” targets. While this may happen in some exceptionally large practices, equity control or financial compensation should more than remunerate the owner-managers of such behemoth practices. Unfortunately, servitude to Wall Street is another matter to consider. Make no mistake however mere size does not encourage acquisition, just as solo practice does not entice appropriation by all management associations.

MGMT TIP: Use the engineering concept of Project Management (PM) and the Critical Path Method (CPM) to determine pivotal or slack steps in the flow of your office. Then modify your processes accordingly. GANNT charts, PERT graphs and Paretto diagrams are helpful visual and practical aides in this regard.

MYTH 3: “You Must Run Your Practice By the Financial Numbers”

Many so-called business experts preach the concept of financial “number -crunching”. In other words, how much revenue is derived, from how many patients per month, week and day, according to some estimated utilization rate?  With this method, physicians are reduced to hourly “employees” and patients to “encounters”. Actuarial firms may even be hired to legitimize the numbers and suggest care standards. While it is important to consider financial tangibles, we must not forget that “numbers can lie”, and that the information from a computer spreadsheet is only as good as its input (GIGO = “garbage in-garbage out”). This is especially evident when one realizes that such firms are only thinly disguised benefits consultants, with a built in bias to cost reductions and rationed care. Therefore, be aware of the potential negative intangibles of a strict business output mentality and recognize that medicine is an intensively personal experience. Lowering the economic “per unit cost” of a widget may be desirable to a manufacturer, but price is only one aspect of good medical care. Other tangible or intangible concepts are often far more important and the negotiating side that first realizes what constitutes these trigger-points, instantly occupies the stronger competitive bargaining position.

For example, doctors should know the answer to many vital questions before entering into any contract negotiations. These include, but are certainly not limited to the following:

  • Doctor control and expectations
  • Contract exclusivity and inclusively
  • Utilization review, “carve-outs”, gag orders and termination clauses
  • And our personal pet peeve; NPI numbers and organizational fiscal data sharing.

Recall the often used example of selling airplane seats is a good way to illustrate the concept of intangibles. Let’s assume a plane has a capacity of 100 seats, 90 of which are sold at the normal ticket price of one hundred dollars; for a total revenue of $9,000. If total costs represent a break-even point of eight thousand dollars, a one thousand dollar profit is realized. Therefore, if any single remaining seat can be sold at a discount; more profit is generated since the plane will fly anyway.

Now, suppose there was a chance that one of the discounted seats will be bought by a terrorist bomber; would the additional marginal profit still be worthwhile?  Of course not! Extending our analogy to the typical small medical office, some management guru’s might argue that a discounted HMO patient is better than no patient at all. But as a doctor, suppose your empty treatment room was filled by a noncompliant capitated diabetic patient with a foot infection, or a litigious prone patient? Tangible considerations aside, don’t the potential medical, legal and emotional entanglements of these situations exceed their marginal benefits? Of course they do!  Philosophically, one could argue that these possibilities still exist in a fee-for-service environment and be quite correct.

Therefore, rest assured that we are not advocating the wholesale non-treatment or abandonment of patients in need. We are simply noting the capitalistic and very demoralizing human feelings of, “why bother”. Or, shall we accept the Socialistic epistemology of laborers who “pretend to work while the government pretends to pay?” Fortunately, primary care seldom presents with many significant moral challenges. Nevertheless, this tawdry rationing type scenario can, and does happen, in the hallowed halls of medicine; daily.

Need proof?  An anonymous Medical Outcomes Study, a few years ago, from the New England Medical Center claimed that of specialists surveyed, one third believed that they provided worst care to HMO members than fee-for-service patients, not just because of any moral deficiency, but because the HMO reduced their access to medical resources. Now we ask; is anyone surprised?

MGMT. TIP: Running your practice solely by the numbers is insane and the rat race will lead you to an early grave as you try to do more, with less, and in less time. Rather, select your insurance contracts carefully and negotiate aggressively for the best deals, and limit your liability with exclusions and stop-lose parameters. Besides, there is no need to join every panel; be selective in your own favor. Recall, mutual contract concessions should benefit both parties, and a contract so negotiated should be mutually advantageous; but not equally advantageous. Aggressive business consultants do not incorporate the conventional wisdom of a “win-win” negotiated settlement. We negotiate to win for our clients and champion their success.

MYTH 4: “Capitation will Kill Fee-for Service Medicine”

All primary doctors do not have to practice deeply discounted capitated medicine. We estimate that only half of all internists will have to become low cost providers and many, either by design or happenstance already are. The remainder will successfully and profitably provide the specialty or value-added services that much of the public demands. HMO’s that do not offer these quality services will perish. The “cost shifting” to private insurance companies currently prevalent will not accelerate, because the population that chooses to retain traditional indemnity insurance will no longer allow it. Such health and quality conscious patients will revolt against high insurance premiums and refuse to be penalized for desiring comprehensive care and for pursuing a healthy life-style. Similarly, physicians who now bear “financial risk” for providing care to noncompliant patients will decide that the incentive to do so is not enough. Patients will be forced to bear their own financial risk as they become compelled to pay higher premiums, co-pays, surcharges or other penalties for unhealthy habits such as smoking, obesity or inactivity. Health care will come full circle by putting the financial burden back on patients.

A survey in Medical Interface a few years ago, revealed that overall, 21% of all capitated patients in a studied cohort rated their HMO as fair to poor, compared with 14% in traditional indemnity systems. Additionally, allow us to quote from Dr. Alain Einthoven, medical economist and author of the original Jackson Hole Managed Care Assemblage:

“Permutations of managed care will produce a dizzying array of benefit levels at varying price structures. HMO’s however will try to mislead the public, through intense advertising campaigns, into believing that all arrangements provide equal benefits at reduced costs.  Medicine’s job is to prove the contrary to the middle class, since the well educated and affluent are becoming aware of the distinction and the poor have no choice”.

Myth 5: “Managed Care Will Socialize Medicine”

The Nixon administration advocated a type of socialized medicine back in the seventies. Obviously, the concept did not take root.  In the nineties, the Clinton administration’s attempt to establish a national standard in its health reform package ended with similar disastrous results. In fact, about 80% of that reform package consisted of bureaucratic rules and regulations to force equality on a capitalistic system. Now, the Obama Administration may pursue a national healthcare agenda, although others argue that the marketplace has achieved the managed care socialism that politicians could not, thus far. As we see it however, the average American is fiercely competitive and not at all egalitarian. There will always be the “have and have not’s” in our society and strictly socialized medicine is not in our future. In fact, we believe that multilayered care will develop, which is just a little different than contemporary traditional insurance plans.

There will always be a basic level of marginal HMO care for the elderly and indigent sponsored by various local, state, national and charitable foundations. The blue collared working middle class will receive better care through PPO’s, MCO’s and PO’s physician managed plans. The bulk of activity for providers, payers and recipients will take place at this level. Note the caveat, “physician-managed”, since doctors will take back their place as maestro of the medical care symphony. The doctor-manager dichotomy will blur as physicians control their professional and economic lives and obviate the need for broker-middlemen-agents sucking huge profits out of the system at the expense of patient and provider.

MGMT. TIP: Notice how aggressively HMO’s are marketing their services to welfare recipients and aged Medicare patients. Likewise, notice how few managers, professionals, corporate executives, unions and politicians join these same HMO’s. Decide immediately your target market, and act accordingly. Remember, the affluent will always pay top dollar for truly quality care and assume independent personal financial risk for their health. The form of care rendered may be in the guise of a cafeteria benefits plan, FSA, HSA, MSA or some other similar arrangement; but it will undoubtedly occur as long as our tax structure favors the top economic tier through the business deductibility of medical fringe benefits. Therefore, medicine will not become socialized anytime soon.

MYTH 6: “Medicine is an Oversupplied Commodity”

Certain medical specialists are now in slight abundance but this situation will not last for more than the next five-ten years. Medical school admissions are currently up, but will decrease as administration information, and the socialism specter is filtered down to prospective students and the domestic economy improves. Additionally, the population will age and increase utilization rates for the remaining physicians but not reimbursement. More specifically, nurse practitioners, physical therapists and physician’ assistants will not negatively impact us in the long term. These extended care providers do not give the same level of care, nor do they provide the same knowledge and expertise that physicians provide. But, they have been used for more than two decades with positive results that will grow going forward. Moreover, do not confuse physician supply with the “commoditization of medicine”, since no product or service ever need become, or remain, a commodity.

For example, automobile tires have been branded (GoodYear), sneakers have been branded (Nike), microchips and potato chips (Intel-Lays) have all been branded. Water, a classic marketing example, as been re-branded many times in the form of Perrier, Evian, Poland Springs and Calistoga.

Thus, if the marginal benefits of junk food can be branded, the eternal human desire for health and its resulting happiness should not be a hard sell. As doctors and medical professionals, we must strive to promote health, longevity and life as a precious benefit to the public; not simply price.

MGMT. TIP: Either work hard to cultivate fewer, but more lucrative fee-for service patients with true value or service directed activities, or become a discount supplier; but do not attempt to be all things to all people. This mix has never been achieved in corporate America and you will not be the first to achieve it. Rather, chose your niche, be true to your self, and maintain your business strategy. A service mix of 2:1:1 (Discount-Value-Service) among the nation’s primary care providers will not only provide maximum profits for everyone, it will renew a lost sense of personal self-esteem.

“Doctors must create a market driven business strategy. This means to serve and assist the patient in whatever manner possible. HMO’s are absolutely wrong to think of medical care as a commodity–that a doctor is a doctor is a doctor. Patients want a successful treatment outcome, assurance and compassion–and this triad is not provided by commodity suppliers”

Myth 7: “Doctors Will No Longer Keep Patients Waiting”

This is the first true statement in our discussion. The perception that patients have about their medical care is becoming increasingly important. Patient-clients, benefits managers and payers all want prompt service for their employees. If you are not timely now, you are likely inefficient as well as rude. Therefore, scheduling promptness is an important, albeit incorrect, measure of medical quality.

On the other hand, one can hardly argue with any provider who chooses not to wait for habitually late patients who are tardy, impolite, condescending or otherwise inhospitable. A poor demeanor should just not be tolerated by any practitioner. In business verbiage, “the marginal benefit of such patients – do not justify their marginal cost”.

For example, would you rather miss your young son’s theatrical debut awaiting a new fee-for-service patient, or a capitated – or socialized – patient? Again, the prudent human being would choose the former without any real moral dilemma. Bilateral collaborative human respect will always prevail.

MGMT. TIP: Schedule like-patient activities in blocks of time to increase efficiency. Do not be too rigid, but by scheduling similar conditions/procedures together, assembly-line efficiency is achieved without assembly line mentality. Time is then emancipated for more revenue enhancing efforts; or leisure activities. Bundling ‘activity-drivers’ is one of the most efficient methods any organization can use to reduce production time.  It is a concept embraced by producer organizations and deficient in most service organizations.

MYTH 8: HMO’s are the Future of Medical Care in the US?

Highly structured, capitated or full risk HMO’s are already becoming passe’. Their demise will be further accelerated by such growing entities as: Preferred Provider Organizations (PPO’s), personal Medical or Health Savings Accounts (MSA’s and HSAs) and true Medical Provider Service Networks (MPSN’s). By a true MPSN, we mean a medical care organization, run by physician-managers who contract directly with employers, rather than through an intermediary or middleman who take a percentage of the fee for business services.

Need testimony?  In Minneapolis, a bastion of HMO care, there is an employer initiated drive to contract directly with physician groups, since HMO’s there seem no longer very interested in managing either for patient care or company welfare, but only for their own bottom line dollar.

MGMT TIP: First, get out of medical school, get through your residency and get Board certified as soon as possible. Take advantage of technology to achieve these goals. Then, enroll in law school, business school or take management and computer instruction courses to re-educate, re-engineer and retrain yourself with the needed organizational tools of the future. You will not survive without them because the bar to a new level of medical care has been raised in this decade.

“In the very near future, physicians will learn about business, accept its material risks, regain influence and take back their rightful control of the Healthcare complex.”

Although we still need actuarial and accounting data, working capital, organizational skill, marketing techniques and correct product pricing, we believe physicians, employers and patients of the future will look back on 2010 and recognize it as the turning point in the current healthcare imbroglio. Therefore, be forewarned and forearmed.

Assessment

As medical practitioners and healthcare consultants, we face the same managed are issues as you do. And, although we may have a particular economics acumen and business management expertise, we should never loose sight of the facts that, above all, medical care should be delivered in a personal and humane manner, with patient interest rather than self interest, as our guiding standard.

“Fools ignore complexity. Pragmatists suffer it. Geniuses remove it.”
-Alan Perlis
[Creator of ALGOL, an early software programming language].

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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The Long-Term Care Hospital

Understanding Hospital Types

By Calvin W. Wiese; MBA, CPA

ho-journal7

According to Healthcare Organizations [Financial Management Strategies], a long term care hospital provides assistance and patient care for the activities of daily living (ADLs), including reminders and standby help for those with physical, mental, or emotional problems. This includes physical disability or other medical problems for three months or more (90 days) www.HealthcareFinancials.com

The ADL Criteria

The criteria of five ADLs may also be used to determine the need for help with the following: meal preparation, shopping, light housework, money management, and telephoning. Other important considerations include: taking medications, doing laundry, and getting around outside.

Assessment

www.HealthDictionarySeries.com

Conclusion

What do you think? Let us know with a post, opinion or comment on this topic; either as a doctor, patient, payer, employer, economic or financial advisor, politician or healthcare social engineer.

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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Dueling Universal Health Coverage Proposals

Obama and AHIP Race to the Finish Line

starting-line

According to the WashingtonPost.com, on December 6, President elect Barack Obama is inviting Americans to spend part of the holiday season talking about health care – in informal ad hoc meetings around the country called Health Care Community Discussions – to be held between December 15 and 31. And, then report the results back to him. HHS Secretary Elect Thomas A. Daschle will prepare a detailed report, complete with video, to present to the next president.

But, according to the Wall Street Journal, December 4, 2008, the AHIP – a trade group for health insurers – is already offering its own universal coverage proposal that calls for Congress to slow the growth of health care costs by 30 percent in five years, envisioning a total savings of more than $500 billion.

Health Spending [16% GDP]

In 2006, health spending in the U.S. reached $2.1 trillion, consuming 16 percent of the nation’s gross domestic product, according to economists at the federal Centers for Medicare and Medicaid Services [CMS].

The AHIP Proposal

In the insurer’s proposal, money could be used to fund coverage of the uninsured and to cut costs for those with insurance. Officials from America’s Health Insurance Plans [AHIP] called on Congress to establish a public-private advisory group to recommend action in three areas:

  • reducing wasteful spending,
  • changing how doctors and hospitals are paid,
  • and reducing administrative costs.

The AHIP reiterated its position that insurers would be required to offer individual policies to people with pre-existing illnesses; as long as all Americans were required to have health insurance.

Assessment

Obama, by applying the high-tech tools and grass-roots activism that helped him win the White House, hopes to circumvent many of the special interests groups that squelched previous health-care reform efforts. And, in yet another indication of the growing interest in health legislation, Sen. Edward M. Kennedy just announced that he will give up his seat on the Judiciary Committee to focus on health care.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. How do physicians, medical executives, advisors, employers, payers and patients differ on this issue?  Is there really a race, at all? Tell Obama here:

http://change.gov/page/s/healthcare

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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Allegory of an Old Man’s Doctor Son

Just Treat the Sick Patients”

cropped-dem

By Dr. David Edward Marcinko; MBA, CMP™

I have known Georgia State University psychologist Dr. Gene Schmuckler Phd, MBA, CTS, of our consulting firm, the Institute of Medical Business Advisors Inc, for more than a decade. We met while in business school. He was my professor of organizational and industrial  behavior.

Since then, we have become friends and colleagues and have lectured together at various seminars and engagements. He also writes for us on his specialty of behavioral finance, medical workplace violence and physician career re-engineering. Of course, his advice was vital to me as I made my own career transition from clinical medicine about a dozen years ago.

The Story

When speaking or publishing, Gene sometimes asks exasperated doctors to recall the story of an old man who spent the day watching his physician son treating HMO patients in the office.  The doctor had been working at his usual feverish pace all morning, and although he was working hard, bitterly complained to his dad that he was not making as much money as he used to. Finally, the old man interrupted him and said,

“Son, why don’t you just treat the sick patients?” 

The doctor-son looked annoyed at his father, and responded,

“Dad, can’t you see, I don’t have time to treat just the sick ones.”

Assessment

I don’t know if this story is original, or not, but it sure causes one to ponder, a bit. So, always remember to add some emotional sanity into your endeavors.

Edsel

Conclusion

What do you think? Let us know what’s on your mind with a post, opinion or comment.

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Product DetailsProduct Details

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™

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Domestic Economy Sickens Hospitals

AHA Reports Negative Financial-Operating News

Staff Reporters

Many hospitals are seeing the effects of the economic downturn. More than 30% of respondents to a recent American Hospital Association [AHA] survey reported a significant decline in patients seeking elective care and 40% reporting a drop in admissions overall. The majority of hospitals also noted an increase in patients unable to pay for care.

DATABANK Results

The report is based on survey results from 736 hospitals and information from DATABANK, a Web-based reporting system used in 30 states to track key hospital trends:  

  • Falling profit margins to [-] 1.6% – from [+] 6.1% year-over-year
  • Medicare and Medicaid patient care is growing
  • Reducing administrative costs (60%), staff (53%) and services (27%)
  • Borrowing for facility and technology improvements has decreased

Capital investments are also being postponed or delayed:

  • 56% delayed plans to increase capacity;
  • 45% delayed purchase of clinical technology or equipment; and
  • 39% delayed investments in new information technology.

Assessment

The report was based on data from two major sources. A survey, “The Economic Crisis: Impact on Hospitals,” provides data from 736 hospitals from late October 2008 through Nov. 10, 2008.  DATABANK figures represent early results from 557 hospitals reporting data for July through September 2007 and 2008 as of Nov. 11, 2008.

Conclusion

And so, your thoughts and comments on this Executive-Post are appreciated. How [much] has the economy affected your healthcare organization?

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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2009 Physician Fee Schedule

CMS Issues Final Rule

Staff Reporters

coinsAccording to the American Medical News on November 24, legislation enacted in July reversed a 10.6 percent cut that took effect at the beginning of that month, while starting in January 2009, a 1.1 percent across-the-board increase will replace an additional roughly 5 percent cut that would have gone into effect if lawmakers had not acted.

Bonus Opportunities

Because the rule applies payment changes related to the most recent five-year adjustment in Medicare relative values for certain services, some physician specialties might see updates slightly larger than or smaller than 1.1 percent. But, CMS stressed that two bonus opportunities exist to more than quadruple the raise that doctors will get for the year.

Example:

For example, physicians who successfully participate in the Physician Quality Reporting Initiative [PQRI] will receive a 2 percent bonus on all of their Medicare payments for the year, while the program for the first time will award a separate 2 percent bonus to physicians who successfully prescribe medications electronically for their Medicare patients.

Assessment

Although the sums will not be paid out until sometime in 2010, after Medicare has processed all of next year’s claims, this means the maximum effective raise for 2009 will be 5.1 percent.

Conclusion

What do you think about this fee increase? Your thoughts and comments on this Executive-Post 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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SearchAmerica Medical Debt Collectors

Join Our Mailing List

A Financial Clearing-House for the Health Industry

[By Staff Reporters]

SearchAmerica is a provider of healthcare solutions and personalized services to optimize the medical care revenue cycle. First incorporated in 1994, and privately held in Maple Grove MN, it has maintained an exclusive healthcare focus since 2001

A Payment Financial Clearinghouse

According to its website, www.SearchAmerica.com is a leading pioneer in financially clearing patients through address verification, prediction of payment and automated screening for charity, Medicaid and other government programs with Software-as-a-Service (SaaS) solutions and personalized services.

Trusted by 1,000 Hospitals?

Furthermore, the company says that it provides a complete range of real-time, integrated solutions and services that have helped more than 1,000 hospitals improve their revenue cycles. SearchAmerica‘s quality and accuracy is described as best-in-class and healthcare providers benefit from smarter data which produces a healthier bottom line.

Services Provided:

SearchAmerica accesses all three credit bureaus and other leading data sources, to help it improve financial clearing through:

  • Bad debt reclassification
  • Prediction of payment
  • Customized reporting – forecasting (including IRS Form 990 Schedule H)
  • Automated charity and Medicaid screening/enrollment
  • Accurate, complete patient demographics, and
  • Workflow application.

Assessment

To ensure that every SearchAmerica industry customer achieves its short and long term goals of improved financial clearing, the company employs experienced revenue cycle strategists, technologists, and other support professionals. These individuals work alongside every customer from implementation to rollout to continued long-term success.

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More:  And now, for a less flattering look from the patient perspective; please see BusinessWeek, December 1, 2008, page 081.

More:

Conclusion

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Sources of Scarce Hospital Capital

Tough Funding in Difficult Times

By Calvin Wiese; MBA, CPA

Staff Writersho-journal4

In general, hospitals have three sources of capital available to them: [1] equity from earnings, [2] equity from donations, and [3] long-term debt. And, the general domestic economic cycle may either exacerbate or retard capital raising efforts for all healthcare organizations. Today, the hospital capital funding acquisition scenario is difficult indeed.

Earnings Equity

Earnings generate cash, and a portion of that cash is available to fund capital investments. Besides funding capital investments, cash generated from earnings is used to fund working capital. As operations grow, more working capital is required to fund the difference between the operating receivables and operating payables since days of revenue in receivables tend to be a good deal higher than days of expense in payables. Additionally, cash on hand [COH] should increase as operations grow so that days of cash remain constant or increase. Once working capital has been adequately funded, any remaining cash generated from earnings is available to invest in capital.

Not-for-Profit Entities

Most not-for-profit hospitals engage in active fundraising to generate donations. Donations are a good source of capital in certain markets. Often, fundraising initiatives are less useful than they appear due to the costs expended in the fundraising activities. It is important to ensure that all the costs incurred in fundraising activities are properly attributed.

Borrowing

Borrowing long-term debt has been an important source of capital for hospitals and will continue to be. Debt is particularly attractive due to the low cost associated with borrowing on a tax-exempt basis. Long-term debt, borrowed on a tax-exempt basis, is probably the lowest cost form of capital available to hospitals. Tax-exempt borrowing is fairly complex due to the tax regulations affecting it. Because of its complexity, the costs associated with these transactions are quite high, making it less practical for small borrowings www.HealthcareFinancials.com

Special Borrowing Transactions

Finally, tax-exempt borrowing transactions require many lawyers and high-priced investment bankers. Credit rating agencies and credit enhancers are also typically involved. Accessing the tax-exempt markets requires a good bit of sophistication and expertise. Despite these requirements, this capital is highly attractive to hospitals and should be used whenever possible.

Assessment

Currently, as the adverse business cycle grinds on, and the – now official – recession deepens, credit rating agency Fitch has just changed its not-for-profit hospital sector view to negative, from a previously stable status.  And, Hospital Corporation of America [HCA] is resorting to potentially risky payment in kind (PIK) debt swaps to keep its bonds afloat. 

Conclusion

And so, your thoughts and comments on this Medical 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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About OSHA’s eTool for Hospitals

Join Our Mailing List

A New Computerized Graphical Safety Interface for 2008

[By Staff Reporters]

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According to the Bureau of Labor Statistics [BLS] in 2001, the nation’s hospitals reported 293,600 nonfatal occupational injuries and illnesses to their personnel.

Hospital Injury Rates High

Among US industries with 100,000 or more injuries and illnesses, hospitals have the second highest rate of nonfatal injury or illness cases. Only eating and drinking places have more injuries and illnesses. The incidence rate for hospitals is 9.2 injuries and illnesses per 100 full-time workers. The incident rate for industry as a whole is 6.1 injuries and illnesses per 100 full-time workers. During October 2000 through September 2001, OSHA performed 103 inspection activities in SIC code 806-Hospitals. The most frequently sited violations were bloodborne pathogens, lockout/tagout, and hazard communication.

Introducing Hospital eTool from OSHA

OSHA is now providing a new computerized graphical, known as eTool, to help healthcare entities and employers identify and address potential occupational hazards in hospitals. This will be done through a comprehensive safety and health program approach.

Assessment

eTool will help employers in developing and implementing engineering and work practice controls which comply with OSHA requirements and can be incorporated into a health facility’s safety and health plan to reduce the hazards of hospital work and improve worker safety. eTool addresses the following areas: 

More: http://www.osha.gov/SLTC/etools/hospital/scope.html

Conclusion

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Obama and Health IT

Works Progress Administration

capital

By Darrell K. Pruitt; DDS

In an article posted on www.ModernHealthcare.com HITS staff writer Matthew DoBias writes: 

 

“President-elect Barack Obama said that his economic recovery plan to create 2.5 million new jobs in part will rely on ‘technology and healthcare modernization,’ a nod toward increasing the use of health information technology among physicians and hospitals as well as the trained staff who will be needed to run it.”

http://www.modernhealthcare.com/article/20081126/REG/311269965

Economic Recovery

The title of the article is “Obama links healthcare reform to economic recovery.”

http://www.modernhealthcare.com/article/20081126/REG/311269965

More Expenses

I was afraid that this would happen. It looks like American citizens are going to help pay for economic recovery through the additional medical expenses necessary for trained healthcare IT staff.  I guess it is still a far better plan for getting us out of a depression than a world war.

As a healthcare provider who has many patients who will go without dental care if I raise my fees to cover the cost of healthcare IT, plus the additional costs of HIPAA compliance, doesn’t that make Obama’s plans counter to the Hippocratic Oath?  Don’t forget the indisputable fact that electronic dental records are more likely to cause dental patients harm than good.

Assessment

Obama scares me. When a customer enters my place of business, they want to pay for safe dentistry, not mandated, busy work jobs carrying tremendous liability that are designed to stimulate the economy.

Conclusion

And so, your thoughts and comments on this Executive-Post 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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Understanding Earnings per Share

One Component of Fundamental Stock Analysis

Staff Reporters

Savvy physician-investors know that probably the most important influence on the price of a stock is reported earnings per share (EPS). Quarterly earnings are multiplied by 4 to simulate upcoming annual earnings, but sometimes “trailing 4 quarters” (i.e., actual) earnings are used. Analysts usually project earnings for several upcoming quarters, and those estimates are used to project the stock price.

Definition

Companies are required to report EPS within 45 days of quarter-end and within 90 days of year-end. According to the Dictionary of Health Economics and Finance [www.HealthDictionarySeries.com], EPS may be defined as follows:

EPS = Net income – Preferred dividends / Number of outstanding shares    

This formula has the same numerator as ROE—income available to common shareholders (after interest and taxes). Undiluted EPS is called primary EPS. If securities exist that are likely to be converted into outstanding common shares (such as convertible preferred stock that is likely to be called, or options held by management that are likely to be exercised), fully diluted EPS are also calculated. EPS states earnings on a per-share basis, which makes it easy to generate the P/E multiple.

Stock Listings

The P/E often appears on website or in newspaper stock listings. With the P/E, the dollar value of current earnings can be backed out using the current stock price. If newly reported earnings are higher than expected, the P/E ratio will be lower than it has been and the stock will be selling at a “discount” to its own prior P/E. If newly reported earnings are lower than expected, the

P/E ratio will be higher than it has been, and the stock is said to be selling at a “premium” to its prior P/E.

Discount/Premium Indicator

A stock’s P/E may also show it selling at a discount or premium to the P/E of the market (an index, like the S&P 500) or the average P/E of other companies in the industry. If compared to the market, it is said to be trading at a high or low relative multiple. Most doctors find that a very high P/E is hard to justify buying—it usually means expectations for future earnings are unrealistic. Small company stocks will tend to have higher P/E ratios than large company stocks. When the multiples of small companies approach those of large companies, it signals a good buying opportunity in small stocks.

Price Tracks Earnings

Over the long term, most charts will show that the price of the stock eventually tracks earnings. The principle of value investing is basically to capture the stock when earnings have risen but the stock price hasn’t caught up and to sell when the price of the stock fully reflects the earnings rise.

A Growth Indicator

A valuable way to look at P/E ratio is to compare it to growth rate. A fairly priced company will have a P/E approximately equal to its earnings growth rate (i.e., a multiple of 12 with an EPS growth rate of 12%). If the multiple is below the growth rate, the stock is considered a bargain. A rule of thumb: A growth rate twice the multiple is a good buy; a growth rate half the multiple means stay away.

The Power of Growth

Physician-investors should never underestimate the power of growth. Even though a company has a high P/E, if the growth rate is also high it will make more money because of the power of compounding. The P/E calculated without cash in the price of the stock could be considered a truer measure of what the operating assets of the company are earning. A physician-investor may break down companies’ P/E further, attempting to find multiples for each business segment of a company.

Assessment

As seen, if it is likely that convertible securities, warrants, rights, or any other stock equivalents outstanding will be converted into common stock, fully diluted EPS are calculated. The fully diluted calculation adds back interest on convertible securities, assuming it will not be paid, but increases the number of shares outstanding. For companies that pay dividends, the dividend payout ratio is calculated by dividing the annual dividend paid by the EPS. A low dividend payout ratio may not be bad—it could indicate that the company is likely to be able to maintain the dividend level. When the dividend payout ratio for the entire market is low, it indicates that the overall market is at a high.

Conclusion

The dividend yield is calculated by dividing the annual dividend by the current price per share. Yields may look particularly high when share price is depressed and may help sustain demand for stocks like utilities. As in analysis of bonds, valuation of the dividend stream (present value of future cash flow) is often used to determine the intrinsic worth of stocks that pay steady dividends.

And so, your thoughts and comments on this Medical Executive-Post are appreciated. With the recent stock market slump, is this traditional ratio due for a popularity comeback by next-gen physician-investors?

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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