On Emergency Funds for Physicians

dr-david-marcinko3Cash Reserves Now More Important Than Ever!

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

CEO: www.MedicalBusinessAdvisors.com

This is a basic question in financial planning circles that has generated much activity in the medical community, of late. Previously considered so mundane – as to be dismissed by some haughty physicians – it has acquired increased urgency with the current financial meltdown.

What Security Level Desired?

Yet, the answer to this question is dependent upon the security level desired by the medical provider and his/her family. Traditionally, financial planners suggested most people with solid employment, and transferrable skills, have at least three months of living expenses (not including taxes) in a reserve fund that is easily accessible (i.e., liquid). The amount needed for a one-month reserve is equal to the amount of expenses for the month, rather than the amount of monthly income. This is because during no-income months – there is no income tax.

The Usual Checklist

We suggest the following questions as helpful in determining the amount of reserve needed by medical professionals:

1. How many incomes do you have in your household?

2. How secure is your current practice, or medical job?

3. Do you have other unrelated sources of income; medically or non-medically related?

4. How long would it take you to find another position in your specialty, if suddenly unemployed? [Hint: Assume one month per ten grand of income; at $150-k annually, this means searching for 15 months].

5. How much money do you spend, and save, each month?

6. Would you be willing [able] to lower your monthly [fixed or variable] expenses, if you were unemployed?

Many Factors to Considerinsurance-book1

But, many other factors come into play when determining how much money a particular physician and his/her family should have on hand. Does the family have one income or two? How stable is this income source? Does the doctor work for himself [managing partner], or is she employed [minority partner, associate, etc]? What kind of firm, company or hospital employs him; private, HMO, MCO, Federal or State entity? Does the family use all of the income each month? What about, life, health, disability or LTC insurance as fringe benefits? Does the family anticipate the possibility of large liability exposures and expenses occurring in the future (i.e., medical school or practice start-up debt, private tuition for the kids, medical expenses, liability suits etc.)? Are you willing to relocate for a new job?

Family Situation Appraisal

If the doctor is in a dual-income family – with stable incomes – and/or lives on a single income – the need for a liquid reserve is minimal; but still much more than for the average layman. On the other hand, if the doctor is a single individual, with an unstable income and she spends everything each month, the need for a liquid cash reserve is higher.

In the previous example, and in the stable past, the doctor may have opted for a six-to-nine month reserve if the need for security was high; and a three-to-six month reserve if the need for security was low. For the last five to seven years however, we have suggested to our medical clients that they expand this reserve cash corpus to 12-24 months; and as a blanket rule of thumb for all medical professionals. Of course, I was roundly criticized for it; until now.

Today, we are suggesting 3-5 years; with considerably less criticism. Cash is power, choice, swagger, potency, freedom and represents options. Acquire it!

Stashing the Cash

Once the amount of reserve is determined, the doctor should consider the appropriate investment vehicles for the reserve fund. At minimum, the reserve should be invested in a money market mutual fund with NAV @ 1.00 USD. Larger income earners may opt for tax-exempt money market mutual funds, as needed.  For larger reserves, an ultra-short term, no-low bond fund, might be appropriate for amounts over three months – in periods of deflation; not so during inflationary periods.

Assessment

Today, we recommend doctors keep 3-5 years of cash-on-hand. Yes, I am aware of the “paradox-of-thrift” conundrum. But, do you want to help the domestic GDP, or your family; you decide? Personally, my own concern is not the macro-economic milieu.

Full disclosure: I am a former insurance agent, registered investment advisor; board certified surgeon and Certified Financial Planner™

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. How stressed out are you, right now? You are sleepless if previously considered cash, as trash.

But, if sitting on a little pile; you should be sleeping like a baby.    

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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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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ADVISORS: www.CertifiedMedicalPlanner.org
BLOG: www.MedicalExecutivePost.com

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

Front Matter with Foreword by Jason Dyken MD MBA

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“BY DOCTORS – FOR DOCTORS – PEER REVIEWED – FIDUCIARY FOCUSED”

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Enter our Writing Contest

You Must Submit – to Win

By Hope Hetico; RN, MHA, CMP™

Managing Editoridea2

Enter the Medical Executive Post submissions contest and just maybe you can become famous! Simply send in a written post about some aspect of the healthcare industrial complex, finance, administration, policy or health economics space that you are particularly knowledgeable about. Or, visit our topic channels for related ideas. Use you fertile imagination.

Rules

Submission must be original, not submitted elsewhere and under 1,000 words. Rest assured that grammar, spelling, citations and punctuation counts. Originality and thought-leadership is a must. Oh, you must be a subscriber and all copyright ownership will be transferred to us, as well. Your material may even be used in some iMBA, Inc print project or publication, now in-progress or in the future.

Grand Prize

Just think! You could become one of 3 finalists featured as an upcoming Medical Executive Post monthly column, with photographic byline, or even the grand prize winner who’ll receive our free best-selling hardcover textbook, the Business of Medical Practice.

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Contest Close

Submissions are due December 31, 2009. There are no limits to the number of times you may apply or the number of submissions you may send in. All results are final. The anonymous judges reserve the right of non-selection. And, we reserve the right to reject any content submission; for any reason perceived as reasonable, or unreasonable.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post submissions contest are appreciated.

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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 Executive-Post – is available for seminar or speaking engagements.

Upcoming Health Economics Interview with Dr. David Marcinko

Coming Soon from Medical Business News, Inc

By Ann Miller; RN, MHA

ME-P Executive-Directordr-david-marcinko22

Medical Business News, Inc., the publisher of Medical News of Arkansas, is a leading source for healthcare industry news that is truly useful. With a professional readership comprised of physicians and key industry decision makers, Medical News publications are devoted entirely to healthcare issues that impact both clinical and administrative best practices. Written and edited specifically for healthcare professionals, MBN writers work with experts at the local, regional and national level to keep stakeholders informed about the ever-evolving healthcare system.

Out Reach

It is no wonder then, why local market MNA editor Jennifer Boulden recently contacted us to arrange an interview with Dr. David Edward Marcinko, our Publisher-in-Chief, who is also a former insurance agent, registered investment advisor, health economist and Certified Financial Planner™

Link: www.MedicalBusinessAdvisors.com  

Interview Topics

The wide open topic in this environment of medically specific lethargy and macro economic insecurity – personal and business planning for physicians. Of course, since this is a broad field, we will use the rating and ranking system of this blog to help Jennifer and her staff, winnow down categories to top-of-mind concerns of our ME-P subscribers and her MNA readers.

Link: www.HealthcareFinancials.com

Assessment

But, we also ask you to send in any particular issues that you may have in order to make the interview helpful and exciting for all concerned.

Link: www.HealthDictionarySeries.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated.

Link: 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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Health HR Webinar Invitation Credibility?

Reaching-Out for ME-P Subscriber Advice?

secova1

Dear Dr. David E. Marcinko,

One of my political friends mentioned that you would be a perfect candidate for an informational Webinar we will be hosting. With you being a thought-leader on healthcare, we would be honored if you could be a co-presenter for a complimentary webinar we will be hosting on the stimulus package relating to healthcare, and what it means to companies today. As you know the stimulus package is making its way through congress. Currently the House and the Senate passed their version and currently the conference committee is making one version.

Your Input Requested

Where do you fit in? Many health issues, including health insurance assistance for the unemployed are heavily being discussed. We and other HR professionals would like to hear your thoughts on this tentative new health care policy, before it is too late. What does this mean for businesses today?

Our Mission 

The mission of our company is to support, educate and inform companies on how to control and drive down the cost of delivering Human Resources and Employee Benefit Services. Shortly after you speak we will provide administrative tips and ideas for those who are going to have to deal with the administrative burden of covering all those uninsureds dating back a year ago.

The Oportunity 

We hope your interest in the problems of, and opportunities for educating, company HR executives will be helpful. We would be happy to provide feedback from our attendees for you if you would like. With your busy schedule we will make this as seamless as possible. We will schedule a short interview with you, ask you questions, write the power point, have you approve it, and provide your transportation to our office; or we will go to yours.

Assessment 

I look forward to a favorable reply, and as soon as I receive it, I will reply accordingly. 

Yours Sincerely,

Sarah Soss

Marketing & Business Development

5000 Birch Street, East Tower Suite 300

Newport Beach, CA 92660

office – direct: 714-384-0590

internal ext. 4590

secure fax: 714-384-0600

email: sarah.soss@secova.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Is this organization credible? How about the invitation; real or sham? Have any ME-P readers or subscribers ever heard-of, or dealt-with, this company? Should the invitation be accepted? Please advise prudently.

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 Administration Terms: www.HealthDictionarySeries.com

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