Managing Hospital Credit Relationships

Understanding the Capital Formation Process

By Calvin W. Wiese; CPA MBA

www.HealthcareFinancials.com

Every hospital needs to manage their credit relationships. Rating agencies and credit providers need to be targeted by hospitals for development and maintenance of credit relationships. Credit relationships are an ongoing process. They need to be fed and nurtured. Hospitals should make sure that they cultivate their relationships with credit analysts even during times when they are not seeking credit.

Capital Financing

Too often, hospitals work on credit relationships only when they need capital financing. That’s the wrong time. Relationships need to be in place before they need financing. Credit relationships should not be transaction based; rather formed and nurtured on an ongoing basis, resulting in better, more optimal transaction results. Credit relationships are fed and nurtured through communication. Communication strategies need to be multi-faceted: quarterly reporting, annual face-to-face reviews, and ad-hoc telephone conversations. Reporting needs to go beyond just what is required by the covenants. Covenanted reporting should be viewed as the minimum.

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Annual Meetings

Perhaps the most important component of nurturing credit relationships is the annual meeting. Annual meetings should be set up and conducted at the offices of the credit analysts. The meeting should review the past year and describe the plans for the future. An important component of the annual review is the financial forecast. Credibility is established by presenting a three- to five-year financial forecast each year. Variances from the forecast should be discussed and whether they are favorable or unfavorable should be explained. Candor about the good and especially the bad creates understanding and trust, which are critical components in credibility.

Uncertain Forecasts

Financial forecasts are inherently uncertain. The future is unknown, and in most cases unknowable. A financial forecast is not so much a prediction of the future, but a description of a management team’s view of the future. That view encompasses both external factors that are largely out of the control of management, and internal factors that are controllable. The forecast describes management’s strategies of dealing with that environment. As such, the financial forecast creates the context for a very profitable discussion between management and analysts. The view of the external environment can be compared and contrasted and challenged by the analysts. It is important for them to develop a comfort level with management’s view of the external environment. Given that environment, analysts can then evaluate management’s strategies for successfully leading the hospital through that environment.

Assessment

Presenting updated forecasts each year provides additional dimensions for useful dialogue. Changes in environmental views can be highlighted and discussed. Implications to hospital strategy can then be usefully identified and debated. Failures and successes in meeting the assumptions presented in prior forecasts highlight strengths and weaknesses of management in dealing with the uncertainties of its environment.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Are the credit relationships at your healthcare institution proactive or retro-active? 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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About Tax-Exempt Hospital Debt

Understanding the Capital Formation Process

By Calvin W. Wiese CPA MBA

www.HealthcareFinancials.com

Tax exempt debt has become an important means of external financing for hospitals, primarily because its cost is very attractive. Interest rates on tax-exempt financing are lower than interest rates on financing that is not tax-exempt because the interest income earned by the holders is exempt from federal income tax. In some states, it is also exempt from state income tax and in some cities; it is also exempt from city income tax. Accordingly, the holders of these debt instruments (usually bonds) are willing to accept lower rates of interest.

State and Local Governments Issue Hospital Debt

Hospitals themselves are not capable of issuing tax-exempt debt. Only state and local governments are. A state or local government issues tax-exempt debt for hospitals and then loans the proceeds to hospitals. This is called “conduit” financing: the state or local government acts as a conduit through which hospitals can access tax-exempt debt markets. State and local governments are authorized to loan proceeds of their bond issues to hospitals through state statutes, and each state statute is different. Some states authorize any state or local government to issue bonds to loan to hospitals. Other states restrict such power to special purpose governmental entities only. And some states restrict this power to a single governmental entity that is specially formed for the sole purpose of issuing tax-exempt bonds on behalf of hospitals.

[picapp align=”none” wrap=”false” link=”term=medical+clinic&iid=252095″ src=”http://view2.picapp.com/pictures.photo/image/252095/clinical-waiting-room/clinical-waiting-room.jpg?size=500&imageId=252095″ width=”324″ height=”480″ /]

The IRS and Tax Exempt Financing

The Internal Revenue Service (IRS) regulates the issuance of tax-exempt financing. While the IRS code nominally provides that debt instruments issued by state and local governments are exempt from federal income tax, it imposes special rules on conduit issues. Therefore, tax-exempt issues whose proceeds are loaned to hospitals must comply with special IRS rules. Although very complex, these rules primarily regulate the use of proceeds, restricting the use of tax-exempt proceeds to the acquisition of property, plant components and equipment. Given state statutes, IRS code and applicable security laws (both state and federal), issuing tax-exempt bonds is legally complex. Many lawyers get paid handsome fees every time tax-exempt debt is issued. The quarterback of the legal team is the bond counsel who represents the interests of the bondholders; the bond counsel issues the critical tax opinion that investors rely upon to claim tax-exemption on the interest from these instruments. Everything revolves around getting this opinion. Given its’ critical nature, only highly qualified lawyers are accepted by the market to provide this opinion. Underwriter’s counsel represents the interests of the investment bankers; their primary concern is compliance with security laws. Issuer’s counsel represents the interests of the state or local government, and hospital counsel represents the interests of the hospital; both have relatively minor roles. In the event credit enhancement is involved, credit enhancement counsel represents their interests and has significant influence on the process.

Bond Trustees

Another unique party to most tax-exempt bond issues is the bond trustee. The bond trustee is usually a bank who performs a fiduciary duty on behalf of the bond holders throughout the life of the bonds. The face of the faceless bond holders, they act on their behalf. And they, too, are represented by counsel in the bond issuance process. State or local government typically appoints bond counsel. In many cases, they work with only a single firm. Not unusually, these relationships are quite cozy, and often result in fees being paid that are well in excess of what otherwise would be paid.

The Indenture

An excess of documents is involved in most tax-exempt financings. The heart of the documents is the indenture, which is the agreement between the bond trustee (on behalf of the bond holders) and the state or local government issuer. It contains the promises made to the bond holders, and it describes the work of the bond trustee. The bond trustee will only perform actions on behalf of bond holders that are explicitly set forth in the bond indenture. The bond indenture is the security given to the bond holders, describing all their recourses.

Assessment

The bond indenture is typically supported by the loan agreement between the state or local government that issues the bonds and the hospital to which the proceeds are loaned. Its terms complement the terms of the bond indenture, which together, form the conduit.

Conclusion

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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Hospital Credit Analysis

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Understanding the Definition of “Essentiality”

[By Calvin W. Wiese CPA MBA]

An important component of hospital credit analysis is essentiality. Hospitals are unusual businesses that many times possess some form of essentiality to their communities. Healthcare is important to the economic vitality of every community. Many hospitals have served their communities for many years; it is not uncommon to find hospitals that have been continuously operating for more than 100 years in the same community.

Not for Profit Entities

Most hospitals are not-for-profit. In not-for-profit hospitals, no private party actually “owns” the hospital; control is vested in various boards, but no one explicitly “owns” a not-for-profit hospital. In a broad sense, communities own not-for-profit hospitals. They are considered “charities” with a “charitable purpose.” Though a not-for profit hospital may not have owners, it has many” stakeholders,” parties that have vested interests in the continuing success of the hospital.

Stakeholder Webs

Many hospitals have broad and vast webs of stakeholders. Stakeholders are why hospitals rarely close or are shut down. Too many stakeholders have interests in the continuing successful operation of hospitals.

Hospital stakeholder relationships need to be considered in the analysis of essentiality. How strong are these relations? How many are there? How important is the continuing success of this hospital to these stakeholders?

Service Analysis

Another dimension of the essentiality analysis is service analysis. How significant are the hospital’s services? If the hospital shuts down, what population segments would suffer? How significant is the population that would suffer? How much would they suffer?

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Assessment

Analysis of hospital’s stakeholders and services should provide a credible view of the degree of essentiality associated with a hospital. Higher degrees of essentiality suggest higher likelihoods that hospitals, one way or another, will meet their commitments, particularly their payment commitments.

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Conclusion

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Join the ME-P “Thought-Leader” Pipeline

Modern Finance and e-Health Culture Devotees Wanted

By Ann Miller RN, MHA

[Executive-Director]

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Doctors are not always totally hip and do not always know what’s going on in popular culture.  Actually, many have no idea what is going on outside of the walls of the hospital; but we’d really like to know.

Health 2.0 

Thus, the “thought-leader” pipeline concept was born. The Pipeline is a team of elite individuals that actually are hip and in the know when it comes to the financial advisory and business sides of medical practice.  These super cool technical individuals are known as ME-P “thought-leaders” and help keep us up to date about Health 2.0 collaboration. Think you’re up for the task?

Contact: 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 Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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About My House Call MD.com

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A New Health Education Project

By Joshua T. Goldman, MD, MBA

Resident Physician | UCLA Department of Family Medicine

Editor-in-Chief & Founder | House Call, MD | www.myhousecallmd.com

P: 760.409.4531 

Dear ME-P  Readers,

As many of you know, I have been working on a health education project called House Call, MD (www.myhousecallmd.com) for the past year and a half.  The idea was born out of the numerous questions people have about their bodies and illness but are unable to have them answered. Knowledge is incredibly powerful when dealing with one’s health but is not emphasized enough in the current health care system.  Doctors are spread increasingly thin and, unfortunately, aren’t given the time to answer the many questions patients have about their conditions and treatment. 

Enter House Call MD

That’s where House Call, MD comes in.  I have recruited an outstanding team of medical professionals that are skilled with the pen (or keyboard) to translate medical knowledge and research into articles for general population. Sounds a lot like WebMD, right?  After you take a look, we hope you will think otherwise.  We’ve taken a unique approach at House Call, MD specifically because we don’t think that the WebMD’s of the world are doing the trick. What’s different about House Call, MD?

The Difference

  • Real Doctor, Real Medicine: Our articles are written by medical professionals (not reporters) and supported by published scientific research.  When we publish it, you know it’s been proven.
  • Medicine that Matters:   WebMD is great when you’ve developed a strange rash that you are attempting to self-diagnose but it’s not the best place to find riveting medical information that you’ll enjoy reading.  We bring you medicine in context.  Our articles are based on things taking place in society today.  We translate that information into straightforward take home messages you can apply to your everyday life.  Medicine you want to know about delivered in a usable way.    
  • Enjoyable Reading: It’s hard to relate to medical professionals.  They speak in a foreign language.  They not around long enough for all your questions.  Our medical professionals are different.  They listen.  They’re funny (most of the time).  They’ve been patients just like you. Most importantly, they speak in a language you can understand and will enjoy reading.
  • Multi-Disciplinary Medicine: Health is complex and multi-factorial.  As such, we’ve taken a team approach at House Call, MD, including pharmacists, dietitians, physical therapists and nurses on our staff, all of whom share their unique expertise.     

I would love your support in trying to share our unique approach to health and wellness with the world.  How can you help support House Call, MD? 

Support 

Ten great ways to show your support:

  1. Sign up for our Healthy Dose Newsletter: http://www.myhousecallmd.com/subscribe
  2. Send it to your friends and family (and forward this e-mail…especially to people in different states, countries, industries)
  3. Tweet it out: http://twitter.com/HouseCallMD 
  4. ‘Like’ it on Facebook: http://www.facebook.com/HouseCallMD
  5. Tell your Doctor (we have a newsletter for primary care doctor’s practices)
  6. Tell your Corporate Wellness Program/College Health Center (we also have a wellness newsletter for corporate & college health programs)
  7. Make it your Facebook status update/GChat status/Linkedin Update
  8. Send it to press you know (We call it cost-efficient health care reform, Mr. President)
  9. Send it around the office
  10. Oh yeah, read the articles!

Twitter: http://twitter.com/HouseCallMD

Facebook: http://www.facebook.com/HouseCallMD

Assessment 

Most importantly, we are always looking for new ways to improve our articles and share our message with a broader audience.  Don’t hesitate to let me know if you have any brilliant ideas.  I can’t thank you enough for your support. Hoping to make the world a healthier place, one article at a time

-Josh Goldman MD MBA

Editor’s Note: We are also pleased to introduce Dr. Goldman as our newest ME-P “thought-leader” and look ahead to his comments and posts. 

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Give www.myhousecallmd.com a click, and tell us what you think? 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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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What Does Health Reform Mean to You?

A Health Reform Pamphlet from the NCPA

By Staff Reporters

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The new health care legislation will impact every American. The National Center for Policy Analysis [NCPA] has created a new pamphlet, “What Does Health Reform Mean for You? It explains the new legislation’s major points in a succinct and unbiased way.

Content Overview

The contents of the pamphlet are reviewed below:

http://www.ncpa.org/healthreform/

Full Report

The full report is available here.

Link: What-Does-Health-Reform-Mean-for-You-A-Consumers-Guide

Conclusion

And so, 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

Other Print Books and 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

Physician Advisors: www.CertifiedMedicalPlanner.com

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Is Another [Double-Dip] Stock Market Crash Looming?

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Understanding the Hindenburg Omen [A Bearish Sell Signal or Mere Folly?]

By Dr. David Edward Marcinko MBA, CMP™

[Editor-in-Chief]

According to Wikipedia, the Hindenburg Omen is a technical analysis pattern that is said to portend a stock market crash. It is named after the Hindenburg disaster of May 6, 1937, during which the German zeppelin Hindenburg was destroyed. The Omen is said to have originated with Jim Miekka. Miekka, who was probably the foremost expert on the Omen, suggesting to his friend Kennedy Gammage that the pattern be dubbed the “Hindenburg Omen” after that ill-fated dirigible.

Historical Review

The HO rests firmly on the logic of Norman G. Fosback’s High-Low Logic Index; and indeed the HLLI is the most important component of the HO. The HLLI was developed in 1979 and published in chapter 20 of Mr. Fosback’s book “Stock Market Logic”, ISBN 0-917604-48-2. The raw value of HLLI is the lesser of the NYSE New Highs or New Lows divided by the number of NYSE Issues Traded. For daily data Mr. Fosback recommended smoothing with an 18% exponential moving average, for weekly a 5% exponential smoothing.

Source: http://en.wikipedia.org/wiki/Hindenburg_Omen

Readings:

Assessment

DJIA = 10,400 2010

DJIA = 28,992 February 2020

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h

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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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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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Common Physician Retirement Plan Payout Methods

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Targeting Portfolios and Medical Endowment Funds

[By Staff Reporters]

According to Wayne Firebaugh CPA, CFP® CMP™ recognizing the risk that market volatility represents to long-term portfolio portfolios or medical endowments utilize a variety of methods to calculate periodic payouts. These include the following:

  • Investment Yield: A portfolio/endowment using this method spends only its dividends and interest and re-invests any unrealized and realized gains. There would appear to be two primary disadvantages of this method. First, the payout amount will be extremely volatile as yields on equity and fixed income investments fluctuate. Second, the endowment manager could be encouraged to adopt a short-term focus on yield to the detriment of purchasing power preservation.
  • Percentage of the Prior Year’s Ending Market Value: An endowment/portfolio using this method would withdraw some fixed percentage of the prior year’s market value. As with the Investment Yield method, disbursements from the endowment can be somewhat volatile under this method.
  • Moving Average: This approach, which is most common among educational institutions, generally involves taking a percentage of a moving average of the endowment market value. The percentage commonly approximates 5% over a 3-year period.
  • Inflation Adjusted: This method simply adds some factor to the applicable rate of inflation for the institution/portfolio.
  • Banded Inflation or Corridor: This method is similar to the Inflation Adjusted method except that it establishes a corridor or band of minimum and maximum increases in an attempt to limit the volatility of disbursement amounts for the portfolio/endowment.

Mature Woman

Assessment

How does the above compare to the typical 4% withdrawal rate suggested by many FAs today … too much or too little?

Does a private MD “spend-down” or “conserve” principle like an endowment fund make sense?

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.

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Introducing Dr. Joshua Goldman MBA

Meet Our Newest ME-P “Thought-Leader”

By Ann Miller RN, MHA

Joshua Goldman, MD, MBA is a resident physician at the University of California, Los Angeles pursuing post-graduate training in family medicine with subsequently plans to complete a Sports Medicine fellowship. He attended graduate school at the University of Southern California, completing his Medical Degree at the Keck School of Medicine concurrent with his Master of Business Administration at the Marshall School of Business. He is functioning as the Director of Strategy for Insight Oncology, an oncology consulting and management firm.

USC Days

While at USC, Josh served as the student body President of the Keck School of Medicine, a teaching assistant in the department of Anatomy and Physiology and held board positions at the USC Stevens Institute for Innovation, the Biomedical Association at the Marshall School of Business, and the Curriculum Committee at the Keck School of Medicine. He was selected as the Keck School of Medicine Student Teacher of the Year for 2009-2010. He has also served as the Vice President of the American Cancer Society at the University of California, Los Angeles. He completed an internship with the Cedars-Sinai Orthopedic Center Trauma Team and with the University of Southern California Athletic Department’s Team Physicians, working with the USC Trojan Football team during their summer training camp.

Undergraduate Days

Joshua received his Bachelor of Science degree from the University of California, Los Angeles in 2005 graduating Magna cum Laude and Phi Beta Kappa with a major in Psychobiology and a minor in English Literature. While at UCLA, Josh was a member of the men’s crew team.

A PE Devotee’

Joshua is very physically active, weight training or running daily. He is also an aspiring tri-athlete, training both on a bike and in the water recently. He also enjoys playing football, tennis, beach volleyball and sailing in his free time in between his many home improvement projects.

Website

Josh is also the Founder and CEO of: www.MyHouseCallMD.com

Conclusion

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About the eHealth Initiative

Foundation for eHealth Initiative

By Staff Reporters

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The eHealth Initiative and the Foundation for eHealth Initiative are independent, non-profit affiliated organizations whose missions are the same: to drive improvement in the quality, safety, and efficiency of healthcare through information and information technology.

Dual Entities

Both organizations are focused on engaging multiple and diverse stakeholders – including hospitals and other healthcare organizations, clinician groups, consumer and patient groups, employers and purchasers, health plans, healthcare information technology organizations, manufacturers, public health agencies, academic and research institutions, and public sector stakeholders – to define and then implement specific actions that will address the quality, safety and efficiency challenges of our healthcare system through the use of interoperable information technology.

Strategic Initiatives

The eHealth Initiative is engaged in a number of strategic initiatives to raise national awareness about the value of using electronic health information to address health care challenges. Currently, the eHealth Initiative is focused the following initiatives:

Assessment

Their united vision is that consumers, health care providers, and those responsible for population health will have ready access to timely, relevant, reliable and secure information and services through an interconnected, electronic health information infrastructure to support better health and healthcare.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Give em’ a click and tel us what you think http://www.ehealthinitiative.org? 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

Our Other Print Books and Related Information Sources:

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

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

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

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Understanding the Tactical Approach to Medical Endowment Fund Management

Guiding Long-Term Investment Decisions

By Staff Reporters

www.HealthcareFinancials.com

According to Wayne Firebaugh CPA, CFP® CMP™ many successful medical endowment funds will establish a “strategic” allocation policy that is intended to guide long-term (greater than one-year) investment decisions. This strategic allocation reflects the endowment’s thinking regarding the existence of perceived fundamental shifts in the market.

Asset Class Target Ranges

Most endowments will also establish a target range or band for each asset class. The day-to-day managers then have the flexibility to make tactical decisions for a given class so long as they stay within the target range.

Definition

The term “tactical” when used in the context of investment strategy refers to the manager’s ability to take advantage of short-term (under one year) market anomalies such as pricing discrepancies between different sectors or across different styles.

Historically, tactical decisions with respect to asset allocation were derided as “market timing.” However, market timing implies moving outside of the target ranges whereas tactical decision making simply addresses the opportunistic deployment of funds within the asset class target range.

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Assessment

www.CertifiedMedicalPlanner.com

Conclusion

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

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Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Dueling New Medicare Reports

Medicare Trustees versus Medicare Actuaries

By Staff Reporters

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According to John Goodman, President, CEO & Kellye Wright Fellow National Center for Policy Analysis, the release of this year’s Medicare Trustees report was unprecedented.

No Medicare Signature Sign-Off 

As noted on www.TheHealthCareBlog.com, in previous posts there and at this blog here and here, Medicare’s chief actuary not only refused to sign off on it, he disowned it — encouraging readers to ignore it and focus instead on an alternative report, prepared by the office of the Medicare actuaries.

Assessment

Industry Indignation Index: 50

Conclusion

Are doctors different than the average investor noted in this essay?

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Avoiding Managed Care Contract Pitfalls

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A Non-All Inclusive List

By Staff Reporters

There are several key pitfalls to watch out for when evaluating a managed care organization contract, as noted and continually revised by the Advisory Board Company, and others.

  • Profitability — Less than 52% of all senior physician executives know whether their managed care contracts are profitable. “Many simply sign up and hope for the best.”
  • Financial Data — 90% of all executives said the ability to obtain financial information was valuable, yet only 50% could obtain the needed data.
  • Information Technology — IT hardware and sophisticated software is needed to gather, evaluate, and interpret clinical and financial data; yet it is typically “unavailable to the solo or small group practice.”
  • Underpayments — This rate is typically between 3 – 10% and is usually “left on the table.”
  • Cash Flow Forecasting — MCO contracting will soon begin yearly (or longer) compensation disbursements, “causing significant cash flow problems to many physicians.”
  • Stop-Loss Minimums — SLMs are one-time up-front premium charges for stop-loss insurance. However, if the contract is prematurely terminated, you may not receive a pro rata refund unless you ask for it!
  • Automatic Contract Renewals ACRs or “evergreen” contracts automatically renew unless one party objects. This is convenient for both the payor and payee, but may result in overlapping renewal and re-negotiation deadlines. Hence, a contract may be continued on a sub-optimal basis, to the detriment of the providers.
  • Eliminate Retroactive Denials — Eliminate the rejection of claims that were either directly or indirectly approved, initially.  Sample: “MCO reserves the right to perform utilization review [prospective, retrospective and/or concurrent] and to adjust or deny payments for medically inappropriate services.”  
  • Define “Clean” and “Dirty Claims” — Eliminate the rejection of standard medical claim formats like CMS-1450, CMS-1500 or UB-92 for non-material reasons. Make payment of appropriate clean claims within some specific time period, like 30 days, in order to enhance free cash flows.
  • Reject Silent or Faux HMO or PPs, etc — Eliminate leased medical networks or affiliates and reject further payment discounts to larger subscriber cohorts than originally anticipated.
  • Include Terms for Health Information Technology — Eliminate the economic risk of leading edge electronic advancements like EMRs, PHRs, CPOEs, and so on.  
  • Establish ability to recover payments after contract termination — Eliminate financial carry forward for an excessive period of time.
  • Preserve Payment Ability — Provide medical services if requested by patients, who are then billed directly.
  • Minimize Differentials — Establish a standardized rate structure [fee schedule] for all plans and then grant discounts for administrative or other efficiencies; rather than have different schedules for each individual plan.

Certified Medical Planner

Conclusion

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On Delta Dental and the National Association of Dental Plans

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ADA News Tries Sarcasm

[By D. Kellus Pruitt DDS]

For fear of retaliation, ADA officials are reluctant to admit that Delta Dental and other members of the National Association of Dental Plans (NADP) have traditionally used the FTC as a tool to intimidate our professional organization. This means that for decades, the federal government has prevented the ADA from adequately representing the interests of dentist members. Something interesting happened in the ADA just days ago that is related to this tyranny. I assume frustration in the ADA’s unfair struggle against both Delta Dental and the FTC caused the editor of the ADA News to recently permit sarcasm for the first time in history – perhaps to attract attention to Delta’s policies?

A Humorous Article 

On August 9, ADA reporter Kelly Soderlund was given the green light to post an uncharacteristic, tongue-in-cheek introduction to her article, “Decision supports Massachusetts Dental Society insurance challenge.” http://www.ada.org/news/4558.aspx She sold it: “For nearly 40 years, Massachusetts dentists have had to abide by a regulatory order that allowed Delta Dental Plan of Massachusetts to receive an additional 5 percent discount off reimbursement fees in addition to other plan discounts.” Soderlund continues, “More than a decade ago, the Massachusetts Dental Society tried to get the order lifted but was unsuccessful. But now, after a reinstated five-year battle, the New England dentists can claim victory.”

OK. I lied.

In spite of her unintentionally humorous description of the Massachusetts Dental Society’s ineffectiveness, Soderlund was actually not sarcastic. That’s right. The ADA indeed hails this (very qualified) success as a long-fought glorious victory for dentists in Massachusetts where 95% of them are Delta preferred providers. That can’t be good for the health of Massachusetts dental patients. Managed care dentistry is dentistry by the lowest bidders with no quality control, and patients notice. Some stop going to the dentist, causing Delta Dental to reap even more profit. That is why it is not in Delta’s interest to satisfy their clients, and the employers who purchase Delta’s plans are clueless. This makes Delta Dental unaccountable to anyone.

The Delta Business Model 

Delta’s business model helps make the company one of the most unfair discount dentistry brokers in the nation, in my opinion. If you want proof, go to doctoroogle.com and visit any major city.

http://www.doctoroogle.com/dentist_ratings.cfm/pageID/2 Then compare dental patients’ ratings of Delta’s preferred providers to fee-for-service dentists’. In the numerous studies I’ve performed, Delta’s dentists’ average satisfaction level as determined by their patients is consistently inferior to fee-for-service dentists. (See Managed Care Report Card from November 10, 2008).

http://community.pennwelldentalgroup.com/forum/topics/transparency-and-managed-care?commentId=2013420%3AComment%3A19577

Delta Accountability? 

As you can see, since the FTC inhibits the ADA from honestly telling our story, dental care principals desperately need the ADA to open our Facebook so Delta can be held accountable to dentists and patients. Otherwise, Delta will never assume responsibility for the dental homes its preferred provider lists break apart – more often than not, sending their clients to less satisfying offices. What’s more, even Delta officials admit that “changing dentists causes fillings.” (See “Managed Care or Dental Homes – You can’t have both,” September 30, 2008)

http://community.pennwelldentalgroup.com/forum/topics/2013420:Topic:14014

FTC Fear 

If dentists and patients are not permitted to tell our story ourselves through the nationally recognized American Dental Association, we will always be 40 years behind Delta Dental and 5% short of what they owe us. Even though ADA leaders will forever be handicapped by fear of the FTC, individual Americans have nothing to fear. The failure of the Massachusetts Dental Association shows us that an ineffective ADA is worse than no ADA at all because a victory after 40 years is defeat.

MDA Victory 

One can read from Soderlund’s words that the Massachusetts Dental Association’s “victory” didn’t even slow Delta down. She writes “Delta Dental of Massachusetts has informed the ADA that the new reimbursement methodology will include the development of regional fee schedules. Information on exactly how those regional fee schedules will be developed and how that will affect dentists’ reimbursement has not yet been made available.” Whatever methodology Delta’s actuaries come up with, you can be sure it will be biased against their clients’ interests and will more than make up for the 5% of principals’ money that they conceded after 40 years. We simply must face the fact that the ADA isn’t helping. Soderlund continues: “The company also announced a new voluntary program to compensate dentists for successfully managing the care of higher risk patients. Delta Dental has not yet explained how that compensation would take effect.”

Assessment

Do you trust a Delta Dental consultant – who works on commission – to decide what is best for your patient? Or are you ready to demand that the ADA open our Facebook so we can all tell Delta Dental what we think of their unfair practices on an individual basis guaranteed by the First Amendment? Our patients depend on us to protect them from harm caused by greedy stakeholders. As Soderlund describes it, we’re losing, but not without humor.

Conclusion

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About Healthcare for A Smarter Planet.Com

IBM’s Future Vision

By Staff Reporters

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Building A Smarter Planet is a blog intended to provide readers with a place to talk about the issues raised within its content space. The goal is for readers to feel compelled to share some of the things they see, read and hear with friends, family and peers. 

The Editor

The Smarter Planet blog is edited by James Mathewson. Click here for a full list of authors and their contributions. There are more than 40 topic channels from analytics to technology.

HealthCare Channel

The blog is not going to deliver final answers to the issues raised, but may serve as a starting point for conversations about how to make our planet smarter.

http://asmarterplanet.com/blog/category/smarter-healthcare

Assessment

Primary Care Sample: http://asmarterplanet.com/blog/2010/05/reinventing-primary-care-your-family-doc-may-never-look-the-same-again.html

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Give em’ a click and tell us what you think. 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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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Become a Columnist for the ME-P

Seeking ME-P “Thought-Leaders”

By Ann Miller RN, MHA

[Executive-Director]

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As our band of loyal ME-P followers grows rapidly each day, so too does our search for quality healthcare business, economics and financial planning practitioners and journalists who target the medical arena and financial advisory space with their cognitive knowledge and new-wave contemporary articles [posts].

Protean Skills

If you think you have the timeless wit of Shakespeare, combined with the medical business know-how of Dr. Gregory House or the financial advisory acumen of Louis Richard “Lou” Rukeyser; you could be the writer for us.

Contact: MarcinkoAdvisors@msn.com

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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On Professor Kenneth Arrow PhD

The “Father” of Health Economics

By Dr. David Edward Marcinko MBA, CMP™

[Editor-in-Chief]

Professor Kenneth Arrow is a Nobel laureate who explored the characteristics of a perfectly competitive marketplace for an ordinary commodity – and how the healthcare industry deviated from those characteristics – and what aspects of health care might explain these deviations.

But, in as much as he did all this in the 1960’s, he is known today as the “father” of health [not health care] economics. 

LINK: https://www.nobelprize.org/prizes/economic-sciences/1972/arrow/facts/

Required ME-P Reading

In fact, his 1963 paper launched health economics as a unique discipline and is as close to required reading as can exist for followers of the ME-P and our related websites and educational consulting firms [sidebar].

Assessment

Arrow Title: “Uncertainty and the Welfare Economics of Medical Care”

Link: Arrow

Commentary

Glossary: Dictionary of Health Economics and Finance

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The “Life Cycle Investment Hypothesis”

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Physicians Returning to Zero?

[By Somnath Basu PhD, MBA] 

How have your investments done over the last three years? If you were to ask doctors, or the myriads of people who are or even pose as professional financial advisors, they would generally say that it would depend on how well your portfolio was diversified. By this jargon, they would mean how your money (in what proportions) was invested among various asset classes such as stocks, bonds, commodities, cash etc. The more it was spread out around various asset classes, the safer they would have been.

To see how safe (or how risky) your portfolio was over the last few years, it’s useful to view how these asset classes themselves fared over this time period. That is what is shown in the next chart where the following asset class performances over the last few years are shown. The chart shows the performances of stocks (S&P 500 shown by the symbol ^GPSC, in red), bonds (symbol IEI, Barclay’s 3-7 Year Treasury Bond index etf, in light green), Commodities (DBC, Powershares etf, in dark green), Long dollar (UUP, Powershares long dollar etf, in orange; this fund allows speculating on the dollar going up against a basket of important currencies; whenever the world financial markets are in turmoil, this index generally goes up as investors around the world seek the “safe haven” status of the dollar.

Alternately, note that this index value will also typically rise when the domestic economy is in a sound condition and both domestic and international investors favor the U.S. financial markets) and the short dollar (UDN, the Powershares inverse of UUP). Note that the “Cash” asset class has been left out and returns on cash (or money market funds) have been close to zero the whole time.

There are a few startling observations from this period. The first part that arrests the eye is how commodities performed over this time period. If your portfolio was heavy in this sector, you had a heck of a ride these last three years. If you had a lot of stocks as well, heck, your ride just got wilder. As can also be seen from the picture, healthy doses of bonds and currencies would have made your ride that much smoother.

On the other hand, what is additionally startling to observe is that we all started this period close to zero returns in the beginning of 2007 (around March 2007) and in June 2010, we are all converging back to zero returns. No matter how you were diversified, you either took a smooth ride (well diversified portfolio) from a zero return environment to a zero return environment or a wilder ride. That is why diversification is so important. Another way to gauge your diversification benefit is to use a two-pronged system.

The first is what I refer to as the “monthly statement effect”. When your monthly financial statements come in, you first observe the current month’s ending balance, then the previous month’s ending balance and then have a great day, a lousy day or an uneventful day. Depending on how good or bad (how volatile the ride) the monthly effect is, it may last for much more than just a day, maybe days. The second piece is your age.

Life Cycle Investment Hypothesis

As you grow older, you ask yourself how wild a ride can you tolerate at this point in your life? Hopefully, as you age, this tolerance level should show significant declines. If it does, you are then joining a rational investment group practicing a “lifecycle-investment hypothesis” style. Finally, did anything do well during this time? Yes, and surprisingly from an asset class whose underlying asset is shaped too like a zero – mother earth and real estate. Having some real estate in your investment basket (another important diversification asset) would not only have smoothed your ride but would have made your financial life so much more pleasurable. Just take a look at this picture below (FRESX, an old Fidelity’s real estate index fund) which says it all.

Assessment

Even in the darkest days of falling real estate markets of 2008, this fund produced a positive return. Of course many other real estate indexes lost their bottoms; thus finding these stable indexes in all asset classes are well worth their salt. That is, if it is time for you to diversify.

Conclusion

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An Open Letter to the TDA Council on Ethics

And … Judicial Affairs

By Darrell K. Pruitt DDS

Dear Dr. Roy N. Burk – Chairman

In your email to me on Thursday, you informed me that you would call my office this week at your convenience to discuss the as yet to be defined complaints about my “unprofessional conduct” from unnamed origins – some of which are rumored to be as old as three years. Also in your reply that was days late, you confirmed my suspicion that you rarely check your email (even though you provided your address). That is why I asked the manager of the TDA Twitter account to send you the message not to call my office. I’ve given her another message today to tell you to check you email. You said you prefer to have a phone conversation with me. However, I naturally decline because of obvious reasons such as inconvenience, misinterpretations and limited exchange of information.

Foundation of our Nation

The foundation of our nation was defined in carefully chosen words written by Thomas Jefferson, Thomas Paine and others. You have to admit that writing is a much more meaningful and efficient way to resolve the TDA’s mistake than with a 5 minute phone conversation. In addition, by working out our misunderstanding in meaningful sentences that can be viewed by all, both of us are much less likely to say something we might regret if our conversation gets heated… which it will. After all, you threatened my reputation in my community, Dr. Roy Burk. And for that reason, I intend to hold you personally accountable in your community if Judicial Case No. 12-2010-3 is not dismissed. Fair is fair.

Let’s Talk 

Things said in anger help nobody, and can be completely avoided with the written word. In short, there is no reason for either our phone conversation or the meeting you have planned for me on September 18. We can all do something else on that Saturday rather than waste the morning in an Omni Fort Worth hotel room. That is, if you are more interested in resolution than punishment. So let’s negotiate this mistake quickly and quietly, but in a transparent manner, Dr. Burk. As Dr. David May said (but did not mean) when he took over as TDA President in 2007, “Let’s talk.”

TDA Censorship? 

The issue at hand is clearly TDA censorship for political reasons rather than “unprofessionalism.” Trust me when I tell you that nobody who is following us is fooled by the kangaroo court you propose. Considering the recent NLRB decision against the TDA for mistreating employees, the TDA is no longer considered an ethically run organization by many. That means your credibility is shot from the beginning. This week, Jan Jarvis, whom I’m sharing this email with, published “Fort Worth medical clinic spends $15,000 notifying patients of theft” in the Fort Worth Star-Telegram.”

http://www.star-telegram.com/2010/08/06/2389717/fort-worth-medical-clinic-spends.html#ixzz0wIaU5AQa

My Community 

This is my community. Some of my patients are (or rather were) also patients of the local allergy clinic where computers containing 25,000 patients’ PHI were stolen in a burglary. In the end, the data breach will cost the clinic hundreds of thousands of dollars in lost customers because of the bad publicity, in addition to possible HIPAA fines and perhaps a lawsuit from Texas Attorney General Gregg Abbott. Yet, the TDA has still failed to warn members of the liability of their computers. There is simply no excuse for the TDA’s neglect, and punishing me for revealing the truth will not help anyone, and it aggravates me. That said, please allow me to show you exactly how the TDA’s censorship is hurting dentists as well as endangering their patients in Texas – even as we speak: One year ago today, I posted the following article concerning the liabilities of data breaches on the TDA’s Facebook. It is one of many cautionary articles I contributed about data breaches, electronic dental records and HIPAA. However, the TDA as well as the ADA has ignored the exploding identity theft problem because of undisclosed allegiances to entities other than dentists and patients. The behavior of my professional organization is counter to the Hippocratic Oath and indefensible.

In October, an unnamed person in the TDA determined that TDA members should be prevented from reading the following information.

TDA Facebook, August 11, 2009

HITECH/HIPAA Breach notification

On August 18, American dentists will hear from HHS that HITECH-empowered HIPAA now requires that patients be notified if a breach includes their identifiers. Most will be surprised to learn that the notification requirement is nothing new. The law has been there for years. Besides the law, everyone has to admit that notifying those whose welfare is at risk is the only ethical thing to do, even if it bankrupts a practice. And that is the problem. Breach notification will bankrupt a dental practice. The law has been around for years. It simply never was enforced by either HHS or CMS because it would be so devastating to small medical and dental practices. I assume that the shoddy enforcement is why the ADA did not see a need to distribute discouraging information about the HIPAA requirement. For some reason, the ADA supported the adoption of HIPAA. Some day we’ll know why.  This is not the first time I’ve brought up the breach notification topic on a TDA publication. At the first of 2007, the TDA ventured into the blogosphere with “Ask a Colleague” Forum as part of the TDA’s Website. I began to take over the forum with a contribution posted on January 13, 2008 which I copied below. It is a snail-mail letter I received from President-elect Dr. John S. Findley, describing for the only time in ADA history, the ADA’s Data Breach protocol.

ADA Resources? 

As you can see from the hard work put into the letter, it took a considerable amount of ADA dues to produce this response for only one ADA member. Nevertheless, my question was not taken lightly because they probably assumed it would show up again. And, they were correct. Even though the leaders failed to share it with other ADA members, before it was forgotten, it was cc’d to

  • Dr. S. Jerry Long, trustee, Fifteenth District
  • Dr. James Bramson, executive director
  • Ms. Mary Logan, chief operative officer
  • Ms. Tamra Kempf, chief legal counsel
  • Ms. Mary Kay Linn, executive director, Texas Dental Association

Two and a half years later, Findley’s letter is current enough to be posted with only minor changes. For example, Dr. James Bramson and Ms. Mary Logan no longer work for the ADA.

One more note about Dr. Findley’s response to my question, I did not misrepresent myself in my email to him that I had a computer stolen. He knew from six months earlier when I first emailed him my question that it was a hypothetical question about an obscure topic that ADA leaders did not want to talk about.

Posted: 13 Jan 2008 10:05 AM on the TDA.org Forum

Data breach protocol announced

On January 8th, Dr. John S. Findley, President-elect of the American Dental Association, signed the letter below which defines a data breach, describes a dentist’s obligation under the law in Texas to notify patients involved and the penalty for failing to do so. This is the first time this information has been made available to dentists anywhere in the nation in the 12 years of the HIPAA rule. Dr. Findley and his team are to be congratulated for working through an arduous and unpopular task. It demanded courage.

Darrell

ADA

American Dental Association

http://www.ada.org

John S. Findley, D. D. S. President-Elect

January 8, 2008

Dr. Darrell Pruitt

6737 Brentwood Stair Rd., Ste. 220

Fort Worth, Texas 76112-3337

Dear Doctor Pruitt:

I received your email of December 26th and regret to learn of the loss of your computer. I did inquire as to appropriate procedures upon the occurrence of such an event and am copying below an excerpt from the response of out legal department. “It appears that under these circumstances the dentist may wish to notify affected patients that their information may have been compromised so that they can take necessary steps to protect themselves (i.e. cancel credit cards, notify social security about potentially stolen social security numbers…). (This communication is informational and personal consultation between the dentist and his or her attorney is recommended.) They should also check their state breach notification laws to determine if there is anything else that is required. In this case, the Texas Identity Theft Enforcement and Protection Act (Texas Code Sec. 48 et seq) (the “Act”) covers data breach notification. The Act protects both “Personal Identifying Information,” which is defined as any information that alone, or in conjunction with other information, can be used to identify an individual and an individual’s:

A) name, social security number, date of birth, or government-issued identification number;

B) mother’s maiden name;

C) unique biometric data, including the individual’s fingerprint, voice print, and retina or iris image;

D) unique electronic identification number, address, or routing code; and

E) telecommunication access device.

The Act also protects “Sensitive Personal Information,” which is defined as an individual’s first name or first initial and last name in combination with any one or more of the following items, if the name and the items are not encrypted:

i) social security number;

ii) driver’s license number or government-issued identification number; or

iii) account number or credit or debit card number in combination with any required security code, access code, or password that would permit access to an individual’s financial account.

Sec. 48.102 of the Act creates a duty for businesses to protect and safeguard information through creating and implementing procedures for such purpose. If there is a breach in the security of information, the Act requires a business that maintains ‘Sensitive Personal Information” to notify the owners of such information as soon as possible that a breach has occurred. The Act specifies one of the following modes of notice to be provided:

1) written notice;

2) electronic notice, if the notice is provided in accordance with 15 U.S.C. Section 7001 (which basically requires that a consumer must consent to receiving such notice in electronic form); or

3) notice as provided by Subsection (f) (see below).

(f) If the person or business demonstrates that the cost of providing notice would exceed $250,000, the number of affected persons exceeds 500,000, or the person does not have sufficient contact information, the notice may be given by:

1) electronic mail, if the person has an electronic mail address for the affected persons;

2) conspicuous posting of the notice on the person’s website; or

3) notice published in or broadcast on major statewide media.

Violations

“A person who violates the Act is liable to the state for a civil penalty of at least $2,000 but not more than $50,000 for each violation.” The information pertaining to your question was found in the Identity Theft Enforcement and Protection Act, Chapter 48 of the Business and Commerce Act of Texas.

We hope this information helps.

Sincerely,

John S. Findley, D.D.S.

President-elect

JSF:cac

cc: Dr. S. Jerry Long, trustee, Fifteenth District

  • Dr. James Bramson, executive director
  • Ms. Mary Logan, chief operative officer
  • Ms. Tamra Kempf, chief legal counsel
  • Ms. Mary Kay Linn, executive director, Texas Dental Association

Assessment

Dr. Findley’s letter to me was also deleted from the now closed TDA.org Forum.  The TDA’s actions are a lot like burning books, Dr. Roy Burk.

Conclusion

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About TheHeart.org

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TheHeart.Org

By Professionals for Professionals

Not one for flash and tinsel, theheart.org is thick with information on the front page. The interface seems based on that used by the New York Times, complete with a “most popular” widget that displays the most visited articles on the site.

Owned by WebMD, which is in turn owned by News Corporation, the site is bereft of fluff and advertisements, instead presenting columns and columns of relevant content. The news and information is as professionally presented as one would expect from an arm of such a worldwide conglomerate, and is aimed squarely at knowledgeable experts.

Membership

Membership is expected, the free registration option is prominently displayed when one first visits the site, and most of its features and content can only be accessed once this is done. Until then, only headlines and tidbits are displayed.

Registration comes in two types: limited access for 30 days, which gives access to their news articles and requires only an email address; and full access, which requires slightly more information and opens up the entire site, including the search and comment functions. Given the quality of the content and the fact that registration is free, it is well worth it for anyone interested.

Focus

The focus of theheart.org is the various diseases and disorders of the heart, and also how to prevent them. By design, the site exchanges breadth for depth–aside from a single section called “Brain/Kidney/Peripheral,” there is no information present that is unrelated to the topic of heart disease. That topic, however, is covered in careful detail. The site would be of little use to a student of human physiology, as the basic anatomy and functioning of the heart is barely mentioned, let alone outlined. It is similarly not designed to lure in the general public, or even patients of heart disease. With titles such as “Antiplatelets in PCI: Doses and Choices” and “The Atrial Septal Pouch–A New Source of Thrombus?”, it is clearly meant to be perused by cardiologists and other healthcare professionals.

Cardiology Excellence

In its chosen area of discussion, however, theheart.org excels. There is nothing sloppy or amateur about this site or the quality of its articles. In fact, it is so professional as to be exclusive, as even the user comments on its posts are often in-depth discussions of medical considerations that a layman would be hard-pressed to decipher.

A doctor, however, could find a wealth of information, news and analysis on the subject of heart functioning and disorders, keeping up-to-date on new discoveries, treatments, medications such as cangrelor and: http://www.theheart.org/article/1024935.do dabigatran, as well as what is happening within the cardiologist community.

Assessment

In summary, there is no shortage of content on the topic of the heart: news articles, blog posts, editorials, and even video and radio programs. A professional in the field of heart health should not fail to become a regular visitor to theheart.org, while a more casual reader would probably find their needs best met elsewhere.

Conclusion

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How Expensive are Healthcare Data Breaches?

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Estimating Financial Damage Often Difficult 

By D. Kellus Pruitt DDS

Dom Nicastro just posted an article on HealthLeaders Media titled “HITRUST: HIPAA Breaches Near $1 Billion.”

http://www.healthleadersmedia.com/content/TEC-255015/HITRUST-HIPAA-Breaches-Near-1-Billion##

“Covered entities and business associates reporting breaches of unsecured personal health information (PHI) affecting 500 or more individuals to the Office for Civil Rights (OCR) together could spend nearly $1 billion because of those breaches.”  Nicastro continues:

“HITRUST used the 2009 Ponemon Institute study that found the average cost for a compromised record to be approximately $144 in indirect costs and $60 of direct costs, for a total cost of $204.”

Fort Worth Star-Telegram

Just days ago, Jan Jarvis described a data breach in the Fort Worth Star-Telegram titled “Fort Worth medical clinic spends $15,000 notifying patients of theft.”

http://www.star-telegram.com/2010/08/06/2389717/fort-worth-medical-clinic-spends.html#ixzz0wIaU5AQa

Jarvis writes,

“In June, employees at a Fort Worth allergy clinic discovered that the office door had been kicked in and four computers containing patients’ personal information including Social Security numbers and birth dates had been stolen.”

Jarvis reports that 25,000 records were involved, and it only cost $15,000 to notify them. That’s only 60 cents per record instead of 60 dollars each as estimated by the Ponemon Institute. Instead of it costing the clinic $1.5 million for direct costs, it only cost them $15,000. That’s a savings of 99%.

Assessment

So what’s the deal? Is the Ponemon Institute that far off in their estimates?

Conclusion

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Schumer Proposes Permanent IRA Rollover

Provision on the Currency Exchange Rate Oversight Reform Act

By Children’s Home Society of Florida Foundation

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Senator Charles Schumer and 15 co-sponsors of the Currency Exchange Rate Oversight Reform Act of 2010 included provisions that would make four charitable deductions permanent. The bill is designed to modify the laws on currency transactions but it provided a platform to add in the four charitable provisions.

Assessment

The senators propose making permanent the IRA Charitable Rollover, the deduction for gifts of food inventory, the deduction for gifts of book inventory to public schools and the enhanced deduction for gifts of computers for educational purposes.

Editor’s Note: While there may not be prompt action on this bill, it is very encouraging that these 16 senators believe it is important to extend these four charitable provisions permanently. The IRA Charitable Rollover was the first of the four in the bill. That suggests that there is strong support in the Senate for permanent status for the rollover. And, as of the date of this publication, the House has passed the tax extenders including the Charitable IRA Rollover but the Senate has been unable to come to agreement on a bill. It is possible that the Senate may act in September to attach the 40 tax extenders to legislation. While that is the earliest possible date for passage of the IRA Charitable Rollover for 2010, it is still probable that the rollover will pass with an effective date of January 1, 2010.

Conclusion

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On Hospital Revenue Cycle Opportunities

Do They Still Exist in Today’s Healthcare Milieu?

Staff Reporters

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For a decade now, healthcare providers have been challenged to deliver quality patient care in an environment of shrinking profit margins. Total margins and operating margins have followed the same trend. Analysts report that an operating margin of less than 5% leaves an organization without the resources to invest in new technology and capital projects, and will eventually force the facility to close or merge. With rising labor costs, a poorly performing economy, and an aging population, these numbers are not likely to improve soon.

Bar code use in hospitals may save lives

Industry Status

Although the industry has seen an overall improvement in accounts receivable days and bad debt for an extended period, it appears that many facilities have reached their peak in addressing these areas, particularly given current demands to reduce staff and other operational costs. So, where is the next major opportunity for reducing costs or maximizing revenue opportunities?

The Experts Opine

According to private consultants Ross J. Fidler and Karen White PhD, revenue cycle improvement still seems to be a promising and popular area today. And, PriceWaterhouseCoopers recently listed five areas to reinvent the revenue cycle:

1) organizational / accountability;

2) process/workflow improvements;

3) information systems/management reporting enhancements;

4) quality assurance mechanisms; and

5) department and staff productivity measurements.

Assessment

A thorough re-examination of the revenue cycle process will typically uncover cost drains and revenue opportunities.

Conclusion

To succeed in enhancing hospital revenue streams, for example, we commence with patient access through HIM to PFS, by applying optimal organizational structures, benchmarking, and technology adoption. Only then will outcomes trend toward higher performing revenue cycles.

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About the Managed Care Digest Series

Creating Custom Data Reports for Chronic Diseases

By Staff Reporters

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The sanofi-aventis Managed Care Digest Series online resource for Chronic Disease Information is part of their continuing commitment to provide the latest most essential information on the evolution of health care. The Series, available online or in print, provides key benchmarking data that can help assess value, control costs, and develop business strategies.

Updates

Updated information is available. Just keep looking for Digest Bytes from the team at the Managed Care Digest Series

Assessment

For step-by-step instructions please review their Articulate Presenter.

Conclusion

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Seeking a Talented Intern for the ME-P

Good References – Exciting Work – No Pay

By Ann Miller RN, MHA

[Executive-Director]

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The ME-P is seeking a talented intern to assist with editorial and web production tasks as our site undergoes a major expansion. The non-paid, but highly visible position is ideal for a graduate, healthcare policy or medical student with an interest in journalism, public policy, and/or the business of health care.  You can work out of your own home. A small monetary bonus may be available for excellent work. References in return for internship; as well!

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Needed Skills

Editorial candidates should have an in depth familiarity with at least one area of the healthcare, financial advisory or technical industries and strong writing and editing skills.  Web production candidates should know their way around content management systems like WordPress.  Basic photoshop / fireworks / gimp or comparable image editing software required. 

Contact Us

Send us an email telling us a little bit about yourself and detailing the reasons you’re interested in the position. If you’re a candidate for the editorial role send us a few clips to give us a feel for your writing style.

Respond by email to Ann Miller RN, MHA. No phone calls please.

MarcinkoAdvisors@msn.com

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Medical Endowment Fund Contingency Planning

Understanding Stock Market Volatility?

Source: www.HealthcareFinancials.com

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According to Wayne Firebaugh CPA, CFP®, CMP™ the many quantitative methods of stock, bond, derivatives, alternative assets and mutual fund investing would have suggested that the October 1987 crash was impossible; yet the flash-crash of 2008 still occurred.

The Improbable Happens

For example, Mark Rubenstein, a professor at University of California at Berkeley, noted that if annualized stock market volatility was assumed to be approximately 20% “(the historical average since 1928), the probability that the stock market could fall 29% in a single day is 10–160. So improbable is such an event that it would not be anticipated to occur even if the stock market were to last for 20 billion years. Indeed, such an event should not occur even if the stock market were to enjoy a rebirth for 20 billion years in each of 20 billion big bangs.”

Statistically Impossible

Although it was statistically impossible for it to happen, it did happen in 1987 and again 2008. The nature of crises is such that many will be unanticipated events with unexpected precipitators. As such, a medical endowment or physician’s portfolio contingency plan cannot address every conceivable event. What a contingency plan should address is the process for confronting these events. Most importantly, the plan should assign responsibility for actions and contain provisions to limit the ability of panic to impair long-term decisions.

Donor Trust is Core

Healthcare and all endowments have at their core donor trust. As such, it is important for an endowment’s contingency plan to include provisions for communicating promptly and forthrightly with the public. One only has to look at the Red Cross’ performance during the aftermath of the 9/11 tragedy to receive a lesson on an inappropriate approach. After donating more than $550 million to the Liberty Fund, donors learned that less than $175 million had been spent on direct aid for victims and that the Red Cross was allocating a large portion of the funds to other programs. After public outcry and congressional hearings, the Red Cross announced that all donations would be spent on direct victim relief.

Unfortunately, Dr. Bernadine Healy, the president of the Red Cross, resigned at least in part because of this controversy. These alleged violations of public confidence can have long-term impacts on an endowment’s donor base. Consider also the United Way whose national leader, William V. Aramony, was accused of fraud, embezzlement, and other charges in 1992. Even a decade later, inflation-adjusted contributions are lower than they were before the scandal even though charitable giving in general has doubled.

Assessment

The very nature of crises is such that pre-determined contingency plans generally allow more rapid and appropriate reaction. For an endowment, a well-considered contingency plan will include both an action (or standstill) plan and a public relations plan.

Note: Red Cross defends handling of September 11 donations on November 6, 2001: see: www.cnn.com

Conclusion

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Tim Geithner and Harry Reid Support Top Tax Rate Increases

Obama Plans to Increase Top Two Tax Brackets

By Children’s Home Society of Florida Foundation

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On a national media program on July 25, 2010, Treasury Secretary Timothy Geithner emphasized that the Obama administration plans to increase the tax rates for the top two brackets. When asked whether the 2001/2003 tax reductions should be extended for all brackets, Secretary Geithner stated, “I don’t believe they should and I don’t believe they will.”

New Top Rates

In the view of Secretary Geithner, the increase of the top two rates to 36% and 39.6% affects only “2% to 3% of Americans, the highest-earning Americans in the country.” He suggested that the increased rates on top earners will not have a “negative effect on growth.”

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Steny Speaks

House Majority Leader Steny Hoyer (D-MD) agreed with Secretary Geithner. He advocated extending the tax cuts for middle-income taxpayers and remarked that their taxes are “lower than they were in any single year” when compared to prior administrations. However, in his view, the increase in the top two brackets is necessary to keep America from going “deeper into debt.”

So Does Orrin

Sen. Orrin Hatch (R-UT) is a member of the Senate Finance Committee. He spoke on the floor of the Senate and expressed frustration over the decision by Majority Leader Harry Reid (D-NV) to refuse to allow a vote on the Hatch proposal to extend all of the tax cuts. Sen. Hatch offered a motion to commit the pending small business bill back to the Finance Committee in order to amend it and extend all of the tax cuts.

Sen. Hatch indicated that this “largest tax increase in history” will dramatically impact small businesses. These businesses, with between 20 to 500 workers, are owned by individuals who face substantial tax increases.

In the view of Sen. Hatch, the top bracket tax increases will reduce the ability of small business to perform its normal function during an economic recovery of generating 70% of new jobs. Sen. Hatch noted that new jobs typically have three components.

Assessment

First, there must be entrepreneurs who are willing to take risks. Second, there must be adequate access to capital. He indicated that the banks and large companies currently hold record amounts of cash reserves, so there certainly is cash available. Third, there must be “reasonable economic certainly” so that the businesses are willing to expand. With the prospect of higher taxes and greater regulations, Sen. Hatch indicates that there is a high level of uncertainly that is directly reducing job growth in America.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. How will this turn of events impact medical professionals? 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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Understanding the 2010 Estate Tax Basis Problems

AICPA Tax Basis Issues

By Children’s Home Society of Florida Foundation

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At a July 27, 2010 conference sponsored by the American Institute of Certified Public Accountants, Treasury Representative Catherine Hughes discussed the basis issues that are arising concerning 2010 decedents.

2010 Estate Tax Repeal

While the estate tax is repealed during 2010, under Internal Revenue Code Sec. 1022 there are new and complex rules on basis adjustments. For large estates, a majority of the assets will be transferred with a “flow through” of the basis. That is, the heirs will be able to use the basis of the decedent in any future sales for the purpose of reporting capital gain. Because many decedents have few or no records of the basis, it is quite possible that these heirs will pay capital gains tax on the full value of future sales.

Allowances for Basis “Step-Up”

However, there are allowances for a basis “step-up” of $1.3 million. In addition, for a surviving spouse, the basis step-up can be $3 million. The step-up in basis cannot be greater than the fair market value of the applicable property. Determining how to allocate the adjusted basis step-up in an estate has caused great concern among estate planning attorneys and CPAs. Treasurer Representative Hughes stated, “I anticipate there will be a lot of mistakes where there isn’t an affirmative allocation” of basis. Treasury is studying the situation and may issue guidance with recommended default allocation rules.

Assessment

While Congress continues to debate estate tax law and, therefore, has not made any decision on a potential retroactive estate tax, the nonpartisan Tax Policy Center this week released an estimate of the potential number of 2011 taxable estates. If a $1 million exemption is applicable in 2011, there will be an estimated 43,500 estates subject to tax. If the 2009 exemption amount of $3.5 million per decedent is applicable next year, the number of taxable estates is reduced to $650,000.

Editor’s Note: The discussion in Washington on the practical aspects of allocating the basis step-up now suggests that there may not be a mandatory retroactive estate tax law. With the pending election, it now seems very likely that Congress will not act on the estate tax before December. The Senate continues to have great difficulty developing a plan acceptable to 60 Senators and to the House of Representatives. However, Senators now recognize that a $1 million exemption and tax on 43,500 estates will impact a large number of middle-class children and other beneficiaries. Therefore, it seems quite likely that a compromise should be passed in December. However, as the AICPA basis adjustment discussion suggests, this compromise is now less likely to mandate an extension of the 2009 exemption for 2010. As a result, attorneys and CPAs will need to address the very complex and uncertain basis adjustment problems for 2010 estates.

Conclusion

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About the Ideal Medical Practices Website

What it is – How it Works

By Staff Reporters

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The authors of this website believe that effective, comprehensive primary care is the foundation of high performing health systems. And, so do we!

[picapp align=”none” wrap=”false” link=”term=physicians&iid=9016855″ src=”http://view.picapp.com/pictures.photo/image/9016855/shot-infant-during/shot-infant-during.jpg?size=500&imageId=9016855″ width=”380″ height=”579″ /]

A Site Support Primary Care

Therefore, this multi-contributor blog addresses effective, comprehensive primary care and how we might create a policy environment that truly supports effective, comprehensive primary care.

Assessment

http://idealmedicalpractices.typepad.com/ideal_medical_practices/

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Give em’ a click, and tell us what you think? 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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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

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More on Modern Investment Portfolio Rebalancing

Understanding Risks and Benefits

By Dr. David Edward Marcinko MBA CMP™

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According to Wayne Firebaugh CPA, CFP®, CMP™ rebalancing a private physician’s portfolio or medical endowment contradicts conventional market “wisdom” that you allow your winners to run. Perhaps in speculation this is true, but for investing such a view can be deadly.

One Healthcare Case Example

Take, for example, the Cleveland Clinic’s experience with its endowment. In 1999, the Cleveland Clinic Foundation reported $1.2 billion in investments. Unfortunately, by the end of 2002, the Foundation’s investments were valued at $650 million, a loss of approximately 50%. Its losses reflected its substantial allocation into technology stocks during the technology boom of the late 1990s. As a result of these investment losses, the Clinic had to postpone a planned $300 million cardiology center and certain debt financing had to be restructured. In addition, both Moody’s and Standard & Poor lowered their ratings on the Clinic.

Definition

Since rebalancing by definition requires an endowment to take money from more successful investment classes and invest it into under-performing classes, it will always cause some measure of anguish. There will always be some reason why rebalancing should not take place. In 1987, the unprecedented single day decline in the market could have been presented as an argument against moving into equities. In 1998, the seemingly endless number of world financial crises could have provided a useful excuse to avoid rebalancing into emerging markets. So too; the flash crash of 2008!

Assessment

Current bond prices could provide similar reasons for not rebalancing into an appropriate fixed income position. However, since the whole reason for asset allocation policy decisions is to mitigate the negative impact that irrational behavior can have on a portfolio or an endowment’s investment performance, they should include a process for periodic rebalancing of its assets.

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.

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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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Tell the SEC What You Think Survey

Survey and Commentary Period

By Staff Reporters

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The Securities and Exchange Commission just posted a form for people to comment as part of its study of obligations and standards that should apply to broker-dealers and registered investment advisors.

http://www.sec.gov/cgi-bin/ruling-comments?ruling=4-606&rule_path=/comments/4-606&file_num=4-606&action=Show_Form&title=Study%20Regarding%20Obligations%20of%20Brokers%2C%20Dealers%2C%20and%20Investment%20Advisers

Assessment

As if it matters after the lobbyists enter the room; or does it?

 [picapp align=”none” wrap=”false” link=”term=financial+reform&iid=9397552″ src=”http://view4.picapp.com/pictures.photo/image/9397552/president-obama-signs/president-obama-signs.jpg?size=500&imageId=9397552″ width=”380″ height=”467″ /]

Conclusion

And so, 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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Our Other Print Books and Related Information Sources:

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

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

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

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Product DetailsProduct DetailsProduct Details       

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About Tele-Health and Medicare

Medicare TeleHealth Enhancement Act of 2009

By Staff Reporters

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According to Richard S. Bakalar, MD, past president of the American Telemedicine Association, many physicians think that telehealth is a wave of the future for Medicare, but so far the program has been slow to embrace technology. Congressional legislation in 1997 and 2000 largely established the telehealth component of Medicare, yet in 2006 the program spent only $2 million on medical services conducted electronically, out of more than $400 billion in total spending.

The Physical Presence Blockade

Remote patient visits, consultations and other care can generate payment only if they fall under a handful of Medicare payment codes approved for telehealth applications, while the patient must be physically present with a health professional at the originating call site located outside of a metropolitan area. Some types of facilities are not approved to get paid for these services, and Medicare will only pay for home telehealth devices and care as part of an approved pilot project.

Assessment

A major factor in Medicare’s cautious stance is concern that a large expansion would strain the system’s finances by opening the doors for physicians and others to bill for a whole host of costly and potentially unnecessary telehealth services. For further discussion, see www.atmeda.org.

Current Updates for 2010

Link: Medicare Telehealth

Conclusion

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

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

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Events Planner: August 2010

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Events-Planner: AUGUST 2010

Staff Writers

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

Welcome to this issue of the Medical Executive-Post and our Events-Planner. It contains the latest information on conferences, news, and relevant resources in healthcare finance, economics, research and development, business management, pharmaceutical pricing, and physician/entity reimbursement!  Watch for a new Events-Planner each month.

First, a little about us! The Medical Executive-Post is still a relative newcomer. But today, we have almost 175,000 visitors and readers each month from all over the country, in addition to our growing subscriber base. We have been a successful collaborative effort, thanks to your contributions.  As a result, we are adding new resources daily. And, we hope the website continues to provide the best place to go for journals, books, conferences, educational resources, tools, and other things you need to establish the value your healthcare consulting and financial advisory intervention.

So, enjoy the Medical Executive-Post and this monthly Events-Planner with our compliments. 

A Look Ahead this Month 

Now, the important dates:

August 1-4: AHRMM Conference, Denver, CO

August 2-4: Healthcare Quality Congress Meeting, Boston, MA 

August 5-6: Medicare Medical Management Meeting, Coronado, CA

August 7-8: Healthcare Quality Congress Meeting, Boston, MA

Please send in your meetings and dates for listing in the next issue of our Events-Planner.

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 

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