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    As a former Dean and appointed University Professor and Endowed Department Chair, Dr. David Edward Marcinko MBA was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

    Professor David Marcinko was a board certified surgical fellow, hospital medical staff President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug, DME and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published academic text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Later, Dr. Marcinko was a vital and recruited BOD  member of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as mentor and coach for Deloitte-Touche and other start-up firms in Silicon Valley, CA.

    As a state licensed life, P&C and health insurance agent; and dual SEC registered investment advisor and representative, Marcinko was Founding Dean of the fiduciary and niche focused CERTIFIED MEDICAL PLANNER® chartered professional designation education program; as well as Chief Editor of the three print format HEALTH DICTIONARY SERIES® and online Wiki Project.

    Dr. David E. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA, FPA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

    Marcinko is “ex-officio” and R&D Scholar-on-Sabbatical for iMBA, Inc. who was recently appointed to the MedBlob® [military encrypted medical data warehouse and health information exchange] Advisory Board.

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Building a Modern Electronic Heath Data Warehouse

A Brief “How-to” Essay with Commentary

By Staff Reporters

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According to a Standish Group survey, more than 70% of Health Information Technology applications go over budget and time and medical data warehouse applications are no exception. However, if you adopt a process, an oriented development approach and implement a rigorous project management discipline, your increase the likelihood that your medical data warehouse will be effective.

Key Steps

This is a simplified list, but reveals some of the key steps needed to build a medical data warehouse.

  • Extracting data from the data sources – can be very challenging as data might reside on different systems and this forces you to prioritize what data you want and what role that plays in your patient relations management decision-making. This step involves moving data from the source (for example to your Web site) to a central location (e.g. your marketing data mart).
  • Transforming the data – a key activity after data extraction.  This is critical to have cleaner data and involves modification, enhancement or elimination of data based on the job instructions.
  • Loading the transformed data into a dimensional database.
  • Building reports for decision makers (e.g. this could be a report for your marketing management outlining the analysis of your latest patient acquisition campaign).

Assessment

The first 3 steps – Effective data extract, transform and load (ETL) processes represent the number one success factor for your medical data warehouse project and can absorb up to 70 percent of the time spent on a typical warehousing project.

Conclusion

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Do SPDRs Yield Tax Advantages?

How about Trading Efficiency?

By Dr. David Edward Marcinko; MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

The bull market generated large mutual fund capital gains distributions at the end of 2007; and maybe again for 2011. Accordingly, tax efficient mutual funds are getting more attention as a result. Also growing in popularity is Standard & Poor’s Depository Receipts (SPDRs), sponsored by and traded on the American Stock Exchange (AMEX). SPDRs are trusts that own stock positions that match a particular index, like the S&P 500. Investors then buy shares of the trust.

The Facts about SPDRs

Investors sell their shares of SPDRs on the Exchange rather than redeeming shares through the mutual fund. The trust does not sell stock to make cash redemptions. This avoids most of the capital gain distributions that annoy long-term investors. As a prospectus from the American Stock Exchange notes:

In-Kind Redemptions

While no unequivocal statement can be made as to the net tax impact on a conventional mutual fund resulting from the purchases and sales of its portfolio stocks over a period of time, conventional funds that have accumulated substantial unrealized capital gains, if they experience net redemptions and do not have sufficient available cash, may be required to make taxable capital gains distributions that are generated by changes in such fund’s portfolio. In contrast, the ‘in kind’ redemption mechanism of SPDRs may make them more tax efficient investments under most circumstances than comparable conventional mutual fund shares.

Fund Trading and AMEX Insight

The AMEX prospectus not only provides a detailed look at the in-kind redemption mechanism of the SPDRs, which is important to their tax efficiency, it also offers analysis of the economics of intraday SPDRs fund trading. Unlike mutual funds, for which prices are determined at the end of each trading day, SPDRs can be bought or sold at anytime during the day at the spot price. SPDRs trade like a stock, so the account does not need futures approval and shares can be sold short or margined. The SPDRs shares track the futures closely.

Assessment

The reservation that physicians and all investors, as well as we financial advisors, have is simply “Are the SPDRs expensive to trade?” The AMEX prospectus does not answer that question in so many words, but it provides the data needed to make a cost calculation. In 1996, the bid/asked spread on the SPDRs was 1/16 or less more than 62% of the time and 1/8 or less about 95% of the time. Each investor can make his or her own commission assumptions, but the range on the S&P 500 exceeded 0.5% more than 75% of the time and was greater than 1% approximately 25% of the time. With such a narrow bid/asked spread relative to the average move in the shares and a reasonable level of commissions, it is often easy to get in or out of the fund at a price appreciably better than closing NAV.

Assessment

What are these spreads today? Copies of the prospectus and other information on SPDRs are available by calling 1-800 THE AMEX

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Do you use SPDRs; why or why not? 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 and http://www.springerpub.com/Search/marcinko

Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

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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About the CDT Health Privacy Project

Survey of Concerns about Health 2.0 and HIPAA

By Staff Reporters 

The Center for Democracy and Technology is a non-profit public interest organization working to keep the Internet open, innovative, and free.

A Civil Liberties Group

As a civil liberties group with expertise in law, technology, and policy, CDT works to enhance free expression and privacy in communications technologies by finding practical and innovative solutions to public policy challenges while protecting civil liberties.

Assessment

The CDT is dedicated to building consensus among all parties interested in the future of the Internet and other new communications media. 

http://cdt.org/about

Health 2.0 / HIPAA Survey

Submit your questions on Health 2.0 / HIPAA here:

Link: http://cdt.org/blogs/cdt/submit-questions-health-20hipaa

Deven McGraw is Director of the Health Privacy Project for the CDT.

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.

Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

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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The Long and Short of Portfolio Construction

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Long-Short Portfolio Construction vs. Long-Only

[By Dr. David Edward Marcinko MBA CMP™]

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Long-Short is an active portfolio construction discipline that balances long positions in high expected return securities and short positions in low expected return securities of approximately equal value and market sensitivity. This type of portfolio is “neutralized” or immunized against changes in value of the underlying market and, therefore, has zero systematic (beta) risk. If the selected securities perform as expected, the long-short positions will provide a positive return, whether the market rises or falls.

Misconceptions

While long-short portfolios are often perceived and portrayed as much costlier and much riskier than long-only, it is inherently neither. Much of the incremental cost and risk is either largely dependent on the amount of leverage employed or controllable via optimization. Those costs and risks that are not controllable—financial intermediation costs of borrowing shares to short, the trading costs incurred to meet long-short balancing, margin requirements, uptick rules, and the risks of unlimited losses on short positions—do not invalidate the viability of long-short strategies.

Long-Short Advantages

Compared with long-only portfolios, long-short portfolios offer enhanced flexibility not only in the control of risk and pursuit of return, but also in asset allocation. Basic market-neutral portfolios achieve a return consisting of three components: (1) interest on funds held as a liquidity buffer, (2) interest on the short sale proceeds maintained with the broker, and (3) the return spread between the aggregate long and aggregate short positions in the portfolios.

Disadvantages

Share borrow-ability and uptick rules make short-selling more difficult and costly than going long. Also, it may be legally or contractually restricted for some investors, such as mutual funds. Inefficiencies may be concentrated in overpriced stocks and, accordingly, short sales of the most overpriced stocks may offer higher positive returns than long purchases of underpriced stocks.

Assessment

Long-only portfolios are confined to altering the weighting of securities within an index in order to realize an excess return. Long-short portfolios are not constrained by index weights and, because they can short securities, they can “underweight” a security by as much as investment insights and risk considerations dictate. Long-short portfolios can be enhanced by “equitizing” them using stock index futures.

Note: “The Long and Short on Long-Short” by Bruce I. Jacobs and Kenneth N. Levy, The Journal of Investing, Spring 1997, pp. 73–86, Institutional Investor, Inc.

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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Why We’re Publishing and Advertising at the ME-P

And, Where We Stand on Funding

By Ann Miller RN MHA

MarcinkoAdvisors@msn.com

[Executive-Director]

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Starting next month, the Medical Executive-Post will begin publishing advertising on its web site, and likely soon we’ll include it in our daily emails, special offerings and send-outs, etc.

Why?

We’re doing this for the usual reason: to help raise revenue that can fuel our operations, promoting what people in the corporate world call “sustainability.”

Philanthropically Driven

The ME-P, as you probably know, has been funded almost entirely by philanthropy. Much of that has come from our founding donors and the Institute of Medical Business Advisors, Inc. www.MedicalBusinessAdvisors.com 

More recently, some has come from people able to make small gifts. And, important support has also come from readers who have contributed what they can. In fact, you may support us right here.

Donation Link: www.e-junkie.com/ecom/gb.php?c=cart&i=641232&cl=109140&ejc=2

Assessment

We wish top remain stand-alone and independent. “Un-biased” and Un-bought” as we like to say around the water cooler.  Advertising will help us get there. But, if you’re interested in advertising directly, please let me know.

Advertise With Us

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 and http://www.springerpub.com/Search/marcinko

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Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

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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Sponsors Welcomed: And, credible sponsors and like-minded advertisers are always welcomed.

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Keep your Investing Options Open – Doctor

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Or – Hedge your Bets

By Dr. David Edward Marcinko MBA CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

As a physician executive or investor, if you don’t ordinarily deal in options or other financial derivatives, you may need to brush up on puts and calls, straddles, strangles (or combinations), forwards, futures, swaps, spreads, and non-equity options such as stock index options. Options and other financial derivatives can be used by astute physicians, financial advisors and investment managers not only as a tool to better manage the investment risks potentially affecting portfolio returns, but to craft truly value-added investment strategies customized to meet investors’ needs. The three main types of risk of equity securities (individual company, industry, and market) can be mitigated with options.

Individual Company Risk

Individual company risk can be addressed with equity options in that company’s stock. Industry risk can be reduced through the use of narrow-based index options, while market risk can be mitigated with broad-based index options. Sophisticated hedging and risk management strategies can be designed using both equity and stock index options.

Exotic Stock Options?

Some doctors feel that options have been generally thought of as too risky or exotic or requiring too much capital, resulting in a general lack of comfort. A decade ago, these opinions have no doubt been shaped by the collapse of Bearings and the resulting bitter litigation by Proctor & Gamble and Gibson Greetings against Bankers Trust. More recently it has been Enron, Tyco, WorldCom, Lehman Brothers, AIG, BA, Fannie, Freddie and all those involved in the “flash-crash” of 2008-09; etc.

Assessment

Generally, premiums paid in buying puts or calls are nondeductible capital expenditures and may produce a capital gain or loss depending upon whether the option is sold prior to exercise, the call expires unexercised, or, if the option is exercised, it is added to the basis of the stock (call) or deducted from it (put). Premiums received for writing puts or calls are not included in income upon receipt but are deferred until the option expires, is exercised, or a closing transaction is entered into. Non-equity options (index options) are marked to market at year end (same as for futures) with 60% considered long-term capital gain and 40% considered short-term.

Note: “An Introduction to Options and Other Financial Derivative Strategies,” by Thomas J. Boczar, Trust & Estates, February 1997, pp. 43–68, INTERTEC/K-III Publishing.

The primary objectives in using derivatives are:

1. Risk management and hedging (reducing or eliminating downside risk, monetizing a position, deferring and possibly avoiding capital gains taxes)

2. Leveraging investment capital

3. Enhancing after-tax returns

4. Creating customized risk/return profiles

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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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On Medical Executive Leadership Mistakes

A List of Attributes to Avoid

By Dr. David Edward Marcinko, MBA, CMP™

By Professor Hope R. Hetico, RN, MHA, CMP™

www.BusinessofMedicalPractice.com

When it comes to leadership development, executive training and self-branding, medical entrepreneurs and practitioners need to strive to avoid what John Zenger PhD and Joseph Folkman PhD describe as the 10 most common leadership shortcomings which is based on the feed back from over 11,000 leaders.

The Drawbacks

  1. Lack energy and enthusiasm
  2. Accept their own mediocre performance
  3. Lack clear vision and direction
  4. Have poor judgment
  5. Don’t collaborate
  6. Don’t follow the standards they set for others
  7. Resist new ideas
  8. Don’t learn from mistakes
  9. Lack interpersonal skills
  10. Fail to develop others.

Assessment

Note: The Daily Stat: The 10 Most Common Failures of Business Leaders, Harvard Business Publishing, June 4th, 2009.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. How do you define and execute leadership traits in your arena? 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 and http://www.springerpub.com/Search/marcinko

Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

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

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

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Sponsors Welcomed: And, credible sponsors and like-minded advertisers are always welcomed.

Link: https://healthcarefinancials.wordpress.com/2007/11/11/advertise

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Why Classic Retirement Planning Often Fails Doctor Colleagues?

Monitor the Money – Not the Returns

Dr. David Edward Marcinko MBA CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

While taking my certified financial planner courses to earn the CFP® designation, almost two decades ago at Oglethorpe University in Atlanta, I learned that in classic retirement planning engagements the financial planner or advisor determines the client’s retirement income needs, the assets already earmarked for the retirement portfolio, the desired retirement date, how distributions will need to be made, the assumed inflation rate, and life expectancy, etc.

Then, if a shortage develops, the advisor changes the asset allocation, increases the savings rate, proposes postponing retirement, or suggests reducing retirement income expectations, etc.

However, later in business school I learned that even when the inflation rate and investment returns prove to be accurate; this approach often fails doctors and all investors.

Geometry not Arithmetic

Why? Most planners focus on the wrong thing when monitoring portfolios. Possibly, there is confusion between compounding investment returns and compounding wealth. Planners tend to compound the arithmetical average return in projecting ending wealth over multi-period horizons. But, the accumulation of wealth is determined by the geometric compounding of actual returns.

Law of Large [Small]  Numbers

Still later on in B-school, I learned of the LoLN [normal distributions, parametric equations and cohorts], as well as Poisson distributions [non-normal or asymmetric distributions, and non-parametric equations and cohorts] or Law of Small Numbers.

Planners and Advisors often believe in the former Law of Large Numbers, and eschew [or are unaware of] the later — that is, that over time, average annual returns will approach ever more closely the expected return. The longer the investment horizon, the further the portfolio can wander from its expected dollar value despite the fact that it is approaching its expected return. The future value of each portfolio is determined by the unique and unpredictable pattern of compounded returns and inflation it suffers.

IOW: The longer the period over which this pattern can exercise its effects, the greater the potential divergence from its required return. In fact, while the expected range for the annualized rate of return narrows over time, the expected range for the terminal value of the portfolio diverges over time.

Assessment

Today, forward thinking advisors use “portfolio sufficiency monitoring” to adjust nominal performance results for inflation by establishing benchmarks for performance objectives, setting triggers for reevaluation of the portfolio when it wanders too far from established benchmarks, and monitoring and adjusting portfolio risk to maximize the probability of meeting retirement portfolio objectives.

It answers the question: “Will I have sufficient assets to meet my retirement income needs?” while investment performance monitoring answers the question, “Is my retirement portfolio performing well relative to other portfolios?” My doctor clients retire; not others!

Note: Monitoring Retirement Portfolio Sufficiency,” by Patrick J.Collins, Kristor J. Lawson, and Jon C. Chambers, Journal of Financial Planning, February 1997, pp. 66–74, Institute of Certified Financial Planners.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. How do you monitor your portfolio? And, how do FAs perform same for their physician and other clients. 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

Practice Management: http://www.springerpub.com/product/9780826105752

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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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Update on How Physicians Get Paid in 2010-11 [A slide show]

Part 2: [A Visual .ppt Presentation]

By Dr. David Edward Marcinko; MBA

[Editor-in-Chief]

From prior posts and comments on this ME-P, we know that most patients don’t have a clue about how doctors get paid in the real world of health insurance reimbursement.

A Popular Topic

We know this because prior posts on the topic have consistently been among the most popular on this platform. For example:

Part 1: https://healthcarefinancials.wordpress.com/2008/09/12/how-doctors-get-paid

Assessment

And so, we have taken the liberty of drilling down the topic, to a more granular level, in this attached .ppt presentation.

Link: How Doctors Get Paid in 2010 

Conclusion

And so, your thoughts and comments on this ME-P special presentation are appreciated. 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, be sure to 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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Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Doctor – “The eMR Made Me Do It?”

Podiatrist Disciplined for Inaccurate eHR Records

Source: James T. Mulder: The Post-Standard [1/21/11]

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What

The state Education Department has taken disciplinary action against a Liverpool foot doctor charged with professional misconduct.

Who

Dr. Bryan Gregory Popovici, a podiatrist, was fined $2,500 and placed on probation for two years by the state Education Department. Popovici admitted in a signed consent agreement that he failed to keep accurate patient records.

Why

The state said Popovici failed to document diagnostics performed, whether treatment options were discussed with a patient, and his rationale for placing a patient in a hard cast rather than a soft cast. 

The Defense

Meghann N. Roehl, Popovici’s attorney, said the problems stemmed from Popovici’s new electronic medical record system. “Dr. Popovici was an early adopter of electronic medical records,” Roehl said. “The earlier versions had software glitches which he is working hard to correct.”

Editor’s Note: The potential for increased liability because of eMR use has been discussed elsewhere on this ME-P.

Conclusion

And so, your thoughts and comments are appreciated. Do eMRs increase medical malpractice liability? Will eMRs be used as a plaintiff / defense argument in other disciplinary or liability actions? 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 and http://www.springerpub.com/Search/marcinko

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e-Filing Tax Season is Now Open

About IR-20 11-5

By Children’s Home Society of Florida Foundation

In a flurry of information letters, the IRS just announced that e-Filing is now open. According to IR-2011-5, the benefit of e-filing is that any taxpayer may receive faster refunds and ensure that their tax return is accurately reported.

The Commissioner Speaks

IRS Commissioner Doug Shulman stated, “IRS e-File is the best option for everyone, especially for people impacted by recent tax law changes. e-File ensures people can file accurately and get refunds quickly. With a new legislative e-File mandate for tax preparers, we anticipate that more tax return preparers will be using e-File this year and we urge people who prepare their own taxes to give it a try.”

Methods of Filing

The e-Filing may be accomplished through three different methods. Tax return preparers may e-File, commercial software may offer the option or there is IRS Free File. The Free File program is available on www.irs.gov. Taxpayers should click on “Free File” and will be permitted to access tax software to prepare their returns. Free File is available for taxpayers with 2010 adjusted gross income of $58,000 or less.

In the view of the IRS, Free File is “perfect for first-time filers, families looking to save money or older Americans adept at using the Internet.”

e-Signature Needed

Those who file electronically will also need an electronic signature. The electronic signature requires a five-digit personal identification number (PIN). There are three ways to obtain your PIN.

1. Self Select – You may use your tax software and select your own five-digit PIN. If you used a PIN in 2009, you may use that number. Alternatively, you may enter your adjusted gross income from your 2009 return to obtain your PIN. The PIN can be a five-digit number, but may not be all zeros.

2. Practitioner PIN – If you are using a paid tax preparer, you may sign IRS Form 8879 and authorize your paid preparer to generate your five-digit PIN. The paid preparer will retain Form 8879, but will not mail it to the IRS.

3. IRS Issue of PIN – If you do not know your 2009 adjusted gross income or your 2009 PIN, the IRS will request a temporary Form 8879(EFP). The Electronic Filing PIN may be obtained using your tax preparation software or through http://www.irs.gov. With the Electronic Filing PIN you may complete your electronic signature.

Military

If your spouse is a military person serving in a combat zone, you are permitted to use the self-select PIN. You will need to obtain IRS Form 8453, attach a Power of Attorney and mail it to the IRS.

Assessment

This program may also be ideal for FAs, medical students, interns, residents, fellows, nurses, new practitioners and all allied medical professionals who qualify.

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 and http://www.springerpub.com/Search/marcinko

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

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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About Cyber Insurance for Doctors

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What it is – How it works?

By Staff Reporters

All medical practitioners and ME-P readers and subscribers are aware that there are stiff penalties for protected health information [PHI] data breaches. And, the HIPPA policies and laws are legendary.

Security Standards

Cyber security standards are standards which enable healthcare and other organizations to practice safe security techniques to minimize the number of successful cyber security attacks and HIPPA information breaches.

Assessment

These guides provide general outlines as well as specific techniques for implementing cyber security. For certain specific standards, cyber security certification by an accredited body can be obtained. There are many advantages to obtaining certification including the ability to get cyber security insurance.

Link: ISA – Cyber-Insurance Metrics and Impact on Cyber-Security

Conclusion

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On the Rise and Fall of Limited Partnerships

Taking A Historical Look at this Investment Vehicle

By Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

Back in the 1980s – a time I am loathe admitting that I remember well – limited partnerships (LPs) were all the rage and often touted as the investment vehicle of the future; especially to tax-averse physicians and high income medical professionals and investors.

Oil and gas and real estate LPs dominated the market. But, there were also cattle feeding, master recording disks, equipment and aircraft leasing, and cable TV investments. The LP heyday was 1983 through 1989, and most early LPs were private or non-publicly traded.

Popularity Rising

Why were they so popular? LPs provided the benefits of direct ownership (income potential and tax benefits) without management responsibility and personal liability. Losses were limited to one’s original investment. Brokerage firms pushed them hard, paying their sales representatives [financial advisors?] the highest commissions and often characterizing these risky investments as “safe” and a “means of capital preservation.”

Early ’80s

In the early 80s, investors could use depreciation, interest, and investment tax credits to offset not only LP income but ordinary income from salary and other investments. This was a huge incentive for high income earning doctors. In 1981, the Tax Act allowed accelerated depreciation for real estate, and non-recourse debt was treated as depreciable cost (partners bore no risk of economic loss). Soon, the IRS began to attack LPs. Both real estate and oil and gas values declined. LPs soon became illiquid investments, producing little or no return.

’86 Tax Act

Then came the Tax Reform Act of 1986 (TRA), which brought with it “at risk” limitations to real estate tax shelters and the new passive loss provisions. LP sales then spiraled downward. The ’86 Tax Law provided that limited partners could not increase their basis in the LP for their share of partnership debt unless they were personally liable for repayment or if the lender had an interest other than as a creditor (unless “qualified non-recourse debt” was used).

1990s

In the ’90s, investors either hung on to – or sold – their LP investments in the secondary market. Investors were subject to substantial discounts upon sale and they had to recapture tax benefits previously received (including those from non-recourse financing).

Assessment

Simply abandoning these investments did not avoid unfavorable tax consequences, such as the decrease in a partner’s share of partnership liabilities being treated as a cash distribution. Capital gains were recognized to the extent that a partner’s share of partnership liabilities exceeds the adjusted basis of the partner’s interest.

Note: “What Happened to Limited Partnerships?” Lee Knight and Ray Knight Journal of Accountancy, July 1997, pp. 37–42, American Institute of Certified Public Accountants.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Were you burned by LPs back in the day, or have a LP story to tell us? Please opine. 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 and http://www.springerpub.com/Search/marcinko

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Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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The Rising Tide of EHR Vendors

Electronic Health Records (EHRs)

By Don Fornes

[Founder & CEO, Software Advice]

EHR software vendors aren’t churning out profits like you might expect. You’d think that the Federal subsidies for EHR implementation would create a rising tide that lifted all boats in the EHR software industry. In reality, some vendors are about to capsize.

Based on data points I’ve observed in the market over the past few months, I think some vendors are facing a cash flow crunch. They’re thrilled to have the wind at their backs for once, but the pace is proving hard to maintain as market evolution has accelerated under the unnatural effect of government subsidies.

Here’s the problem.

EHR Vendors Are Spending Money Like Crazy

Most software markets evolve over a twenty or thirty-year period. Consider the enterprise resource planning (ERP) market: the first ERP vendors were founded in the early 1970s, but rapid growth and innovation continued until about the year 2000. The EHR market, however, will mature in the next five years. This is because healthcare providers are buying EHR systems sooner than they otherwise would, to make the most of massive federal subsidies and avoid penalties. Consequently, EHR vendors are in a mad rush to gain market share.

Those that win will own a massive customer base paying recurring support fees. Those that lose will become irrelevant from a market share standpoint and will be ingested into a larger vendor (if they’re lucky; some will just go broke). As a result, EHR vendors are increasing their R&D budgets to develop new features and meet meaningful use criteria. Their marketing colleagues are spending heavily on demand generation and brand building. These vendors have no choice but to win today’s market share battle.

But Medical Providers Are Gun Shy

Almost a year and a half passed between when the American Recovery & Reinvestment Act (ARRA) was signed in 2009, and the final definitions of “Meaningful Use” and “Certified EHR” were issued in July 2010. Certainly that process was no small task, but during that time, most providers took a wait-and-see approach to EHR adoption. There have been tens, maybe hundreds, of thousands of practices out kicking tires, but fewer than expected are writing checks to buy an EHR system. Furthermore, a disproportionate share of these deals – I’m estimating >60% – are going to the top ten market leaders, which is typical of enterprise software markets.

With meaningful use criteria now defined, I believe demand trends have improved. Providers now have the clarity necessary to make purchase decisions with confidence. That can’t happen soon enough, however. EHR spending has to catch up with the investments these vendors have been making over the past two years.

And Subscription Pricing Constrains Cash Flow

To complicate matters further, the software industry as a whole is shifting to cloud computing. Providers have not yet embraced the Cloud en masse, but they have embraced the subscription pricing model popularized by Cloud vendors. Why make a large, up-front investment in a perpetual license when you can just pay monthly for what you consume? Subscriptions are even more logical in light of a five-year subsidy payout.

To meet physician demands, the major EHR players are now offering low monthly pricing and publishing it right on their home pages. EHR vendors love this recurring subscription revenue, but their cash flow is spread out into the future as a result. It takes a healthy balance sheet to withstand this transition.

So what do we have so far?

  • EHR vendors are investing lots of money;
  • providers are writing fewer checks than expected; and,
  • checks that are written are smaller and spread out.

The result is a very difficult cash flow scenario for many, but not all, EHR vendors. Lately, I’ve seen some EHR vendors stretching their payables out 90 or even 120 days. Meanwhile, I’ve been surprised to hear that some leading vendors are operating between breakeven and just a few points of profit margin. Both practices represent good financial discipline considering the pace of market evolution. In reality, however, some vendors are struggling – “taking on water,” to stick with our nautical imagery.

Buyers Beware

The EHR and practice management markets have always been highly fragmented into hundreds of software vendors, largely as a result of the need to service small and demanding local practices. As a result, providers have seen plenty of vendors fail to reach critical mass, then close up shop or sell out. Anecdotally, I also know that some of the leading EHR vendors grew their top line 30% to 60% last year, while laggards foundered. Gaps between winners and losers are expanding quickly, so expect to see more consolidation.

Vendor size is important, but isn’t the deciding factor for success and viability. In this intense market, success will result from execution. The winners and losers will be determined by the competency and discipline of their management. EHR vendors must spend with discipline and generate a strong return on their investments. It wouldn’t hurt to raise capital, either, but not all vendors will need to take this step.

It’s tough for providers to assess the financial viability of private EHR vendors. Software Advice offers our Guide to Assessing Medical Software Vendor Viability, but the industry really needs a trusted third-party to evaluate the 400 plus vendors. Organizations like CCHITInfoGard and ICSA Labs are all certifying EHRs against functional criteria. However, buyers also need the equivalent of an A.M. Best orMoody’s to rate the financial health of EHR vendors. Okay, maybe without the negligence and bias the later demonstrated during the mortgage bubble.

Assessment

Link:  http://www.softwareadvice.com/medical/electronic-medical-record-software-comparison/

There will be some big EHR winners within the next five years and consolidation will be a net positive for the industry. However, buyers must be careful not to become collateral damage as the fierce battle for market share plays out. It’s important to determine which vendors are closing businesses, growing their revenue and building a sustainable, profitable business. Providers should keep in mind that their success is tied to the success of the software vendor that will enhance and support their EHR system in years to come.

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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How Doctors Divvy Up the Estate Money [New Spouse v. Kids]

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The Kids of a New Spouse

Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief]

Multiple marriages entail interesting estate planning moves. Why? In these days of multiple marriages, doctor clients and others often can get caught between wanting to provide for their children from a previous marriage and their spouse’s statutory inheritance rights. Depending on the state of residence, the surviving spouse may have a statutory right to a specific share of his or her spouse’s estate. But, states define what constitutes the “augmented estate” in different ways. Some fairly sophisticated estate planning may be appropriate.

States Right’s

Inasmuch as spousal rights of election were codified many decades ago when divorce was not a common occurrence, many states’ statutes do not fairly recognize the economics and family dynamics of married individuals who have children from a prior marriage. In some states, a spousal right of election is limited to those assets that pass through probate. In other states, the right of election is enforceable against not only probate assets but certain assets, such as jointly held property that would otherwise pass via title to the co-owner, gifts the decedent made within a certain time period prior to death, and life insurance benefits. This expanded pool of assets against which the right of election may be assessed is typically referred to as the “augmented estate.” Most states provide that the right of election is charged ratably against the beneficiaries under the decedent’s will and the beneficiaries of any testamentary substitutes.

The UPC

In many states, the same percentage would apply regardless of the length of the marriage. In 1990, the model Uniform Probate Code (UPC) was amended to provide a scaled right of election based on the length of the marriage. It ranges from a minimum of 12% up to a maximum of 50% for marriages of 15 years or more. Only a handful of states have adopted it. Even though the UPC includes pension and profit sharing plan benefits in the augmented estate, the sliding scale is subordinate to federal pension legislation which can result in an inequity in the case of a short-term marriage.

Assessment

While both pre- and post-nuptial agreements can help, life insurance is favored, particularly in the majority of states where it is excluded from the augmented estate. And, in states where life insurance is part of the augmented estate, it could be used to provide the surviving spouse with his or her share, particularly when a closely held business is passed on to children of a prior marriage. Financial planners, doctors and advisors need to be familiar with this area to effectively serve clients.

Note: “Providing for Children from a Prior Marriage: An Estate Planning Entry Point,” George B. Kozol, Journal of the American Society of CLU & ChFC, January 1997, pp. 52–57, American College.

Conclusion

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

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

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The Legacy of Dr. Jack Treynor

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The History Behind A Popular Investing Theory

[By Dr. David Edward Marcinko MBA CMP™]

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

In his 1959 “Portfolio Selection,” Harry Markowitz PhD [father of MPT], said that investors should diversify against market risk but that determining the required return from such a group of diversified assets was another matter. Seven years later, economist Jack Treynor PhD wrestled with the issue of how investors can measure the expected risk in a portfolio against its expected return. Meanwhile, William Sharpe developed his own measure of risk and return known as the Capital Asset Pricing Model (CAPM) first published in the Journal of Finance in 1964 and discussed elsewhere on the ME-P.

A Seminal Paper

Treynor’s 1961 paper entitled “Toward a Theory of Market Value of Risky Assets” concluded that investors expect greater compensation for the larger risk they take in the stock market than they do from risk-free assets, such as Treasury bills. He called it the “equity risk premium” and created a method to predict it.

Fisher Black Collaboration

In 1973, Treynor collaborated with Fischer Black to devise a method for predicting the risk premium and to demonstrate its overarching importance in the behavior of capital markets as well as in portfolio selection. From 1969 through 1981 he furthered the work of many leading financial theorists, including Sharpe and Black, when he edited the Financial Analysts Journal.

Intellectual Band-Aid

In an interview about a decade ago, Treynor stated his belief that modern finance is preoccupied with statistical, rather than economic, thinking about risk. He explained that beta has come under attack in recent years because it is a statistical concept of risk. An economic concept of risk would have a lot more predictive value—it would be tied more intimately into fundamental analysis of companies and portfolios. He refers to beta as “just an intellectual Band-Aid.”

The Jensen Alpha

Treynor also described Bill Jensen’s alpha as looking at a market line established by a large number of funds and identifying those that had returns above the market line. Accordingly, a portfolio manager can increase his or her alpha by simply buying and selling larger positions of the same research recommendations.

Assessment

Black and Treynor developed a ratio of alpha to residual risk (return squared /risk squared), which shows that when you have everything else equal and you increase this ratio, you improve performance. And, they actually introduced the term Sharpe ratio.

Note: “It’s All About Odds,” Jonathan Burton, Dow Jones Asset Management, July/August 1997, pp. 20–28, Dow Jones Financial Publishing Corp., (732) 389-8700.

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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Understanding Client Engagement Letters for Financial Advisors

Review the Basics to Protect Yourself from Liability

By Dr. David Edward Marcinko MBA CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

According to the Professional Liability Agents Network (PLAN), a nonprofit association of insurance agencies specializing in risk management and loss prevention, there are two things that FAs should remember about engagement letters: have them and revise them. In fact, according to iMBA Inc’s Dr. Gary L. Bode CPA MSA – an accountant, financial advisor and board certified doctor – not all financial advisors and financial planners use engagement letters. “And, I think they are making a big mistake.”

www.MedicalBusinessAdvisors.com

Moreover, merely having a standard engagement letter is not enough: The changing scope of client service requires advisors and planners to review and update their engagement letters annually. Engagement letters should be updated to reflect changes in the engagement’s scope or timing. Many attorneys also recommend using a separate engagement letter each year to avoid problems of continuous representation and to establish the date of the statute of limitations before the engagement begins (thereby limiting the time period in which a client can file a claim).

The 10 Essential Elements

Even short, simple engagement letters are binding contracts. When creating or updating your engagement letters, make sure several essential provisions are included. Although additional clauses may be necessary, these basic provisions are the framework of your engagement letter.

1. Scope of Services and Limitations

Many doctors and lay professionals think of financial planning as a comprehensive analysis. If your engagement is limited, you must state that clearly in your engagement letter. Courts have held that it is reasonable for a client to expect a comprehensive analysis unless you state otherwise.

2. Client Responsibilities

The client’s role in an engagement is to provide the advisor or planner with certain data and to verify its accuracy. An engagement letter should contain a provision identifying the assistance you expect from your client in providing information and verifying its accuracy. The engagement letter should also specify any timetables applicable to this information.

3. Fees and Billing Procedures

Fee collection suits by advisors and planners against clients can result in professional liability counter-suits. You can prepare for this problem by specifying fees and billing procedures. An important part of this provision is your right to suspend work in progress until unpaid balances are brought current.

4. SEC Provisions for Investment Advisors

Planners who serve in investment advisory roles are required by the SEC to add several clauses to their engagement letters. First, if you collect any part of your fee in advance, you must explain in your engagement letter how a refund of the advance fee will be calculated if the client decides to stop the relationship before you have finished your work.

Second, you must state that you will not assign your responsibilities as a planner to a third party without the written consent of the client.

Finally, you can avoid regulatory responsibilities resulting from your possessing discretionary authority to act on behalf of your client by including in your engagement letter a disclaimer that says you will not exercise your discretionary authority without the client’s express written consent.

5. IRS Requirements

The IRS requires financial advisors and financial planners to have written consent to use a client’s tax return for purposes other than preparing a tax return. Thus, to protect yourself from liability, it’s important to add a “consent to use tax return information” clause in engagement letters.

6. Sharing of Information

Many financial advisors and planners recommend including in engagement letters a clause that allows the planner to receive information from and share information with their client’s other advisors. But, if you’re going to exchange information about a client, you’d better have the client’s affirmation; much like the HIPAA Statutes [business associates agreement].

7. Dispute Resolution

Include an arbitration clause in every engagement letter – arbitration is much faster and cheaper than taking a case through the court system. This theory is supported by PLAN, which recommends including in every engagement letter details about the type of dispute resolution to be used in the case of a disagreement.

8. Limitation of Liability

PLAN recommends that client service professionals require clients to either indemnify them from certain types of claims or establish a dollar limit on their liability. Although this provision has been used successfully in other professions, the SEC position on such clauses seems unclear. So, before adding a limitation of liability or indemnification clause, then, check with your state and federal regulatory agencies about standard procedure.

9. Good Will

Many firms conclude an engagement letter with a “good will” provision that thanks the client for his or her business and offers to discuss the letter and its provisions if the client has questions. While this provision may appear gratuitous, PLAN believes this can be critically important to a defense if a client claims to not know what he or she was signing.

10. Signature

As mentioned above, your engagement letter becomes your contract for professional service. As such, it is important to have it signed by your client http://www.plan.org

Assessment

Much like medical and surgical consent forms, or even treatment plans, client engagement letters for financial services professionals now seem the norm.

Note: Julie Schaeffer, a Chicago-based freelance writer, assisted in the original version of this essay.

Conclusion

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On FAs Working with Terminal Clients

Unique Challenges Financial Planners Face when Advising Dying Clients

By Dr. David Edward Marcinko MBBS DPM MBA MEd CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

We doctors are comfortable – or at least familiar – in dealing with death; financial advisors and planners are not!

Although many financial planners attend conferences to keep current on sophisticated planning techniques, most are not emotionally equipped to service terminally-ill clients. Others claim that there’s intensity and an intimacy that comes with working with dying clients that can be deeply rewarding. Such clients are usually grateful for having their affairs put in order before death. The few FAs in the industry that are both physicians and advisors concur.

Myriad of Issues

The many issues that need to be addressed in these situations include:

1. How the client wants to spend their final months, what it will cost, and what impact it may have on the estate;

2. Whether to spend money [health insurance navigation] on expensive and also experimental medical treatments;

3. If there is an existing life insurance policy; the pros and cons of accelerated benefits or viatical settlements;

4. Spending down or gifting assets to reduce estate taxes;

5. How long to keep working;

6. Taking important actions while still competent to do so;

7. Deciding whether to transfer assets to the dying client (one year survival) in order to get a step-up in basis at death;

8. Helping clients decide what type of funeral or final arrangements are preferred;

9. Working with the surviving spouse to restructure final financial affairs.

Rules-of-Thumb

Financial rules of thumb are often reversed in these situations. Instead of maximizing gains, the goal is to minimize losses. Macro-planning gives way to micro-planning and crisis management. Surviving spouses may be torn between wanting to pay for treatments to save his or her spouse and to protect the funds available in the event of the spouse’s death.

Assessment

Emotional turmoil does not necessarily end with the client’s death. As the financial advisor, you may take long, tearful phone calls from a surviving spouse whose grief and anxiety has been transformed into fears about their finances. Sometimes their fear can result in irrational anger, which they may take out on you. This type of work is not for the weak-spirited.

Note: “Final Plans,” Anita J. Slomski, Dow Jones Investment Advisor, March 1997, pp. 76–82, Dow Jones Financial Publishing Corp.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. As a FA, do you work with the terminally ill? 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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Recognizing the Differences between Healthcare and Other Industries

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Why Hospitals, Clinics and Medical Offices are Not Hotels, or Manufacturing Plants or Production Assembly Lines, etc.

By Dr. David E. Marcinko FACFAS, MBA, CMP™

[Editor-in-Chief]

The rising cost of health insurance remains a major concern for business; despite the Affordable Care Act [ACA] of March 2010. Local and national news publications have trumpeted that healthcare costs are not just rising but are growing in proportion to the cost of other goods and services.

Many of these publications have expressed the widely held view that because of the “inflation gap,” the cost of medical expenses needs curbing.  Proponents of this viewpoint attribute the growth in the gross domestic product (GDP) devoted to personal medical services (from 5% in 1965 to approximately 14% in 2005 and 17% in 2012) to increases in both total national medical expenditures as well as prices for specific services, and then conclude that there is a need to rein in the growing costs of healthcare services for the average American, even if it be through a legislative mandate.

Healthcare Is the Economy

According to colleague Robert James Cimasi MHA, AVA, CMP™ of Health Capital Consultants LLC in St. Louis, MO, healthcare cannot be separated from the economy at large. Although economists have cited the aging population as the reason for the increase in healthcare’s share of the GDP, other voices assert that financial greed among HMOs, pharmaceutical companies, hospitals, and medical providers like doctors and nurses is responsible.  In reality, the rise in healthcare expenditures is, at least in large part, the result of a much deeper economic force.

www.CertifiedMedicalPlanner.org

As economist William J. Baumol of New York University explained in a November 1993 New Republic article: “the relative increase in healthcare costs compared with the rest of the economy is inevitable and an ineradicable part of a developed economy. The attempt [to control relative costs] may be as foolhardy as it is impossible”.

Baumol’s observation is based on documented and significant differences in productivity growth between the healthcare sector of the economy and the economy as a whole.

Low Productivity Growth

Healthcare services have experienced significantly lower productivity growth rates than other industry sectors for three reasons, according to Cimasi:

1) Healthcare services are inherently resistant to automation. Innovation in the form of technological advancement has not made the same impact on healthcare productivity as it has in other industry sectors of the economy.  The manufacturing process can be carried out on an assembly line where thousands of identical (or very similar) items can be produced under the supervision of a few humans utilizing robots and statistical sampling techniques (e.g., defects per 1,000 units). The robot increases assembly line productivity by accelerating the process and reducing labor input. In medicine, most technology is still applied in a patient-by-patient manner — a labor-intensive process. Patients are cared for one at a time. Hospitals and physician offices cannot (and, most would agree, should not) try to operate as factories because patients are each unique and disease is widely variable.

2) Healthcare is local. Unlike other labor-intensive industries (e.g., shoe making), healthcare services are essentially local in nature. They cannot regularly be delivered from Mexico, India or Malaysia.  They must be provided locally by local labor.  Healthcare organizations must compete within a local community with low or no unemployment among skilled workers for high quality and higher cost labor.

3) Healthcare quality is — or is believed to be — correlated with the amount of labor expended. For example, a 30-minute office visit with a physician is perceived to be of higher quality than a 10-minute office visit. In mass production, the number of work-hours per unit is not as important a predictor of product quality as the skills and talents of a small engineering team, which may quickly produce a single design element for thousands of products (e.g., a common car chassis).

Assessment

Healthcare suffers a number of serious consequences when its productivity grows at a slower rate than other industries, the most serious being higher relative costs for healthcare services. The situation is an inevitable and ineradicable part of a developed economy.

For example, as technological advancements increase productivity in the computer, and eHR, manufacturing industry, wages for computer industry labor likewise increase. However, the total cost per computer produced actually declines.  But in healthcare (where technological advancements do not currently have the same impact on productivity), wage increases that would be consistent with other sectors of the economy yield a problem: the cost per unit of healthcare produced increases.

Conclusion

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The Living Legacy of Dr. Harry Markowitz

Creating Diversified Portfolios of Uncorrelated Assets

By Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief]

More than a half century ago, a paper appeared in The Journal of Finance written by a 24-year-old doctoral candidate in economics at the University of Chicago—Harry Markowitz. It was called “Portfolio Selection” and suggested that investors take into account risk in pursuit of the highest return—a concept that we take for granted today [Modern Portfolio Theory].

Markowitz drew a trade-off curve between risk and reward and called it the “efficient frontier.” A rational physician executive or other investor who knew his or her risk tolerance could choose an appropriate portfolio from a point on this curve. Markowitz led investors to diversified portfolios of uncorrelated investments.

Dissertation Follow-up

Markowitz followed up his dissertation in 1959 with a book entitled Portfolio Selection [Efficient Diversification of Investment]. His many contributions to finance earned him the Nobel Prize in Economic Science in 1990 along with William Sharpe and Merton Miller. He reasoned that diversification is about avoiding the covariance.

If risks are uncorrelated, you can reduce the risk of a portfolio to practically zero by sufficient diversification. This doesn’t work if risks are correlated. If one invests in a very large number of securities that are correlated, risk does not approach zero but rather the average covariance, which is a very substantial amount of risk.

Where It All Started

It was at the RAND Corporation that Markowitz met William [Bill] Sharpe who was working on his PhD at UCLA. Markowitz takes issue with Sharpe’s Capital Asset Pricing Model (CAPM), which claims that the expected return of a security depends only on its beta—ignoring fundamental analysis.

CAPM also implies that the market portfolio is efficient, even though investors in the market may not act rationally. It says that the market portfolio is a mean-variance efficient portfolio. Markowitz disputes this conclusion. He points to Fama and French and others who have found that expected returns are more closely related to book-to-price or size—not to beta.

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Assessment

The still living Markowitz fends off criticism of mean-variance analysis only being valid when probability distributions are normal by stating that he realizes that probability distributions are not normal in the real world.

But, if they are similar to a normal distribution, mean variance does a good job at approximating expected utility. He admits that when they are too dispersed, mean variance doesn’t work well.

Note: Travels along the Efficient Frontier,” an interview with Harry Markowitz by Jonathan Burton, Dow Jones Asset Management, May/June 1997, pp. 21–28, Dow Jones Financial Publishing Corp.

Conclusion

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Let’s Consider Two New Emerging Medical Delivery Models

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Entrepreneurial, New-Wave and Outside-the-Box Competitive Models

Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

I travel quite a bit in my professional and personal life. And, have been told possess an above-average curiosity in all things medical management. I look – see and report. So, what have I noted recently?

There are a number of new-wave health care delivery models now being explored to improve the manner in which medical care can be delivered. Let’s take a quick look at two emerging options at both the individual and institutional levels.

1. The Micro Medical Practice [MMP]

A micro medical practice [MMP] is a low overhead, high-tech, labor reduced and often mobile office model that allows more physician control and patient face-time [i.e., Dr. Ramona Seidel, Annapolis, Maryland]. This concept can be extended to those patients who want or need to pay cash for their health care; high deductible health insurance, health insurance with high co pays and residuals, etc.

Or, the concept may include that seen with the practice of physician-assistant Cheryl DeMonner PA-C at the Micro Medical Practice of Santa Cruz County. William Morris MD is her supervising physician.

Source: www.micromedsc.com

2. Satisfaction Guaranteed Medical Care

At the Detroit Medical Center, patient focused medical care is taken to a competitive extreme with this promise:

“If our patients are not absolutely satisfied with any aspect of their inpatient service or overnight stay in a DMC hospital, we will credit their patient pay balance up to $100.”

Guarantee applies to all inpatient (or overnight) stays and all surgery services provided at a DMC hospital. Adjustment/Refund is dependent upon the nature of dissatisfaction as follows:

  • Tier 1 ($25) Problems with physical facilities
  • Tier 2 ($50) Inadequate communication
  • Tier 3 ($75) Excessive wait issues
  • Tier 4 ($100) Poor service from employees

And, they have the twenty-nine minute emergency room guarantee.

Source: http://doctorandpatient.blogspot.com/2007/01/29-minute-er-guarantee.html

Assessment

If you were to take a good guess as to what sort of new healthcare delivery business model will spring up next, you would be well served by looking at smaller private and more entrepreneurial entities [personal and primary care], rather than behemoth organizations [secondary or tertiary care].

Conclusion

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Chairman Bernanke Advocates Tax Reform

Reform Coming in 2011?

By The Children’s Home Society of Florida Foundation

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Chairman of the Federal Reserve [the FED], Ben Bernanke met January 7th 2011 with the Senate Budget Committee. He spoke on the topic of tax reform during 2011. According to sources, Mr. Bernanke noted, “Greater clarity and certainty is obviously beneficial, and to the extent you can create more certainty about where the tax code is going to be over the next couple years, that would be helpful.”

Budget Committee Seems to Agree

Chairman Bernanke and the Senate members of the Budget Committee all noted that with the current weak economy and high level of unemployment, it is a very key year for potentially reforming the tax code. Sen. Ron Wyden (D-OR) joined with Sen. Judd Gregg (R-NH) to introduce the bipartisan Tax Fairness and Simplification Act of 2010. Sen. Wyden noted, “The big idea for economic growth in our country is fundamental tax reform, where you go in there and clean out this job-killing, thoroughly discredited mess.” Senate Budget Chair Kent Conrad (D-ND) agreed that the tax code “is just completely out of date.” He responded, “It does not take account of the world that we live in today.”

Assessment

In the House, the new Chairman of the Ways and Means Committee, Dave Camp (R-MI), also showed interest in tax reform during 2011. He suggested that it will be necessary to “streamline the tax code that today is too costly, too complex and too burdensome for families and employers.”

Editor’s Note: Both House and Senate Finance Leaders will be holding hearings this year on tax reform. Because 2011 is not an election year, it is a potentially good year for major tax reform. As was evident from the tax bill that was signed in December 2010, tax reform will require compromise between the Senate, the House and the White House. However, with the unemployment rate currently at 9.4%, there is now a growing consensus on the need for continued improvements in the tax system in order to reduce unemployment.

Conclusion

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Has the ADA Ever Mentioned Quality Control?

About My Tell-All Book?

By D. Kellus Pruitt DDS

One day, I’m going to write a tell-all book about quality control dentistry …  But, for all I’ve been told, it might be fiction.

The Quality Mandate 

Here’s something I find entertaining about the “quality” reporting mandate that was quietly written into HIPAA about the time President Clinton amended the 1966 Freedom of Information Act – making doctors’ records no longer proprietary business information. The 1996 HIPAA Rule is modular, and around every corner, we’ve learned there is an exploding surprise that was slipped into a thick bill long ago. The bolus technique of passing difficult legislation is not unlike the way the 2000 page healthcare reform bill was handled. It gets crap through the system too quick to be read, understood and debated by principals in healthcare who aren’t paying attention anyway. It’s a rule-making policy that simply favors stakeholders rather than doctors and patients. Depending on the campaign contributions, silliness can catch fire like a Madoff investment.

Dental Quality Compliance 

I don’t know about physicians, but dentists have never been warned about the quality control part of compliance. Now that it’s an integral part of healthcare reform’s imaginary funding, it’s a sure bet that no ADA official is willing to discuss the egregious blunder even anonymously.

ADA Department of Informatics

Soon enough, ADA members will learn about the clandestine quality control efforts of the ADA Department of Informatics – the brainchild of former ADA Sr. Vice President Dr. John Luther, who I hear is no longer part of the organization. Although I’m a persistent, nosey outsider peeking into a secretive not-for-profit organization (?), from what I can tell, the ADA’s interest in quality control began about 6 years ago following a visit to the ADA Headquarters by Newt Gingrich – which evidently favored the ADA Department of Dental Informatics with federal funding to replace dependence on finicky members’ dues. Had ADA members who were busy treating dental patients actually known the directions the ADA took the ADA’s mission statement for easy money, Dr. Luther’s career with the organization would have been even shorter.

Anonymous ADA Leaders 

Knowing that anonymous ADA leaders’ blunders no longer stay hidden forever, don’t you find the shyness of today’s dental leaders amusing? Don’t you just know the trusting early-adopters of interoperable eDRs will be pissed off when they discover that long ago, the ADA could have warned them about ambitious stakeholders’ plans for the profession?

Assessment

Who’s going to break the sweet news to dues-paying members before CMS, insurers, and quality control consultants (today’s dental insurance consultants), are granted a back door to HIPAA-compliant dentists’ interoperable computers allowing access for real-time quality control authorities, as well as fraud, HIPAA, FTC and other inspectors working on commission? It’s a dark tale.

Conclusion

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David B. Nash MD MBA FACP

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Hospitals & Healthcare Organizations

FOREWORD 

David Nash MD MBA

It should come as no surprise to our readers that the nation faces a financial crisis in healthcare. 

Currently, the United States spends nearly 16% of the world’s largest economy on providing healthcare services to its citizens.  Another way of looking at this same information is to realize that we spend nearly $6,500 per man, woman, and child per year to deliver health services.  And, what do we get for the money we spend?  

This is an important policy question and the answer is disquieting.  Although the man and woman on the street may believe we have the best health system in the world, on an international basis, using well-accepted epidemiologic outcome measures, our investment does not yield much!  

According to information from the World Health Organization and other international bodies, the United States of America ranks somewhere towards the bottom of the top fifteen developed nations in the world, regarding the outcome in terms of improved health for the monies we spend on healthcare. 

From a financial and economic perspective then, it appears as though the 16% of the GDP going to healthcare may not represent a solid investment with a good return. 

It is then timely that our colleagues at the Institute of Medical Business Advisors, Inc. have brought us their greatest work: Healthcare Organizations: [Financial Management Strategies]; a two-volume set of nearly 1,200 pages.  

Certainly, this comprehensive manual, and its quarterly updates, is not for everyone. It is intended only for those executives and administrators who understand that clinics, hospitals and healthcare organizations are complex businesses, with advances in science, technology, management principles and patient/consumer awareness often eclipsed by regulations, rights, and economic restrictions.  Navigating a course where sound organizational management is intertwined with financial acumen requires a strategy designed by subject matter experts. Fortunately, Healthcare Organizations: [Financial Management Strategies] provides that blueprint.

Allow me to outline its strengths and put it into context relative to other policy works around the nation. 

For nearly two years, the research team at iMBA, Inc., has sought out the best minds in the healthcare industrial complex to organize the seemingly impossible-to-understand strategic financial backbone of the domestic healthcare system.   

The periodical print-guide is organized into two volumes in order to appropriately cover many of the key topics at hand.  It has a natural flow, starting with Competitive Strategy and moving through Asset Management, Cost Management, and Claims Management.  

Volume 1, most especially the Competitive Strategy section, has broad appeal and would be of interest to most people in the health insurance industry, including managed care, hospitals, third party benefit managers and the pharmaceutical industry. 

Volume 2 continues in a well-organized theme, progressing from Risk Management and Compliance to Health Policy, Information Technology, and most importantly, Financial Benchmarking. 

Volume 2 would be of greater interest to those in the policy sphere, both in Washington, DC, in state legislatures, consulting companies, medical colleges, and graduate schools of health administration, public health and related fields. Every day colleagues ask me to help explain the seemingly incomprehensible financial design of our healthcare system.  These two volumes would go a long way toward answering their queries. 

I also believe both volumes would be appropriate as text books and reference tools in graduate level courses taught in schools of business, public health, health administration, and medicine. 

In my travels about the nation, many faculty members would also benefit from the support of these two volumes as it is nearly impossible, even for experts in the field, to grasp all of the rapidly evolving details. 

On a personal level, I was particularly taken with the Competitive Strategy section and it brought back enjoyable memories of my work nearly twenty-five years ago at the Wharton School, on the campus of the University of Pennsylvania.  There, I was exposed to some of the best economic minds in the healthcare business and it was a watershed event for me forming some of my earliest opinions about the healthcare system. 

I also very much enjoyed the section on Health Policy, most especially, the section on the Sarbanes-Oxley Act for hospitals and healthcare organizations.  I believe we have not fully embraced the comprehensive nature of Sarbanes-Oxley on the hospital side, and envision a day when hospital boards will be held accountable for quality, in the same way that proprietary corporations are held accountable for the strength and comprehensiveness of their audit reports. Simply put, Sarbanes-Oxley for quality is around the corner and this volume goes a long way toward preparing our basic understanding of the Act and its potential future implications. Congratulations to all authors, but this one in particular deserves specific mention. As a board member for a major national integrated delivery system, I am happy that there appears to be a greater interest in the intricacies of Sarbanes-Oxley on the healthcare side of the ledger. 

In summary, Healthcare Organizations: [Financial Management Strategies] represents a unique marriage between the Institute of Medical Business Advisors, Inc., and its many contributors from across the nation.  As its mission statement suggests, I believe this massive interpretive text carries out its vision to connect healthcare financial advisors, hospital administrators, business consultants, and medical colleagues everywhere. It will help them learn more about organizational behavior, strategic planning, medical management trends and the fluctuating healthcare environment; and consistently engage everyone in a relationship of trust and a mutually beneficial symbiotic learning environment.  

Editor-in-Chief and healthcare economist Dr. David Edward Marcinko and his colleagues at the Institute of Medical Advisors, Inc should be complimented for conceiving and completing this vitally important project. There is no question that Healthcare Organizations: [Journal of Financial Management Strategies] will indeed enable us to leverage our cognitive assets and prepare a future generation of leaders capable of tackling the many challenges present in our healthcare economy.  

My suggestion therefore, is to “read it, refer to it, recommend it, and reap.”  

David B. Nash MD, MBA
The Dr. Raymond C and Doris N. Professor and
Chair of the Department of Health Policy
Jefferson Medical College
Thomas Jefferson University
Philadelphia, Pa, USA
 

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Why Doctors Must Take Care When Swapping Insurance Policies and Annuities

Understanding Section 1035 Treatment of Exchanges

By Dr. David Edward Marcinko MBA CMP™

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[Publisher-in-Chief]

With the passage of the Tax Equity and Fiscal Responsibility Act, back in 1982 (TEFRA), insurance companies were required to report the payment of all surrender proceeds, forcing physicians and all individuals to be more compliant in reporting gains on the surrender of an old policy. As a result, insureds took advantage of IRC Section 1035 and made tax-free exchanges of insurance, endowment, and annuity contracts. If the exchange is structured properly, gains (and losses) on the surrender of an old policy must be deferred beyond the life of the policyholder.

Section 1035 Treatment

The following types of exchanges qualify for tax-free treatment:

1. A life insurance contract for another life insurance, annuity, or endowment contract

2. An endowment contract for an annuity contract or for another endowment contract in which the payments begin at a date no later than the date that payment would have begun under the original contract

3. An annuity contract for another annuity contract

However, to the extent that money or other property (“boot”) is received by the insured in a 1035 exchange, gain may be recognized to the extent of the “boot.” The new policy received takes the basis of the old contract exchanged, decreased by the value of boot received, and increased by any gain required to be recognized.

Limits

Unlike exchanges subject to Section 1031, in which there is a 180-day limit, there is apparently no statutory time limit for completing an exchange under Section 1035. However, be careful in the case of an exchange of immediate annuity contracts in which the annuity starting date must begin no later than one year from the date of the purchase of the annuity. When an exchange has occurred, the holding period of the original contract attaches to the new contract. Therefore, the insured may not have begun to receive the annuity within one year from the date of the annuity’s purchase, and therefore, the 10% premature withdrawal penalty may apply.

Section 403(b) Annuities

The IRS has even allowed tax-free exchange of Section 403(b) annuities provided the new contract’s distribution restrictions are at least as stringent as those of the old contract. And, distributions from financially troubled life insurance companies, if reinvested within 60 days of receipt, can qualify for 1035 treatment. But, in most cases, a doctor or taxpayer should undertake a direct exchange whenever possible.

Note: “Nontaxable Exchanges of Insurance Contracts and Annuities Under Section 1035,” John C. Zimmerman and Tamara K. Kowalczyk, Journal of Taxation of Investments, Summer 1997, pp. 307–315, Warren, Gorham & Lamont, (800) 950-1205.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Have you ever made this sort of exchange; successful or not? 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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SPDRs vs. Index Mutual Funds

Understanding Vehicular Pros and Cons

By Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

It is possible to buy or sell during a trading day with SPDRs, just as one would with a common stock, and, accordingly, the trading price may be set anytime during the day. This could prove valuable in a sudden market downturn. Also, they may be traded using the same types of orders used for stocks (market, limit, at the close, and at the opening) and sold short, even on a downtick.

However, dividend reinvestment is provided by only a few brokers. Since SPDRs represent passive equity portfolios, they tend to be fully invested in the stock market, which removes a significant drag on performance; their expense ratios are significantly below that of stock mutual funds in general, and below many index mutual funds; and they have virtually no turnover and accordingly, minimal capital gains.

Index Mutual Funds

Index funds, on the other hand, may only be purchased or redeemed at the net asset value (NAV) at the end of the trading day. Short sales are not possible; however, dividend reinvestment is available.

The Disadvantages

On the down side, SPDRs are sold like common stocks and, therefore, incur brokerage commissions, but this can be minimized by using discount brokers. SPDRs have been so successful that both the American and New York Stock Exchanges launched internationally indexed products modeled after SPDRs in the spring of 1996. They are termed World Equity Benchmark Shares (WEBS) and Country Baskets.

Note: “Index Stocks: An Introduction to SPDRs—S&P 500 Depository Receipts,” Robert T. Kleiman, in his article, AAII Journal, January 1997, pp. 23–26, American Association of Individual Investors [312] 280-0170).

Conclusion

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How Investors View Financial Advisors?

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A Public Opinion Survey

Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.org

Boston-based Dalbar company is a surveyor of financial information for the mutual fund industry. About a decade ago Dalbar released a nine-part survey on personal financial advice to measure the level of demand for advice that existed back then and to ascertain consumer preferences, expectations, beliefs, and sources for personal financial advice.

Now, please allow me to suggest that all FA colleagues use the results to evaluate your current practices and planed initiatives to determine how current thinking must change to meet today’s and tomorrow’s needs. And so, we now share some of the results of this survey.

Customer Expectations of Personal Financial Advisors

• Investors and prospective investors expect their personal financial advisors to educate them about investments and to minimize the taxes they pay.

• Unrealistic expectations present a major problem to personal financial advisors. The expectations for advisors to produce the highest returns, prevent investing mistakes, and avoid losses set the stage for disappointment in the future, thus undermining the public trust of advisors.

• Advertising, training, compensation, and industry practice is out of step with customer expectations. This survey indicates that emphasis in all these areas should be directed to vastly simplify education, increase use of tax saving strategies, and help investors to define financial goals.

Demand for Personal Financial Advisors

• Of the consumers surveyed, 89% report the need for a personal financial advisor for assets of $100,000 or more. This contradicts the notion that a growing number of people prefer to do-it-themselves. This finding presents the advisor with an opportunity: The demand for advice is higher than the market would suggest.

• The demand for advice, as measured by the Advice Demand Index (ADI) is highest among those who prefer to pay for advice through commissions. The ADI is highest for commission-payers at 93%, followed by those who prefer to pay a percentage of their assets (92.5%). Flat-fee payers have the lowest demand for advice, at just 88.7%.

Importance of Personal Financial Advice Functions

• Consumers unanimously agree that the ability of their advisor to provide clear explanations of investment alternatives, to be available when needed, and to keep them informed of their investment status are the most important financial advice functions.

• Consumers revealed that the delivery of a comprehensive written financial plan is the least important function that their advisor performs.

Assessment

This report was not physician specific so one wonders how applicable it is to medical providers; especially the “no-desire” for a financial plan part?

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Are the results still valid today; or after the 2008-09 “flash crash”? 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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Defining Health Level Seven [HL-7]

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What it is – How it works?

By Dr. David Edward Marcinko MBA CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

HL7 is an international community of health care subject matter experts and information technology physicians and scientists collaborating to create standards for the exchange, management, and integration of protected electronic health care information. The Ann Arbor, Mich.-based Health Level Seven (HL7) standards developing organization has evolved Version 3 of its standard, which includes the Reference Information Model (RIM) and Data Type Specification (both ANSI standards).

HL7-3

The HL7 Version 3 is the only standard that specifically deals with creation of semantically interoperable health care information, essential to building the national infrastructure; HL7 promotes the use of standards within and among health care organizations to increase the effectiveness and efficiency of health care delivery for the benefit of all patients, payers, and third parties; uses an Open System Interconnection (OSI) and high level seven health care electronic communication protocol that is unique in the medical information management technology space and modeled after the International Standards Organization (ISO) and American National Standards Institute (ANSI); each has a particular health care domain such as pharmacy, medical devices, imaging, or insurance (claims processing) transactions. Health Level Seven’s domain is clinical and administrative data.

The Goals

Goals include:

  • develop coherent, extendible standards that permit structured, encoded health care information of the type required to support patient care, to be exchanged between computer applications while preserving meaning;
  • develop a formal methodology to support the creation of HL7 standards from the HL7 Reference Information Model (RIM);
  • educate the health care industry, policymakers, and the general public concerning the benefits of health care information standardization generally and HL7 standards specifically;
  • promote the use of HL7 standards world-wide through the creation of HL7 International Affiliate organizations, which participate in developing HL7 standards and which localize HL7 standards as required;
  • stimulate, encourage, and facilitate domain experts from health care industry stakeholder organizations to participate in HL7 to develop health care information standards in their area of expertise;
  • collaborate with other standards development organizations and national and international sanctioning bodies (e.g., ANSI and ISO) in both the health care and information infrastructure domains to promote the use of supportive and compatible standards; and
    • collaborate with health care information technology users to ensure that HL7 standards meet real-world requirements and that appropriate standards development efforts are initiated by HL7 to meet emergent requirements.

Assessment

http://www.springerpub.com/Search/marcinko

HL7 focuses on addressing immediate needs but the group dedicates its efforts to ensuring concurrence with other U.S. and International standards development activities. Argentina, Australia, Canada, China, Czech Republic, Finland, Germany, India, Japan, Korea, Lithuania, The Netherlands, New Zealand, Southern Africa, Switzerland, Taiwan, Turkey, and the United Kingdom are part of HL7 initiatives.

Conclusion

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Going ‘Bare’ Might be an Expensive Mistake

An Opinion on E & O Insurance for FAs

Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

This post is not about medical malpractice liability insurance. As a doctor, financial advisor and insurance agent I have written and opined on this subject before; informally on this blog and more formally through our handbooks:

http://www.amazon.com/Insurance-Management-Strategies-Physicians-Advisors/dp/0763733423/ref=sr_1_3?ie=UTF8&s=books&qid=1275315795&sr=1-3

and, of course, pragmatically with clients: www.MedicalBusinessAdvisors.com

No, this post is about Errors and Omissions insurance for financial advisors.

About E & O Insurance for FAs

Like many physicians, most financial planners and advisors are confident that the way they practice minimizes the chance of being sued by a disgruntled [patient] client. And, perhaps that has been their experience so far. But just one arbitration case for a substantial claim can cost $10,000 or more, and a conventional lawsuit that goes to court with a jury trial will run about $50,000, even if it’s a totally bogus claim. With the cost of errors and omissions coverage for financial advisors now down to between $650 and $2,000 per year, it doesn’t make much sense to “go bare;” especially after the highly emotional 2008-09 debacle.

Historical Past

In years past, most financial planners opted to go without insurance because premiums on E&O policies ran about $7,500 -10,000 per year. Most of them should think again and take the same advice they give their clients—insure for catastrophic loss. We all know that when the stock market bubble finally bursts, there will be a lot of unhappy clients looking to recoup losses. What better time than now while things are good to put E&O coverage in place.

E & O Coverage

E&O policies cover errors, misstatements, negligence, breach of duty, and other wrongful acts, but fraudulent acts are usually not covered. Many major broker/dealers carry group coverage for the affiliated planners. Deductibles are typically $5,000 per planner and $20,000 for the firm. Policies are not standard—coverage can vary widely. Some cover insurance, some cover only securities, investment advisory and financial planning, and some cover other investment advice (e.g., real estate, franchises, etc.). Make sure the policy you buy covers what you actually do.

Claims-Made Policies

Be aware that these policies, like malpractice coverage, are on a “claims-made basis” rather than an “occurrence basis.” Therefore, prior acts are not usually covered unless the planner had continuous coverage with an insurer since the act was committed. As a result, it is essential to never permit a gap in coverage inasmuch as this could break the chain necessary for coverage of prior acts. So, this is where “tail coverage” comes into play; and it might be expensive!

Assessment

Experts point out that the biggest reason planners get sued is failure to diversify the client’s portfolio adequately. A fair [majority?] number of “financial advisors” are “one-product” sales people who always sell the product they know. This can be an expensive modus operandi. You only buy professional liability insurance because you cannot afford the consequences.

Note: “Minding Your Es & Os,” by Eric L.Reiner, Dow Jones Investment Advisor, February 1997, pp. 56–61, Dow Jones Financial Corp. [908] 389-8700)

Conclusion

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More on Disability Insurance for Physicians

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Some Advice from a Doctor, Insurance Agent and Financial Advisor

Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Policies Are Harder to Get, More Expensive, and Offer Less Protection Than Before

Due principally to large claims from anesthesiologists, surgeons, emergency room physicians, and trial attorneys, disability insurance underwriting is becoming stricter. Among the effects on policyholders: revised definitions of disability; restriction of benefits to two years on so-called “soft tissue” disabilities and mental and nervous disorders; and downgrading of professionals to the general white-collar category. The result is higher premiums.

Buy a Good Individual Policy

Based upon the fact that disability is the only insurance product on the market that is non-cancelable (premiums and policy features are locked in until age 65), my advice is to buy a good quality individual policy as early as possible and hang on to it. Group benefits should be added later. Also, many group plans only include straight salary in compensation. Incentive compensation, which makes up a large portion of an executive’s compensation, is not considered. Under the Revenue Reconciliation Act of 1993, employee disability benefits can only cover up to $150,000 in compensation. Finally, don’t forget that if the employer pays the premiums, benefits are taxable. This can substantially reduce an executive’s disability income.

Pay More for Non-Cancelable Coverage

I also may recommend paying a 15–20% higher premium to obtain non-cancelable coverage, if available, as compared to guaranteed renewable coverage. In both cases, coverage cannot be canceled. However, in the latter case, premiums can be increased on a class basis. Also, investigate the partial-disability benefits as well as the residual benefits after returning to work.

Note: “Your Disability Is Your Opportunity,” by Jaberta C. Evans, Dow Jones Investment Advisor, December 1996, pp. 76–80, Dow Jones Financial Publishing Corp., [908] 389-8700.)

Conclusion

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On Standard & Poor’s Depository Receipts

Don’t be Afraid of ‘SPIDERS’

By Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

What they are – How they work?

No, I’m not talking about creepy, crawly insects. I’m referring to Standard & Poor’s Depository Receipts (SPDRs, or spiders), a derivative product, which combines many of the advantages of index funds with the superior trading flexibility of common stocks.

Creation

SPDRs were created in January 1993 by the American Stock Exchange. SPDRs are units in a trust holding the S&P 500 securities in proportion to their index weighting and which are adjusted as necessary to track changes made to the index by S&P. They pay quarterly cash dividend distributions based on the accumulated dividends paid by the stocks held in the SPDR trust minus an annual fee of about .19% of principal to cover trust expenses. They trade at approximately one-tenth the value of the index.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Do you use SPDRs; why or why not? 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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Do Patients Really Believe in eMRs?

Not Necessarily

By Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief]

A NPR / Kaiser / Harvard School of Public Health patient opinion poll of more than a year ago [Aril 2009], demonstrated that for the most part, patients believed that just spending money on eMR’s was not going to improve their health or bring down health care costs.

The Personal Touch

In fact, the most important part, it seems, is their relationship with their doctor [ie, trust].

Link: Harvard

Assessment

So, how does this square with the following tends?

  • Patient-Doctor face time is decreasing.
  • Doctors avoid eye contact because of poor keyboarding computer input skills.
  • Some medical schools may abandon courses in physical diagnosis.

Conclusion

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On Stock Market [Mis]Timing Strategies

Do They Come Up Short?

Dr. David Edward Marcinko MBA CMP™

www.CertifiedMedicalPlanner.com

[Publisher-in-Chief]

Stock market investment rules are notorious for showing profit when tested on the same sample period from which they were developed, and then failing when applied to a new period. According to Professor Roger C. Vergin, it’s dangerous to use the same data to both discover and test the rules.

Of Marty Zweig

Using the “Zweig Strategies” developed by Martin Zweig and published back in 1986 in Winning on Wall Street (WOWS), Professor Vergin shoots some rather sizable holes in Zweig’s indicators by testing them against the 10-year period since WOWS was published. Zweig’s models are applied to various periods from 19 to 33 years, ending in 1985, and they claim to outperform a buy-and-hold strategy with annual rates of return as much as eight times as large, according to some measures. When the author ran these strategies for the 10-year period ending Dec. 5, 1995, not only did they not outperform a buy-and-hold strategy, but they trailed the market averages by a significant amount—9% vs. 14.4% for buy-and-hold.

The “Z” Indicators

Zweig’s indicators include a prime rate indicator, a Federal Reserve indicator, an installment debt indicator, a 4% indicator (market momentum), a monetary model, and a “super” model, which Zweig referred to as “the only investment model you will ever need.” 

Vergin corrects for inconsistencies in the evaluation criteria from one strategy to the next in WOWS and runs the numbers for the original test period first. Zweig’s strategies still outperform buy-and-hold. But, when run against an independent time period, as the author has done, the wheels fall off. Vergin runs the Zweig Strategies against the S&P 500, the Value Line Index, and an index developed by Zweig called ZUPI (all NYSE stocks).

Assessment

Over the 10-year period, none of the six Zweig Strategies outperformed a simple buy-and-hold strategy when compared against any of the three indexes mentioned above. They produced an average return of 9% compared to 14.4% for buy-and-hold.

In fact, Dr. Burton Malkiel’s [personal communication] conclusion in his book A Random Walk Down Wall Street, was that: “market timing is likely, not only to not add value, but to be counterproductive” seems to have borne out again.”

Note: “Market-Timing Strategies: Can You Get Rich?” by Roger C. Vergin. The Journal of Investing, Winter 1996, pp. 79–85, Institutional Investor, Inc. [212] 224-3185)

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. By trying enough patterns against past events, one can always find simple rules that “would have” worked well in the past. But, do they hold up against differing periods of time; like say 2008-09? … At least not yet! What do 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 and http://www.springerpub.com/Search/marcinko

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Looking to Convert to a Paperless Dental [Medical] Practice?

Why Does the ADA Promote eDRs?

By Darrell K. Pruitt DDS

Not so Fast!

Before a dentist trustingly accepts the recommendation of the American Dental Association and unwittingly converts his or her practice to paperless, one should read the story I copied below which was posted on VillageSoup.com yesterday.

Unlucky dentist loses everything …

http://waldo.villagesoup.com/business/brief/business-services/unlucky-dentist-loses-everything/373672

Worst Way to Start Off the Year

I have been on my own for last 7 yrs. We have a small business server (windows 2003) 6 work stations, completely paperless using Dentrix 11 and Vixwin platinum. One morning, when we returned to work, we could not access the server. Went into panic mode! Not able to get anything! Not knowing the schedule. Who is coming what they are coming for, etc. It was decided that my server crashed. It was set up w/2 hard drives to mirror each other and also had an external drive back up (Seagate). We ended up rushing the drives to a data recovery company in (data doctors). They sounded very promising claim 90% success). I agreed to pay additional $4100 to rush case! We were led to believe all is well once they diagnosed case. A few hrs later every thing changed. We got the bad news that both drives are not recoverable since they found a minute scratch on one of the plates. Also we are not able to recover anything from the external drive.

At this point I have lost all patient records including x rays going back 7 yrs. I have no access to schedule, ledgers, notes, insurance, X-rays, anything. This is leading both me and my wife into depression. We are very stressed, at a loss. This is a catastrophic loss. Not sure how to move forward?

I am worried about the liability on top of everything else. How do I tell my patients? How do I know who paid for what balances on work that needs to be done, etc. I keep waking up at night thinking of all the possible problems.

This is the lowest point in my career. I don’t even want to go into the office from stress. If any one can offer any advice I would really appreciate it. I know in the past you guys lifted me up. I love forum name.

Thank you.

Assessment

On top of the anguish this person already suffers, the HIPAA violation must be reported to the Department of Health and Human Services. Thanks to HITECH, an expensive inspection is likely to follow. The dentist’s letter reminds me of a desperate private note from a dentist a few months ago describing his HIPAA violation. He lost a laptop computer he was using as a daily backup device. Since there were thousands of his patients’ unencrypted PHI on the computer, he was similarly paralyzed by the same cold and lonely panic a professional feels when optimistic career plans suddenly crumble into a dark void that includes abject business failure. People sometimes hurt themselves and others when even choosing to do the right thing leads to ruin. A person with any compassion can tell from reading the dentist’s plea for help that the newer harsher penalties from HHS and state Attorneys General for data breaches will only further destroy the lives of innocent dentists and their families. HITECH is cruel nonsense in dentistry and ADA leaders are stone-cold heartless.

Although encryption is strongly advised in the “ADA Practical Guide to HIPAA Compliance,” If ADA officials dared to keep track of their failure in promoting safe digital dental records, I bet their own data would show that less than 3% of US dental patients’ PHI is encrypted. Yet proud leaders in my profession remain stoically unresponsive to members’ and patients’ concerns about risks of data breaches. They call their aloofness “professionalism.” It infuriates me that shy ADA officials hide from personal accountability for the careless harm they cause dentists and dental patients.

“Image is everything” ADA/IDM slogan

The nation’s ambulatory healthcare providers – including dentists, podiatrists, chiropractic doctors and physicians – cannot continue to blindly trust our professional organizations to protect our practices from the dangers of the electronic health records they promote for their personal benefit. We’ve been sold out.

Assessment

As far as I can tell, selfish ADA leaders with careers invested in dental informatics just can’t tolerate truth. When I consider the pain they cause at no risk to themselves, I say the parasites should be encouraged to move on down the road and look for their power in a field where they won’t endanger others.

Conclusion

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Are You Scared of Investment Losses?

Well Doctors – You Should Be!

By Somnath Basu PhD, MBA
President: AgeBander
Thousand Oaks, CA

There is a very simple way for medical professionals, and us all, to approach investment decision making. To start with, begin by asking yourself some basic and preliminary questions such as what is the investment for (to buy a house, to fund a kid’s education, or is it to fund retirement and the like) and how long these investments will last (for example, up to 40 – 50 years sometimes when one starts planning for retirement early).

Basic Questions

Once these basic questions are answered then ask this $64 million dollar question of your-self. Over your planning time horizon, how much of this money are you willing to lose? For example if you are trying to accumulate $100,000 for a house, how much could you afford to lose and still not lose your bearings? What if it is a five-year plan and in the 4th year you lose 50% of your accumulated funds with only one more year to go. How would you feel? This is the critical question in any investment decision. Typically you will not hear a financial planner [FP] or financial advisor [FA] talk in such terms; but perhaps they should!

www.CertifiedMedicalPlanner.com

Conservative Investing

When financial planners and financial advisors talk about conservative investing, they couch the same idea in terms of risk and return. In the language of these experts such measures are often quantitative and difficult to understand for the average investor. While return on investments seems like a fairly straightforward concept (8% or 11% for example), risk is mentioned usually in terms of standard deviation, a statistical terminology difficult both to explain and to understand. Hence, most physicians and investors are pretty much in the dark when it comes down to making the decision itself since it is their sole responsibility. Thus, the investor is left with no other choice but to decide on whether the suggested investment return sounds attractive or not. On this track, the higher the return, the more attractive the investment seems.

Furthermore, FAs may suggest that a return such as 8-10% is a conservative rate whereas 12-15% is aggressive. Hence if an 8-10% based investment is being suggested, the investor is likely to go with what she/he thinks is the most conservative decision, being the conservative investors they believe they are. (As an aside, there is a whole theory about physician investors being conservative and risk averse)

Unwinding the Mystery

To unwind this basic mystery, simply ask the FA the likelihood of various amounts of losses in any single year including the last year of the investment. Could half your funds be wiped out in any year including the last year? What is the likelihood of such an event? What is the likelihood that it could be 25% in any given year? Suppose your planner shows how your $100,000 will grow to $150,000 in five years if you were to earnings the average rate of 8% per year for five years. Under such a scenario, what is the likelihood that you could lose half your accumulated funds in the last year and come out with a negative investment return even though you still earned that 8% average rate over the five years? As we know now such possibilities not only exist but are not uncommon either. As an extreme case in point consider the 2008-09 financial debacle [flash-crash]! If your investment was maturing in 2009, the outcome would have been a lot worse.

The Driver of Concern

This concern of loss is what should drive us in our investment decisions. Most planners are unable to explain this concept of loss aversion to their clients because they themselves are not adequately educated to understand the concept themselves. However, as mentioned before, the solution is simple. Now reconsider the example above of earning an average annual rate of 8% over 5 years. While it sounds conservative on the surface, it is actually quite aggressive. Earning 8% a year for five consecutive years (or averaging out over the five years to an 8% rate) is a very tall order. To do so, especially under most circumstances, one would actually be exposed to a large amount of loss in any given year.

Without getting into the details of how the standard deviation measurement of risk converts into the loss propensity and using very rough estimates, another way to view the 8% investment opportunity is to understand that in any year, you may not even earn a dollar (0%) and this could happen in each and every year. The likelihood of such an outcome is astonishingly high – about 25%. Thus, the investment decision is about whether you are willing to bet where the odds of loss is one to four (25%) every year for each of the five years. Of course the reverse is also true that in each of the years you have a 75% chance to  earn a positive return on your investment and the earning rate itself could be anywhere from zero to the highest rate imaginable. Further, there is a 12% chance that you could be actually losing 8% a year for each of the five years! In prolonged economic downturns, which are not so uncommon, such are the outcomes. Now ask yourself this question: If you were told about these odds of losses, would you still consider the 8% investment opportunity to be conservative? Hopefully not, especially when you feel unsettled about the existing economic state of affairs. Further, would you consider a 10% return to be attractive and conservative if you were rejecting a 15% investment and choosing the 10% one?

Assessment

As mentioned earlier, this idea of loss aversion is probably the most powerful tool in the investor’s bag. Once you understand the implications of loss from any investment decision, then the loss aversion approach to making this decision is a dimensional shift, something that can be easily understood and applied by all investors. Furthermore, if most physicians and investors behaved similarly, collectively we would make the investment market a much safer place. Unfortunately for now, there are no known ways of educating all investors about this critical aspect since the tools that currently exist are all based on statistical concepts of risk and return which make little sense to most lay investors.

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 and http://www.springerpub.com/Search/marcinko

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The Death of Medical Practice? [A Voting Poll and Survey]

Has Demise been Greatly Exaggerated?

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By Staff Reporters

QUESTION: Are solo practitioners, and small group physician medical practices, on the verge of disappearing?

In our businessmodel, some pundits opine that:

“Primary care physicians and other specialists will continue to be the target of acquisitions by larger health and hospital systems. Physicians will begin to transition to a more consumer-based patient orientation model (i.e. concierge medicine, cash-for-services, retail) in order to replace lower reimbursements, or opt out of third-party reimbursement models entirely. Or alternatively, these physicians will shift to become an employee of a larger system.”

Please vote and opine.

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ProPublica Reports Standard’s & Poor’s Triple “A” Ratings Collapse Again

The Question is Why?

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By Jesse Eisinger

Several weeks ago, Standard & Poor’s put out a press release: The credit rating agency warned it was poised to downgrade almost 1,200 complex mortgage securities. This data is vital to all physician executives, financial  advisors and investors.

Assessment

So what? Isn’t that dog-bites-man at this point?

Link: http://www.propublica.org/thetrade/item/the-trade-credit-rating-agencies-standard-and-poors/

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Seeking Chief Medical Director

IlliniCare Health Plan

CLASSIFIED ADVERTISEMENT

By Judy Kliethermes

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JOB POST

Centene Corporation is seeking a Chief Medical Director for IlliniCare Health Plan, a wholly owned subsidiary and HMO for the state of Illinois.  The regional headquarters for IlliniCare is in Chicago.  A Fortune 500 company, Centene Corporation is a national leader in low-cost solutions for high quality health care services for the un-insured and under-insured.

CMD Responsibiities 

The Chief Medical Director (CMD) will be responsible for directing and coordinating the medical management, quality improvement and credentialing functions for IlliniCare. S/he will serve as a clinical advisor and educator of the medical management staff, ensuring the clinical quality and efficacy of patient care. The CMD will identify trends in patient treatment data and proactively develop programs to address improve patient health and wellness needs.  As an integral part of IlliniCare senior leadership team, the CMD will have an active role in supporting the strategic plans and vision of the organization. 

Assesment

Previous experience as medical director for a health plan and knowledge of managed Medicare and Medicaid is preferred. Board certification and an unrestricted medical license are required. I would welcome your interest or your nominations for the Chief Medical Director role.

  • Cejka Executive Search
  • 4 CityPlace Drive, Ste. 300
  • St. Louis, MO  63141
  • (800) 209-8143 Toll Free
  • (314) 236-4429 Direct
  • judyk@cejkasearch.com

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Introducing the Body Browser

A New Offering by Google

By Staff Reporters

No this is not a porno club or whole body airport security scanner.

Rather, it is a new offering from Google. The just released Body Browser is a 3-dimensional multi-layered anatomical model of the human body that you can rotate, zoom in on, and search.

One can also peel back anatomical layers, click to identify anatomy, or search for muscles, organs, bones and more. You can also share the exact scene you are viewing by copying and pasting the URL

Some pundits have even called it the equivalent of Google Earth for the human body?

Assessment

To use it, you’ll need a beta version of Chrome, Firefox or Safari that supports WebGL.

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 and http://www.springerpub.com/Search/marcinko

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

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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On the Estate and Gift Law Tax Changes

Update on the New Tax Laws

[By Chris Miller JD and Nicole McNair]

Robinson & Miller, PC

Dear ME-P Readers and Subscribers,

On behalf of attorney J. Christopher Miller of our firm, please find attached a letter summarizing the changes in the estate and gift tax law enacted last month by the Obama Administration. We trust you find it interesting and informative.

Link: 2010 Estate Tax Reform Letter

Assessment

Please call with questions.

  • Robinson & Miller, PC
  • 3460 Preston Ridge Road, Suite 100
  • Alpharetta, GA 30005
  • http://www.robinsonmiller.com
  • Tel: 770-817-4999
  • Fax: 770-817-4994

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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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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PhysAssist Scribes for eMRs [Necessity or Frivolity?]

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On Human eHR Input Devices [aka Personal Secretaries]

By Dr. David Edward Marcinko MBA CMP™

[Publisher-in-Chief] www.CertifiedMedicalPlanner.org

What it Is – How it Works?

According to their website, PhysAssist Scribes provide turn-key solutions, recruits, interviews, trains and certifies staff, schedules and maintains highly-trained human eHR input scribes for their clients [$8-10/hour wages]. Emergency room departments and physicians were an initial target market.

Data Input Services

Scribes provide real-time charting for physicians by shadowing them throughout their shifts and performing a variety of tasks including recording patients’ history and chief complaints, transcribing the physical exam, ordering x-rays, recording diagnostic test results, and preparing plans for follow-up care, etc.

Typical Clients

Clients are mostly hospital based physicians, but one can imagine progressing down the food chain to large medical practices and even to solo practitioners as technology advances and HR costs are reduced. So, give em’ a click, and tell us what you think.

http://iamscribe.com

Reported Benefits

  • Increase physician performance
  • Increase physician job satisfaction
  • Increase overall patient satisfaction
  • Improve chart accuracy
  • Decrease patient length of stay
  • Increase communication among ED staff
  • Improve physician recruiting and [retension] retention.

Related story: http://www.hhnmag.com/hhnmag_app/jsp/articledisplay.jsp?dcrpath=HHNMAG/Article/data/12DEC2010/1210HHN_FEA_staffingissues&domain=HHNMAG

Assessment

  • It seems implausible to me that in order to facilitate the widespread use of eMRs, one has to hire another layer of bureaucracy in order to input the patient encounter. Is this an indictment of the various speech recognition systems or physician keyboarding ability? I am not a technophobe but eHRs are not yet up to pragmatic-use snuff. This is reminiscent of jeweled encrusted “buggy-whips” of the 1850’s. They were expensive, cumbersome and added no utility; but were “nice-to-have” devices for the affluent until the internal combustion engine came along [i.e. non-solo or small group medical practitioner].
  • Of course, injecting another human resource [i.e. personal secretary] into the data input equation increases privacy breach possibilities for this protected health information [PHI]. And, it is not exactly the model of a contemporary and lean micro-medical office.
  • Does a secretary-scribe really have to be “certified”? Won’t a good typist do just as well? Is this an example of vertical integration in the PhysAssist business model?  How long till the scribes join the labor-union movement and seek employment benefits?
  • What happens to the doctor, patient and data input chain when a scribe quits, or is a no-show for work?
  • What ever happened to Occam’s razor (or Ockham’s razor), often expressed in Latin as the lex parsimoniae (translating to the law of parsimony, law of economy or law of succinctness), which is a principle that generally recommends selecting a hypothesis that makes the fewest new assumptions. IOW: KISS
  • Of additional interest to note is the misspelling of the word retention, as “retension” on the www.IAmScribe.com website. Not a very good impression for a transcribing firm; or am I just an aging editorial curmudgeon?
  • Are e-MR scribes a necessity or mere frivolity?

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Are such secretary scribes a “covered entity” or “business associate” under the HIPAA laws with the needed paperwork, etc? Or, is this an Obama administration job creation initiative?

And, feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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Book Dr. Marcinko to Speak

At Your Next Medical Management, Pharma or Financial Services Seminar  

Our Editor-and-Chief, Dr. David Edward Marcinko MBA CMP™ is a former medical practitioner and board certified surgeon [FACFAS], certified financial planner, stock-broker, insurance agent, Registered Rep, RIA representative, writer, editor, journalist, expert witness and healthcare economist who enjoys public speaking and gives as many talks each year as possible, at a variety of medical society, pharmaceutical and financial services conferences around the country and world.

Many Venues

These have included lectures and visiting professorships at major academic centers, keynote lectures for hospitals, economic seminars, pharma conventions and health systems, endnote lectures at city and statewide financial coalitions, and break-out lectures for a variety of internal and external yearly meetings.

Assessment

More info: https://medicalexecutivepost.com/dr-david-marcinko%e2%80%99s-bookings/

Speaker: And so, 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 and http://www.springerpub.com/Search/marcinko

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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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[Health] Plan Management Navigator

January 2011

By Douglas B. Sherlock, CFA
Senior Health Care Analyst

Dear ME-P Readers and Subscribers,

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At the risk of appearing overwhelmed with New Year’s enthusiasm, we think this edition of Plan Management Navigator is especially interesting:

1. We report on the cost decisions made by low cost Blue Cross Blue Shield plans. Low cost plans make decisions that differ from their higher cost peers. Hallmarks of these decisions include levels and distributions of expenses between functions, the levels and distribution of staff between functions, the levels of compensation and its distribution between functions and the distribution between functions, and levels of, non-labor expenses. Overall, low cost Blue Cross Blue Shield Plans have “tactical” administrative expenses that are $5.75 PMPM, or 30%, lower than their higher cost counterparts. These tactical expenses are all administrative expenses excluding medical management and sales and marketing.

Last month we published a similar study of the choices of low cost Independent / Provider-Sponsored Plans. Low cost health plans had tactical costs that were 36% lower than their peers, or by $6.39.

A more detailed version of either of these analyses is available to licensed users of each of our benchmarks. Please call us for further information if you have an interest.

2. We introduce a new service on our website that will enable you to determine how a health plan is doing relative to the 2010 benchmarks. You can select your universe and then determine whether you are high or low and, if so, by how much.

3. We invite you to participate in the 2011 benchmarking study. We are now forming universes. We think that, under pending MLR rules, participation is very timely.

Link: Navigator January 2011

Thank you for your continued interest in our research.

Assessment

sherlock@sherlockco.com
Ph:  215-628-2289
Fax: 215-542-0690

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.

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About ZocDoc!

What it is – How it works?

By Staff Reporters

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ZocDoc is a free service that allows patients to book medical appointments online. ZocDoc started in September of 2007 as a service to help people find and make dentist appointments in New York City.

Expanded Offerings

Today ZocDoc also offers primary care, dermatologist, eye-specialist, ENT, orthopedist, OB/GYN, allergist, podiatrist, cardiologist, pediatrician, radiologist and psychiatrist appointments in New York City, Washington DC, San Francisco, Chicago and Dallas. More are slated to onboard soon.

Assessment

So, use em’ – or give em’ a click – and tell us what you think?

http://www.zocdoc.com

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Is this a valuable service or un-needed intermediary? 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 and http://www.springerpub.com/Search/marcinko

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Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Get a Free Retirement Planning e-Book

Unveiling the Retirement Myth

Review by: Dr. David Edward Marcinko MBA CMP™

[Publisher-and-Chief]

Jim Otar is a certified financial planner in Canada. He wrote the book: Unveiling the Retirement Myth on retirement income planning: how to make your retirement portfolio last as long as you do when you are living off your savings and investments in retirement.

The Print Version

The print version costs $49.99 on Amazon. But, for a limited time only, Jim Otar is offering a PDF version of this 525-page, 45 chapter book for FREE on his website retirementoptimizer.com.

The e-Book

Here’s the download link until January 10th, 2011:

http://www.retirementoptimizer.com/downloads/URMG/URMGreem.pdf

Assessment

This is a very worthwhile e-book offered at an excellent price-point. Its’ subtitle is advanced retirement planning based on market history, and that is exactly what is presented – much historical review although not especially of an advanced nature. But, it is voluminous. Additionally, since the past is no indication of the future – and current events like the potential of a “new economics normal” are not explicitly entertained – the treatise lacks a feeling of modernity!

Fortunately, the author does include many figures, graphs, illustrations and tables for ease of understanding. The mini case-examples also help keep it from trending to the boorish. This is an important point I have painfully learned after almost four decades of writing, editing and publishing [i.e., readability and interest]. Moreover, if the reader was not familiar with time-value of money calculations and concepts before reading, s/he will surely be after.

While mostly generic in nature – containing little tax, insurance, risk management and accounting information  – and not written for a physician or medical professional audience; the book represents a worthwhile review for doctor colleagues and/or those laymen unfamiliar with the ever widening topic. However, those physicians seeking healthcare specificity should look elsewhere for assistance www.CertifiedMedicalPlanner.com

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 and http://www.springerpub.com/Search/marcinko

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Healthcare Organizations: www.HealthcareFinancials.com

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The New 2011 Income Tax Rates

A “First-Look” for Medical Professionals

By Children’s Home Society of Florida Foundation

In Rev. Proc. 2011-12, 2011-2 IRB 1 (21 Dec 2010)

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TABLE 1 – Section 1(a) – Married Individuals Filing Joint Returns and Surviving Spouses

If Taxable Income Is:   The Tax Is:
Not over $17,000   10% of the taxable income
Over $17,000 but
not over $69,000
  $1,700 plus 15% of
the excess over $17,000
Over $69,000 but
not over $139,350
  $9,500 plus 25% of
the excess over $69,000
Over $139,350 but
not over $212,300
  $27,087.50 plus 28% of
the excess over $139,350
Over $212,300 but
not over $379,150
  $47,513.50 plus 33% of
the excess over $212,300
Over $379,150
 
  $102,574 plus 35% of
the excess over $379,150

TABLE 2 – Section 1(b) – Heads of Households

If Taxable Income Is:   The Tax Is:
Not over $12,150   10% of the taxable income
Over $12,150 but
not over $46,250
  $1,215 plus 15% of
the excess over $12,150
Over $46,250 but
not over $119,400
  $6,330 plus 25% of
the excess over $46,250
Over $119,400 but
not over $193,350
  $24,617.50 plus 28% of
the excess over $119,400
Over $193,350 but
not over $379,150
  $45,323.50 plus 33% of
the excess over $193,350
Over $379,150
 
  $106,637.50 plus 35% of
the excess over $379,150

TABLE 3 – Section 1(c) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)

If Taxable Income Is:   The Tax Is:
Not over $8,500   10% of the taxable income
Over $8,500 but
not over $34,500
  $850 plus 15% of
the excess over $8,500
Over $34,500 but
not over $83,600
  $4,750 plus 25% of
the excess over $34,500
Over $83,600 but
not over $174,400
  $17,025 plus 28% of
the excess over $83,600
Over $174,400 but
not over $379,150
  $42,449 plus 33% of
the excess over $174,400
Over $379,150
 
  $110,016.50 plus 35% of
the excess over $379,150

TABLE 4 – Section 1(d) – Married Individuals Filing Separate Returns

If Taxable Income Is:   The Tax Is:
Not over $8,500   10% of the taxable income
Over $8,500 but
not over $34,500
  $850 plus 15% of
the excess over $8,500
Over $34,500 but
not over $69,675
  $4,750 plus 25% of
the excess over $34,500
Over $69,675 but
not over $106,150
  $13,543.75 plus 28% of
the excess over $69,675
Over $106,150 but
not over $189,575
  $23,756.75 plus 33% of
the excess over $106,150
Over $189,575
 
  $51,287 plus 35% of
the excess over $189,575

TABLE 5 – Section 1(e) – Estates and Trusts

If Taxable Income Is:   The Tax Is:
Not over $2,300   15% of the taxable income
Over $2,300 but
not over $5,450
  $345 plus 25% of
the excess over $2,300
Over $5,450 but
not over $8,300
  $1,132.50 plus 28% of
the excess over $5,450
Over $8,300 but
not over $11,350
  $1,930.50 plus 33% of
the excess over $8,300
Over $11,350
 
  $2,937 plus 35% of
the excess over $11,350

6. Child Credits — The credit per child is $3,000.

7. Standard Deduction — For a married couple, the standard deduction is $11,600. Single persons have a standard deduction of $5,800.

8. Aged or Blind — The additional deduction for an aged or blind person is $1,150. It is $1,450 for a single person who is not a surviving spouse.

9. Personal Exemptions — The personal exemption in 2011 will be $3,700.

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 and http://www.springerpub.com/Search/marcinko

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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 There an “Efficient Frontier” for Medicare Payment Reform?

An Essay on Financial Health Risk Self-Selection

By Dr. David Edward Marcinko MBA CMP™

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Health economist Austin Frakt PhD, of the Incidental Economist, alerted us to this recent publication “Achieving Cost Control, Care Coordination, and Quality Improvement through Incremental Payment System Reform”, by and from: (Averill, et al., JACM, 2010). The paper describes various Medicare payment reform methods.

The Abstract

The healthcare reform goal of increasing eligibility and coverage cannot be realized without simultaneously achieving control over healthcare costs. The reform of existing payment systems can provide the financial incentive for providers to deliver care in a more coordinated and efficient manner with minimal changes to existing payer and provider infrastructure. Pay for performance, best practice pricing, price discounting, alignment of incentives, the medical home, payment by episodes, and provider performance reports are a set of payment reforms that can result in lower costs, better coordination of care, improved quality of care, and increased consumer involvement. These reforms can produce immediate Medicare annual savings of $10 billion and create the framework for future savings by establishing financial incentives for long-term provider behavior changes that can lead to lower costs.

Patient Risk Sharing

Of course, the third dimension of risk [beyond traditional doctor/hospital provider and Medicare insurer] would be the risk borne by the patient insured (degree of cost-sharing or “consumer responsibility”). This relationship is represented diagrammatically right here:

Brief Review of MPT

Modern portfolio theory (MPT) attempts to maximize investment portfolio expected returns for a given level of risk by carefully choosing the proportions of various asset classes. As a mathematical formulation, the concept of diversification aims to select a collection of assets that collectively lowers risk [measured by standard deviation] more than any individual asset class. This pleasing point is known as the “efficient frontier.” And, it can be seen intuitively because different types of assets often change in value in opposite ways.

Is There an Insurance Efficient Frontier?

Health insurance [medical payment reform] econometric considerations may now be extended in this analogy to suggest that medical providers and CMS payers are the surrogates for two dimensions in the MPT. The third might be the risks borne by the patient insured (degree of cost-sharing or “consumer responsibility”), as above.

Assessment

Then, patients could self-select where they wish to fall on the health insurance “efficient frontier”, balancing all three dimensions as in MPT, along with lifestyle and moral hazard considerations, etc.

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Is there an “efficient frontier” for Medicare payment reform?

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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