The DUPONT Decomposition Equation for ROI

D.D.E. FOR HOSPITALS AND HEALTHCARE ORGANIZATIONS

DEM blue

By Dr. David E. Marcinko MBA CMP

[Editor-in-Chief] http://www.CertifiedMedicalPlanner.org

According to the Dupont Decomposition Equation – which involves the conglomeration of net operating income, revenues, expenses and average operating assets – ROI and economic profit is increased in three prioritized ways:

  1. Cost and expense reductions.
  2. Revenue increases [Rev]
  3. Reduced average operating assets [AOO]

Note: ROI = NOI / Rev X Rev / AOO

Cost and expense reductions

Although many hospitals have reduced expenses, postponed projects and put clinical or information technology projects on hold because of the MU conundrum, this may be unwise and quality may suffer. And, mental health care programs are almost always the first cost center to be reduced in tough times.

Upgrades today, especially with concurrent marketing and advertising promotions, may well be considered a strategic competitive advantage, and at bargain basement prices for those with cash or credit. This cost reduction is easy because it gives the biggest buck-bang in the ROI equation, and is the first line of ROI augmentation by savvy administrators and CEOs. It is also intuitive and wholly “wrung-out” in the marketplace, to date.

Revenue increases

On the other hand, revenues can usually be only incrementally increased by improving services like emergency care, urgent care, wellness, out-patient and/or surgical departments. This is the more difficult part of the equation and yields a positive, but lesser return in the ROI equation.

CITE: https://www.r2library.com/Resource/Title/0826102549

DuPont Formula: Learn More At Accounting Play

Three Modern Collections Rules for Hospitals

The following medical practice procedures will markedly increase upfront office collections:  

  • Train staff to handle exceptions. What is your policy if the patient payment is significant? Will you allow 25% payments—one today and three over the next three months? Communicate your policy to all staff. What will you do if a patient shows up without an insurance card? There will be other exceptions. Train employees to call the appropriate practice-management contact when an exception does not fit in the categories you provide and make sure those managers are responsive.
  • Understand that not everyone will shine in collections. The value of this new front-desk function should be reflected in job descriptions and wages. Track staff performance and hold employees accountable for collection goals. The most successful practices collect in the 90% range.
  • Provide professional signage that states your basic policy. “Payments are due at time of service.” Avoid typewritten, lengthy explanations taped to walls or desks that look like clutter.

Reduced average operating assets

Finally, any delay in updating facilities – while easy and may reduce operating assets – there is little ROI advantage and profit potential. Of course, facility asset upgrades mean borrowing funds through tax-exempt bonds – the main source of debt for most hospitals – and is currently difficult or impossible in this climate. Loans from banks, private investors, angels, venture capitalists or other financial institutions are similarly difficult to obtain. Thus, this part of the equation may often be neglected; as is the case now.

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Mental Health Entrepreneurial Start-Up Companies

Top Ten [10] Venture Capital Backed

PRE and POST Texas School Shooting MEMORIUM

By Dr. David Edward Marcinko MBA

By Carol Miller RN MBA

By http://www.MCOL.com

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Mental Health White Paper:

FILE: https://healthcarefinancials.files.wordpress.com/2019/05/mental-health-dr.-marcinko.pdf

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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™

LINK: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989

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UPDATE: Gold, Peer-2-Peer Payment, Pediatric Vax and the Lumber Markets

By Staff Reporters

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The price of gold dropped below $1,800 an ounce and appears hyper-focused on the soaring U.S. Dollar Index, which rose to 107.15. Over the last five days, the index is up by more than two points, and has risen five points over the last 30 days.

The minimal reporting threshold for peer-to-peer payment platform transactions has decreased from $20,000 (or 200 transactions) to just $600 because of a provision in the American Rescue Plan Act of 2021. That means that businesses that use platforms like Venmo, Cash App, PayPal, and even storefronts like Etsy and eBay can expect to receive 1099-K forms for the 2022.

Children in the US are getting vaccinated at a lower rate than the rest of the nation, with only 300,000 kids under five receiving the vaccine since it became available two weeks ago. Health officials say this was expected since most parents want to get their kids vaccinated at a doctor’s office.

Finally, lumber markets were a harbinger of economic shifts during the pandemic and today’s slumping prices could be just as prescient. Lumber prices hit a record $1,607 per thousand board feet in May 2021, due to soaring demand for new homes, a boom in DIY home renovation activities, and production and supply chain issues stemming from the pandemic. Twelve months later, lumber prices collapsed to $648, a more than 50% decrease from $1,464 in March. 

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MEDICAL ETHICS: Managing Risk is a Component of Real Health Caring

Demanding High Moral Standards of Self … and Economic HEALTHCARE Organizations

Dr. David Edward Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

CMP logo

It has been argued that physicians have abdicated the “moral high ground” in health care by their interest in seeking protection for their high incomes, their highly publicized self-referral arrangements, and their historical opposition toward reform efforts that jeopardized their clinical autonomy. 

Experts Speak

In his book Medicine at the Crossroads, colleague and Emory University professor Melvin Konnor, MD noted that “throughout its history, organized medicine has represented, first and foremost, the pecuniary interests of doctors.” He lays significant blame for the present problems in health care at the doorstep of both insurers and doctors, stating that “the system’s ills are pervasive and all its participants are responsible.” 

In order to reclaim their once esteemed moral position, physicians must actively reaffirm their commitment to the highest standards of the medical profession and call on other participants in the health care delivery system also to elevate their values and standards to the highest level.

Evolution

In the evolutionary shifts in models for care, physicians have been asked to embrace business values of efficiency and cost effectiveness, sometimes at the expense of their professional judgment and personal values.  While some of these changes have been inevitable as our society sought to rein in out-of-control costs, it is not unreasonable for physicians to call on payers, regulators and other parties to the health care delivery system to raise their ethical bar. 

Harvard University physician-ethicist Linda Emmanuel noted that “health professionals are now accountable to business values (such as efficiency and cost effectiveness), so business persons should be accountable to professional values including kindness and compassion.” 

Within the framework of ethical principles, John La Puma, M.D., wrote in Managed Care Ethics, that “business’s ethical obligations are integrity and honesty.  Medicine’s are those plus altruism, beneficence, non-maleficence, respect, and fairness.”

Incumbent in these activities is the expectation that the forces that control our health care delivery system, the payers, the regulators, and the providers will reach out to the larger community, working to eliminate the inequities that have left so many Americans with limited access to even basic health care. 

Charles Dougherty clarified this obligation in Back to Reform, when he noted that “behind the daunting social reality stands a simple moral value that motivates the entire enterprise”. 

ASSESSMENT

Health care is indeed grounded in caring. And, managing risk is a component of caring. It arises from a sympathetic response to the suffering of others.

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ORDER TEXTBOOK: https://www.routledge.com/Risk-Management-Liability-Insurance-and-Asset-Protection-Strategies-for/Marcinko-Hetico/p/book/9781498725989

Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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Justice Recovers $5B from Healthcare Fraud Cases in 2021

By Staff Reporters

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The Justice Department’s (JD) efforts returned almost $1.9 billion to the federal government or paid it out to private individuals. Of that money, about $1.2 billion went to the Medicare trust fund. About $98.7 million in federal Medicaid money was transferred to CMS. The JD opened 831 criminal healthcare fraud cases last year. Federal prosecutors filed criminal charges in 462 cases involving 741 defendants. A total of 312 defendants were convicted of healthcare fraud during the year. The JD opened 805 civil healthcare fraud investigations and had 1,432 civil healthcare fraud matters pending at the end of last year. 

HHS Office of the Inspector General (OIG) investigations resulted in 504 criminal actions against individuals or entities accused of Medicare- and Medicaid-related crimes. The OIG filed 669 civil actions, which included false claims and unjust-enrichment lawsuits filed in federal district courts, and civil monetary penalties. The OIG excluded 1,689 individuals and entities from participating in federal healthcare programs, including Medicare and Medicaid. 

Source: Andrew Cass, Becker’s Hospital Review

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