SVB: Grew from the Business Start-Up Ecosystem

By Staff Reporters

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DEFINITION: Startups are young companies or ventures that are founded to develop a unique or innovative product, service, or platform, and bring it to market. They are typically in the early stages of their development and face high uncertainty and failure rates. They are usually self-funded by the founders or seek external funding from investors or loans. They aim to grow large beyond the solo founder and disrupt existing industries or create new one.

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

SVB rooted in the startup ecosystem

SVB was relatively small—it had 40,000 customers compared to JPMorgan Chase’s 66 million—but it claimed to bank nearly half of all US tech and life sciences startups last year, including household names like Etsy, Roblox, and Roku. The cultural cachet of having a relationship with SVB as a venture-backed startup was like sporting a New Yorker tote at Whole Foods.

But the reason its loss will leave such a gaping hole in the startup community isn’t that it was cool to name-drop at a networking event. Because the bank was created in 1983 specifically to cater to venture-backed startups, it helped them in ways that most banks can’t—or won’t.

SVB chill loans: According to the MorningBrew, SVB would offer loans to startups more readily than large banks, basing the loans on a company’s ability to raise venture capital funds, not to turn a profit. SVB was also known for being flexible—even if startups breached their loan terms. “They were the easiest money for an unprofitable, early stage to mid-stage tech company,” Irving Investors founder Jeremy Abelson told The Information. And, even small startups received hand-holding services, such as guidance on how to set up their financial infrastructure. Its bankers personally called startups when they secured their first rounds of funding, according to The Information.

Startups now have to deal with big banks

Several founders who previously banked with SVB told Bloomberg that they’re moving their money to Chase and Bank of America, banks considered “too big to fail.”

Startups’ experience at big banks won’t be like their time at SVB. Not only is Jamie Dimon unlikely to call a startup to congratulate them on their Series A, but big banks are also expected to be more tight-fisted with their loans. The Office of the Comptroller of the Currency, a regulator that oversees large US banks, disapproves of loans to companies that are further out than one year from profitability, according to Crunchbase.

The loss of SVB is therefore expected to have a chilling effect on loans to venture-backed startups, aka “venture debt,” which SVB handed out more of than any other bank.

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Physician Assets, Liabilities and Personal Net Worth

How are Assets and Liabilities Related to Doctor Net Worth?

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Dr. David E. Marcinko MBA  

Before the relationship among financial assets, liabilities and net worth can be examined, some based definitions must be understood. 

LINK: http://www.CertifiedMedicalPlanner.org

[A] Short-Term Assets

Short-term goals (less than 12 months) require liquidity or short-term assets. These assets include cash, checking and saving accounts, certificates of deposit, and money market accounts. These accounts have two things in common. The principal is guaranteed from risk of loss, and pay a very low interest rate.  As an investment, they are considered substandard and one would only keep what is actually needed for liquidity purposes in these accounts.           

[B] Long-Term Assets

Longer-term assets (more than 12 months) include real estate, mutual funds, retirement plans, stocks, and life insurance cash value policies. Bonds may also be an appropriate long-term investment asset for a number of reasons, for example, if you are seeking a regular and reliable stream of income or if you have no immediate need for the amount of the principal invested. Bonds also can be used to diversify your portfolio and reducing the overall risk that is inherent in stock investments. 

[C] Short-Term Liabilities

Short-term liabilities (less than 12 months) include credit card debt, utility bills, and auto loans or leasing. When a young doctor leaves residency and starts practice, the foremost concern is student debt. This is an unsecured debt that is not backed by any collateral, except a promise to pay. There are recourses that an unsecured creditor can take to recoup the bad debt. Usually, if the unsecured creditor is successful obtaining a judgment, it can force wages to be garnished, and the Department of Education can withhold up to ten percent of a wages without first initiating a lawsuit, if in default.  It is also probable that young medical professionals have been holding at least one credit card since their sophomore year in college.  Credit card companies consider college student the most lucrative target market and medical students hold their first card for an average of fifteen years. There are several other types of other unsecured debt, including department store cards, professional fees, medical and dental bills, alimony, child support, rent; utility bills, personal loans from relatives, and health club dues, to name a few.  

[D] Long-Term Liabilities

A secured debt, on the other hand, is debt that is pledged by a specific property. This is a collateralized loan. Generally, the purchased item is pledged with the proceeds of the loan. This would include long-term liabilities (more than 12 months) such as a mortgage, home equity loan, or a car loan. Although the creditor has the ability to take possession of your property in order to recover a bad debt, it is done very rarely. A creditor is more interested in recovering money. Sometimes, when borrowing money, there may be a requirement to pledge assets that are owned prior to the loan.  

For example, a personal loan from a finance company requires that you pledge all personal property such as your car, furniture, and equipment.  The same property may become subject to a judicial lien if you are sued and a judgment is made against you. In this case, you would not be able to sell or pledge these assets until the judgment is satisfied.

A common example of a lien would be from unpaid federal, state or local taxes. Doctors can be found personally liable for unpaid payroll taxes of employees in their professional corporations.  Be aware that some assets and liabilities defy short or long-term definition. When this happens, simply be consistent in your comparison of financial statements, over time. 

[E] Personal Physician Net Worth

Once the value of all personal assets and liabilities is known, net worth can be determined with the following formula: Net worth = assets minus liabilities. Obviously, higher is better.  In The Millionaire Next Door, Thomas H. Stanley, PhD, and William H. Danko give the following benchmark for net worth accumulation. Although conservative for physicians of a past generation, it may be more applicable in the future because of current managed care environment.

Here is the guide: Multiple your age by your annual pre-tax income from all sources – except inheritances – and divide by ten. 

Real-Life Medical Example: As an HMO pediatrician, Dr. Curtis earned $ 60,000 last year. So, if she is 35, her net worth should be at least $ 210,000.

How do you get to that point? In a word, consume less, save more and watch the student loans. Stanley and Danko found that the typical millionaire set aside 15 percent of earned income annually and has enough invested to survive 10 years, at current income levels if he stopped working.  Now, if Dr. Curtis lost her job tomorrow, how long could she pay herself the same salary? 

[F] Common Liability Management Mistakes

 A common liability management mistake is not recognizing when you are heading for trouble. If doctors are paying only the minimum payments on credit card debt, while continuing to charge purchases at a rate faster than the pay-down, trouble is brewing. If you don’t categorize your debt, you could find yourself paying down non-priority debt while ignoring priority debt.

A priority debt is one that is essential or subject to serious consequences, if not paid. Examples include rent, mortgage payments, utility bills, child support, car payments, unpaid taxes, and other secured debt. If in one month, a doctor had to choose between paying his accounting bill or his rent, it would be essential to pay the rent. 

CITE: https://www.r2library.com/Resource/Title/082610254

Conclusion

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners(TM)Invite Dr. Marcinko

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Financial-Tech [Entrepreneurial Start-Ups] Falling

By Staff Reporters

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DEFINITION: Financial technology (abbreviated fintech or FinTech) is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, Blockchain, Cloud computing, and big Data are regarded as the “ABCD” (four key areas) of FinTech. The Fintech industry is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing, borrowing services, and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public.

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Financial technology companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies.

CITE: https://www.r2library.com/Resource/Title/082610254

A subset of fintech companies that focus on the insurance industry are collectively known as insurtech or insuretech

READ: https://tinyurl.com/yrx2kxy4

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INVESTING: https://www.amazon.com/Comprehensive-Financial-Planning-Strategies-Advisors/dp/1482240289/ref=sr_1_1?ie=UTF8&qid=1418580820&sr=8-1&keywords=david+marcinko

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DAILY UPDATE: The CARES Act and the MARKETS

By Staff Reporters

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The CARES Act, a COVID relief law that was enacted in March of 2020, made it easier to pull money from one’s 401(k) or IRA It allowed people to take up to $100,000 out of their accounts and have three years to pay it back without the normal 10% early withdrawal penalty and tax payment. For Americans who needed cash quickly, their 401(k) was a tempting well to dip into that wouldn’t have been otherwise available.

In the spring of 2020, nearly 20% of all withdrawals from 401(k)’s, between April 6th and June 26th were related to COVID, according to CNBC. CNBC reported that at Fidelity Investments, the largest provider of 401(k) plans in the U.S., more than 700,000 people took from their 401(k) or their 403(b) plan. The median amount was about $5,000, while more than 18,000 people asked for the full $100,000 amount.

And Vanguard’s How America Saves report from 2021 found that more than 7% of people withdrew from their 401(k) or a 401(b) — similar to a 401(k) but available to not-for-profit companies — in 2020.

READ: https://oig.treasury.gov/cares-act

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Here is where the major indexes settled:

  • The S&P 500 Index was down 65.41 (1.6%) at 4071.63; the Dow Jones industrial average was down 344.57 (1.0%) at 33,530.83; the NASDAQ Composite was down 238.05 (2.0%) at 11,799.16.
  • The 10-year Treasury yield was down about 12 basis points at 3.394%.
  • CBOEs Volatility Index was up 1.99 at 18.92.

Transportation stocks also had a rough day after United Parcel Service’s (UPS) shares dropped some 10% after its results missed analysts’ forecasts. Energy companies were lower after WTI crude oil futures dropped under $77 a barrel for the first time this month. Small-cap companies, which are considered to have greater recession exposure than larger businesses, were also under pressure, with the Russell 2000 index falling more than 2% and nearing a five-week low.

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

CITE: https://www.amazon.com/Dictionary-Health-Information-Technology-Security/dp/0826149952/ref=sr_1_5?ie=UTF8&s=books&qid=1254413315&sr=1-5

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Gifts that Violate the FCA Anti-kickback Statute

THE EIGHT [8] GIFTS

By Staff Reporters

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Much like the False Claims Act, the Anti-Kickback Statute (AKS) remains a frequent tool used by the Department of Justice to investigate the healthcare industry. Unlike the False Claims Act, the AKS imposes criminal penalties on violators.

FCA: https://medicalexecutivepost.com/2022/03/28/doj-recoveries-for-false-claims-act-cases-doubled-in-2021/

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

The leaders of a physicians’ practice may be held liable for what others in the practice do, even if the leader did not know precisely what was going on. It has been called the “crime of doing nothing.”

1. Providing free dinners or lunches to physicians

2. Travel expenses paid to physicians

3. Entering into consulting or research agreements with physicians under which payments are made but minimal (or zero) work is done in return

4. Other gifts, such as electronics or tickets to sporting events 

5. Laboratory pays a specimen processing fee to physicians above the fair value for those fees

6. Physician retention or recruitment agreements, when those agreements provide for payments above fair market value or are made with the intent to induce Medicare referrals

7. Agreements for speaking or teaching where the payments are above fair market value or made with the intent to induce referrals

8. Discount schemes that do not meet the safe harbor requirements

Source: Sara Kropf and Logan Lutton, Physicans Practice

STARK LAWS: https://medicalexecutivepost.com/2023/04/18/podcast-the-anti-kickback-and-stark-laws-for-doctors-and-hospitals-explained/

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