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Young adults are delaying life insurance purchases due to financial constraints and a preference for spending on immediate experiences. The insurance industry is responding with digital-first strategies and more flexible products.
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The DJIA closed above 40,000 for the first time after briefly crossing the milestone the day before and clinching its fifth winning week. Reddit shot up after announcing a partnership with OpenAI that lets the AI train on your posts and gives Reddit advertising dollars and the ability to use the tech to make new tools.
But, GameStop stock plunged after the recently reinvigorated meme stock filed to sell 45 million new shares and revealed that sales were down last quarter.
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Jerome Powell, chair of the Federal Reserve has tested positive for Covid. But the economy needn’t worry because he’s working from home.
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[By Dr. David E. Marcinko MBA MEd CMP™]
[By Ann Miller; RN, MHA]
Currently, there is a growing dilemma in the financial sales and services industry. It goes something like this:
Now, in as much as this controversy affects laymen and physician-investors alike, we went right to the source for up-to-date information regarding this often contentious topic, for an email interview and Q-A session, with Ben Aikin.
About Bennett Aikin AIF® and fi360.com
Bennett [Ben] Aikin is the Communications Coordinator for fi360.com. He oversees all communications for fi360. His responsibilities include messaging, brand management, copyrights and trademarks, and publications. Mr. Aikin received his BA in English from Virginia Tech in 2003 and is currently an MS candidate in Journalism from Ohio University.
Q. Medical Executive Post
You have been very helpful and gracious to us. So, let’s get right to it, Ben. In the view of many; attorneys, doctors, CPAs and the clergy are fiduciaries; most all others who retain this title seem poseurs; sans documentation otherwise.
A. Mr. Aikin
You are correct. Attorneys, doctors and clergy are the prototype fiduciaries. They have a clear duty to put the best interests of their clients, patients, congregation, etc., above their own. [The duty of a CPA isn’t as clear to me, although I believe you are correct]. Furthermore, this is one of the first topics we address in our AIF training programs, and what we call the difference between a profession and an industry. The three professions you name have three common characteristics that elevate them from an industry to a profession:
Q. Medical Executive Post
It seems that Certified Financial Planner®, Chartered Financial Analysts, Registered Investment Advisors and their representatives, Registered Representative [stock-brokers] and AIF® holders, etc, are not really financial fiduciaries, either by legal statute or organizational charter. Are we correct, or not? Of course, we are not talking ethics or morality here. That’s for the theologians to discuss.
A. Mr. Aikin
One of the reasons for the “alphabet soup”, as you put it in one of your white papers [books, dictionaries and posts] on financial designations, is that while there is a large body of knowledge, there is no one recognized body of knowledge that one must acquire to enter the financial services industry. The different designations serve to provide a distinguisher for how much and what parts of that body of knowledge you do possess. However, being a fiduciary is exclusively a matter of function.
In other words, regardless of what designations are held, there are five things that will make one a fiduciary in a given relationship:
So, if you are a fiduciary according to one of these definitions, you can be held accountable for a breach in fiduciary duty, regardless of any expertise you do, or do not have. This underscores the critical nature of understanding the fiduciary standard and delegating certain duties to qualified “professionals” who can fulfill the parts of the process that a non-qualified fiduciary cannot.
Q. Medical Executive Post
How about some of the specific designations mentioned on our site, and elsewhere. I believe that you may be familiar with the well-known financial planner, Ed Morrow, who often opines that there are more than 98 of these “designations”? In fact, he is the founder of the Registered Financial Consultants [RFC] designation. And, he wrote a Foreword for one of our e-books; back-in-the-day. His son, an attorney, also wrote as a tax expert for us, as well. So, what gives?
A. Mr. Aikin
As for the specific designations you list above, and elsewhere, they each signify something different that may, or may not, lend itself to being a fiduciary: For example:
• CFP®: The act of financial planning does very much imply fiduciary responsibility. And, the recently updated CFP® rules of conduct does now include a fiduciary mandate:
• 1.4 A certificant shall at all times place the interest of the client ahead of his or her own. When the certificant provides financial planning or material elements of the financial planning process, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board. [from http://www.cfp.net/Downloads/2008Standards.pdf]
• CFA: Very dependent on what work the individual is doing. Their code of ethics does have a provision to place the interests of clients above their own and their Standards of Practice handbook makes clear that when they are working in a fiduciary capacity that they understand and abide by the legally mandated fiduciary standard.
• FA [Financial Advisor]: This is a generic term that you may find being used by a non-fiduciary, such as a broker, or a fiduciary, such as an RIA.
• RIA: Are fiduciaries. Registered Investment Advisors are registered with the SEC and have obligations under the Investment Advisers Act of 1940 to provide services that meet a fiduciary standard of care.
• RR: Registered Reps, or stock-brokers, are not fiduciaries if they are doing what they are supposed to be doing. If they give investment advice that crosses the line into “comprehensive and continuous investment advice” (see above), their function would make them a fiduciary and they would be subject to meeting a fiduciary standard in that advice (even though they may not be properly registered to give advice as an RIA).
• AIF designees: Have received training on a process that meets, and in some places exceeds, the fiduciary standard of care. We do not require an AIF® to always function as a fiduciary. For example, we allow registered reps to gain and use the AIF® designation. In many cases, AIF designees are acting as fiduciaries, and the designation is an indicator that they have the full understanding of what that really means in terms of the level of service they provide. We do expect our designees to clearly disclose whether they accept fiduciary responsibility for their services or not and advocate such disclosure for all financial service representatives.
Q. Medical Executive Post
Your website, http://www.fi360.com, seems to suggest, for example, that banks/bankers are fiduciaries. We have found this not to be the case, of course, as they work for the best interests of the bank and stockholders. What definitional understanding are we missing?
A. Mr. Aikin
Banks cannot generally be considered fiduciaries. Again, it is a matter of function. A bank may be a named trustee, in which case a fiduciary standard would generally apply. Banks that sell products are doing so according to their governing regulations and are “prudent experts” under ERISA, but not necessarily held to a fiduciary standard in any broader sense.
Q. Medical Executive Post
And so, how do we rectify the [seemingly intentional] industry obfuscation on this topic. We mean, our readers, subscribers, book and dictionary purchasers, clients and colleagues are all confused on this topic. The recent financial meltdown only stresses the importance of understanding same.
For example, everyone in the industry seems to say they are the “f” word. But, our outreach efforts to contact traditional “financial services” industry pundits, CFP® practitioners and other certification organizations are continually met with resounding silence; or worse yet; they offer an abundance of parsed words and obfuscation but no confirming paperwork, or deep subject-matter knowledge as you have kindly done. We get the impression that some FAs honesty do-not have a clue; while others are intentionally vague.
A. Mr. Aikin
All of the evidence you cite is correct. But that does not mean it is impossible to find an investment advisor who will manage to a fiduciary standard of care and acknowledge the same. The best way to rectify confusion as it pertains to choosing appropriate investment professionals is to get fiduciary status acknowledged in writing and go over with them all of the necessary steps in a fiduciary process to ensure they are being fulfilled. There also are great resources out there for understanding the fiduciary process and for choosing professionals, such as the Department of Labor, the SEC, FINRA, the AICPA’s Personal Financial Planning division, the Financial Planning Association, and, of course, Fiduciary360.
We realize the confusion this must cause to those coming from the health care arena, where MD/DO clearly defines the individual in question; as do other degrees [optometrist, clinical psychologist, podiatrist, etc] and medical designations [fellow, board certification, etc.]. But, unfortunately, it is the state of the financial services industry as it stands now.
Q. Medical Executive Post
It is as confusing for the medical community, as it is for the lay community. And, after some research, we believe retail financial services industry participants are also confused. So, what is the bottom line?
A. Mr. Aikin
The bottom line is that lay, physician and all clients have a right to expect and demand a fiduciary standard of care in the managing of investments. And, there are qualified professionals out there who are providing those services. Again, the best way to ensure you are getting it is to have fiduciary status acknowledged in writing, and go over the necessary steps in a fiduciary process with them to ensure it is being fulfilled.
Q. Medical Executive Post
The “parole-evidence” rule, of contract law, applies, right? In dealing with medical liability situations, the medics and malpractice attorneys have a rule: “if it wasn’t written down, it didn’t happen.”
A. Mr. Aikin
An engagement contract accepting fiduciary status should trump a subsequent attempt to claim the fiduciary standard didn’t apply. But, to reiterate an earlier point, if someone acts in one of the five functional fiduciary roles, they are a fiduciary whether they choose to acknowledge it or not. I have attached a sample acknowledgement of fiduciary status letter with copies of our handbook, which details the fiduciary process we instruct in our programs, and our SAFE, which is basically a checklist that a fiduciary should be able to answer “Yes” to every question to ensure the entire fiduciary process is being covered.
Q. Medical Executive Post
It is curious that you mention checklists. We have a post arguing that very theme for doctors and hospitals as they pursue their medial error reduction, and quality improvement, endeavors. And, we applaud your integrity, and wish only for clarification on this simple fiduciary query?
A. Mr. Aikin
Simple definition: A fiduciary is someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.
Q. Medical Executive Post
Who is a financial fiduciary and what, if any, financial designation indicates same?
A. Mr. Aikin
Functional definition: See above for the five items that make you a fiduciary.
Financial designations that unequivocally indicate fiduciary duty: Short answer is none, only function can determine who is a fiduciary.
Q. Medical Executive Post
Please repeat that?
A. Mr. Aikin
Financial designations that indicate fiduciary duty: none. It is the function that determines who is a fiduciary. Now, having said that, the CFP® certification comes close by demanding their certificants who are engaged in financial planning do so to a fiduciary standard. Similarly, other designations may certify the holder’s ability to perform a role that would be held to a fiduciary standard of care. The point is that you are owed a fiduciary standard of care when you engage a professional to fill that role or they functionally become one. And, if you engage a professional to fill a non-fiduciary role, they will not be held to a fiduciary standard simply because they have a particular designation. One of the purposes the designations serve is to inform you what roles the designation holder is capable of fulfilling.
It is also worth keeping in mind that just being a fiduciary doesn’t equate to a full knowledge of the fiduciary standard. The AIF® designation indicates having been fully trained on the standard.
Q. Medical Executive Post
Yes, your website mentions something about fiduciaries that are not aware of same! How can this be? Since our business model mimics a medical model, isn’t that like saying “the doctor doesn’t know he is doctor?” Very specious, with all due respect!
A. Mr. Aikin
I think it is first important to note that this statement is referring not just to investment professionals. Part of the audience fi360 serves is investment stewards, the non-professionals who, due to facts and circumstances, still owe a fiduciary duty to another. Examples of this include investment committee members, trustees to a foundation, small business owners who start 401k plans, etc. This is a group of non-sophisticated investors who may not be aware of the full array of responsibilities they have.
However, even on the professional side I believe the statement isn’t as absurd as it sounds. This is basically a protection from both ignorant and unscrupulous professionals. Imagine a registered representative who, either through ignorance or design, begins offering comprehensive and continuous investment advice. Though they may deny or be unaware of the fact, they have opened themselves up to fiduciary liability.
Q. Medical Executive Post
Please clarify the use of arbitration clauses in brokerage account contracts for us. Do these disclaim fiduciary responsibility? If so, does the client even know same?
A. Mr. Aikin
By definition, an engagement with a broker is a non-fiduciary relationship. So, unless other services beyond the scope of a typical brokerage account contract are specified, fiduciary responsibility is inherently not applicable. Unfortunately, I do imagine there are clients who don’t understand this. Furthermore, AIF® designees are not prohibited from signing such an agreement and there are some important points to understand the reasoning.
First, by definition, if you are entering into such an agreement, you are entering into a non-fiduciary relationship. So, any fiduciary requirement wouldn’t apply in this scenario.
Second, if this same question were applied into a scenario of a fiduciary relationship, such as with an RIA, this would be a method of dispute resolution, not a practice method. So, in the event of dispute, the advisor and investor would be free to agree to the method of resolution of their choosing. In this scenario, however, typically the method would not be discussed until the dispute itself arose.
Finally, it is important to know that AIF/AIFA designees are not required to be a fiduciary. It is symbolic of the individuals training, knowledge and ongoing development in fiduciary processes, but does not mean they will always be acting as a fiduciary.
Q. Medical Executive Post
Don’t the vast majority of arbitration hearings find in favor of the FA; as the arbitrators are insiders, often paid by the very same industry itself?
A. Mr. Aikin
Actual percentages are reported here: http://www.finra.org/ArbitrationMediation/AboutFINRADR/Statistics/index.htm However, brokerage arbitration agreements are a dispute resolution method for disputes that arise within the context of the securities brokerage industry and are not the only means of resolving differences for all types of financial advisors. Investment advisers, for example, are subject to respond to disputes in a variety of forums including state and federal courts. Clients should look at their brokerage or advisory agreement to see what they have agreed to. If you wanted to go into further depth on this question, we would recommend contacting Brian Hamburger, who is a lawyer with experience in this area and an AIFA designee. Bio page: http://www.hamburgerlaw.com/attorneys/BSH.htm.
Q. Medical Executive Post
What about our related Certified Medical Planner® designation, and online educational program for financial advisors and medical management consultants? Is it a good idea – reasonable – for the sponsor to demand fiduciary accountability of these charter-holders? Cleary, this would not only be a strategic competitive advantage, but advance the CMP™ mission to put medical colleagues first and champion their cause www.CertifiedMedicalPlanner.org above all else.
A. Mr. Aikin
I think it is a good idea for any plan sponsor to demand fiduciary status be acknowledged from anyone engaged to provide comprehensive and continuous investment advice. I also think it is a good idea to be proactive in verifying that the fiduciary process is being followed.
Q. Medical Executive Post
Is there anything else that we should know about this topic?
A. Mr. Aikin
Yes, a further note about fi360’s standards. I wrote generically about the fiduciary standard, because there is one that is defined by multiple sources of regulation, legislation and case law. The process defined in our handbooks, we call a Fiduciary Standard of Excellence, because it covers that minimum standard and also best practice standards that go above and beyond. All of our Practices, which comprise that standard, are legally substantiated in our Legal Memoranda handbook, which was written by Fred Reish’s law firm, who is considered a leading ERISA attorney.
Additional resources:
Q. Medical Executive Post
Thank you so much for your knowledge and willingness to frankly share it with the Medical-Executive-Post.
Assessment
All are invited to continue the conversation with Mr. Aikin, asynchronously online, or thru this contact information:
fi360.com
438 Division Street
Sewickley, PA 15143
412-741-8140 Phone
866-390-5080 Toll-free phone
412-741-8142 Fax
Conclusion
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[By staff reporters]
The Eisenhower Matrix is a business management and strategic planning productivity tool that helps to sort tasks and spread them reasonably over time.
The sort out is based on the principals of urgency and importance. When assigned to each task, those two factors place the task to the relevant quadrant of the matrix.
After this routine is done, it’s enough to take a look at the matrix to visually estimate what you should start with.
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HOSPITALS
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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Walgreens has released its own brand of naloxone, a medication that reverses the effects of an opioid overdose. Available online now, Walgreens Brand Naloxone HCl Nasal Spray comes with two doses for $34.99, about $10 cheaper than the name-brand version, Narcan. The over-the-counter medication will also be available in stores by the end of May in the pain aisle, according to a press release, making the life-saving nasal spray more accessible.
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Here’s where the major benchmarks ended:
Among major companies, Nvidia (NVDA) dropped 2% Friday but still posted a 2.9% advance for the week ahead of the semiconductor leader’s quarterly earnings Wednesday. Among sectors, energy shares led gainers behind a 1% jump in WTI Crude Oil (/CL) futures. The small-cap Russell 2000® Index (RUT) ended little changed but still gained 1.7% for the week.
CITE: https://www.r2library.com/Resource
Fraudulent research papers have cost scientific journal publishers millions in lost revenue. (the Wall Street Journal)
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The 10 Top Causes of Adult Death in the U.S.A.
1. Heart disease 267.2* 2. Cancer 142.3 3. Unintentional injuries 64.0 4. COVID-19 44.5 5. Stroke 39.5 6. Chronic lower respiratory disease 34.3 7. Alzheimer disease 28.9 8. Diabetes 24.1 9 Kidney disease 13.8 10. Chronic liver disease and cirrhosis 13.8 Deaths per 100,000 population.
Source: Jeffrey Bendix, Medical Economics [5/15/24]
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Finance, economics and management essays of most current interest to all physicians and healthcare professionals
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DOCTORS AND MEDICAL PROFESSIONALS BEWARE?
We ARE Different!
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For example, in a tight job market, an emergency fund amounting to six months of household expenses does not consider the possibility of extended unemployment. I’ve always suggested 2-3 years for doctors. Venture capitalist lay-offs of physicians during the pandemic confirm this often criticized benchmark opinion of mine.
As another example, buying life insurance based on a multiple of income does not account for the specific needs of the surviving family, which include a mortgage, the need for college funding and an extended survivor income for a non-working spouse. Again a huge home mortgage, or several children or dependents, may be the financial bane of physician colleagues and life insurance.
CITE: https://www.r2library.com/Resource/Title/082610254
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EXAMPLES: Old/New Rules
There are also rules of thumb for determining how much net worth you will need to retire comfortably at a normal retirement age. Here is the calculation that Investopedia uses to determine your net worth:
RULES 72, 78 and 115: https://medicalexecutivepost.com/2022/01/30/the-rules-of-72-78-and-115/
INVITATION: https://medicalexecutivepost.com/2021/05/08/invite-dr-marcinko-to-your-next-big-event/
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
***
Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
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Here’s where the major benchmarks ended:
America’s oldest popular stock index, the Dow Jones Industrial Average, hit a brief record high yesterday morning when it traded above 40,000, reflecting renewed hope for the market’s health after Wednesday’s promising inflation report.
Walmart’s strength fueled a strong day for consumer staples shares. The S&P 500 Consumer Staples ($SP500#30), which includes Walmart as well as companies like Coca-Cola (KO) and Procter & Gamble (PG), surged 1.5% to its highest level in over two years.
Among other companies, Applied Materials (AMAT) fell 1.6% ahead of the semiconductor industry supplier’s quarterly earnings report, which is expected after Thursday’s close.
CITE: https://www.r2library.com/Resource
And, Core CPI, which tracks the price of goods and services excluding volatile food and energy prices and is closely watched as an inflation indicator, rose 3.6% from the same period last year. That’s the smallest annual increase since April 2021. On a monthly basis, core CPI rose 0.3%, marking the first time in six months that its growth slowed from the prior month. Other good signs include:
CITE: https://tinyurl.com/2h47urt5
Finally, Joe Manchin (D-W.Va.) and a group of Republican senators are moving to overturn a retirement investment planning rule that was finalized by the Labor Department last month. The Labor Department unveiled the new rule last month that would update the definition of an investment advice fiduciary under the Employee Retirement Income Security Act. Manchin and 15 Republican senators joined in co-sponsoring a Congressional Review Act (CRA) resolution that would overturn this new rule.
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By Staff Reporters
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The Dow Jones Industrial Average briefly crossed 40,000 for the first time, a milestone that appeared implausible little more than two years ago when the Federal Reserve began raising interest rates to cool an overheated economy.
Gloom and doom forecasts abounded. When the central bank ended the era of low rates that prevailed in the years following the global financial crisis, economists predicted painful consequences: a U.S. recession and rising unemployment.
But – So far … so good!
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By Health Capital Consultants, LLC
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Valuation of Accountable Care Organizations: Reimbursement
The U.S. healthcare payment and delivery system is increasingly moving to a value- and quality-based system. Accountable care organizations (ACOs) are at the forefront of delivering high-quality and cost-effective care to millions of Medicare beneficiaries and privately insured patients, incentivized by substantial shared savings for those who increase quality while containing costs.
CITE: https://www.r2library.com/Resource
This third installment of a five-part series on the valuation of ACOs will discuss the reimbursement environment in which ACOs participate.(Read more…)
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
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More people are interested in determining their “heart age” using new tests and tech tools, but some skeptics say it’s not a healthy data point to focus on. (the Wall Street Journal)
CITE: https://www.r2library.com/Resource
The Cathie Wood-led Ark Invest just made some significant trades. The most prominent among them were the increased stakes in Palantir Technologies Inc (NYSE:PLTR) and the reduced holdings in Coinbase Global Inc (NASDAQ: COIN).
Here’s where the major benchmarks ended:
Chipmaker shares led the way higher Wednesday, lifting the Philadelphia Semiconductor Index (SOX) almost 3% to a 10-week high. Interest-rate-sensitive sectors like real estate and utilities were also strong. The small-cap Russell 2000® Index (RUT) advanced 1.1% to a seven-week high. The U.S. Dollar Index ($DXY) slumped to its weakest level in five weeks, reflecting expectations for lower interest rates that may reduce the appeal of U.S. fixed income assets.
Among companies, Cisco Systems (CSC) surged 1.5% ahead of its quarterly results expected after Wednesday’s close. Dow member Walmart (WMT) is expected to release results Thursday morning as the unofficial retail earnings season accelerates.
CITE: https://tinyurl.com/2h47urt5
And … The U.S. Department of Justice (DOJ) announced it has established a new task force to take on healthcare monopolies and collusion. The task force, made up of prosecutors, economists, healthcare industry experts and others, will guide the division’s enforcement strategy and policy approach in healthcare, including by facilitating policy advocacy, investigations and, where warranted, civil and criminal enforcement in healthcare markets.
CITE: https://tinyurl.com/tj8smmes
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Electronically CUSTOMIZABLE FOR EVERY FOOT / ANKLE / LEG SURGEON
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CUSTOMIZABLE CMS & AGENCY FOR HEALTHCARE RESEARCH AND QUALITY STYLED PROTOCOLS, CHECKLISTS AND TEMPLATES
.… Specifically for Podiatrists ….
e-Podiatry Consent Forms™ is an innovative new suite of software programs from the Institute of Medical Business Advisors [iMBA, Inc]. Our products solve your informed consent problems and enhance the education, discussion and documentation of the informed consent process for all podiatrists performing foot, ankle and leg reconstructive surgical procedures.
THE PROBLEM
All podiatrists are being pressured by the Centers for Medicare and Medicaid Services [CMS], the Joint Commission on Accreditation of Healthcare Organizations [JCAHO], liability carriers and private insurance payers to make their consent process more patient-friendly, informed and easily understood. And, the pressure to standardize and comply is great.
Most recently, based on the need to make healthcare even safer, the Agency for Healthcare Research and Quality (AHRQ) undertook a major study to identify patient safety issues and develop recommendations for “best practices”.
The AHRQ Evidence Report
The AHRQ report identified the challenge of addressing shortcomings such as missed, incomplete or not fully comprehended informed consent, as a significant patient safety issue and opportunity for improvement.
The authors of the AHRQ report hypothesized that better informed patients:
“are less likely to experience errors by acting as another layer of protection.”
And, the AHRQ study ranked a “more interactive informed consent process” among the top 11 practices supporting more widespread implementation; especially for surgical consent forms.
THE SOLUTION
Why Us: https://epodiatryconsentforms.com/why-us/
One answer to the modern risk-management problem of “informed consent interactivity” may be e-Podiatry Consent Forms™ We license two core interactive surgical products, and a reference library, with related concepts and products in development:
Each e-Podiatry Consent Forms™ CD-ROM [secure email delivery is now available] is increasingly trusted as the simple solution to standardized communications across the entire office-enterprise; from managing-risk, informing-patients and complying with modern regulatory requirements through enhanced patient-centric informed consent encounters.
Thus, by improving the consistency, details, documentation and effectiveness of the informed consent process, e-Podiatry Consent Forms™ equips all podiatric surgeons with the tools needed to augment quality standards, reduce litigation potential and improve patient outcomes and safety.
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DELIVERY: By email only
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Celebrating 30 Years of Your Success!
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Engineers at MIT want to optimize your jog. Some of the brightest minds in math and science have created a predictive model that can tell you what kind of shoe you would run best in. The model assesses a person’s height, weight, and leg length to simulate their gait in sneakers of different materials and mid-soles. It then projects the optimal shoe based on which one produces the most efficient running form (i.e., which uses as little energy as possible per stride).
And so, as 3D printing and related tech continue to drive sneaker innovation, the researchers say their model will be beneficial to designers who want to create new kinds of highly functional kicks (Adidas funded some of the research).
Why? Marketing and product sales, of course. But, some experts suggest improved shoes might increase your running away speed by 8-10% while reducing injuries.
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The Foot and Ankle Research Consortium, Inc. (FARC) is the leading publisher of Podiatric educational software. Since 1992, we have been producing the most effective and innovative method of preparing for ALL the Podiatry Board Examinations.
CURIOUS STUDY: Hallux Valgus Met I
SCARF: scarf osteotomy
This includes: The American Board of Podiatric Surgery, The American Board Of Podiatric Orthopedics and Primary Podiatric Medicine, the American Podiatric Medical Specialties Board, ABLES and the PMLexis. (Now includes the latest information for all Board Re-Certifications).
CONTENTS: https://podiatryprep.org/compatibility-test/
Customization and private tutoring services also available.
FAN CLUB: https://podiatryprep.org/podiatryprep-fan-club/
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By Dr. David Edward Marcinko MBA MEd CMP®
www.CertifiedMedicalPlanner.org
Today’s electronic media makes physician-patient communication possible; yet there is another kind of intimacy. ICTs—information and communication technologies—enable 24/7 monitoring of basic information such as blood pressure, glucose levels, pulse, and respiration, etc.
Example:
In one study, an ICT not only made it easier for patients to stay in touch with their doctors, the outcomes were also significantly better.[i] Today, Hippocrates is no longer trailing patients around the house to keep track of their snacks and moods. But Hippocrates has gone digital in the form of a wearable device that records subtle changes in biological markers and communicates them instantaneously to a health provider.
While this is obviously a great advance, we suggest you pause for a moment before plugging in.
Why?
ICTs and social media tools can make a difference to one of the most important dimensions—physiological outcomes. But you can have the latest interactive technology at your disposal and still fail to be connected.
Example:
A story that a friend told me shows how.
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One morning, her elderly father was touching up the paint on his sailboat. Nearby, another boat-owner, who happened to be an emergency medical technician, noticed her father was struggling to breathe and that his lips had turned purple. A trip to the local community hospital led to a barrage of high-tech tests and procedures, a diagnosis of emphysema, later complications with cerebral hematomas, and hospitalizations and re-hospitalizations that brought him into contact with a neurologist, a neurosurgeon, a cardiologist, and a pulmonologist.
Throughout her father’s medical ordeal, the team of specialists stayed in touch with each other and the primary care physician via various electronic media. But one person remained out of the loop—her father. One day, six months into the experience, the primary care physician phoned our friend’s mother to check on his patient. Her father recalls thinking, “Why was he calling her?”
The physician was communicating, but he was emotionally disconnected.
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The Moral
The moral of the story: communication needs to be patient-centered in both electronic and psychological terms. That means understanding how someone likes to communicate and making sure the medium fits the message. Electronic media are just part of the equation. The other is the doctor-patient relationship. Once a relationship is established, it may be fine to use e-mail to send information about dosage.
But, delivering a new diagnosis may require the extra effort of scheduling a phone call or a face-to-face visit. Today, since you have so many Health 2.0 choices, it takes some effort to select the right way to communicate in a particular situation.
Use the Right Relationship Strategy
A colleague recently shared another story about an encounter with a specialist.
Example:
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After an examination for a minor ailment, he was told that there might be a medicated lotion that could ameliorate his condition. The doctor thought for a moment, then swiveled around to the computer on his desk. As our colleague watched the screen, his physician typed a few words into a search engine. Up popped a list and he wrote out a script. “Try this,” his doctor concluded. “I think it will help.”
It did, almost overnight.
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The Moral
Even though his physical problem had disappeared completely, our colleague felt there was something missing in the interaction. “It bothered me that my doctor turned to the Web for help at that moment. He found a cure, but I felt he wasn’t paying attention to me.”
The physician is supposed to be an authority who has a special relationship to the patient. “Anybody can Google,” our colleague complained. Was he being unreasonable? Maybe.
But; this story tells us something important about technology—it cuts both ways.
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Assessment
Everyone has their own preferences when it comes to how they want to interact with each other and with technology. If these preferences are explicit and aligned, the chances for a productive partnership are high. The preferences, however, are many and complex. You can easily get lost in the tangled thicket of interpersonal styles and virtual mediums.
In the Web 2.0 environment, it helps to narrow down the endless choices to just a few options.
MORE: Is Text Messaging being Overlooked as an Engagement Tool in Healthcare?
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
OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
[i] Hanson, William M. The Edge of Medicine: The Technology That Will Change Our Lives. New York, NY: Palgrave Macmillan, 2008.
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
http://www.MedicalBusinessAdvisors.com
SPONSORED BY: Marcinko & Associates, Inc.
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Here’s where the major benchmarks ended:
Among companies, Home Depot’s (HD) quarterly results reported earlier Tuesday kicked off the unofficial start of the retail earnings season. The home improvement retailer’s earnings topped expectations, but revenue missed forecasts, initially sending the company’s shares down sharply.
Home Depot also reaffirmed its full-year guidance for a 1% decline in comparable-store sales and a 1% increase in total sales. The company’s shares bounced back to end with a 0.1% loss.
CITE: https://www.r2library.com/Resource
And, the Cathie Wood-led Ark Invest just made some significant trades. The most prominent among them were the increased stakes in Palantir Technologies Inc (NYSE PLTR) and the reduced holdings in Coinbase Global Inc (NASDAQ: COIN).
Moreover, the website-building platform Squarespace is to go private, which it announced it’ll be doing in an all-cash deal with Permira, a private equity firm. Squarespace, which was public for nearly three years, joins a group of other smaller tech companies like Qualtrics that have recently pulled themselves off the public market. (CNBC)
CITE: https://tinyurl.com/2h47urt5
Employers and private insurers are paying hospitals more for inpatient and outpatient services than in previous years, a study from RAND Corporation finds. The American Hospital Association dismissed the report saying it offers a “skewed and incomplete picture.”
And finally … Kaiser Permanente began its 2024 earnings season with more than $2.7 billion in net income and $935 million in operating income, just months after sharing plans to lay off workers.
CITE: https://tinyurl.com/tj8smmes
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“MY CHART”
By AMANDA SEITZ
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E-Mailing your Physician may Cost You like Your Attorneys!
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WASHINGTON (AP) — The next time you message your doctor to ask about a pesky cough or an itchy rash, you may want to check your bank account first — you could get a bill for the question.
Hospital systems around the country are rolling out fees for some messages that patients send to physicians, who they say are spending an increasing amount of time poring over online queries, some so complex that they require the level of medical expertise normally dispensed during an office visit. Patient advocates, however, worry these new fees may deter people from reaching out to their doctor and that they add another layer of complexity to the U.S. health care system’s already opaque billing process.
“This is a barrier that denies access and will result in hesitancy or fear to communicate and potentially harm patients with lower quality of care and outcomes at a much higher cost,” said Cynthia Fisher, the founder of Patient Rights Advocate, a Massachusetts-based nonprofit that pushes for hospital price transparency.
CITE: https://www.r2library.com/Resource/Title/082610254
The explosion of telehealth over the last three years — driven by the COVID-19 outbreak and relaxed federal regulations for online care — prompted many doctors to adopt more robust telecommunication with their patients. Consultations that once happened in an office were converted to computer or smart phone visits. And health care systems invited patients to use new online portals to message their doctors with a question at any time, American Medical Association president Jack Resneck Jr. told The Associated Press.
“When people figured out this is cool and could improve care, you saw hospitals and practice groups saying to patients, welcome to your portal … you can ping your physician with questions if you want,” Resneck said. “We found ourselves as physicians getting dozens and dozens of these a day and not having time built in to do that work.”
The charges vary for each patient and hospital system, with messages costing as little as $3 for Medicare patients to as much $160 for the uninsured. In some cases, the final bill depends on how much time the doctor spends responding.
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BILLY EATS MEDICAL BILLS
By Eric Bricker MD
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By Staff Reporters
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
http://www.MedicalBusinessAdvisors.com
SPONSORED BY: Marcinko & Associates, Inc.
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Here’s where the major benchmarks ended:
Biotechnology and food and beverage shares were among the market’s strongest sectors Monday, while communication services stocks were among the biggest laggards. Energy shares took pressure despite a jump of 1.2% in WTI Crude Oil (/CL) futures, which ended above $79 per barrel after slumping last week to two-month lows.
CITE: https://www.r2library.com/Resource
Moderna is “bleeding money” as its forthcoming RSV vaccine doesn’t appear to deliver better results than other RSV shots already on the market. (Bloomberg)
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It’s ChatGPT-4o’s time to shine. The “o” stands for omni, and it’s the latest iteration of OpenAI’s signature chatbot. According to the company, it’s much faster with enhanced “capabilities across text, vision, and audio.”
CITE: https://tinyurl.com/2h47urt5
23% is the average portion of the bill hospitals collected from patients before treatment in Q1 of this year, up 3% YoY. (the Wall Street Journal)
CITE: https://tinyurl.com/tj8smmes
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By Dr. David Edward Marcinko MBA, MEd, CMP™
SPONSOR: http://www.CertifiedMedicalPlanner.org
[Publisher-in-Chief]
One relatively recent performance evaluation approach that was developed to help improve the relevance of comparisons is the separation of stock universes and managers by style. This classification method attempts to distinguish between stocks or manager philosophies based upon general financial characteristics of the investments.
The Managers
In very general terms, a manager is often a growth manager if the investment approach that the manager uses focuses on stocks showing growth and momentum in its earnings and price.
A value manager is generally considered to be a manager that attempts to identify under-valued securities based upon fundamental analysis of the company. A stock may be considered either “growth” or “value” based on a given set of valuation measures such as price-to-earnings, price-to-book value, and dividend yield.
The Style
The goal of style-based performance comparisons is to take some of the biases of the market environment out of the comparison, since a portfolio’s returns will ideally be evaluated versus a universe of alternatives that represent similar investment characteristics facing the same basic market environment. Thus, if the environment is one in which investors in stocks with strong past earnings and price momentum have generally performed better than those using fundamental analysis to find under-valued stocks, comparing the growth/momentum portfolio to a growth index or universe should help eliminate the bias.
Style-based universes can help the medical professional better understand the basic environment captured over a given performance time period.
However, there are significant limitations with the various approaches to constructing style-based stock and manager universes that should be understood if they are to be used in direct performance comparisons. Taking style-based stock universes separately from style-based manager universe, one of the most significant issues regarding the categorization of stocks by “growth” and “value” styles is the lack of agreement in the specification of what a growth stock is versus a value stock. With some universes divided by price-to-book value, others by price-to-earnings and/or dividend yields and some by combinations of similar variables, stocks are often classified very differently by two different stock universes. Further, stocks move across a broad spectrum as their price and fundamentals change, resulting in stocks constantly moving between growth and value categories for any given universe. If there is ambiguity in the rating of a given stock, then the difficulty is only compounded when we attempt to boil what may be complex investment processes of an investment manager or mutual fund portfolio manager to a simple classification of growth or value. A beaten down cyclical stock that no self-respecting growth/momentum manager would purchase may be classified as “growth” because it has a high price-to-earnings ratio (i.e., from low earnings) or a high price-to-book value (i.e., from asset write-offs). Value managers are not the only ones to own low valuation stocks that have improving earnings.
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The second problem with style categorization is that managers are often misclassified or they purposefully “game” the categorization of their own process in order to appear more competitive. As an example, if a manager that typically looks for relatively strong earnings/price momentum is lagging in a period when “growth” managers are outperforming, the rank of the manager can be improved simply by claiming a “value” approach. Morningstar’s “style box” classification of mutual funds by size and style of the current portfolio highlight this problem for any given fund by showing how their portfolio has changed its classification annually.
Current Events
The stock market has been booming lately. Up almost 100% since March 2009, after being down almost 50%. And so, perhaps this is a good time to re-evaluate the performance of your investment portfolio[s].
Assessment
However, this leads to an interesting question for the medical professional or his/her advisor: If a manager is still using the same basic investment philosophy and disciplines, but their “style” category has changed according to the ratings service, should you fire them? If the answer is “yes”, then the burden of monitoring and the cost of manager turnover are an inevitable part of narrow style based performance comparisons.
But, if the answer is “no,” then it is easy to see the difficulty of fitting every management approach into a simple style box. The more reasonable alternative is to use style-based stock and manager universes as a tool for understanding the environment, rather than an absolute performance benchmark.
Conclusion
And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com
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SPONSOR: http://www.CertifiedMedicalPlanner.org
By: Dr. David Edward Marcinko; MBA, MEd, CMP™
[Editor-in-Chief]
[PART 2 OF 8]
NOTE: This is an eight part ME-P series based on a weekend lecture I gave more than a decade ago to an interested group of graduate, business and medical school students. The material is a bit dated and some facts and specifics may have changed since then. But, the overall thought-leadership information of the essay remains interesting and informative. We trust you will enjoy it.
Introduction
Despite the SEC restrictions, noted in Part I of this series, some idea of potential demand for a new security issue can be gauged and have a bearing on pricing decisions.
For example, as CEO of a medical instrument company, or interested investor, would you rather see a great deal of interest in a potential new issue or not very much interest? There is however, one kind of advertisement that the underwriter can publish during the cooling off period. It’s known as a tombstone ad. The ad makes it clear that it is only an announcement and does not constitute an offer to sell or solicit the issue, and that such an offering can only be made by prospectus. SEC Rule 134 of the 1933 Act itself, refers to a tombstone ad as “communication not deemed a prospectus” because it makes reference to the prospectus in the ad. Tombstones have received their name because of the sparse nature of details found in them.
However, the most popular use of the tombstone ad is to announce the effectiveness of a new issue, after it has been successfully issued. This promotes the success of both he underwriter, as well as the company.
Since distributing securities involves potential liability to the investment bank, it will do everything possible to protect itself. So, near the end of the cooling off period, a meeting is held between the underwriter and the corporation. It is known as a due diligence meeting. At this meeting they both discuss amendments that are going to be necessary to make the registration statement complete and accurate. The corporate officers, and the underwriters sign, the final registration statement. They have civil liability for damages that result from omissions of material facts or
Mis-statements of fact. They also have criminal liability if the distribution is done by use of fraudulent, manipulative, or deceptive means. Due diligence takes on a whole new meaning when incarceration from a half-hearted effort underwriting efforts can occur. The investment bank strives to ensure that there have been no material changes to the issuer or the terms of the issue since the registration statement was filed.
Again, as a physician, how would you feel if you were an investment banker raising capital for a new pharmaceutical company that had developed a drug product that was highly marketable. But, on the day after the issue was effective, there was a major news story indicating that the company was being sued for patent infringement? What effect do you think that would have on the market price of this new issue? It would probably plunge. How could this situation have been prevented? The due diligence meeting is more than a cocktail party or a gathering in a smoke filled room. Otherwise, the company would require specially trained people, to do a patent search lessening the likelihood of this scenario. At the due diligence meeting, work is done on the preparation of the final prospectus, but the investment bank does not set the public offering price or the effective date at this meeting. The SEC will eventually set the effective date for the registration and it is on that date that the final offering price will be determined.
Once the SEC sets the effective date, sales may be executed and money can be accepted by the investment bank. It is at this time that the final prospectus, similar to the red herring but without the red ink and with the missing numbers, is issued. A prospectus is an abbreviated form of the registration statement, distributed to purchasers, on and after the effective date of the registration. It is not the same as the registration statement. A typical registration statement consists of papers that stand more than a foot high; rarely does a prospectus go beyond 40 or 50 pages. All purchasers will receive a final prospectus and then it becomes permissible for the underwriter to provide sales literature.
In addition to the requirement that a prospectus must be delivered to a purchaser of new issues no later than with confirmation of the trade, there are two other requirements that healthcare executives investors should know.
90-day: When an issuer has an initial public offering (IPO), there is generally a lack of publicly available material relating to the operations of that issuer. Because of this, the SEC requires that all members of the underwriting group make available a prospectus on an IPO for a period of 90 days after the effective date.
4O-day: Once an issuer has gone public, there are a number of routine filings that must be made with the SEC so there is publicly available information regarding the financial condition of that issuer. Since additional information is now available, the SEC requires that, on all issues other than IPOs, any member of the underwriting group must make available a prospectus for a period of 40 days after the effective date.
In the event that the investment bankers misgauged the marketplace, and the issue moves quite slowly, it is possible that information contained in the prospectus would be rendered obsolete by the SEC. Specifically, the SEC requires that any prospectus used more than 9 months after the effective date, may not have any financial information more than 16 months old. It can however, be amended or stickered, with updated information, as needed.
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Syndication Among Underwriters
Because the investment banking firm may be underwriting (distributing) a rather large dollar amount of securities, to spread its risk exposure, it may form a group made up of other investment bankers or underwriters, known as a syndicate. The syndicate is headed by a syndicate manager, or lead underwriter, and it is his job to decide whether to participate in the offering. If so, the managing underwriter will sign a non-binding agreement called a letter of intent. .
If all has gone well and the market place is sufficiently interested in the security, and the SEC has been satisfied with respect to the registration statement, it is time for all parties to the offering to formalize their relationships with a contract including the basic understandings reflected in the letter of intent. Three principal underwriting contracts are involved in the usual public offering, each serving a distinct purpose. These are the: Agreement among Underwriters, Underwriting Agreement, and the Dealer Agreement.
In the Agreement Among Underwriters (AAU), the underwriters committing to a portion of the issue, enter into an agreement establishing the nature and terms of their relationship with each other. It designates the syndicate manager to act on their behalf, particularly to enter into an Underwriting Agreement with the issuer, and to conduct the offering on behalf of each of them. The AAU will designate the managing underwriter’s compensation (management fee) for managing the offering.
The authority to manage the offering includes the authority to: agree with the issuer as to the public offering price; decide when to commence the offering; modify the offering price and selling commission; control all advertising; and, control the timing and effectiveness of the registration statement by quickly responding to deficiency letters. Each underwriter agrees to purchase a portion of the underwritten securities, which is known as each under-writer’s allotment (allocation). It is normally signed severally, but not jointly, meaning each underwriter is obligated to sell his allocation but bears no financial obligation for any unsold allotment of another underwriter. This is referred to as a divided account or a Western account. Much less frequently, an undivided or Eastern account, will be used. Each underwriter is responsible for unsold allotments of others, based upon a proportionate share of the offering.
The above comments referred to firm commitment underwriting. Another type of underwriting commitment however, is known as best efforts underwriting. Under the terms of best efforts underwriting, the underwriters make no commitment to buy or sell the issue, they simply do the best they can, acting as an agent for the issuer, and having no liability to the issuer if none of the securities are sold. There is no syndicate formed with a best efforts underwriting. The investment bankers form a selling group, with each member doing his best to sell his allotment. Two variations of a best efforts underwriting are: the all-or-none, and the mini-max (part-or-none) underwriting. Under the provisions of an all-or-none offering, unless all of the shares can be distributed within a specified period of time, the offering will terminate and no subscriptions or orders will be accepted or filled. Under mini-max, unless a set minimum amount is sold, the offering will be terminated.
SEC Rule 15c2-4 requires the underwriter to set up an escrow account for any money received before the closing date, in the event that it is necessary to return the money to prospective purchasers. If the “minimum”, or the “all” contingencies are met, the monies in escrow go to the issuer with the underwriters retaining their appropriate compensation. In order to make sure that investors are properly protected, the escrow account must be maintained at a bank for the benefit of the investors until every appropriate event or contingency has occurred. Then, the funds are properly returned to the investors. If the money is to be placed into an interest bearing account, it must have a maturity date no later than the closing date of the offering, or the account must be redeemable at face with no prepayment penalty as regards principal.
Underwriter Compensation Hierarchy
As we have seen, in a firm commitment the underwriter buys the entire issue from the issuer and then attempts to resell it to the public. The price at which the syndicate offers the securities to the public is known as the public offering price. It is the price printed on the front page of the prospectus.
However, the managing underwriter pays the issuer a lower price than this for the securities. The difference between that lower price and the public offering price is known as the spread or underwriting discount. Everyone involved in the sale of a new issue is compensated by receiving part of the spread. The amount of the spread is the subject of negotiations between the issuer and the managing underwriter, but usually is within a range established by similar transactions between comparable issuers and underwriters. The spread is also subject to NASD [now FINRA] review and approval before sales may commence. The spread is broken down by the underwriters so that a portion of it is paid to the managing underwriter for finding and packaging the issue and managing the offering (usually called the manager’s fee); and a portion is retained by each underwriter (called the underwriting or syndicate allowance) to compensate the syndicate members for their expenses, use of money, and assuming the risk of the underwriting. The remaining portion is allocated to the selling group and is called selling concession. It is often useful to remember the compensation hierarchy pecking order in the following way:
While the above deal with corporate equity, the only other significant item with respect to corporate debt is the Trust Indenture Act of 1939. This Federal law applies to public issues of debt securities in excess of $5,000,000. The thrust of this act is to require an indenture with an independent trustee (usually a bank or trust company) who will report to the holders of the debt securities on a regular basis.
Successful marketing of a new issue is a marriage between somewhat alien factors: compliance and numerous Federal, state, and self-regulatory rules and statutes; along with finely honed and profit-motivated sales techniques. It’s not too hard to see that there could be a real, or apparent, conflict of interest here. Most successful investment bankers have built their excellent reputations upon their ability to properly balance these two objectives consistently, year after year.
PART ONE:
Understanding investment banking rules, securities markets, brokerage accounts, margin and debt
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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While Buy Now-Pay Later (BNPL) reduces friction when purchasing, it’s giving some economy watchers unease. As Americans’ budgets buckle under the weight of inflation and higher interest payments, some worry BNPL is more of an invisible burden than a boon, Bloomberg reports. Beware the “phantom debt,” a Wells Fargo economist recently warned, referring to the BNPL industry’s short-term loans, which go largely unaccounted for by those tracking Americans’ debt load. That’s because, unlike credit cards and auto loan providers, Afterpay, Affirm, Klarna, and other BNPL providers don’t usually report transactions to credit scoring agencies.
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The Cathie Wood-led Ark Invest just made some significant trades. The most prominent among them were the increased stakes in Palantir Technologies Inc (NYSE: PLTR) and her reduced holdings in Coinbase Global Inc (NASDAQ: COIN).
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Dell has recently seen a decline in its revenue. In its most recent earnings report, it revealed that its net revenue shrunk by 11% year-over-year during its fiscal 2024 fourth quarter. For full year 2023, the company’s revenue was down by 14% to $88.4 billion. Partly that was due to a weak personal-computer market and the costs associated with more than 6,000 layoffs. But investors are excited by Dell’s growth potential for its server and computer businesses because of artificial intelligence, the Motley Fool reported.
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By Dr. David Edward Marcinko; MBA MEd CMP
[Editor-in-Chief]
As ME-P readers are aware, I’ve had a High Deductible Healthcare Plan [HDHP] coupled with a Health Savings Account [HSA] for my family, and consulting firm, for more than a decade. We’ve been very pleased with it thus far. No significant health problems along the way; just a few scares that proved costly, but benign, because of physician over-protection, over-reaction, or liability phobia; i.e., its better to be safe, than sorry!.
Still, having some economic skin in the insurance game because of the high-deductible feature, makes one an informed consumer. It also provides a sense of empowerment which, while ultimately illusionary for mortals, does offer a bit of self-control. After all, while we can’t mitigate against drunk-drivers and catastrophic diseases, we can live a healthy lifestyle and pay out of pocket for true health “maintenance” … much as we self-pay to maintain our cars and homes, etc. We can do our best … and hope for the rest.
Of course, the savings portion [HSA] has always been a secondary after-thought relative to the actual re-insurance coverage terms, exclusions and conditions. I personally remain focused on the indemnity or PPO type with full coverage, no co-payments and few restrictions. After all, if I use up my high-deductible for an adverse health incident, I figure I have far more problems to worry about than economic. My health, well-being and probably life are significantly in peril.
Nevertheless, as a health economist, I have always appreciated the above market rates given to my cash HSA account; 5% to 4.0% historically; and now 7.0%. Compared to the paltry 0.29% in my FDIC protected bank money market deposit account, or the 0.8% in my non-FDIC protected money market mutual fund [brokerage] account; this is a great deal.
Oh the Irony! 
So, it comes as some surprise that after more than a decade, and the recent health insurance reform political re-debacle, that there is a surge of interest in the HSA companion. This time however, interest comes not from the insured’s – but the insurers. And, not from the health insurance industry, but rather from the affiliated [and desperate] banking industry.
How so – and why?
Well, it now seems some insurance companies actually desire the business of folks like me who are willing to bear a higher deductible in return for lower premiums, or who are willing to research CPT® code prices and question the efficacy of the procedures they negotiate with physicians in a collaborative fashion; or who are willing to watch their weights and abstain from over-indulgences for their own good. How novel; and again, why?
It’s the HSA pot-o-gold; Duh!
The Proof
Below, is a copy of an email I personally received from eHealthInsurance soliciting my separate health savings account [HSA] business; not my health insurance coverage business:
Dear David,
Did you know that your health insurance plan can be complemented by a Health Savings Account (HSA)? If you haven’t opened an HSA yet, it’s not too late! An HSA allows you to:
There are no penalties or taxes when you use your HSA funds to pay for qualified medical expenses. Take advantage of your health plan’s benefits and open an HSA today! eHealthInsurance has partnered with nationally recognized, highly-rated HSA banks to offer you industry leading choices:
We’re with you every step of the way
Our representatives are also available for online chat 24 hours day.
Gary Matalucci
Vice President of Customer Care
The Question Is?
Such the deal; NOT!
So, any thinking HDHP participant [like me] must logically ask why such “nationally recognized, highly-rated HSA banks” would offer above market rates during these times of essentially high interest rate levels. Why the interest at all? Are they trying to loose money; or are they just befriending me?
As tennis player John McEnroe might say: are you serious!
Assessment
Yes John, the high rates are a serious loss-leader for more expensive products.
These banks want to make money; not from the interest rate spread on your HSA cash, but by enticing us to place this growing cash horde into their “investment vehicles.” In the recent past, some of us mortgaged our homes chasing the stock market or were goaded into flipping houses. And now, these same bankers are encouraging us to mortgage our health insurance on whatever high-priced, low-quality, fee-ridden, load bearing, snarky “investment vehicles” they can pawn off on us.
Of course, the health insurance companies get a fat sales commission or percentage cut, as well. A win-win situation for all but us – the insured.
Think AARP.
My Personal Advice
Do not do it. Do not take the bait.
The HSA portion of your HDHP is for paying premiums and future medical care in the event of a health catastrophe. It is for savings, not for investing in a risk-bearing vehicle. Far too many of us realized too late that a home is a place to live – not an investment. Likewise, a health savings account is for your health, and health insurance – not risky investing.
Assessment
Well, that’s my opinion as a retired surgeon, former insurance agent and financial advisor. Your own thoughts are appreciated.
Conclusion
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Filed under: Health Economics, Health Insurance, Op-Editorials, Retirement and Benefits | Tagged: banks, Dr. Marcinko, eHealthInsurance, Gary Matalucci, HDHCP, HDHP, health savings account, high deductible health plan, HSA, HSA Bank, JPMorgan Chase, Marcinko, MSA, OptumHealth Bank, PPO, Sovereign Bank, The Bancorp Bank, Wells Fargo Bank | 11 Comments »
By Staff Reporters
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Women’s health startups are still closing multi million-dollar funding deals despite a challenging venture capital (VC) landscape in which VC dollars are on track to fall by 73% this year compared to last.
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For example, in the last year, virtual maternity care program Pomelo Care raised $33 million in seed and Series A rounds led by Andreessen Horowitz; Caraway Health, a digital mental, physical, and reproductive health services platform, raised almost $17 million in a Series A round led by Maveron and GV (formerly Google Ventures); and Intrinsic, which acquires brands that make women’s health products, announced a $15 million equity fund raise (which is when a company raises money by selling its shares).
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WORKING MOMS
By Staff Reporters
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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HAPPY MOTHER’S DAY 2024
Fat Brands is the parent company of Fatburger, Johnny Rockets, and a few other restaurant chains. Last year, former CEO Andy Wiederhorn stepped down after the Los Angeles Times reported that the federal government was investigating him for fraud. He has since stayed on as the company’s chairman, but on Friday the Justice Department charged him with perpetuating a $47 million fraud against his own shareholders.
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In a recent Becker’s Health Care Newsletter, it is reported that a large multi-state hospital system is suing Multiplan for illegal price fixing and automatic significant price reductions, in particular, for out-of-network providers. The story states that Multiplan, by bombarding healthcare providers with automatic reductions in pricing, has made it impossible for providers to deliver healthcare.
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National Nurses Week, which ends today on May 12th, Florence Nightingale’s birthday
Rite Aid has announced that 39 stores are set to close their doors for good, this follows the decision to declare Chapter 11 bankruptcy back in October, 2023.
The strategy? Reduce the total number of stores to 1,600 nationwide.
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By Christopher J. Cummings CFA CFP™
By Dr. David Edward Marcinko MBA MEd CMP™
SPONSOR: http://www.CertifiedMedicalPlanner.org
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A hedge fund in the United States is generally a limited partnership providing a limited number of qualified investors with access to general partner investment decisions with little restriction in the type of investments or use of leverage. While the flexibility available to a hedge fund from a regulatory standpoint implies a high degree of potential risk, there is a wide range of investment philosophies, strategies, security types and objectives captured under the broad title of hedge fund.
Thus, generalizations regarding the characteristics of hedge funds are even less appropriate than with mutual funds, and evaluation of the investment characteristics and merits of a hedge fund strategy must be on a case-by-case basis. Likewise, the cost structure of a hedge fund often includes a base management fee to the general partner plus a performance-based fee or percentage of the profits, and must be evaluated on a case-by-case basis.
Several different investment vehicles operate under the oversight of varying regulatory bodies which provide access to an investment-managers’ discretionary decisions. While each approach generally represents ownership of an underlying pool of securities, there is usually a great deal of flexibility for the manager to deviate from a specific asset class or investment approach. Also, the fee structure of each vehicle can vary greatly and be quite large once distribution fees and sales charges are taken into account.
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Thus, it is important for a medical professional to remember the following:
1. Evaluate the features and costs of an investment vehicle carefully;
2. Consider the cash flows and valuations of the securities that the manager or management approach will focus on as if the investments were being made directly, and above all;
3. Read the prospectus or agreement carefully before making any investment.
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HEDGE FUND
By Staff Reporters
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“I did a lot of math. I made a lot of money, and I gave almost all of it away. That’s the story of my life.”
There are longer versions of the life story of Jim Simons, the legendary mathematician, quantitative investing pioneer, and philanthropist who just died at age 86, but his summary is pretty good.
In 1978, Simons started what would become his wildly successful hedge fund, Renaissance Technologies, where he used his mathematical savvy to deliver a performance that outpaced Warren Buffett and George Soros. Its signature fund averaged 66% annual returns.
With his wife, Marilyn Simons, he also started the Simons Foundation, which gave billions to causes they cared about—including, most recently, the Dublin–New York portals.
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Economic Implications of Pain, Suffering and Imminent Death
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By Eric Bricker MD
Examples of Inelastic Demand in Healthcare Are:
1) Emergencies
2) Patented Medications for Diseases That Have No Other Alternative Drugs
3) Doctor Specialties Where the Patient Has No Choice in the Services Such As Radiologists, Anesthesiologists and Pathologists [RAP]
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By Dr. David Edward Marcinko MBA MEd CMP
Understanding the Prisoner’s Dilemma
[From Wikipedia, the free encyclopedia]
As all economists and psychologists know, the prisoner’s dilemma is a standard example of a game analyzed in game theory that shows why two completely “rational” individuals might not cooperate, even if it appears that it is in their best interests to do so. It was originally framed by Merrill Flood and Melvin Dresher working at RAND in 1950. Albert W. Tucker formalized the game with prison sentence rewards and named it, “prisoner’s dilemma” (Poundstone, 1992), presenting it as follows:
Two members of a criminal gang are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communicating with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge. They hope to get both sentenced to a year in prison on a lesser charge.
Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to: betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent.
The offer is:
It is implied that the prisoners will have no opportunity to reward or punish their partner other than the prison sentences they get, and that their decision will not affect their reputation in the future. Because betraying a partner offers a greater reward than cooperating with him, all purely rational self-interested prisoners would betray the other, and so the only possible outcome for two purely rational prisoners is for them to betray each other.
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The interesting part of this result is that pursuing individual reward logically leads both of the prisoners to betray, when they would get a better reward if they both kept silent.
In reality, humans display a systemic bias towards cooperative behavior in this and similar games, much more so than predicted by simple models of “rational” self-interested action. A model based on a different kind of rationality, where people forecast how the game would be played if they formed coalitions and then they maximize their forecasts, has been shown to make better predictions of the rate of cooperation in this and similar games given only the payoffs of the game.
An extended “iterated” version of the game also exists, where the classic game is played repeatedly between the same prisoners, and consequently, both prisoners continuously have an opportunity to penalize the other for previous decisions. If the number of times the game will be played is known to the players, then (by backward induction) two classically rational players will betray each other repeatedly, for the same reasons as the single shot variant. In an infinite or unknown length game there is no fixed optimum strategy, and Prisoner’s Dilemma tournaments have been held to compete and test algorithms.
Advertising is sometimes cited as a real-example of the prisoner’s dilemma.
When cigarette advertising was legal in the United States, competing cigarette manufacturers had to decide how much money to spend on advertising. The effectiveness of Firm A’s advertising was partially determined by the advertising conducted by Firm B. Likewise, the profit derived from advertising for Firm B is affected by the advertising conducted by Firm A. If both Firm A and Firm B chose to advertise during a given period, then the advertising cancels out, receipts remain constant, and expenses increase due to the cost of advertising. Both firms would benefit from a reduction in advertising.
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However, should Firm B choose not to advertise, Firm A could benefit greatly by advertising. Nevertheless, the optimal amount of advertising by one firm depends on how much advertising the other undertakes. As the best strategy is dependent on what the other firm chooses there is no dominant strategy, which makes it slightly different from a prisoner’s dilemma. The outcome is similar, though, in that both firms would be better off were they to advertise less than in the equilibrium. Sometimes cooperative behaviors do emerge in business situations.
For instance, cigarette manufacturers endorsed the making of laws banning cigarette advertising, understanding that this would reduce costs and increase profits across the industry. This analysis is likely to be pertinent in many other business situations involving advertising
Without enforceable agreements, members of a cartel are also involved in a (multi-player) prisoners’ dilemma. ‘Cooperating’ typically means keeping prices at a pre-agreed minimum level. ‘Defecting’ means selling under this minimum level, instantly taking business (and profits) from other cartel members. Anti-trust authorities want potential cartel members to mutually defect, ensuring the lowest possible prices for consumers.
More Healthcare Examples:
Assessment
The prisoner’s dilemma game can be used as a model for many real world situations involving cooperative behavior. In casual usage, the label “prisoner’s dilemma” may be applied to situations not strictly matching the formal criteria of the classic or iterative games: for instance, those in which two entities could gain important benefits from cooperating or suffer from the failure to do so, but find it merely difficult or expensive, not necessarily impossible, to coordinate their activities to achieve cooperation.
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Novavax, the Covid vaccine-maker’s value doubled after it announced a $1.2 billion deal to develop new shots with Sanofi.
And, Mortgage rates fell for the first time since March, to just over 7%.
Here’s where the major stock market benchmarks ended:
Chip makers ranked among top gainers Friday after Taiwan Semiconductor Manufacturing (TSM) shares surged 4.5% after the company said its April revenue soared 60% behind AI-driven demand. The Philadelphia Semiconductor Index (SOX) climbed 1% and posted a 1.9% gain for the week. Consumer staples and transportation shares were also strong. Energy shares slipped behind a 1.2% drop in WTI Crude Oil (/CL) futures, though oil still ended slightly higher for the week.
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National hospital operator Ascension said a “cyber security event” has disrupted some of its clinical operations, according to a news release. Ascension, a St. Louis-based nonprofit and Catholic healthcare network, announced it had detected “unusual activity” on some of its systems. In response, the company kicked off an investigation and remediation efforts—including turning to outside cybersecurity firm Mandiant for help, as well as notifying the “appropriate authorities,” per the release.
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Planet Fitness to raise membership price for the first time since 1998. It’s going to take more than $10/month to join a gym once Planet Fitness raises the price of a basic membership for new members to $15 per month this summer. The $10 amount, which has held steady for 26 years, was considered a sweet spot where people were happy to sign up and wouldn’t bother to cancel once they gave up on their fitness goals. But after posting weaker-than-expected Q1 results, the gym chain decided it’s time to change, even though execs acknowledged that customers are looking to save rather than spend.
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DEFINITION: In macro-economics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define “money”, but standard measures usually include currency in circulation (i.e. physical cash) and demand deposits (depositors’ easily accessed assets on the books of financial institutions . The Central Bank [FOMC] of a country may use a definition of what constitutes legal tender for its purposes.
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Though there are a few variations of money supply, most economists tend to focus on M1 and M2. The former takes into account cash and coins in circulation, as well as demand deposits in checking accounts and traveler’s checks. In other words, money that’s either in your hand or can be accessed very easily.
Meanwhile, M2 accounts for everything in M1 and adds savings accounts, money market funds, and certificates of deposit (CDs) below $100,000. It’s money you have access to, but it takes a little extra effort to put this capital to work. It’s M2 money supply that’s raising eyebrows on Wall Street and making history.
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What’s of interest is what’s happened to M2 money supply over the trailing year. Following a peak of $21.7 trillion in July 2022, M2 has fallen to a fresh reading of $20.81 trillion, as of May 2023. Although the May reading was higher than April and broke a nine-month downtrend, we’ve still witnessed a 4.1% aggregate drop in M2 from its all-time high.
Considering that M2 enjoyed a historic expansion during the pandemic, it’s certainly possible that a 4.1% decline can be shrugged off as nothing more than money supply reverting back to the mean. But history suggests otherwise.
Though history rarely repeats itself on Wall Street, it often rhymes. We haven’t seen a meaningful year-over-year decline in M2 money supply since the Great Depression in 1933.
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And so, based on what we’re seeing from M2 money supply, commercial bank lending, and domestic banks tightening their lending standards for C&I loans, the ingredients for a U.S. recession are most definitely there. Stock losses have, historically, been most pronounced in the months that follow the official declaration of a recession by the eight-economist panel of the National Bureau of Economic Research.
However, Wall Street’s performance is largely dependent on your investment time frame. If you’re patient, these and other potentially worrisome money metrics represent nothing more than temporary white noise.
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In economics, Knightian uncertainty is a lack of any quantifiable knowledge about some possible occurrence, as opposed to the presence of quantifiable risk (e.g., that in statistical noise or a parameter’s confidence interval). The concept acknowledges some fundamental degree of ignorance, a limit to knowledge, and an essential unpredictability of future events.
Knightian uncertainty is named after University of Chicago economist Frank Knight (1885–1972), who distinguished risk and uncertainty in his work Risk, Uncertainty, and Profit:[1]
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Divining the Future?
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Here’s where the major benchmarks ended:
Interest-rate-sensitive sectors, such as real estate and utilities, were among the strongest performers Thursday. Energy shares were also strong after WTI Crude Oil (/CL) futures rose for a second straight day after sinking to a two-month low earlier this week. Semiconductor shares were under pressure after disappointing revenue guidance from chip designer Arm Holdings (ARM) sent its shares down 2.3%.
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The Dow jumped for the seventh straight day while the S&P 500 closed above 5,200 for the first time in a month as stocks climbed across the board, possibly a reaction to data showing that the cooling labor market could translate into a Federal Reserve interest rate cut in a few months. But, Roblox, tanked 22% yesterday after the company cut its annual bookings forecast. The rough patch suggests that the game’s pandemic-induced popularity has likely peaked.
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Last year, Uber boasted its first full-year profit since going public. But yesterday, the company reported a surprise loss for the first quarter of 2024, dashing investors’ hopes for steady profits and sending its stock way down.
Meanwhile, Uber’s smaller rival Lyft appears to have its foot on the gas pedal. It posted better-than-expected quarterly results on Tuesday and saw a stock bump yesterday.
Microsoft plans to put the cash toward creating an AI data center. President Biden was on hand in Wisconsin to help announce the news—and not just to tout a big investment that’s expected to create jobs.
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Personal Physician Budgeting Thoughts
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BY DR. DAVID E. MARCINKO MBA CMP®
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Although some doctors might view a budget as unnecessarily restrictive, sticking to a spending plan can be a useful tool in enhancing the wealth of a practice. And so, I will emphasize keys to smart budgeting and how to track spending and savings in these tough economic times; like today with the stock market busts, venture capitalists invading health care, corona virus the pandemic, aging baby boomer physicians and the great resignation; etc.
There is an aphorism that suggests, “Money cannot buy happiness.” Well, this may be true enough but there is also a corollary that states, “Having a little money can sure reduces the unhappiness.”
Unfortunately, today there is still more than a little financial unhappiness in all medical specialties. The challenges range from the commoditization of medicine, aging demographics, Medicare reimbursement cutbacks, ACA, and increased competition to floundering equity markets, the squeeze on credit and declines in the value of a practice. Few doctors seem immune to this “perfect storm” of economic woes. And then Covid-19, corona, and covid.
Far too many physicians are hurting and it is not limited to above-average earning professionals. However, one can strive to reduce the pain by following some basic budgeting principles. By adhering to these principles, physicians can eliminate the “too many days at the end of the month” syndrome and instead develop a foundation for building real wealth and security, even in difficult economic climates like we face today.
There are three major budget types. A flexible budget is an expenditure cap that adjusts for changes in the volume of expense items. A fixed budget does not. Advancing to the next level of rigor, a zero-based budget starts with essential expenses and adds items until the money is gone. Regardless of type, budgets can be extremely effective if one uses them at home or the office in order to spot money troubles before they develop.
For the purpose of wealth building, doctors may think of this budget as a quantitative expression of an action plan. It is an integral part of the overall cost-control process for the individual, his or her family unit or one’s medical practice.1
Preparing a net income statement (lifestyle cash flow budget) is often difficult because many doctors perceive it as punitive. Most doctors do not live a disciplined spending lifestyle and they view a budget as a compromise to it. However, a cash flow budget is designed to provide comfort when there is surplus income that can be diverted for other future needs. For example, if you treat retirement savings as just another periodic bill, you are more likely to save for it.
You may construct a personal cash budget by recording each cash receipt and cash disbursement on a spreadsheet. Only the date, amount and a brief description of the transaction are necessary. The cash budget is a simple tool that even doctors who lack accounting acumen can use. Since it is possible to track the cash-in and cash-out in the same format used for a standard check register, most doctors find that the process takes very little time. Such a budget will provide a helpful look at how well you are staying within available resources for a given period.
We then continue with an analysis of your operating checkbook and a review of various source documents such as one’s tax return, credit card statements, pay stubs and insurance policies. A typical statement will show all cash transactions that occur within one year. It is helpful to establish a monthly equivalent to all items of income and expense. For the purposes of getting started, note items of income and expense by the frequency you are accustomed to receiving or spending them.
For a medial office, the first operations budget item might be salary for the doctor and staff. Operating assets and other big ticket items come next. Some doctors/clients review their office P&L statements monthly, line by line, in an effort to reduce expenses. Then they add back those discretionary business expenses they have some control over.
Now, do you still run out of money before the end of the month? If so, you had better cut back on entertainment, eating dinner out or that fancy, new but unproven piece of medical equipment. This sounds draconian until you remind yourself that your choice is either: live frugally later or live a simpler lifestyle now and invest the difference.
As a young doctor, it may be a difficult trade-off. By mid-life, however, you are staring retirement in the face. That is why the action plan depends on your actions concerning monetary scarcity, a plan that one can implement and measure using simple benchmarks or budgeting ratios. By using these statistics, perhaps on an annual basis, the podiatrist can spot problems, correct them and continue planning actively toward stated goals like building long-term wealth.2
In the past, generic budgeting ratios would emphasize not spending more than 15 to 20 percent of your net salary on food or 8 percent on medical care. Now these estimates have given way to more rigorous numbers. Personal budget ratios, much like medical practice financial ratios, represent comparable benchmarks for parameters such as debt, income growth and net worth. Although these ratios are still broad, the following represent some useful personal budgeting ratios for physicians.
• Basic liquidity ratio = liquid assets / average monthly expenses. Cash-on-hand should approach 12 to 24 months or more in the case of a doctor employed by a financially insecure HMO or fragile medical group practice. Yes, chances are you have heard of the standard notion of setting enough cash aside to cover three months in a rainy day scenario. However, we have decried this older laymen standard for many years in our textbooks, white papers and speaking engagements as being wholly insufficient for the competitively unstable environment of modern healthcare.
• Debt to assets ratio = total debt / total assets. This percentage is high initially but should decrease with age as the doctor approaches a debt-free existence
• Debt to gross income ratio = annual debt repayments / annual gross income. This represents the adequacy of current income for existing debt repayments. Doctors should try to keep this below 20 to 25 percent.
• Debt service ratio = annual debt repayment / annual take-home pay. Physicians should aim to keep this ratio below 25 to 30 percent or face difficulty paying down debt.
• Investment assets to net worth ratio = investment assets / net worth. This budget ratio should increase over time as retirement approaches.
• Savings to income ratio = savings / annual income. This ratio should also increase over time as one retires major obligations like medical school debt, a practice loan or a home mortgage.
• Real growth ratio = (income this year – income last year) / (income last year – inflation rate). This budget ratio should grow faster than the core rate of inflation.
• Growth of net worth ratio = (net worth this year – net worth last year) / net worth last year – inflation rate). Again, this budgeting ratio should stay ahead of the specter of rising inflation.
In other words, these ratios will help answer the question: “How am I doing?”
Far from the burden that most doctors consider it to be, budgeting in one form or another is probably one of the greatest tools for building wealth. However, it is also one of the greatest weaknesses among physicians who tend to live a certain lifestyle.3
In fact, I have found that less than one in 10 medical professionals have a personal budget. Fear, or a lack of knowledge, is a major cause of procrastination. Fortunately, the following guidelines assist in reversing this microeconomic disaster.
1. Set reasonable goals and estimate annual income. Do not keep large amounts of cash at home or office. Deposit it in an FDIC insured money-market account for safety. Do not deposit it in a money market mutual fund with net asset value (NAV) that may “break the buck” and fall below the one-dollar level. The new limit is $250,000. Track actual bills and expenses.
2. Do not pay bills early, do not have more taxes withheld from your salary than needed and develop spending estimates to pay fixed expenses first. Fixed expenses are usually contractual and usually include housing, utilities, food, Social Security, medical, debt repayments, homeowner’s or renter’s insurance, auto, life and disability insurance, etc. Reduce fixed expenses when possible. Ultimately, all expenses get paid and become variable in the long run.
3. Make it a priority to reduce variable expenses. Variable expenses are not contractual and may include clothing, education, recreational, travel, vacation, gas, cable TV, entertainment, gifts, furnishings, savings, investments, etc. Trim variable expenses by 5 to 20 percent.
4. Use “carve-outs or “set-asides” for big ticket items and differentiate true wants from frivolous needs.
5. Calculate both income and expenses as a percentage of your total budget. Determine if there is a better way to allocate resources. Review the budget on a monthly basis to notice any variance. Determine if the variance was avoidable, unavoidable or a result of inaccurate assumptions. Take corrective action as needed.
6. Know the difference between saving and investing. Savers tend to be risk adverse while investors understand risk and take steps to mitigate it. Watch mutual fund commissions and investment advisory fees, which cut into return-rates. Keep investments simple and diversified (stocks, bonds, cash, index, no-load mutual and exchange traded funds, etc.).4
Sooner or later, despite the best of budgeting intentions, something will go awry. A doctor will be terminated or may be the victim of a reduction-in-force (RIF) because of cost containment initiatives of the corona pandemic. A medical practice partnership may dissolve or a local hospital or surgery center may close, hurting your practice and livelihood. Someone may file a malpractice lawsuit against you, a working spouse may be laid off or you may get divorced. Regardless of the cause, budgeting crisis management encompasses two different perspectives: awareness and execution.
First, if you become aware that you may lose your job, the following proactive steps will be helpful to your budget and overall financial condition.
• Decrease retirement contributions to the required minimum for company/practice match.
• Place retirement contribution differences in an after-tax emergency fund.
• Eliminate unnecessary payroll deductions and deposit the difference to cash.
• Replace group term life insurance with personal term or universal life insurance.
• Take your old group term life insurance policy with you if possible.
• Establish a home equity line of credit to verify employment.
• Borrow against your pension plan only as a last resort.
If you have lost your job or your salary has been depressed, negotiate your departure and get an attorney if you believe you lost your position through breach of contract or discrimination. Then execute the following steps to recalculate your budget and boost your wealth rebuilding activities.
• Prioritize fixed monthly bills in the following order: rent or mortgage; car payments; utility bills; minimum credit card payments; and restructured long-term debt.
• Consider liquidating assets to pay off debts in this order: emergency fund, checking accounts, investment accounts or assets held in your children’s names.
• Review insurance coverage and increase deductibles on homeowner’s and automobile insurance for needed cash.
• Then sell appreciated stocks or mutual funds; personal valuables such as furnishings, jewelry and real estate; and finally, assets not in pension or annuities if necessary.
• Keep or rollover any lump sum pension or savings plan distribution directly to a similar savings plan at your new employer, if possible, when you get rehired.
• Apply for unemployment insurance.
• Review your medical insurance and COBRA coverage after a “qualifying event” such as job loss, firing or even after quitting. It is a bit expensive due to a 2 percent administrative fee surcharge but this may be well worth it for those with preexisting conditions or who are otherwise difficult to insure. One may continue COBRA for up to 18 months.
• Consider a high deductible Health Savings Account (HSA), which allows tax-deferred dollars like a medical IRA, for a variety of costs not normally covered under traditional heath insurance plans. Self-employed doctors deduct both the cost of the premiums and the amount contributed to the HSA. Unused funds roll over until the age of 59½, when one can use the money as a supplemental retirement benefit.
• Eliminate unnecessary variable, charitable and/or discretionary expenses, and become very frugal.
The behavioral psychologist, Gene Schmuckler, PhD, MBA, sometimes asks exasperated doctors to recall the story of the old man who spent a day watching his physician son treating HMO patients in the office. The doctor had been working at his usual feverish pace all morning. Although he was working hard, he bitterly complained to his dad that he was not making as much money as he used to make. Finally, the old man interrupted him and said, “Son, why don’t you just treat the sick patients?” The doctor-son looked at his father with an annoyed expression and responded, “Dad, can’t you see, I do not have time to treat just the sick ones.”5
Always remember to add a bit of emotional sanity into your budgeting and economic endeavors.6
Regardless of one’s age or lifestyle, the insightful doctor realizes that it is never too late to take control of a lost financial destiny through prudent wealth building activities. Personal and practice budgeting is always a good way to start the journey.7
The Author:
Dr. Marcinko is a former university endowed chairman and professor, former certified financial planner and has been a medical management advisor for more than two decades. He is the CEO of www.MedicalBusinessAdvisors.com, a health economics and business finance consulting firm.
References:
1. Marcinko DE (Ed). The Business of Medical Practice (Advanced Profit Maximizing Techniques for Savvy Doctors). Springer Publishers, New York, NY, 2000 and 2004 2. Marcinko DE (Ed). Financial Planning for Physicians and Advisors, Jones and Bartlett Publishers, Sudbury, MA, 2005 3. Marcinko DE (Ed). Risk Management and Insurance Panning for Physicians and Advisors, Jones and Bartlett Publishers, Sudbury, MA, 2006. 4. Marcinko DE, Hetico HR. The Dictionary of Health Insurance and Managed Care. Springer Publishing, New York, 2007. 5. Marcinko DE, Hetico HR. The Dictionary of Health Economics and Finance. Springer Publishing, New York, 2008. 6. Marcinko DE, Hetico HR. Healthcare Organizations (Financial Management Strategies). Standard Technical Publishers, Blaine, WA, 2009. Additional Reference 7. Schmuckler E. Bridging Financial Planning and Human and Human Psychology. In, Marcinko DE (Ed): Financial Planning for Physicians and Healthcare Professionals. Aspen Publications, New York, NY, 2001, 2002 and 2003.
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It’s the first anniversary of the Medicaid unwinding for many states, a process that kicked off when federal rules that had kept people on Medicaid and the Children’s Health Insurance Program (CHIP) through the pandemic expired. And while states could redetermine eligibility again, things have “unwound” more than some experts predicted. Children were kicked off the rolls at higher rates than adults, according to a new study the Urban Institute released May 2. Twelve states—Montana, Iowa, South Dakota, Alabama, Idaho, Georgia, Texas, Arkansas, Oklahoma, Florida, Mississippi, Colorado—exceeded 100% of their total projections for disenrolling children.
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Here’s where the major benchmarks ended:
Retail and real estate shares were among the weakest areas Wednesday, while banks and utilities were firm. Utility shares extended a nearly month-long rally, which may in part reflect greater expectations for Fed rate cuts. Lower interest rates can make utility shares with high dividend yields relative to Treasuries more appealing. The Dow Jones Utility Average ($DJU) rose 0.5% to end at its highest level since late July and is up 12% from a mid-April low.
And, Shopify’s value plunged by nearly $20 billion after the online payments company released a gloomy forecast for this quarter. It’s the latest pandemic darling to stumble: According to the Financial Times, the firms that skyrocketed during lockdowns have lost a collective $1.5 trillion in value since the end of 2020.
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Steward Health Care System, the largest U.S. physician-owned hospital operator, is expected to file for chapter 11 bankruptcy as soon as Sunday, according to a WSJ report, which cited people familiar with the matter. Steward Health Care is the largest tenant of Medical Properties Trust (NYSE: MPW). Steward Health Care hired restructuring advisers to improve its liquidity and restore its balance sheet in January 2024.
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By Dr. David E. Marcinko MBA CMP®
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DEFINITION: Mental accounting attempts to describe the process whereby people code, categorize and evaluate economic outcomes. The concept was first named by Richard Thaler. Mental accounting deals with the budgeting and categorization of expenditures. People budget money into mental accounts for expenses or expense categories
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Mental Accounting is the act of bucketizing investments and then reviewing the performance of the individual buckets separately (e.g. investing at low savings rate while paying high credit card interest rates).
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Examples of mental accounting are: (1) matching costs to benefits (wanting to pay for vacation before taking it and getting paid for work after it was done, even though from perspective of time value of money the opposite should be preferred0, (2) aversion to debt (don’t like long-term debt for short-term benefit), (3) sunk-cost effect (illogically considering non-recoverable costs when making forward-going decisions).
In investing, treating buckets separately and ignoring interaction (correlations) induces people not to sell losers (even though they get tax benefits), prevent them from investing in the stock market because it is too risky in isolation (however much less so when looked at as part of the complete portfolio including other asset classes and labor income and occupied real estate), thus they “do not maximize the return for a given level of risk taken).
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Examples of Exploitation and Deception?
BY ERIC BRICKER MD
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
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Here’s where the major stock market benchmarks ended:
Interest-rate-sensitive sectors, such as real estate and utilities, were among the market’s strongest performers Tuesday. The Philadelphia Utility Index (UTY) rose 1.3%, its fifth straight daily gain, and hit its highest level in almost a year. The recent strength may in part reflect heightened expectations for lower interest rates, which may make utility shares with relatively high dividend yields compared to Treasuries more appealing. The utilities sector is also coming off a strong April, during which it was the only S&P 500 sector with a positive return, with chart patterns suggesting a bullish long-term momentum shift.
The semiconductor sector was among the weakest sectors Tuesday, partly behind a 1.7% drop in Nvidia (NVDA). The shares fell after billionaire investor Stanley Druckenmiller told CNBC he reduced his stake in the chipmaker in late March, saying that artificial intelligence may be a “little overhyped” for the short term.
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Peloton is reportedly being circled by private equity firms for a potential buyout of the enfeebled fitness company.
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The SEC is preparing to sue over Robinhood’s crypto business. Robinhood just revealed that it’s been notified that the SEC plans to bring an enforcement action against its crypto unit for alleged securities violations. But the online brokerage said it’s not sweating: “We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law,” Dan Gallagher, Robinhood’s chief legal, compliance, and corporate affairs officer, wrote in a blog post. Such a notice doesn’t always mean a suit will follow, but crypto companies and the agency have been sparring for years over whether crypto tokens count as securities.
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The Biden administration were quick to praise a new report that extends the lifespan of the Hospital Insurance Trust Fund, but the report renewed calls for increasing physician payments.
Amwell, a telehealth company, continues to struggle in the stock market, and both its bottom- and top-line results in the first quarter missed Street analysts’ estimates.
And … between the Change Healthcare cyberattack and Medicare Advantage headwinds, major insurers faced unique challenges in the first quarter.
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Stat: 8.7%. That’s the level to which US consumers can expect the 30-year mortgage rate to rise over the next year, which marks a series high, according to a New York Federal Reserve survey (MarketWatch)
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Domestic Medical SCHOOL Education
Robert James Cimasi
Todd A. Zigrang
U.S. medical education began in the late eighteenth century as an apprenticeship program in which physicians taught their trade to a few pupils, a pedagogical learning style which relied heavily upon the capacity, skills, and knowledge of the individual physician.[1] However, as learning newly discovered information and utilizing new technologies became more necessary to the industry’s practice, many physicians found the apprenticeship system no longer adequate as a manner of educating the next generation of physicians.[2] As a result, the conventional concept of medical education that originated in the U.S. in the 1750s was manifested through informal courses and demonstrations by private individuals or for-profit institutions. Those individuals who were not satisfied with a typical U.S. medical education, consisting of two identical 16-week lecture terms, might venture to Europe for a more formalized and detailed manner of learning.[3]
One of these students who studied in Europe was William Shippen, who began teaching an informal course on midwifery when he returned to the American colonies in 1762.[4] He later addressed the limitations of what might be taught in one informal course when he began teaching a lecture series on anatomy to help educate those who wished to be a physician, but could not travel abroad. John Morgan, a classmate of Shippen, noticed the potential of his friend’s endeavor and proposed the idea to create a professorship for the practice of medicine to the board of trustees of the College of Philadelphia.[5] Just across town, Thomas Bond, who conceived the idea of, and successfully established, the Pennsylvania Hospital with Benjamin Franklin, recognized the value to allowing medical students to participate in bedside training.[6] When Bond agreed to a partnership with the College of Philadelphia, the University of Pennsylvania became home to America’s first medical school.[7]
In 1893, Johns Hopkins University also made history by housing the first medical school that was able to operate out of a university-owned hospital.[8] The medical school not only encouraged clinical research to be performed by every member of their faculty, but the program also included a clinical research clerkship for every student during their rotation.[9] This program quickly became the model to which schools aspired and set the foundation for national medical education by connecting science and medical research with clinical medicine.[10]
With these early examples of medical schools, America’s field of medical education and clinical medicine made monumental strides. However, the societal pressures, caused by the U.S.’s population growth and demand for educated physicians,[11] did not allow many other universities to build on Johns Hopkins’ or the University of Pennsylvania’s foundation model, and led to the development of medical schools that had their own unique set of entrance and graduation requirements. While some focused entirely on medicine, other schools (termed Studia Generalia) also incorporated law, theology, and philosophy in their curricula.[12] In an attempt to both understand and make uniform the field of medical education, the American Medical Association (AMA) founded the Council on Medical Education (CME) in 1904.[13] The CME created minimum national educational standards for training physicians, and subsequently found that many schools did not meet these established standards.[14] However, the CME did not share the ratings of any of these medical schools “outside the medical fraternity.”[15]
In 1910, the AMA commissioned the Carnegie Foundation for Advancement of Teaching to conduct a study of medical education and schools.[16] Abraham Flexner conducted the inquiry and detailed his findings in what became known as The Flexner Report.[17] In his review of the U.S. medical education system, Flexner found that many of the proprietary medical schools met the AMA’s educational goals, but an imbalance existed between the pursuit of science and medical education.[18] Professors were focused solely on student throughput, and did not ensure a high level of medical training that reflected the developments in the medical industry.[19] As aptly noted by Dr. John Roberts in his book entitled The Doctor’s Duty to the State, “[m]any of you remember the struggle to wrest from medical teachers the power to create medical practitioners with almost no real knowledge of medicine. The medical schools of that day were, in many instances, conducted merely as money-makers for the professors.”[20] As the AMA gained more influence over the provision of healthcare in the U.S., the value and power of medical education also gained recognition. Notably, teaching hospitals had the power to influence the development of their disciplines through their research initiatives, the quality of care they provided, and their ability to operate as an economy of scale, allowing them to dictate the evolution of medical education.[21]
Since the establishment of the first medical school in the U.S., medical education has been the foundation for shaping standards of care in the practice of medicine and defining medical errors as deviations from the norms of clinical care.[22] When Thomas Bond helped establish the University of Pennsylvania medical school, he envisioned a normal day where the physician:
“…meets his pupils at stated times in the Hospital, and when a case presents adapted to his purpose, he asks all those Questions which lead to a certain knowledge of the Disease and parts affected; and if the Disease baffles the power of Art and the Patient falls a Sacrifice to it, he then brings his Knowledge to the Test, and fixes Honour [sic] or discredit on his Reputation by exposing all the Morbid parts to View, and Demonstrates by what means it produced Death, and if perchance he finds something unexpected, which Betrays an Error in Judgement [sic], he like a great and good man immediately acknowledges the mistake, and, for the benefit of survivors, points out other methods by which it might have been more happily treated.”[23]
Originally, students were to study and learn from medical errors and adverse events through medical education as a means of improving the quality of care. However, it is difficult to effectively implement any significant advancement learned through the research and investigation of prior errors in a timely and cost-effective manner. Additionally, physician supply shortages have only increased the amount of patients that a physician must see daily, while simultaneously decreasing the amount of time they can spend with each patient. Although medical education continues to be one of the central underpinnings to the development of the medical industry, outside pressures that shape the clinical practice of physicians continue to limit physician effectiveness in providing quality care to patients.[24]
While improving the quality and rigor of medical education has been a constant focus throughout the history of U.S. medical education, the challenges of replicating it on a scale that produces enough qualified physicians to meet the growing demands of the U.S. population, with constantly changing technologies, has consistently been a central issue. Notably, in the 13 years preceding 1980, the ratio of actively practicing physicians to patients increased by 50%.[25] This increased physician-to-patient ratio led to concerns over quality of care and cost-effectiveness, which in turn caused the creation of a government committee to evaluate physician manpower allocation and distribution. The Graduate Medical Education National Advisory Committee (GMENAC) was first chartered in April 1976, and later extended through September 1980.[26] Its purpose was to “analyze the distribution among specialties of physicians and medical students and to evaluate alternative approaches to ensure an appropriate balance,”as well as to“encourage bodies controlling the number, types, and geographic location of graduate training positions to provide leadership in achieving the recommended balance.”[27] GMENAC produced seven volumes of recommendations regarding physician manpower supply,[28] through the development of several models by which to determine the projected number of physicians that would be needed in the future by different subspecialties to achieve “a better balance of physicians.”[29] Ignoring critics of the report, U.S. medical schools adjusted their enrollment numbers in response to the GMENAC’s recommendations, causing a significant decrease in the supply of new physicians going into the 21st century.
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[1] “Healthcare Valuation: The Four Pillars of Healthcare Value,” Volume 1, Robert James Cimasi, MHA, ASA, FRRICS, MCBA, CVA, CM&AA, John Wiley & Sons, Hoboken, NJ: 2014, p. 22-23.RR
[2] “Before There Was Flexner,” American Medical Student Association, 2014,
http://www.amsa.org/AMSA/Homepage/MemberCenter/Premeds/edRx/Before.aspx (Accessed 1/7/15).
[3] “Time to Heal: American Medical Education from the Turn of the Century to the Era of Managed Care,” By Kenneth M. Ludmerer, New York, NY:
Oxford University Press, 1999, p. 4.
[4] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 3-5.
[5] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 3-5.
[6] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 3-5.
[7] “Before There Was Flexner,” American Medical Student Association, 2014,
http://www.amsa.org/AMSA/Homepage/MemberCenter/Premeds/edRx/Before.aspx (Accessed 1/7/15).
[8] “Time to Heal: American Medical Education from the Turn of the Century to the Era of Managed Care,” By Kenneth M. Ludmerer, New York, NY:
Oxford University Press, 1999, p. 18-19.
[9] “Time to Heal: American Medical Education from the Turn of the Century to the Era of Managed Care,” By Kenneth M. Ludmerer, New York, NY:
Oxford University Press, 1999, p. 18-19.
[10] “Science and Social Work: A Critical Appraisal,” By Stuart A. Kirk, and William James Reid, New York, NY: Columbia University Press, 2002, Chapter 1, p. 2-3.
[11] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 6-7.
[12] “Western Medicine: An Illustrated History,” By Irvine Loudon, New York, NY: Oxford University Press, 1997, p. 58.
[13] “Western Medicine: An Illustrated History,” By Irvine Loudon, New York, NY: Oxford University Press, 1997, p. 58.
[14] “Western Medicine: An Illustrated History,” By Irvine Loudon, New York, NY: Oxford University Press, 1997, p. 58.
[15] “Western Medicine: An Illustrated History,” By Irvine Loudon, New York, NY: Oxford University Press, 1997, p. 58.
[16] “U.S. Health Policy and Politics: A Documentary History,” By Kevin Hillstrom, Thousand Oaks, CA: CQ Press, 2012, p. 141.
[17] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 3-19.
[18] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 3-19.
[19] “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 3-19.
[20] “The Doctor’s Duty to the State: Essays on The Public Relations of Physicians,” By John B. Roberts, AM, MD, Chicago, IL: American Medical Association Press, 1908, p. 23.
[21] “Time to Heal: American Medical Education from the Turn of the Century to the Era of Managed Care,” By Kenneth M. Ludmerer, New York, NY:
Oxford University Press, 1999, p. 19.
[22] “Science and Social Work: A Critical Appraisal,” By Stuart A. Kirk, and William James Reid, New York: Columbia University Press, 2002, Chapter 1, p. 2-3.
[23] “Dr. Thomas Bond’s Essay on the Utility of Clinical Lectures,” By Carl Bridenbaugh, Journal of the History of Medicine (Winter 1947), p. 14; “The Flexner Report on Medical Education in the United States and Canada in 1910,” By Abraham Flexner, Bethesda, MD: Science and Health
Publications, Inc., p. 4.
[24] “Time to Heal: American Medical Education from the Turn of the Century to the Era of Managed Care,” By Kenneth M. Ludmerer, New York, NY:
Oxford University Press, 1999, p. xxi.
[25] “How many doctors are enough?” By J.E. Harris, Health Affairs, Vol. 5, No. 4 (1986), p.74.
[26] “Report of the Graduate Medical Education National Advisory Committee to the Secretary, Department of Health and Human Services – Volume VII,” Graduate Medical Education National Advisory Committee, Washington, DC: U.S. Government Printing Office, 1981, p. 5, 16.
[27] “Report of the Graduate Medical Education National Advisory Committee to the Secretary, Department of Health and Human Services – Volume VII,” Graduate Medical Education National Advisory Committee, Washington, DC: U.S. Government Printing Office, 1981, p. 73.
[28] “Report of the Graduate Medical Education National Advisory Committee to the Secretary, Department of Health and Human Services – Volume VII,” Graduate Medical Education National Advisory Committee, Washington, DC: U.S. Government Printing Office, 1981, p. 5-6.
[29] “GMENAC: Its Manpower Forecasting Framework,” By D.R. McNutt, American Journal of Public Health, Vol. 71, No. 10 (October 1981), p. 1119.
[30] “Crossing the Quality Chasm: A New Health System for the 21st Century,” Institute of Medicine, National Academy of Sciences, 2001, front matter.
[31] “Overview of Medical Errors and Adverse Events,” By Maité Garrouste-Orgeas, et al., Annals of Intensive Care, Vol. 2, No. 2 (2012), p. 6.
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MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
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Low-income communities often struggle to access healthcare services, but a new analysis of federally qualified health centers (FQHCs)—which provide quality care to patients regardless of ability to pay—has helped nail down one reason. When it comes to screening for certain cancers, these nonprofit community health centers have fallen far behind the national average, according to a study led by cancer center researchers at the University of Texas MD Anderson and the University of New Mexico.
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Healthcare bankruptcies surged in 2023, and it turns out many of the companies that went under had one thing in common: private equity (PE) ownership. At least 21% of the 80 healthcare companies that filed for bankruptcy last year were PE-owned, according to a report from the nonprofit Private Equity Stakeholder Project (PESP).
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Warren Buffett on contemplated his own mortality at Berkshire’s meeting. Succession was the topic du jour at the Berkshire Hathaway shareholder meeting in Omaha last week. After his longtime business partner Charlie Munger died last year at 99, CEO Warren Buffett—who turns 94 in August—revealed his heir apparent, Greg Abel, will have the final say on investment decisions in his absence. Buffett ended his Q&A portion with the quip, “I not only hope you come next year. I hope I come next year.” Adding to the ominous vibes, Buffett said AI is a genie that “scares the hell out of me.”
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Here’s where the major benchmarks ended:
Semiconductors were among the strongest performers Monday behind Micron Technology (MU), whose shares rallied 4.7% after Robert W. Baird upgraded the chipmaker to “outperform” from “neutral.” Micron Technology was the top gainer in the Philadelphia Semiconductor Index (SOX), which advanced 2.2% to near a four-week high.
Small-cap stocks also got out of the gate strong this week. The Russell 2000® Index (RUT) gained 1.2% to end at a four-week high but is still up just 1.7% for the year, while the S&P 500 has gained 8.6%.
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[By Dr. David Edward Marcinko MBA MEd CMP™]
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Financial benchmarking can assist healthcare managers and professional financial advisors in understanding the operational and financial status of their organization or practice.
The general process of financial benchmarking analysis may include three elements: (1) Historical subject benchmarking; (2) Benchmarking to industry norms; and, (3) Financial ratio analysis.
History
Historical subject benchmarking compares a healthcare organization’s most recent performance with its reported performance in the past in order to: examine performance over time; identify changes in performance within the organization (e.g., extraordinary and non-recurring events); and, to predict future performance.
As a form of internal benchmarking, historical subject benchmarking avoids issues such as: differences in data collection and use of measurement tools; and, benchmarking metrics that often cause problems in comparing two different organizations.
However, it is necessary to common size data in order to account for company differences over time that may skew results.
Benchmarking
Benchmarking to industry norms, analogous to Fong and colleagues’ concept of industry benchmarking, involves comparing internal company-specific data to survey data from other organizations within the same industry. This method of benchmarking provides the basis for comparing the subject entity to similar entities, with the purpose of identifying its relative strengths, weaknesses, and related measures of risk.
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Financial Ratio Analysis
The process of benchmarking against industry averages or norms will typically involve the following steps:
Trends
Financial ratio analysis typically involves the calculation of ratios that are financial and operational measures representative of the financial status of an enterprise. These ratios are evaluated in terms of their relative comparison to generally established industry norms, which may be expressed as positive or negative trends for that industry sector. The ratios selected may function as several different measures of operating performance or financial condition of the subject entity.
The Selected Ratios
Common types of financial indicators that are measured by ratio analysis include:
Data Homogeneity
The selection of financial ratios for analysis and comparison to the organization’s performance requires careful attention to the homogeneity of data. Benchmarking of intra-organizational data (i.e., internal benchmarking) typically proves to be less variable across several different measurement periods.
However, the use of data from external facilities for comparison may introduce variation in measurement methodology and procedure. In the latter case, use of a standard chart of accounts for the organization or recasting the organization’s data to a standard format can effectively facilitate an appropriate comparison of the organization’s operating performance and financial status data to survey results.
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Operational Performance Benchmarking
Operational benchmarking is used to target non-central work or business processes for improvement. It is conceptually similar to both process and performance benchmarking, but is generally classified by the application of the results, as opposed to what is being compared. Operational benchmarking studies tend to be smaller in scope than other types of benchmarking, but, like many other types of benchmarking, are limited by the degree to which the definitions and performance measures used by comparing entities differ. Common sizing is a technique used to reduce the variations in measures caused by differences (e.g., definition issues) between the organizations or processes being compared.
Common Sizing
Common sizing is a technique used to alter financial operating data prior to certain types of benchmarking analysis and may be useful for any type of benchmarking that requires the comparison of entities that differ on some level (e.g., scope of respective benchmarking measurements, definitions, business processes). This is done by expressing the data for differing entities in relative (i.e., comparable) terms.
Example:
For example, common sizing is often used to compare financial statements of the same company over different periods of time (e.g., historical subject benchmarking), or of several companies of differing sizes (e.g., benchmarking to industry norms). The latter type may be used for benchmarking an organization to another in its industry, to industry averages, or to the best performing agency in its industry. Some examples of common size measures utilized in healthcare include:
Assessment
As with any data, differences in how data is collected, stored, and analyzed over time or between different organizations may complicate the use of it at a later time. Accordingly, appropriate adjustments must be made to account for such differences and provide an accurate and reliable dataset for benchmarking.
Conclusion
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BY DR. DAVID E. MARCINKO MBA MEd CMP®
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The investment profession has come a long way since the door-to-door stock salesmen of the 1920s sold a willing public on worthless stock certificates. The stock market crash of 1929 and ensuing Great Depression of the 1930s forever changed the way investment operations are run. A bewildering array of laws and regulations sprung up, all geared to protecting the individual investor from fraud. These laws also set out specific guidelines on what types of investment can be marketed to the general public – and allowed for the creation of a set of investment products specifically not marketed to the general public. These early-mid 20th century lawmakers specifically exempted from the definition of “general public,” for all practical purposes, those investors that meet certain minimum net worth guidelines.
The lawmakers decided that wealth brings the sophistication required to evaluate, either independently or together with wise counsel, investment options that fall outside the mainstream. Not surprisingly, an investment industry catering to such wealthy individuals, such as doctors and healthcare professionals, and qualifying institutions has sprung up.
The original hedge fund was an investment partnership started by A.W. Jones in 1949. A financial writer prior to starting his investment management career, Mr. Jones is widely credited as being the prototypical hedge fund manager. His style of investment in fact gave the hedge fund its name – although Mr. Jones himself called his fund a “hedged fund.” Mr. Jones attempted to “hedge,” or protect, his investment partnership against market swings by selling short overvalued securities while at the same time buying undervalued securities. Leverage was an integral part of the strategy. Other managers followed in Mr. Jones’ footsteps, and the hedge fund industry was born.
In those early days, the hedge fund industry was defined by the types of investment operations undertaken – selling short securities, making liberal use of leverage, engaging in arbitrage and otherwise attempting to limit one’s exposure to market swings. Today, the hedge fund industry is defined more by the structure of the investment fund and the type of manager compensation employed.
The changing definition is largely a sign of the times. In 1949, the United States was in a unique state. With the memory of Great Depression still massively influencing common wisdom on stocks, the post-war euphoria sparked an interest in the securities markets not seen in several decades. Perhaps it is not so surprising that at such a time a particularly reflective financial writer such as A.W. Jones would start an investment operation featuring most prominently the protection against market swings rather than participation in them.
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Apart from a few significant hiccups – 1972-73, 1987 and 2006-07 being most prominent – the U.S. stock markets have been on quite a roll for quite a long time now. So today, hedge funds come in all flavors – many not hedged at all. Instead, the concept of a private investment fund structured as a partnership, with performance incentive compensation for the manager, has come to dominate the mindscape when hedge funds are discussed. Hence, we now have a term in “hedge fund” that is not always accurate in its description of the underlying activity. In fact, several recent events have contributed to an even more distorted general understanding of hedge funds.
During 1998, the high profile Long Term Capital Management crisis and the spectacular currency losses experienced by the George Soros organization both contributed to a drastic reversal of fortune in the court of public opinion for hedge funds. Most hedge fund managers, who spend much of their time attempting to limit risk in one way or another, were appalled at the manner with which the press used the highest profile cases to vilify the industry as dangerous risk-takers. At one point during late 1998, hedge funds were even blamed in the lay press for the currency collapses of several developing nations; whether this was even possible got short thrift in the press.
Needless to say, more than a few managers have decided they did not much appreciate being painted with the same “hedge fund” brush. Alternative investment fund, private investment fund, and several other terms have been promoted but inadequately adopted. As the memory of 1998 and 2007 fades, “hedge fund” may once again become a term embraced by all private investment managers.
ASSESSMENT: Physicians, and all investors, should be aware, however, that several different terms defining the same basic structure might be used. Investors should therefore become familiar with the structure of such funds, independent of the label. The Securities Exchange Commission calls such funds “privately offered investment companies” and the Internal Revenue Service calls them “securities partnerships.”
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By Eric Bricker MD
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The origins of managed care can be traced back to at least 1929, when Michael Shadid, a physician in Elk City, Oklahoma, established a health cooperative for farmers in a small community without medical specialists or a nearby general hospital. He sold shares to raise money to establish a local hospital and created an annual fee schedule to cover the costs of providing care. By 1934, 600 family memberships were supporting a staff that included Dr. Shadid, four newly recruited specialists, and a dentist. That same year, two Los Angeles physicians, Donald Ross and Clifford Loos, entered into a prepaid contract to provide comprehensive health services to 2,000 employees of a local water company
Development of Prepaid Health Plans
Other major prepaid group practice plans were initiated between 1930 and 1960, including the Group Health Association in Washington, DC, in 1937, the Kaiser-Permanente Medical Program in 1942, the Health Cooperative of Puget Sound in Seattle in 1947, the Health Insurance Plan of Greater New York in New York City in 1947, and the Group Health Plan of Minneapolis in 1957. These plans encountered strong opposition from the medical establishment, but they also attracted a large number of enrollees.
Today, such prepaid health plans are commonly referred to as health maintenance organizations (HMOs). The term “health maintenance organization,” however, was not coined until 1970, with the aim of highlighting the importance that prepaid health plans assign to health promotion and prevention of illness. HMOs are what most Americans think of when the term “managed care” is used, even though other managed care models have emerged over the past 40 years.
Public Managed Care Plans
The enactment of the Health Maintenance Organization Act of 1973 (P. L. 93-222) provided a major impetus to the expansion of managed health care. The legislation was proposed by the Nixon Administration in an attempt to restrain the growth of health care costs and also to preempt efforts by congressional Democrats to enact a universal health care plan. P. L. 93-222 authorized $375 million to assist in establishing and expanding HMOs, overrode state laws restricting the establishment of prepaid health plans, and required employers with 25 or more employees to offer an HMO option if they furnished health insurance coverage to their workers. The purpose of the legislation was to stimulate greater competition within health care markets by developing outpatient alternatives to expensive hospital-based treatment. Passage of this legislation also marked an important turning point in the U.S. health care industry because it introduced the concept of for-profit health care corporations to an industry long dominated by a not-for-profit business model.
In the decade following the passage of P. L. 93-222, enrollment in HMOs grew slowly. Stiff opposition from the medical profession led to the imposition of regulatory restrictions on HMO operations. But the continued, rapid growth in health care outlays forced government officials to look for new solutions. National health expenditures grew as a proportion of the overall gross national product (GNP) from 5.3 percent in 1960 to 9.5 percent in 1980. In response, Congress in 1972 authorized Medicare payments to free-standing ambulatory care clinics providing kidney dialysis to beneficiaries with end-stage renal disease. Over the following decade, the Federal Government authorized payments for more than 2,400 Medicare procedures performed on an outpatient basis.
Responding to the relaxed regulatory environment, physicians began to form group practices and open outpatient centers specializing in diagnostic imaging, wellness and fitness, rehabilitation, surgery, birthing, and other services previously provided exclusively in hospital settings. As a result, the number of outpatient clinics skyrocketed from 200 in 1983 to more than 1,500 in 1991, and the percentage of surgeries performed in hospitals was halved between 1980 (83.7%) and 1992.
The Influence of Medicare Prospective Payments
Health care costs, however, continued to spiral upward, consuming 10.8 percent of GNP by 1983. In an attempt to slow the growth rate, Congress in 1982 capped hospital reimbursement rates under the Medicare program and directed the secretary of HHS to develop a case mix methodology for reimbursing hospitals based on diagnosis-related groups (DRGs). As an incentive to the hospital industry, the legislation (the Tax Equity and Fiscal Responsibility Act (P. L. 97-248)) included a provision allowing hospitals to avoid a Medicare spending cap by reaching an agreement with HHS on implementing a prospective payment system (PPS) to replace the existing FFS system. Following months of intense negotiations involving federal officials and representatives of the hospital industry, the Reagan Administration unveiled a Medicare PPS. Under the new system, health conditions were divided into 468 DRGs, with a fixed hospital payment rate assigned to each group.
Once the DRG system was fully phased in, Medicare payments to hospitals stabilized. However, since DRGs applied to inpatient hospital services only, many hospitals, like many group medical practices, began to expand their outpatient services in order to offset revenues lost as a result of shorter hospital stays. Between 1983 and 1991, the percentage of hospitals with outpatient care departments grew from 50 percent to 87 percent. Hospital revenues derived from outpatient services doubled over the period, reaching 25 percent of all revenues by 1992
Since DRGs were applied exclusively to Medicare payments, hospitals began to shift unreimbursed costs to private health insurance plans. As a result, average per employee health plan premiums doubled between 1984 and 1991, rising from $1,645 to $3,605. With health insurance costs eroding profits, many employers took aggressive steps to control health care expenditures. Plan benefits were reduced. Employees were required to pay a larger share of health insurance premiums. More and more employers—especially large corporations—decided to pay employee health costs directly rather than purchase health insurance. And a steadily increasing number of large and small businesses turned to managed health care plans in an attempt to rein in spiraling health care outlays.
Managed Long-Term Services and Supports
Arizona became the first state to apply managed care principles to the delivery and financing of Medicaid-funded LTSS in 1987, when the federal Health Care Financing Administration (later renamed the Centers for Medicare and Medicaid Services) approved the state’s request to expand its existing Medicaid managed care program. Medicaid recipients with physical and developmental disabilities became eligible to participate in the Arizona Long-Term Care System as a result of this program expansion. Over the following two decades, a number of other states joined Arizona in providing managed LTSS, and by the summer of 2012, 16 states were operating Medicaid managed LTSS programs
Growth of Commercial Managed Care Plans
During the late 1980s and early 1990s, managed care plans were credited with curtailing the runaway growth in health care costs. They achieved these efficiencies mainly by eliminating unnecessary hospitalizations and forcing participating physicians and other health care providers to offer their services at discounted rates. By 1993, a majority (51%) of Americans receiving health insurance through their employers were enrolled in managed health care plans. Eventually, however, benefit denials and disallowances of medically necessary services led to a public outcry and the enactment of laws in many states imposing managed care standards. According to one analysis, nearly 900 state laws governing managed health practices were enacted during the 1990s. Among the measures approved were laws permitting women to visit gynecologists and obstetricians without obtaining permission from their primary care physician, establishing the right of patients to receive emergency care, and establishing the right of patients to appeal decisions made by managed care firms. Congress even got into the act in 1997 when it passed the Newborns’ Mother Health Protection Act, prohibiting so-called “drive-through deliveries” (overly restrictive limits on hospital stays following the birth of a child).
Research studies have yielded little evidence that managed health care excesses have undermined the quality of health care services. For example, in a survey of 2,000 physicians, Remler and colleagues found that managed care insurance plans denied only about 1 percent of recommended hospitalizations, slightly more than 1 percent of recommended surgeries, and just over 2.5 percent of referrals to specialists. In another study, Franks and colleagues found that medical outcomes were similar for participants in HMOs versus FFS health plans. Franks also reported that HMO patients were hospitalized 40 percent less frequently than FFS patients, and the rate of inappropriate hospitalizations was lower among HMO patients.
Link: http://www.ncd.gov
More Recent Developments
Over the past 15 to 20 years, the public outcry against draconian managed care practices has waned, primarily due to the expanded out-of-network options afforded to participants in HMOs, PPOs, and POS health plans. But the perception that managed care represents an overly cost-conscious, mass market approach to delivering medical services lingers among the American public, even though more than 135 million people with health insurance coverage now receive their primary, preventive, and acute health services through a managed care plan. People with disabilities, especially high users of medical care and LTSS, share many of the same negative perceptions of managed care as the general public.
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Conclusion
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A cooling labor market raises hopes for a rate cut in the summer. The latest Labor Department data shows the US added 175,000 jobs in April, but much less than the 300,000 added in March and also less than economists expected. Meanwhile, the unemployment rate ticked up to 3.9% from 3.8% in March, and wages rose less than anticipated. All that bad news for us was music to the ears of investors who are holding out hope that the Federal Reserve might still cut interest rates this summer despite most recent economic data showing that inflation is sticking around.
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