SPIKE: Hospitals Suing Patients for Unpaid Medical Bills

By Staff Reporters

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Spike in Hospitals Suing Patients for Unpaid Medical Bills

 •  Lawsuits over unpaid bills for hospitals rose by 37% in Wisconsin from 2001 to 18.
 •  Wage garnishments from the lawsuits rose 27% in that time period.
 •  5% of hospitals account for 25% of lawsuits. Nonprofit hospitals and critical access hospitals are more likely to sue patients, according to the study.
 •  There were 1.86 lawsuits per 1,000 Black residents in 2018, compared to 1.32 per 1,000 white residents.

Source: YaleNews, December 6, 2021

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RICARDIAN DEMAND HEALTH ECONOMICS: https://medicalexecutivepost.com/2021/12/14/ricardian-derived-demand-economics-in-medicine/

RISING HEALTH CARE COSTS: https://medicalexecutivepost.com/2018/03/11/medical-treatment-costs-becoming-expensive-25-factors/

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CRAFTING A BUSINESS PLAN AND STARTING A MEDICAL PRACTICE

[Understanding Business Models, the Entrepreneurial Spirit and Obtaining Capital]

Dr. DEM

By Dr. David Edward Marcinko MBA CMP™

Medical Office Business Plan

We have been involved in the highly competitive private, and/or “for-profit”, education sector for two decades. Yet, are also familiar with the larger public university and sustainable ecosystem.

Solo Medical Practice NOT Dead!

For example, we’ve participated in start-up business competitions, and refereed PhD / MBA Capstone presentations at Georgia State University, Emory University and the Georgia Institute of Technology; including at Triangle Technology Park, NC; and the Whitman School of Business in Syracuse, NY.

Funding was achieved for emerging initiatives deemed most efficient and profitable; like solo and small group medical practices and clinics.

Executive Service Line [ESL] education

Also known as Executive Service Line [ESL] education, this business model refers to academic programs for business leaders and adults that are generally non-credit and non-degree-granting, but may lead to professional certifications.

Estimates by Business Week magazine suggest that executive education in the United States is a $900 million annual business with approximately 80 percent provided by university schools. Beside the educational benefits, monetary dividends are reaped as open enrollment eases matriculation access. Similar programs at the Wharton School, Darden, Harvard and the Goizueta Business School at Emory University charge premium rates for the implied institutional moniker.

Assessment

And, an imperative is that electronic technology be used to expand the universe of targeted adult-learners. This is for aspiring professionals and executives, or those already in the workforce. The tuition gathering universe is thus expanded beyond the School. We have developed and launched several such successful programs that were merged or sold to private investors, colleges and hedge funds

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INFLATION Is Here – UPDATE?

But for How Long?

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Vitaliy N. Katsenelson, CFA

[CEO & Chief Investment Officer]

READERS

DEFINITION: In economics, inflation (or less frequently, price inflation) is a general rise in the price level of an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index, usually the consumer price index, over time.

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

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DEAR READERS

This essay is going to be long.
I blame inflation, be it transitory or not, for inflating its length. 

The number one question I am asked by clients, friends, readers, and random strangers is, are we going to have inflation? 

I think about inflation on three timelines: short, medium, and long-term

The pandemic disrupted a well-tuned but perhaps overly optimized global economy and time-shifted the production and consumption of various goods. For instance, in the early days of the pandemic automakers cut their orders for semiconductors. As orders for new cars have come rolling back, it is taking time for semiconductor manufacturers, who, like the rest of the economy, run with little slack and inventory, to produce enough chips to keep up with demand. A $20 device the size of a quarter that goes into a $40,000 car may have caused a significant decline in the production of cars and thus higher prices for new and used cars. (Or, as I explained to my mother-in-law, all the microchips that used to go into cars went into a new COVID vaccine, so now Bill Gates can track our whereabouts.)

Here is another example. The increase in new home construction and spike in remodeling drove demand for lumber while social distancing at sawmills reduced lumber production – lumber prices spiked 300%. Costlier lumber added $36,000 to the construction cost of a house, and the median price of a new house in the US is now about $350,000.

The semiconductor shortage will get resolved by 2022, car production will come back to normal, and supply and demand in the car market will return to the pre-pandemic equilibrium. High prices in commodities are cured by high prices. High lumber prices will incentivize lumber mills to run triple shifts. Increased supply will meet demand, and lumber prices will settle at the pre-pandemic level in a relatively short period of time. That is the beauty of capitalism! 

Most high prices caused by the time-shift in demand and supply fall into the short-term basket, but not all. It takes a considerable amount of time to increase production of industrial commodities that are deep in the ground – oil, for instance. Low oil prices preceding the pandemic were already coiling the spring under oil prices, and COVID coiled it further. It will take a few years and increased production for high oil prices to cure high oil prices. Oil prices may also stay high because of the weaker dollar, but we’ll come back to that.

Federal Reserve officials have told us repeatedly they are not worried about inflation; they believe it is transitory, for the reasons I described above. We are a bit less dismissive of inflation, and the two factors that worry us the most in the longer term are labor costs and interest rates. 

Let’s start with labor costs 

During a garden-variety recession, companies discover that their productive capacity exceeds demand. To reduce current and future output they lay off workers and cut capital spending on equipment and inventory. The social safety net (unemployment benefits) kicks in, but not enough to fully offset the loss of consumer income; thus demand for goods is further reduced, worsening the economic slowdown. Through millions of selfish transactions (microeconomics), the supply of goods and services readjusts to a new (lower) demand level. At some point this readjustment goes too far, demand outstrips supply, and the economy starts growing again.

This pandemic was not a garden-variety recession 

The government manually turned the switch of the economy to the “off” position. Economic output collapsed. The government sent checks to anyone with a checking account, even to those who still had jobs, putting trillions of dollars into consumer pockets. Though output of the economy was reduced, demand was not. It mostly shifted between different sectors within the economy (home improvement was substituted for travel spending). Unlike in a garden-variety recession, despite the decline in economic activity (we produced fewer widgets), our consumption has remained virtually unchanged. Today we have too much money chasing too few goods– that is what inflation is. This will get resolved, too, as our economic activity comes back to normal.

But …

Today, though the CDC says it is safe to be inside or outside without masks, the government is still paying people not to work. Companies have plenty of jobs open, but they cannot fill them. Many people have to make a tough choice between watching TV while receiving a paycheck from big-hearted Uncle Sam and working. Zero judgement here on my part – if I was not in love with what I do and had to choose between stacking boxes in Amazon’s warehouse or watching Amazon Prime while collecting a paycheck from a kind uncle, I’d be watching Sopranos for the third time. 

To entice people to put down the TV remote and get off the couch, employers are raising wages. For instance, Amazon has already increased minimum pay from $15 to $17 per hour. Bank of America announced that they’ll be raising the minimum wage in their branches from $20 to $25 over the next few years. The Biden administration may not need to waste political capital passing a Federal minimum wage increase; the distorted labor market did it for them. 

These higher wages don’t just impact new employees, they help existing employees get a pay boost, too. Labor is by far the biggest expense item in the economy. This expense matters exponentially more from the perspective of the total economy than lumber prices do. We are going to start seeing higher labor costs gradually make their way into higher prices for the goods and services around us, from the cost of tomatoes in the grocery store to the cost of haircuts.

Only investors and economists look at higher wages as a bad thing. These increases will boost the (nominal) earnings of workers; however, higher prices of everything around us will negate (at least) some of the purchasing power. 

Wages, unlike timber prices, rarely decline. It is hard to tell someone “I now value you less.” Employers usually just tell you they need less of your valuable time (they cut your hours) or they don’t need you at all (they lay you off and replace you with a machine or cheap overseas labor). It seems that we are likely going to see a one-time reset to higher wages across lower-paying jobs. However, once the government stops paying people not to work, the labor market should normalize; and inflation caused by labor disbalance should come back to normal, though increased higher wages will stick around.

There is another trend that may prove to be inflationary in the long-term: de-globalization.  Even before the pandemic the US set plans to bring manufacturing of semiconductors, an industry deemed strategic to its national interests, to its shores. Taiwan Semiconductor and Samsung are going to be spending tens of billions of dollars on factories in Arizona.  

The pandemic exposed the weaknesses inherent in just-in-time manufacturing but also in over reliance on the kindness of other countries to manufacture basic necessities such as masks or chemicals that are used to make pharmaceuticals.  Companies will likely carry more inventory going forward, at least for a while.  But more importantly more manufacturing will likely come back to the US. This will bring jobs and a lot of automation, but also higher wages and thus higher costs.  

If globalization was deflationary, de-globalization is inflationary  

We are not drawing straight-line conclusions, just yet. A lot of manufacturing may just move away from China to other low-cost countries that we consider friendlier to the US; India and Mexico come to mind.  

And then we have the elephant in the economy – interest rates, the price of money. It’s the most important variable in determining asset prices in the short term and especially in the long term. The government intervention in the economy came at a significant cost, which we have not felt yet: a much bigger government debt pile. This pile will be there long after we have forgotten how to spell social distancing
 
The US government’s debt increased by $5 trillion to $28 trillion in 2020 – more than a 20% increase in one year! At the same time the laws of economics went into hibernation: The more we borrow the less we pay for our debt, because ultra-low interest rates dropped our interest payments from $570 billion in 2019 to $520 billion in 2020. 

That is what we’ve learned over the last decade and especially in 2020: The more we borrow the lower interest we pay. I should ask for my money back for all the economics classes I took in undergraduate and graduate school.

This broken link between higher borrowing and near-zero interest rates is very dangerous. It tells our government that how much you borrow doesn’t matter; you can spend (after you borrow) as much as your Republican or Democratic heart desires. 

However, by looking superficially at the numbers I cited above we may learn the wrong lesson. If we dig a bit deeper, we learn a very different lesson: Foreigners don’t want our (not so) fine debt. It seems that foreign investors have wised up: They were not the incremental buyer of our new debt – most of the debt the US issued in 2020 was bought by Uncle Fed. Try explaining to your kids that our government issued debt and then bought it itself. Good luck.

Let me make this point clear: Neither the Federal Reserve, nor I, nor a well-spoken guest on your business TV knows where interest rates are going to be (the total global bond market is bigger even than the mighty Fed, and it may not be able to control over interest rates in the long run). But the impact of what higher interest rates will do the economy increases with every trillion we borrow. There is no end in sight for this borrowing and spending spree (by the time you read this, the administration will have announced another trillion in spending). 

Let me provide you some context about our financial situation 


The US gross domestic product (GDP) – the revenue of the economy – is about $22 trillion, and in 2019 our tax receipts were about $3.5 trillion. Historically, the-10 year Treasury has yielded about 2% more than inflation. Consumer prices (inflation) went up 4.2% in April. Today the 10-year Treasury pays 1.6%; thus the World Reserve Currency debt has a negative 2.6% real interest rate (1.6% – 4.2%). 

These negative real (after inflation) interest rates are unlikely to persist while we are issuing trillions of dollars of debt. But let’s assume that half of the increase is temporary and that 2% inflation is here to stay. Let’s imagine the unimaginable. Our interest rate goes up to the historical norm to cover the loss of purchasing power caused by inflation. Thus it goes to 4% (2 percentage points above 2% “normal” inflation). In this scenario our federal interest payments will be over $1.2 trillion (I am using vaguely right math here). A third of our tax revenue will have to go to pay for interest expense. Something has to give. It is not going to be education or defense, which are about $230 billion and $730 billion, respectively. You don’t want to be known as a politician who cut education; this doesn’t play well in the opponent’s TV ads. The world is less safe today than at any time since the end of the Cold War, so our defense spending is not going down (this is why we own a lot of defense stocks). 

The government that borrows in its own currency and owns a printing press will not default on its debt, at least not in the traditional sense. It defaults a little bit every year through inflation by printing more and more money. Unfortunately, the average maturity of our debt is about five years, so it would not take long for higher interest expense to show up in budget deficits. 

Money printing will bring higher inflation and thus even higher interest rates

If things were not confusing enough, higher interest rates are also deflationary 

We’ve observed significant inflation in asset prices over the last decade; however, until this pandemic we had seen nothing yet. Median home prices are up 17% in one year. The wild, speculative animal spirits reached a new high during the pandemic. Flush with cash (thanks to kind Uncle Sam), bored due to social distancing, and borrowing on the margin (margin debt is hitting a 20-year high), consumers rushed into the stock market, turning this respectable institution (okay, wishful thinking on my part) into a giant casino. 

It is becoming more difficult to find undervalued assets. I am a value investor, and believe me, I’ve looked (we are finding some, but the pickings are spare). The stock market is very expensive. Its expensiveness is setting 100-year records. Except, bonds are even more expensive than stocks – they have negative real (after inflation) yields.

But stocks, bonds, and homes were not enough – too slow, too little octane for restless investors and speculators. Enter cryptocurrencies (note: plural). Cryptocurrencies make Pets.com of the 1999 era look like a conservative investment (at least it had a cute sock commercial). There are hundreds if not thousands of crypto “currencies,” with dozens created every week. (I use the word currency loosely here. Just because someone gives bits and bytes a name, and you can buy these bits and bytes, doesn’t automatically make what you’re buying a currency.)

“The definition of a bubble is when people are making money all out of proportion to their intelligence or work ethic.”

By Mike Burry MD
[The Big Short]

I keep reading articles about millennials borrowing money from their relatives and pouring their life savings into cryptocurrencies with weird names, and then suddenly turning into millionaires after a celebrity CEO tweets about the thing he bought. Much ink is spilled to celebrate these gamblers, praising them for their ingenious insight, thus creating ever more FOMO (fear of missing out) and spreading the bad behavior.

Unfortunately, at some point they will be writing about destitute millennials who lost all of their and their friends’ life savings, but this is down the road. Part of me wants to call this a crypto craziness a bubble, but then I think, Why that’s disrespectful to the word bubble, because something has to be worth something to be overpriced. At least tulips were worth something and had a social utility. (I’ll come back to this topic later in the letter).

But ….

When interest rates are zero or negative, stocks of sci-fi-novel companies that are going to colonize and build five-star hotels on Mars are priced as if El Al (the Israeli airline) has regular flights to the Red Planet every day of the week except on Friday (it doesn’t fly on Shabbos). Rising interest rates are good defusers of mass delusions and rich imaginations. 

In the real economy, higher interest rates will reduce the affordability of financed assets. They will increase the cost of capital for businesses, which will be making fewer capital investments. No more 2% car loans or 3% business loans. Most importantly, higher rates will impact the housing market. 

Up to this point, declining interest rates increased the affordability of housing, though in a perverse way: The same house with white picket fences (and a dog) is selling for 17% more in 2021 than a year before, but due to lower interest rates the mortgage payments have remained the same. Consumers are paying more for the same asset, but interest rates have made it affordable.

At higher interest rates housing prices will not be making new highs but revisiting past lows. Declining housing prices reduce consumers’ willingness to improve their depreciating dwellings (fewer trips to Home Depot). Many homeowners will be upside down in their homes, mortgage defaults will go up… well, we’ve seen this movie before in the not-so-distant past. Higher interest rates will expose a lot of weaknesses that have been built up in the economy. We’ll be finding fault lines in unexpected places – low interest has covered up a lot of financial sins.

And then there is the US dollar, the world’s reserve currency. Power corrupts, but the unchallenged and unconstrained the power of being the world’s reserve currency corrupts absolutely. It seems that our multitrillion-dollar budget deficits will not suddenly stop in 2021. With every trillion dollars we borrow, we chip away at our reserve currency status (I’ve written about this topic in great detail, and things have only gotten worse since). And as I mentioned above, we’ve already seen signs that foreigners are not willing to support our debt addiction. 

A question comes to mind.
Am I yelling fire where there is not even any smoke? 

Higher interest rates is anything but a consensus view today. Anyone who called for higher rates during the last 20 years is either in hiding or has lost his voice, or both. However, before you dismiss the possibility of higher rates as an unlikely plot for a sci-fi novel, think about this. 

In the fifty years preceding 2008, housing prices never declined nationwide. This became an unquestioned assumption by the Federal Reserve and all financial players. Trillions of dollars of mortgage securities were priced as if “Housing shall never decline nationwide” was the Eleventh Commandment, delivered at Temple Sinai to Goldman Sachs. Or, if you were not a religious type, it was a mathematical axiom or an immutable law of physics. The Great Financial Crisis showed us that confusing the lack of recent observations of a phenomenon for an axiom may have grave consequences. 

Today everyone (consumers, corporations, and especially governments) behaves as if interest rates can only decline, but what if… I know it’s unimaginable, but what if ballooning government debt leads to higher interest rates? And higher interest rates lead to even more runaway money printing and inflation? 

This will bring a weaker dollar 

A weaker US dollar will only increase inflation, as import prices for goods will go up in dollar terms. This will create an additional tailwind for commodity prices. 

If your head isn’t spinning from reading this, I promise mine is from having written it. 

To sum up: A lot of the inflation caused by supply chain disruption that we see today is temporary. But some of it, particularly in industrial commodities, will linger longer, for at least a few years. Wages will be inflationary in the short-term and will reset prices higher, but once the government stops paying people not to work, wage growth should slow down. Finally, in the long term a true inflationary risk comes from growing government borrowing and budget deficits, which will bring higher interest rates and a weaker dollar with them, which will only make inflation worse and will also deflate away a lot of assets.

THE END
UPDATE: https://www.msn.com/en-us/news/us/how-us-inflation-rate-is-impacting-americans-wallets-before-the-holiday-season/vi-AAROG5J

CURRENT: https://www.msn.com/en-us/money/markets/us-treasury-yields-tick-lower-on-fears-omicron-will-dent-recovery/ar-AARYSKy?li=BBnbfcL

Your thoughts are appreciated.

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PODCASTS: How Prescription [Rx] Coverage Works

Formulary Tiers, PBM, Rebates, Spread-Pricing Explained

By Dr. Eric Bricker MD

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

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Medical Risk Management and Insurance Planning Practices of Leading CERTIFIED MEDICAL PLANNERS®

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 Our New Texts – “Take a Peek Inside – Now Available

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

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SAMPLE: 21. Practice Risks

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What is QUANTITATIVE EASING?

Q.E.

By Dr. David E. Marcinko MBA CMP®

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QE (Quantitative Easing = compound noun)

Although standard definitions will tell you that it is a ‘monetary policy’ used by central banks to stimulate the national economy, in reality it is more as follows:

– A cleverly disguised word that simply means ‘money printing’.

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

Central banks use QE as a disguise for increasing the money supply, as to monetize its increasing debt.

For a more technical analysis of the actual mechanics of QE, I invite you to read the article entitled QE for Dummies.

Examples:

1. The Central Bank embarked on another round of QE in hopes that it can kick-start the economy.

2. Ben Bernanke is set to begin the Fed’s taper of QE as soon as next month.

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Common Entrepreneurial Mistakes

BY JONATHAN MASE R.N.

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Being an entrepreneur is not necessarily easy, and many people that try to become entrepreneurs wind up failing. It’s important to recognize the risk of failure before you decide to walk down this path. Being an entrepreneur is very rewarding, and you can find success if you can do things right.

Keep reading to learn about common entrepreneurial mistakes that you can avoid to give yourself a better chance of realizing your entrepreneurial goals. 

READ: https://jonathanmase.wordpress.com/2021/08/06/common-entrepreneurial-mistakes/

Your comments are appreciated.

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MD Entrepreneurs: https://medicalexecutivepost.com/2021/07/29/minnovation-for-physician-entrepreneurs/

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PODCAST: Amazon Pharmacy VS. GoodRx Drug Prices

A HEAD-2-HEAD COMPARISON

By Eric Bricker MD

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BUSINESS PLAN CONSTRUCTION: For Health Industry Modernity

FOR MEDICAL AND HEALTHCARE ENTREPRENEURS AND INNOVATORS

By Dr. David Edward Marcinko MBA MEd CMP®

I was asked by business schools and medical colleagues – and their bankers, CPAs and advisors – to speak about this topic several times last year before the pandemic.

Now, with the specter of M-4-A etc; it certainly is a vital concern to all young entrepreneurs, doctors & medical professionals whether live, audio recorded or in podcast form. And so, here is a written transcript of a recent presentation for your review.

Now, with the specter of tele-health, tele-medicine, M-4-A etc; it certainly is a vital concern to all young doctors & medical professionals whether live, audio recorded or in podcast form. And so, here is a written transcript of a recent presentation for your review.

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New Product Business Plan Sample [2021 Updated] | OGScapital

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READ: https://healthcarefinancials.files.wordpress.com/2017/08/mba-business-plan-capstone-outline.pdf

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STOCK ORDERS: Positions Doctors Should Know

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ACADEMIC C.V. | DAVID EDWARD MARCINKO

BY DR. DAVID E. MARCINKO MBA CMP®

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Miscellaneous STOCK Orders and MARKET Positions

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

Beside market, limit and stop orders, there are some other miscellaneous orders for the physician or guided investor, to know:

A stop limit order is a stop order that, once triggered or activated, becomes a limit order. Realize that it is possible for a stop limit to be triggered and not executed, as the limit price specified by the doctor may not be available.

In addition, there are all or none and fill or kill orders, and even though both require the entire order to be filled, there are distinct differences. An all or none (AON) is an order in which the broker is directed to fill the entire order or none of it.

A fill or kill (FOK) is an order either to buy or to sell a security in which the broker is directed to attempt to fill the entire’ amount of the order immediately and in full, or that it be canceled.

The difference between an all or none and a fill or kill order is that with an all or none order, immediate execution is not required, while immediate execution is a critical component of the fill or kill. Because of the immediacy requirement,

FOK orders are never found on the specialist’s book. Another difference is that AON orders are only permitted for bonds, not stocks, while FOK orders may be used for either.

Also, there exists an immediate or cancel order (IOC), which is an order to buy or sell a security in which the broker is directed to attempt to fill immediately as much of the order as possible and cancel any part remaining. This type of order differs from a fill-or-kill order which requires the entire order to be filled. An IOC order will permit a partial fill. Because of the immediacy requirement, IOC and FOK orders are never found on the specialist’s book.

 Long and Short Positions

A long buy position means that shares are for sale from a market makers inventory or owned by the medical investor outright. Market makers take long positions when customers and other firms wish to sell, and they take short positions when customers and other firms want to buy in quantities larger than the market maker’s inventory. By always being ready, willing, and able to handle orders in this way, market makers assure the investing public of a ready market in the securities in which they are interested. When a security can be bought and sold at firm prices very quickly and easily the security is said to have a high degree of liquidity, also known as marketability. 

A short position investor seeks to make a profit by participating in the decline in the market price of a security.

Now; let’s see how these terms, long and short, apply to transactions by medical investors [rather than market makers] in the securities markets.

When a doctor buys any security – he is said to be taking a long position in that security. This means the investor is an owner of the security. Why does a doctor take a long position in a security? Well, receiving dividend income to make a profit from an increase in the market price is one reason. Once the security has risen sufficiently in price to satisfy the investor’s profit needs, the investor will liquidate his long position, or sell his stock. This would officially be known as a long sale of stock, though few people in the securities business use the label “long sale”. This is the manner in which the above investor had made a profit is the traditional method used; buy low, sell high.

Let’s look at an actual investment in General Motors to investigate this principle further. A medical investor has taken a long position in 100 shares of General Motors stock at a price of $70 per share. This means that the manner in which he can do that is by placing a market order which will be executed at the best “available market price at the time, or by the placing of a buy limit order with a limit price of $70 per share. The investor firmly believes, on the basis of reports that he has read about the automobile industry and General Motors specifically, that at $70 a share, General Motors is a real bargain. He believes that based on its current level of performance, it should be selling for a price of between $80 and $85 per share. But, the doctor investor has a dilemma. He feels certain that the price is going to rise but he cannot watch his computer, or call his broker, every hour of every day. The reason he can’t watch is because patients have to be seen in the office. The only people who watch a computer screen all day are those in the offices of brokerage firms (stock broker registered representatives), and doctor day traders, among others. 

In the above example, with a sell limit order, if the doctor investor was willing to settle for a profit of $12 per share, what order would he place at this time? If you said, “sell at $82 good ’til canceled”, you are correct. Why GTC rather than a day order? Because our doctor investor knows that General Motors is probably not going to rise from $70 to $82 in one day. If he had placed an order to sell at $82 without the GTC qualification, his order would have been canceled at the end of this trading day. He would have had to re-enter the order each morning until he got an execution at 82. Marking the order GTC (or open) relieves him of any need to replace the order every morning. Several weeks later, when General Motors has reached $82 per share in the market, his order to sell at 82 is executed. The medical investor has bought at 70 and sold at 82 and realized a $12 per share profit for his efforts.

Let’s suppose that the medical investor, who has just established a $12 per share profit, has evaluated the performance of General Motors common stock by looking at the market performance over a period of many years. Let’s further assume that the investor has found by evaluating the market price statistics of General Motors that the pattern of movement of General Motors is cyclical. By cyclical, we mean that it moves up and down according to a regular pattern of behavior.

Let’s say the investor has observed that in the past, General Motors had repeated a pattern of moving from prices in the $60 per share range as a low, to a high of approximately $90 per share. Further, our investor has observed that this pattern of performance takes approximately 10 to l2 months to do a full cycle; that is, it moves from about 60 to about 90 and back to about 60 within a period of roughly l2 months. If this pattern repeats itself continually, the investor would be well advised to buy the stock at prices in the low to mid 60’s hold onto it until it moves well into the 80’s, and then sell his long position at a profit. However, what this means is that our investor is going to be invested in General Motors only 6 months of each year. That is, he will invest when the price is low and, usually within half a year, it will reach its high before turning around and going back to its low again. How can the doctor-investor make a profit not only on the rise in price of General Motors in the first 6 months of the cycle, but on the fall in price of General Motors in the second half of the cycle? One technique that is available is the use of the short sale.

The Short Sale

If a doctor investor feels that GM is at its peak of $ 90 per share, he may borrow 100 shares from his brokerage firm and sell the 100 shares of borrowed GM at $ 90. This is selling stock that is not owned and is known as a short sale. The transaction ends when the doctor returns the borrowed securities at a lower price and pockets the difference as a profit. In this case, the doctor investor has sold high, and bought low. 

Odd Lots

Most of the thousands of buy and sell orders executed on a typical day on the NYSE are in 100 share or multi-100 share lots. These are called round lots. Some of the inactive stocks traded at post 30, the non-horseshoe shaped post in the northwest corner of the exchange, are traded in 70 share round lots due to their inactivity. So, while a round lot is normally 700 shares, there are cases where it could be 10 shares. Any trade for less than a round lot is known as an odd lot. The execution of odd lot orders is somewhat different than round lots and needs explanation.

When a stock broker receives an odd lot order from one of his doctor customers, the order is processed in the same manner as any other order. However, when it gets to the floor, the commission broker knows that this is an order that will not be part of the regular auction market. He takes the order to the specialist in that stock and leaves the order with the specialist. One of the clerks assisting the specialist records the order and waits for the next auction to occur in that particular stock. As soon as a round lot trade occurs in that particular stock as a result of an auction at the post, which may occur seconds later, minutes later, or maybe not until the next day, the clerk makes a record of the trade price.

Every odd lot order that has been received since the last round lot trade, whether an order to buy or sell, is then executed at the just noted round lot price, the price at which the next round lot traded after receipt of the customer’s odd lot order, plus or minus the specialist’s “cut “.  Just like everything else he does, the specialist doesn’t work for nothing. Generally, he will add 1/8 of a point to the price per share of every odd lot buy order and reduce the proceeds of each odd lot sale order by 1/8 per share. This is the compensation he earns for the effort of breaking round lots into odd lots. Remember, odd lots are never auctioned but, there can be no odd lot trade unless a round lot trades after receipt of the odd lot order. 

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What is CHROMETOPHOBIA?

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A great question to ponder during National Financial Planning Month!

About the “FEAR OF MONEY”

By Charles Patrick Davis, MD, PhD

Fear of money: An abnormal and persistent fear of money. Sufferers experience undue anxiety even though they realize their fear is irrational. They worry that they might mismanage money or that money might live up to its reputation as “the root of all evil.” Perhaps they remember well the ill fortune that befell the mythical King Midas. His wish that everything he touched be turned to gold was fulfilled, and even his food was transformed into gold.

The fear of money is termed chrometophobia or chrematophobia, from the Greek “chrimata” (money) and “phobos” (fear). The “chrome” in “chrometophobia” may also be related to the Greek word “chroma” (color) because of the brilliant colors of ancient coins — for example, gold, silver, bronze and copper.

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Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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US DEBT BUSTERS: The 1 TRILLION DOLLAR Coin

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BY MORNING BREW

The Legend of the $1 Trillion Platinum Coin

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You may have heard that a deadline to suspend the debt ceiling is rapidly approaching, and if lawmakers don’t do anything it could lead to “economic catastrophe,” in the words of Treasury Secretary Janet Yellen.

But what if we told you there was a solution to the debt ceiling fiasco so crazy…it just might work?

The solution: Yellen could have the Treasury mint a $1 trillion platinum coin, deposit it at the Fed to “retire” loads of US federal debt, and then enable the government to carry on with business as usual without having to worry about defaulting on its existing debt.

But can the Treasury really do that? Yes. According to Section 31 US Code § 5112

  • “The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.”

The law is crystal clear, and has been deemed kosher by numerous academics. “The statute clearly does authorize the issuance of trillion-dollar coins,” Laurence Tribe, a Harvard Law professor, told Washington Monthly back in 2013.

In fact, nothing says we have to stop at $1 trillion. Yellen could go big with a $10 trillion coin, hypothetically. As Bloomberg’s Joe Weisenthal explains, none of this would lead to inflation because it’s merely an “accounting trick”—not an influx of money into the economy.

Have we tried this before? The $1 trillion platinum coin idea seems to pop up every time the US faces a debt ceiling crunch. It was first introduced by a Georgia lawyer in 2010 and gained traction during the debt-ceiling crisis of 2011.

Things really turned up in 2013, when the government was…you guessed it, facing another debt ceiling deadline. The hashtag #MintTheCoin became popular on Twitter, and economists like Paul Krugman advocated for unleashing the coin. “If we have a crisis over the debt ceiling, it will be only because the Treasury Department would rather see economic devastation than look silly for a couple of minutes,” he wrote.

But each time the $1 trillion coin is mentioned as a way of resolving debt ceiling problems, the people in charge dismiss it as a distraction from Congress doing its job. “Neither the Treasury nor the Federal Reserve believes that the law can or should be used to produce platinum coins for the purpose of avoiding an increase in the debt limit,” The Treasury wrote during…well, yes, another debt ceiling emergency in 2015.

As for our current predicament, the Biden administration rejected the minting of the $1 trillion coin yet again last week.

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

Bottom line: Perhaps some enterprising future Treasury Secretary will manifest the platinum coin into existence, but for now it remains as mythical as Camelot.

MORE: https://medicalexecutivepost.com/2021/09/21/what-is-the-us-debt-ceiling/

COINS: https://www.msn.com/en-us/news/politics/2-democrats-say-they-want-to-mint-a-coin-to-solve-the-debt-ceiling-showdown-and-save-the-us-from-catastrophic-default/ar-AAOXLcU?li=BBnb7Kz

GOVERNMENT Rxn: https://www.msn.com/en-us/news/politics/heres-what-would-happen-if-washington-doesnt-prevent-a-government-shutdown/ar-AAODYi5?li=BBnb7Kz

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PODCAST: Medicare Part D [Rx Drugs]

LATE ENROLLMENT PENALTY CALCULATIONS

Medicare – CMS

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What is the US DEBT CEILING?

IN BRIEF

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What is the domestic national debt ceiling? 

A cap on how much the US government can borrow to finance its operations. 

  • It was introduced during World War I so that Congress wouldn’t have to approve every bond issuance by the Treasury Department as it had done previously—freeing up more time for name-calling. 
  • The debt ceiling has been suspended dozens of times over the years, including 3x during the Trump administration. 

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

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Debt Ceiling: Definition, Current Status

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Without suspending the debt ceiling, the US wouldn’t be able to borrow money to pay its bills—and things would get ugly if that happened. The federal government would have to slash spending for programs like Medicaid, local governments would find it harder to borrow, and financial markets could go haywire.

In short, a failure to act would “produce widespread economic catastrophe,” Treasury Secretary Janet Yellen wrote in the Wall Street Journal. 

Important note: The debt ceiling doesn’t account for new spending, like the $3.5 trillion proposal the Democrats have on the table. Instead, it’s about spending Congress has already authorized, such as paying out Social Security. Over the years, the debt ceiling has become a “political weapon,” according to the AP, as each party tries to blame the other for their spending habits and for heaping more debt on the US. 

IRS: https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit

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PODCASTS: Surgery Safety Checklists

ATUL GAWANDE MD

Medical Culture

BY ERIC BRICKER MD

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Study Finds COVID-19 Accelerated Physician Practice Acquisitions

Study Finds COVID-19 Accelerated Physician Practice Acquisitions

By Health Capital Consultants, LLC


A recent study from Physicians Advocacy Institute (PAI), prepared by Avalere Health, associated the growing number of both physician practice acquisitions and employed physicians between 2019 and 2021 with the COVID-19 pandemic.

To study COVID-19’s impact on physician employment trends, the June 2021 study evaluated the IQVIA OneKey database that contains physician practice and health system ownership information.

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To assess these trends at a national and regional level, Avalere researchers studied the two-year period from January 1, 2019 to January 1, 2021. (Read more…)

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The BUSINESS of Medical Practice

BY DR. David Edward Marcinko MBA

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HOSPITAL OPERATIONS: Organizations, Strategies, Techniques, Tools, Templates and Case Models

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Hospitals and Healthcare Organizations

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On Higher Prescription Drug Cost-Sharing and Mortality?

Raises Mortality among Medicare PART D Beneficiaries

QUERY: What are the health consequences when patients reduce their use of prescribed medications in response to higher out-of-pocket costs?

w28439.jpg

In The Health Costs of Cost-Sharing (NBER Working Paper 28439), researchers Amitabh Chandra, Evan Flack and Ziad Obermeyer use the distinctive out-of-pocket cost-sharing features of Medicare Part D to demonstrate that such reductions can increase mortality.

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CMS: Open Payment Data

OPEN PAYMENTS DATA SEARCH TOOL

By Dr. David Edward Marcinko MBA

The Open Payments Search Tool is used to search payments made by drug and medical device companies to physicians and teaching hospitals.

CMS releases star ratings; nearly 10% of hospitals earn ...

WEBSITE: https://openpaymentsdata.cms.gov/

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The Next-Generation of “Anti-Millionaire” Doctors

“$1 Million Mistake: Becoming a Doctor”

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BY DR. DAVID E. MARCINKO MBA CMP®

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CBS Moneywatch published an article entitled “$1 Million Mistake: Becoming a Doctor” Aside from the possibility that devoting one’s life to helping others might be considered a mistake, medical student Dan Coleman was struck by the “$1 million” figure.

Before medical school, he worked in the pharmaceutical industry and even turned down a hefty promotion to his education as soon as possible, rather than defer for a year or two. But, his financial calculations made it fairly obvious that, including benefits, bonuses, and potential promotions, his medical decision was not a $1 million mistake, but was more like a $1.3 million dollar disaster. Still; he opined:

Yet, even today, as we stare down the barrel of the Affordable Care Act, being a doctor is a very desirable job. We may not be famous, but we will be well-respected. We may not be rich, but we will certainly live comfortably. We may work a lot, but we will never be out of work. To future doctors, the young and impecunious, the anti-millionaires, tuition is a mere afterthought. All that matters is the MD.

Source: http://in-training.org/medical-students-the-anti-millionaires-4361

Millionaire Interview 81 - ESI Money

OVER HEARD IN THE MEDICAL STUDENT’S LOUNGE

“We are medical students.
We are young, proud, and righteous.
We have made the hard choice (medicine), but we have cleared the high hurdle (getting into school).


We know healthcare is a difficult, imperfect art, but we are devoted.
We arm ourselves with the weapons of knowledge and compassion, prepared to defend against the onslaught of trauma, disease, and time.
We are here to the bitter end, for our patients and ourselves.
And above all, we know the cost of our choice.

And if we’re lucky, it will stay under 6% interest through graduation”.

Daniel Coleman

[Georgetown University School of Medicine]

First-year Student

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MEDICARE: Safe Harbor Regulations

Medicare “Safe Harbor” Regulations

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The Medicare Safe Harbor rules were passed in an effort to identify areas of practice that would not lead to a conviction under the anti-fraud statute.  The Safe Harbor regulations provide for eleven areas where providers may practice without violating the anti-fraud statute. 

CITE: https://www.amazon.com/Dictionary-Health-Insurance-Managed-Care/dp/0826149944/ref=sr_1_4?ie=UTF8&s=books&qid=1275315485&sr=1-4

Areas of safe practice under these regulations are briefly highlighted below:

  • Large Entity Investments – Investment in entities with assets over $50 million. The entity must be registered and traded on national exchanges.
  • Small Entity Investments – Small entity investment entities must abide by the 40-40 rule.  No more than 40% of the investment interests may be held by investors in a position to make referrals. Additionally, no more than 40% of revenues can come through referrals by these investors.
  • Space and Equipment Rentals – Such lease agreements must be in writing and must be for at least a one year term. Furthermore, the terms must be at fair market value.
  • Personal Services and Management Contracts – These contracts are allowable as long as certain rules are followed. Like lease agreements, these personal service and management contracts must be in writing for at least a one-year term, and the services must be valued at fair market value.
  • Sale of a medical practice – There are restrictions if the selling practitioner is in a position to refer patients to the purchasing practitioner.
  • Referral services– Referral services (such as hospital referral services) are allowed. However, such referral services may not discriminate between practitioners who do or do not refer patients.
  • Warranties – There is certain requirements if any item of value is received under a warranty.
  • Discounts – Certain requirements must be met if a buyer receives a discount on the purchase of goods or services that are to be paid for by Medicare or Medicaid.
  • Payments to Bona Fide Employees – Payments made to bona fide employees do not constitute fraud under the Safe Harbor Regulations.
  • Group Purchasing Organizations – Organizations that purchase goods and services for a group of entities or individuals are allowed; provided certain requirements are met.
  • Waiver of Beneficiary Co-Insurance and Deductible – Routine waiver would not come under the safe harbor.

A physician’s actions that come under the Safe Harbor Regulations will not violate the Medicare Fraud and Abuse Statutes.  However, the provider must still abide by the Stark amendments and must also abide by applicable state law.

STARK UPDATE: https://medicalexecutivepost.com/2018/08/03/cms-to-review-stark-law-relevance-once-again/

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Financing LONG-TERM CARE Needs?

AGING AND RETIREMENT

Long-term care (LTC) may not be the first thing individuals or couples think about as they approach retirement, but the costs for those who needs it can disrupt and derail retirement security. A good plan for long-term care requires many decisions over an extended period of time, and well before retirement.

In this article, Milliman consultant Robert Eaton discusses the major considerations and options for financing LTC needs in retirement.

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Effect of Negative Credit Shocks on Hospital Quality

A STUDY OF the National Bureau of Economic Research

BY HEALTH CAPITAL CONSULTANTS, LLC


A recent study from the National Bureau of Economic Research (NBER) indicates that quality and patient outcomes suffer in hospitals that cannot maintain their relationships with banks and their lines of credit.

The NBER study measured quality and cost data in Medicare-certified hospitals from 2010 to 2016, during which banks were undergoing annual stress tests. Regulatory “stress tests” are annual assessments from the Federal Reserve, put in place after the Great Recession in 2008, to examine a bank’s ability to survive an impending economic crisis. (Read more…) 

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Tele-Medicine Valuation and Reimbursement

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By Health Capital Consultants, LLC
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The second installment in this five-part Health Capital Topics series on the valuation of telemedicine will focus on the reimbursement environment for telemedicine.
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Telemedicine is reimbursed based on the services provided through this medium and includes many restrictions on where, how, and by whom services can be conducted. The first installment in this series introduced telemedicine and its increasing importance to, and popularity among, providers and patients. It also discussed the current and future challenges related to telemedicine, many of which hinge upon reimbursement restrictions and regulations. (Read more…)
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Financial Stress in Times of Transition

Financial Stress Adaptation

By Rick Kahler CFP®

Stress is what happens when something you care about is at stake. This definition comes from Susan Bradley, CFP, author of Sudden Money and a specialist in the financial aspect of life transitions.

The stress around these transitions is a common reason that people seek out financial advice. We tend to be driven to consult advisors as a result of stressful changes in our lives, such as a divorce, a sudden money event like an inheritance or insurance settlement, an investment or job loss, retirement, or the death of a loved one.

While all these life events certainly have financial components, it’s almost always the emotional components of the change—how we respond to them—that are the cause of the stress.

Any change includes three stages: an ending, a period of passage while we relate and adapt to the change, and a new beginning. This period of transition can be fraught with emotion and behaviors that can trip us up in many ways, including financially.

Susan identifies nine such emotions and behaviors that she sees commonly in people in transition.

1. Lack of identity. If the transition results in the loss of a familiar role—spouse or employee, for example—you may struggle with “Who am I now? “There is often confusion and ambivalence about the future, and an inability to make decisions.

2. Confusion/Overwhelm/Fog. There is a sense of defeat by everything. You may physically slump, have a glazed-over look, and ask others to repeat a lot. It’s hard to understand, be present, respond, focus, or move forward.

3. Hopelessness. You may have a sense of having given up, not being in control of your fate, or being a victim. It may seem that there is nothing you can do to change yourself or the outcome. Financial decision-making is very difficult.

4. Invincibility. This can happen with a big positive change in your finances. You may think everything is going to turn out fine. You may feel euphoric, confident, and smarter than your advisors. You may spend more and take greater investment risks.

5. Mental and Physical Fatigue. Change can be exhausting, and the exhaustion can go undetected by others and even yourself. You may have difficulty following an agenda and tasks.

6. Numb/Withdrawn. You may feel ambivalent about and indifferent to exploring the changes in your life, what you want, and what the future may hold. You don’t give much feedback and are withdrawn and non-expressive. You may miss or not return phone calls or emails. The planning process often comes to a standstill.

7. Narrow or Fractured Focus. You may either be preoccupied with one area that excludes everything else or have an inability to focus on anything. In either case, focusing on what’s important becomes difficult or impossible.

8. Inconsistent Behavior. This is the inability to hold to one position. Instead, you may change your mind repeatedly or switch between opposite positions. You are uncertain and often embrace opposites in your wants and desires in the same breath. Making decisions become impossible.

9. Combative. You may hold on to feelings of anger, resentment, victimization, and rage regardless of the facts. You are outwardly emotionally expressive and challenging. You don’t respond well to logic and practicality. A combative person doesn’t have problems making decisions, but does have difficulty making good decisions that are in their best interests.

Assessment

Emotions and behaviors like these are generally temporary. Financial decisions made in the midst of transition-based stress, though, can have lasting negative consequences. The support of trustworthy advisors can be invaluable in navigating through both painful and joyful life changes.

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The Surprising Spending Patterns of High Earners

If you want to guess someone’s income level, look at what they buy

By Rick Kahler CFP®

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Obviously, the rich and the poor will spend their available funds on different things.  Just what those things are, however, is less obvious. To illustrate, here is a pop quiz: Since 1992, what two products most consistently indicated that those using them were in the top 25% of all income earners in the U. S.?

Guessing a new car or a house would be logical, but wrong. The top two products indicative of being in that top one-fourth were dishwashers and dishwashing detergent. According to a fascinating study done by Marianne Bertrand and Emir Kamencia, “Coming Apart? Cultural Distances in the United States Over Time,” published in June 2018, if you use either there is about a 70% chance you are in the highest-earning 25%.

The study’s broader focus was on cultural differences, but what I couldn’t stop reading was the economic information. The products indicating affluence were nowhere near what I would have guessed.

Let’s start with 1992. The top product purchased by the rich was a dishwasher. If you owned one, there was a 70.4% chance you were in the top quartile of income earners. If you used dishwasher detergent, the chances were 70.2% you earned a high income. If you took a vacation where you traveled away from home, the chances were 67.0% you were high income. The top brands purchased by the affluent/rich were Grey Poupon Dijon mustard (62.2%), Kodak film (61.6%), and Thomas English muffins (61.5%). The top TV shows watched were Autoworks 200 (57.3%), Bush Clash (57.1%), and Tour du Pont (56.7%). Sorry, but I’ve never heard of any of these shows.

Moving on to 2004, the preferences of high income earners shifted slightly. The top product purchased by the affluent was a new vehicle (73.6%), followed by dishwashing detergent (71.6%), and owning a dishwasher (70.8%). A vacation was in fourth place with 70.5%. The top brands indicating affluence were Land O’ Lakes butter (59.2%), Kikkoman soy sauce (58.7%), and people who did not use a BIC lighter (58.7%). The top TV shows were the Super Bowl (58.5%), NFL Monday Night Football (56.1%), and NFL Regular Season Football (55.9%).

Jaguar Touring sedan XJ-V8-LWB

What about today? In 2016—the last year of data studied—the top product was a vacation (70.9%), owning a passport (70.3%), and having a Bluetooth in your vehicle (70.2%). Eight of the top 10 items related to travel or technology. The other two? Numbers five and six were owning a dishwasher and using dishwasher detergent. The top brand indicative of a high income was far and away Apple, with an iPhone first (69.1%) and an iPad second (66.9%). Across all years in their data, no individual brand was as predictive of being high-income than these two products. Other brands high on the list were Verizon Wireless (61.0%), an Android phone (59.5%), and Kikkoman soy sauce. Top TV shows were the Super Bowl (57.1%), Love It Or List It (55.9%), and Property Brothers (55.7%).

Keep in mind that the study showed seven out of 10 people who own iPhones, travel on vacation, or use dishwashers are in the top 25% of income earners. Not all people who do these things are affluent. Still, the odds that they are high earners are far better than the odds of winning any game of chance in Deadwood.

Assessment

So next time you want to size up the chances of someone being high income, ask them where they went on vacation this year and whether they took vacation photos with an iPhone or iPad. Or just ask how often they run their dishwasher.

Conclusion

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MORE FOR DOCTORS AND NURES:

“Insurance & Risk Management Strategies for Doctors” https://tinyurl.com/ydx9kd93

“Financial Management Strategies for Hospitals” https://tinyurl.com/yagu567d

“Operational Strategies for Clinics and Hospitals” https://tinyurl.com/y9avbrq5

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Poverty in the USA

Fewer people in the US are living in poverty

By Rick Kahler CFP®

According to the October 2017 annual report of the Hamilton Project of the Brookings Institute, the number of Americans living in poverty declined by 13%, or 6 million people, in the two years from 2014 to 2016. That’s encouraging news.

Not so encouraging is that 40.6 million people still live under the government poverty level. This is about one out of every eight Americans. The department of Health and Human Services sets the poverty rate at $32,580 or less for a family of six and $16,020 or less for two people.

Who are those officially classified as poor?

According to IPUMS, an organization associated with the University of Minnesota which integrates worldwide census data, 33% are children under age 18 and 11% are seniors over age 65. So 56% of those living in poverty are of working age, ages 18-65.

Of those who are working age, 21% are disabled, 15% are caregivers, 13% are students, and 10% are early retirees or unclassified, which leaves 41% available to work full time. This is 24% of all people who are in poverty, or about 9.8 million people.

Of that 9.8 million, 65% work part time, 25% work full time, and 10% don’t work. This means just under one million of the 40.6 million people in poverty are actually able to work but unemployed.

Something I found interesting was that of the 65% who work part time, two-thirds (4.3 million) choose to do so and only one-third (2.1 million) would like to work full time. If we add the one million who are unemployed and the 2.1 million part time workers who want full time employment, we have 3.1 million people in poverty who would like to work full time, but can’t find work. This is just 7.4% of all people considered to be below the poverty level.

That leads me to wonder what might change if the 4.3 million choosing to work part time actually worked full time. Might a significant portion of them pull themselves and their families out of poverty? Is it possible that many of these people choose to live in poverty? Or might some of them choose to work part time because earning more would be countered by factors like higher child care costs or losses in government benefits? While I don’t have any statistics on this, I have a hunch it is both.

Keven Winder, a life coach who blogs at thriveinexile.com, has a post from June 2017 titled “The Poverty of the Poor.” He says, “The cause of poverty is not solely education, politics, or the need for jobs. It’s not mental illness, addiction, housing, or food programs,” which he contends are by-products of poverty. “Poverty is deeper. Poverty is disengagement from that which powers us.”

It seems to me that Winder is using “disengagement” to mean what might be described as emotional poverty. The type of emotional disengagement that helps keep people in poverty may be no different from that of a person who earns a comfortable income but chooses not to save for retirement. Or someone who loses a job but has too much false pride to take a lesser one even temporarily.

We know the cure for financial behaviors based in emotional disengagement is not more information. Those choosing to work part time and live in poverty don’t need budget figures on how earning more would increase their standard of living. The behavior goes much deeper and is emotionally entrenched.

Assessment

Certainly, financial therapy might make a difference. Unfortunately, it’s still unavailable for too many of those who need it the most.

Conclusion

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https://www.crcpress.com/Comprehensive-Financial-Planning-Strategies-for-Doctors-and-Advisors-Best/Marcinko-Hetico/p/book/9781482240283

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About USAFACTS.com

About the Website: USAFACTS.com

By Staff Reporters

Principles

USAFacts is a new data-driven portrait of the American population, our government’s finances, and government’s impact on society. They are a non-partisan, not-for-profit civic initiative and have no political agenda or commercial motive. They provide this information as a free public service and are committed to maintaining and expanding it in the future.

USA FACTS rely exclusively on publicly available government data sources. They don’t make judgments or prescribe specific policies. Whether government money is spent wisely or not, whether our quality of life is improving or getting worse – that’s for you to decide. They hope to spur serious, reasoned, and informed debate on the purpose and functions of government. Such debate is vital to our democracy. They hope that USAFacts will make a modest contribution toward building consensus and finding solutions.

More

There’s more to USAFacts than their website. They also offer an annual report, a summary report, and a “10-K” modeled on the document public companies submit annually to the SEC for transparency and accountability to their investors.

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Innspiration

USAFacts was inspired by a conversation Steve Ballmer [former CEO Microsoft Corporation] had with his wife, Connie. She wanted him to get more involved in philanthropic work. He thought it made sense to first find out what government does with the money it raises.

Assessment

Where does the money come from and where is it spent? Whom does it serve? And most importantly, what are the outcomes?

Visit: http://www.USAFACTS.com

Conclusion

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CEO Compensation is Down

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NO, IT’S UP – YOU BETTER JUDGE FOR YOURSELF        

ArtBy Arthur Chalekian GEPC

[Financial Consultant]

The New York Times reported the 200 most-highly-paid CEOs in the United States collectively experienced a pay cut last year!

CEOs’ average compensation – all CEOs compensation added together and then divided by 200 – fell by 15 percent from 2014 to 2015.

Of course, you know what they say about lies and statistics

Equilar, the company responsible for the study, reported CEO pay grew modestly in 2015. They looked at median CEO pay – the number in the middle. It was $16.6 million for fiscal 2015. That’s up 5 percent from the previous year.

No matter how you interpret the results, not one CEO earned more than $100 million. CEOs in the technology industry had the highest median pay while those in basic materials (which includes oil and gas companies) had the lowest, according to Equilar.

Many people have argued company performance should inform CEO pay, but there wasn’t much evidence this was the case. Although there may have been a basis for CEO pay changes, there was no clear correlation to shareholder returns or company revenues.

For instance:

  • A 702 percent increase in pay was awarded when total shareholder return was down 5 percent, and company revenues were down 1 percent.
  • A 286 percent increase in pay was awarded when total shareholder return was up 16 percent, and company revenues were up 9 percent.
  • A 48 percent reduction in pay occurred when total shareholder return was up 25 percent, and company revenues were up 4 percent.

Assessment

The portion of 2015 corporate budgets allotted to pay hikes for employees increased by 2.8 percent, on average, according to Mercer. The report said, “… the highest-performing employees received average base pay increases of 4.8 percent in 2015 compared to 2.7 percent for average performers and 0.2 percent for the lowest performers …”

Conclusion

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On Income Inequality

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A Passionate Discussion

Rick Kahler MS CFP

By Rick Kahler MS CFP®

Income inequality is a topic of passionate discussion today in many of the circles I move in. The discussion typically starts with a foregone conclusion that income inequality is a huge problem in the US. Some solutions I hear include increasing the top income tax bracket to 90%, initiating an annual wealth tax, or increasing the estate tax to 100%.

While leveling the playing field will certainly solve income inequality, it won’t solve the real problem. When I say that, I often get stares of bewilderment and disdain. It isn’t unusual for people to slowly distance themselves as if I had shapeshifted into Donald Trump.

How bad is it?

First, how bad is income inequality in the US? It’s certainly no worse today than it’s been in the last 80 years. The CIA World Factbook 2015 Gini Index, a rating where 0 is equal income and 100 is completely unequal income, finds the US rates a 45.0, exactly what it was in 1929. That puts us in 38th place, slightly above the global median, which is 39.4. The worst 30 countries have ratings of 46.8 to 63.2.

Regardless of the fact that it has not increased over the last 80 years, what is the real problem with income inequality? A common assumption is that it has created an America where most people don’t have enough to afford a minimal quality of life.

But is that true?

In a column from October 2015, George Will cites a new book, On Equality, by Harry G. Frankfurt, a Princeton emeritus professor of philosophy. Frankfurt drives home a main contention that economic inequality is not inherently morally objectionable and that “doing worse than others does not entail doing badly.” His alternative to economic egalitarianism is the “doctrine of sufficiency,” which is that the moral imperative should be that everyone have enough.

Now, consider this

If you are a US citizen with an income of over $32,400, you are in the world’s top 1%. Globally, you are considered “rich.” Indeed, the poorest 1% of US citizens have more wealth than two-thirds of the world’s people. Clearly, income inequality in the US doesn’t inherently mean everyone in society doesn’t have enough. This would suggest that complaints about US income inequality may be in response to something other than having enough.

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Perhaps the real problem is more of a “discontent of those who are comfortable but envious,” as George Will suggests. Consider this: to be in the top 1% in income in the US you need to earn over $380,000 a year. Someone earning $32,400 a year, even though they are in the global top 1%, may easily lose that perspective when viewing someone earning over $380,000. The comparison could foster discontent by stirring up feelings of envy, jealousy, unworthiness, shame, and guilt. Rather than taking responsibility for and exploring these difficult emotions, instead we often shove them deep within and demonize others.

Will suggests that the biggest underlying producer of income inequality is freedom. Freedom includes the power to choose careers, such as opting to be a teacher rather than an engineer with full knowledge that teachers generally earn substantially less than engineers. The economic and non-economic benefits of each profession are dictated by market forces, rather than those in government deciding the winners and losers.

Assessment

Envy of the rich is almost timeless and universal. Properly reframed, it also can be motivating. Contrary to common perception, 85% of the top 1% did not inherit wealth but are first-generation millionaires or billionaires. Perhaps envy didn’t drive them to try to tear down what others had achieved. Instead, it motivated them to build their own success. 

Conclusion

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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***

The Central Banks are at it Again!

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Central banks were at it again – and markets loved it!
Art
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By Arthur Chalekian GEPC [Elite Financial Partners]
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Several weeks ago, European Central Bank (ECB) President Mario Draghi surprised markets when he indicated the ECB’s governing council was considering cutting interest rates and engaging in another round of quantitative easing.
The Economist explained European monetary policy was heavily tilted toward growth before the announcement:
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“The ECB is already delivering a hefty stimulus to the Euro area, following decisions taken between June 2014 and early 2015. It has introduced a negative interest rate, of minus 0.2%, which is charged on deposits left by banks with the ECB. It has also been providing ultra-cheap, long-term funding to banks provided that they improve their lending record to the private sector. And, most important of all, in January it announced a full-blooded program of quantitative easing (QE) – creating money to buy financial assets – which got under way in March with purchases of €60 billion ($68 billion) of mainly public debt each month until at least September 2016.”
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Despite these hefty measures, recovery in the Euro area has been anemic, and deflation remains a significant issue. According to Draghi, Euro area QE is expected to continue until there is “a sustained adjustment in the path of inflation.” Europe is shooting for 2 percent inflation, just like the United States.
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The People’s Bank of China (PBOC) eased monetary policy last week, too. On Monday, data showed the Chinese economy grew by 6.9 percent during the third quarter, year-over-year. Projections for future growth remain muted, according to BloombergBusiness. On Friday, the PBOC indicated it was cutting interest rates for the sixth time in 12 months.
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U.S. markets thrilled to the news. The Dow Jones Industrial Average, Standard & Poor’s 500 Index, and NASDAQ were all up more than 2 percent for the week. Many global markets delivered positive returns for the week, as well.
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Conclusion
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***

[PHYSICIAN FOCUSED FINANCIAL PLANNING AND RISK MANAGEMENT COMPANION TEXTBOOK SET]

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

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Do you Want to be a Millionaire?

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Millionaire versus Billionaire

By Rick Kahler MS CFP®  http://www.KahlerFinancial.com

Rick Kahler MS CFP

Doctor – Would you like to build up a million-dollar nest egg by the time you retire?

For middle-class earners, that goal is challenging but possible if you start at age 25 and save $1750 a month. Many married couples could do this by maxing out their 401(k) contributions. Or; you could take the route that many people follow and build a small business – or medical practice – into a million-dollar asset.

FREE WHITE PAPER [Is Medical Practice a New Asset Class?] from iMBA, Inc

Billion … with a “B”

What if you want to accumulate a billion-dollar nest egg instead? Starting at the same age of 25, you would need to save $21 million a year. Good luck with getting any employer match on that.

There’s a vast difference between a million and a billion. It’s completely misleading when activists, politicians, and the media refer glibly to “millionaires and billionaires” as if the two are almost interchangeable. Someone with a net worth of one million dollars isn’t even close to being in the same category as someone worth one billion.

Here are a few more examples to clarify the difference:

  • One million seconds from now is about 11 and a half days away. One billion seconds from now is about 31 and a half years in the future.
  • A million hours ago was 114 years in the past, early in the 20th century; our ancestors were using electricity and telephones. A billion hours ago was over 114,155 years in the past; our ancestors had evolved into Homo sapiens but were still using primitive stone tools.
  • Put one million ants on one side of a scale and a female Asian elephant on the other side. The million ants, at around six pounds, would hardly register against the elephant’s three tons. Put a billion ants on the scale, however, and they would balance or even outweigh the elephant.
  • One million pennies stacked on top of each other would make a tower nearly a mile high. One billion pennies stacked on top of each other would make a tower almost 870 miles high.
  • If you earned $45,000 a year and stashed it all under your mattress, you’d have one million dollars at the end of 22 years. To accumulate one billion dollars at that same rate, you’d need the help of your many-times-great grandchildren, because it would take 22,000 years.

Security versus Wealth

In today’s world, being a millionaire represents financial security, not vast wealth. At a withdrawal rate of 3%—the amount most experts consider sustainable—an investment portfolio of one million dollars will provide an income of $30,000 a year. Combined with Social Security, that would be enough to live comfortably but not lavishly in retirement.

Three percent of one billion dollars, on the other hand, will furnish an income of $30 million a year; definitely private jet and gated estate territory.

If millions and billions aren’t challenging enough, here’s a quick look at trillions. One trillion is a million millions, or a thousand billions. It would take one thousand elephants to balance the weight of one trillion ants. Astronomers estimate the number of stars in our Milky Way galaxy between 100 billion and 400 billion; not even close to a trillion. No wonder it’s so hard for most of us to wrap our minds around information like, “The current US national debt is more than 16.7 trillion dollars.”

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Assessment

Becoming a millionaire? It’s not only achievable, but wise if you want financial security in old age. Becoming a billionaire? You’d better plan to invent something amazing, write several dozen international best-sellers, or build an incredibly successful business. Becoming a trillionaire? Don’t waste your time thinking about it. For good reason, the word isn’t even in the dictionary.

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:

 Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

Personal financial success in the PP-ACA era will be more difficult to achieve than ever before. It requires the next generation of doctors to rethink frugality, delay gratification, and redefine the very definition of success and work–life balance. And, they will surely need the subject matter medical specificity and new-wave professional guidance offered in this book.

This book is a ‘must-read’ for all health care professionals, and their financial advisors, who wish to take an active role in creating a new subset of informed and pioneering professionals known as Certified Medical Planners™.

Dr. Mark D. Dollard FACFAS [Private Practice, Tyson Corner, Virginia

http://www.CertifiedMedicalPlanner.org

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Physician Couples and Money Management

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On Cash Management Techniques

By Rick Kahler MS CFP® www.KahlerFinancial.com

Rick Kahler MS CFPMoney is just one of many challenges to becoming part of a couple; especially for physicians. Probably the most common question couples ask me concerns the best way to handle their cash management.

Specifically, they wonder if they should combine all their cash flow into one joint checking account, keep everything separate, or have some combination of both.

Stock Answers

My stock answer is “yes.” It seems that, the older I become, the fewer right answers there are and the more often I say, “It depends.” This is one of those situations where there is no one best method.

Future Physicians

Let’s consider the advantages and disadvantages of each approach.

  1. Combining everything in one joint account

The plus side of this scenario is that there is total financial transparency as to where the money comes from and goes to. Each party has full access to and opportunity to be fully aware of the money flow. It’s easy to track. There are no secrets.

Which brings us to the downside: there are no secrets, no autonomy. Each party can see the other’s spending and spend the other’s money. This works well in some relationships where the shared belief is, “My money is your money and your money is my money.” It doesn’t work well absent that philosophy. I find this scenario is often problematic when one or both of the parties want autonomy over how they spend their money without the watchful (often critical) eye of the other. Often this arrangement doesn’t work well in second marriages or where both parties have careers.

  1. Keeping everything completely separate

The positive of this scenario is that each party has complete autonomy and control over his or her money. This often works well for two-career couples or second marriages where both partners came into the union with significant pensions or assets. It may also be a good fit for unmarried couples. If one partner is a spendthrift, it can protect the other partner from unauthorized purchases.

The negatives are that it can be more difficult to manage joint expenses like housing costs and that neither party has any specifics into the spending of the other. If a partner has any type of addiction, separate accounts can serve to enable the addiction by hiding the extent of the problem from the other partner.

  1. Combination of joint and separate accounts

The advantage to this scenario is that it provides more autonomy than putting everything into a joint account, yet it offers an easier way to manage joint expenses. It can often result in a clear agreement on what is mine, yours, and ours. Some couples have a system where each one’s earnings are their own, and they each contribute put fixed amounts into joint account. Another method is to deposit all the income into the joint account and give each partner a periodic allowance.

The disadvantages to this are the need to manage three accounts and to decide who writes the checks from the joint account.

Spouses

Case Example:

Personally, my wife and I use the third option. As the major breadwinner, I deposit most of my income into the joint account, from which she pays all the family bills. A smaller amount of my income goes into my separate account that I use to pay for private schooling, funding 529 plans, and personal care like massages and haircuts.

Assessment

Problems often arise when partners assume the money should be managed (or is being managed) in a certain way. No matter which approach couples use, the most important factor is to discuss it and agree, as equal partners, to a system that works for them.

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More:

  1. Physician Cash Maximization Rules
  2. On Emergency Funds for Physicians
  3. Essential Insights on Successful Physician Budgeting

Conclusion

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Some Financial Health Insurance Hardships and Concerns of Adults

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Privately Insured

By http://www.MCOL.com

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Assessment

Conclusion

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Product DetailsProduct Details

About Theranos

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What is Is – How it Works

[By Staff Reporters]

The next time your doctor recommends a blood test, you may be able to swing by your local Walgreens. You can have your finger pricked and receive results within four hours. The process of blood testing has remained the same since the 1960s. Doctors and nurses drawing vials of blood, from you, that are sent to labs leaving patients waiting for results for days or weeks.

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theranos

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Enter Theranos

Theranos is a privately held health technology and medical laboratory services company based in Palo Alto, California that provides blood tests. The company’s blood testing platform uses a few drops of blood obtained via a fingerstick rather than vials of blood obtained via traditional venipuncture, using microfluidics technology.

Link: http://en.wikipedia.org/wiki/Theranos

Founder Elizabeth Holmes

At 30, Elizabeth Holmes makes her debut on the Forbes 400 as the youngest self-made woman billionaire. She dropped out her sophomore year of Stanford University to found Palo Alto, Calif.-based blood testing company Theranos in 2003 with money she saved for college. With a painless prick, her labs can quickly test a drop of blood at a fraction of the price of commercial labs which need more than one vial. Theranos has raised $400 million from venture capitalists, valuing the company at $9 billion, and Holmes’ 50% stake at $4.5 billion. She has assembled a stellar board that includes elder statesmen George Shultz and Henry Kissinger. Last year, Walgreens, the largest U.S. retail pharmacy chain, with more than 8,100 stores, announced plans to roll out Theranos Wellness Centers inside its pharmacies.

Link: http://news.therawfoodworld.com/walgreens-implements-new-technology-uses-just-one-drop-blood-run-dozens-tests/

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Conclusion

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Product DetailsProduct Details

Getting the Most from College 529 Plans

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A List of Suggestions

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

Rick Kahler CFPWhen it comes to 529 college savings plans, the best strategy is to start early and start big. Don’t wait to set up an account until your teenager is starting to wonder which schools might offer skateboarding scholarships.

These accounts are excellent vehicles to save for college, in large part because of the tax-free growth they offer. Here are some suggestions for getting the most benefit from a 529 plan.

The List

1. Start as early as possible. The best time to start a 529 plan is at birth. Well, maybe a few weeks later; you do need to wait until the kid gets a Social Security number. The earlier an account is established, the more years of growth it will provide. Ideally, the plan and the child will grow together.

2. In the early years, invest more aggressively. It would be a shame to open a plan for a two-year-old and put everything in a money market fund or bonds; the goal in early years is growth. It’s a good idea to invest heavily in equities for about the first 10 years, then gradually move to bonds and other low-risk options. Many plans have an age-based option that does this automatically.

3. Fund the plan as much as you can when the child is young. Obviously, this can be a challenge for young families. If you can, however, it’s good to start with higher monthly amounts even if you need to taper off your contributions as the child gets older. The goal is to get as much into the plan as you can.

4. Consider using the five-year option. If someone has the ability to put a large amount into a child’s 529 plan all at once, it’s possible to contribute as much as $70,000 that is considered a contribution in advance for the following five years. The five-year period is to minimize federal gift tax purposes. This option might be most applicable for grandparents as part of their own estate planning.

5. Pay attention to fees and performance. Many 529 plans are sold through investment firms, and the commissions paid to those firms vary. Some offer mutual funds with relatively high annual fees. Fees are required to be clearly disclosed. It’s also a good idea to look at the performance of the fund managers. As an example of how to find this information, the South Dakota 529 plan has a FAQ section on its website with details on fees, performance, and funds.

6. Compare several state plans. While some states do offer tax breaks for residents who use their 529 plans, you aren’t limited to the plan from your own state. You can open new accounts in or move existing accounts to other states.

7. The more plans, the better. One child can be the beneficiary of several plans, perhaps set up by parents and both sets of grandparents. Or grandparents, say, could contribute to accounts opened by parents. The potential disadvantage here is that the money then belongs to the owner of the account.

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One Last Point

Don’t get so excited by the idea of maximizing a 529 plan that you forget one essential guideline: Parents should fund their own retirement accounts ahead of funding college accounts for the kids.

Assessment

There are many places to find a little extra money for kids’ 529 plans. A few possibilities are cash gifts from relatives, contributions from grandparents, tax refunds, or bonuses. But the worst place to find that money is your own retirement fund. It isn’t wise to sacrifice a healthy retirement plan in order to create a healthy 529 plan.

More: Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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Low Interest Rate Traps

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IRs at Historic Lows

[By David K. Luke MIM CMP™ http://www.NetWorthAdvice.com]

David K. LukeWhile our economy is still in a “Land of Make Believe”, despite the “mini-crash” today and with interest rates still at historic low levels, now is a good time to remind ourselves of a couple tempting financial missteps:

Taking On New Debt

Debt is Debt!

When you borrow money to buy that second home, nice boat, or remodel the kitchen, it is easier to justify considering the lower monthly payments at 3 to 6%. That $110,000 Sea Ray 300 Sundeck boat you have always wanted is only $729 a month (240 months @ 5% no down). Affordable, right?

Whether or not it easily fits within your budget is one thing, but the low interest rate does not negate the fact that you now have an $110,000 liability on your Balance Sheet. Depending on depreciation and resale factors, you may also be draining your net worth with such a purchase if you end up “upside down” on the value.

Neglecting Existing Debt

Your mortgage is under 3.5%. Your practice just scored a low interest rate on a needed new piece of medical equipment. Your local bank just quoted you 1.99% on a new car loan. Life is good for medical professionals!

Perhaps because the emotional benefits of paying off debt is difficult to quantify, paying off low interest rate loans is not usually a priority for most physicians. Professor Obvious states: “Once a debt is paid, you have freed yourself of future recurring interest costs and an outstanding obligation.” While this seems like a trite concept, the point is that funds that have been previously used to pay interest, no matter how low the rate was, can be used for other purposes. Unfortunately physicians and financial advisors, CPAs, estate planning attorneys tend to be over analytical and miss the “happiness factor” of getting out of debt and owning your abode and other assets. For the strictly number-oriented person or over analytical physician, this can be a sticking point. After all, why pay off a 3.5 % mortgage (that after tax is costing you around 2.5% or less)?

***

Euro Debt

***

A physician would never remortgage their home to invest in a mutual fund. In fact, it is now accepted by FINRA, the SEC, and other regulatory bodies in the financial services industry that a financial advisor that encourages a client to leverage principle residence equity (take out a 1st or 2nd mortgage) to make a security investment is akin to committing malpractice. Yet I hear the rationale that funds are being deployed to other “investments” rather than paying off a low interest rate mortgage.

Life Is Good!

From a financial planning perspective, avoiding new debt and retiring existing debt obligations as soon as reasonable gives a physician and his or her family more options. Taking a locum tenens position, retiring early, and working less hours are just a few of these options.

Assessment

With a little consideration and restraint on your personal debt situation, even at these low interest rates, financial freedom and the resulting empowerment is achievable earlier.

Conclusion

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Developing the Millionaire’s Mindset [Part 1]

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To Build a Solid Financial Foundation to Support your Goals

By Rick Kahler MS CFP® http://www.KahlerFinancial.com

Rick Kahler CFPIf you’re a new graduate, nursing or medical student, taking your first steps into the adult world, here is the most important financial advice I can offer: Develop a millionaire mindset.

This absolutely does not mean making wealth your life goal. But, thinking like a millionaire will help you build a solid financial foundation to support you in reaching your life goals.

Definitions

First of all, let me define “millionaire.” A millionaire is someone with a net worth of one million dollars. That amount would generate an income of around $30,000 a year. In today’s world, that’s not even close to lavish-lifestyle wealth.

You probably know several millionaires. If you don’t think of them as rich, it’s most likely because they practice the millionaire mindset.

Here’s how:

1. Spend like a millionaire

The number-one common denominator of wealth accumulators is frugality. Millionaires shop sales, clip coupons, read labels, compare prices, and bargain. People who build wealth usually don’t wear designer clothes, drive luxury cars, live in extravagant houses, or shop at Neiman Marcus. They typically wear jeans bought on sale, drive used Toyotas, live in middle class neighborhoods, and shop at Walmart.

There’s no place in a millionaire mindset for credit card debt. Pay cash for everything but your home. Use a credit card only for convenience and pay it off every month. If you ever find yourself unable to pay the full amount, cut up your card. Pay off the balance as quickly as you can, and then don’t use a credit card for at least one year.

2. Work like a millionaire

Most millionaires work long hours, and most of them love what they do. They often have some “skin in the game” by owning part or all of their own businesses. As much as possible, find a job and career you love. When you do, your work becomes play. Invest time and money to keep your career skills and knowledge current. The millionaire mindset knows that your career is your most valuable financial asset.

3. Budget like a millionaire

Most college students live on budgets that allow only a Ramen noodle lifestyle. When you start getting career paychecks, keep that lifestyle for a time. Don’t increase your budget when you get a new job, a raise, or a promotion. Always have your lifestyle at least one step below your income.

***

Millionaire's Jaguar

***

To budget like a millionaire, follow these steps on every gross dollar you earn:

  • First, pay your taxes. Estimate your total tax liability and be sure your employer withholds enough to cover it. If you are self-employed, deposit a percentage of every check into a savings account that you use solely to pay your quarterly estimated taxes. Never “raid” these funds.
  • Second, put away at least 20% or more of every gross dollar you earn until you have six months to one year of living expenses in an emergency account. Then continue to invest that 20% of your gross pay in qualified retirement plans like 401ks, 403bs, or IRAs.
  • Third, pay your fixed expenses like housing and utilities.
  • Fourth, set up short-term savings accounts for foreseeable future “unexpected” lump-sum expenses like car and home repairs, vacations, holiday giving, college tuition, and medical emergencies.
  • Fifth, go ahead and blow the rest any way you wish. For most people, this means living on 30 to 60 cents out of every gross dollar you earn.

Assessment

The ways you spend, budget, and work are only part of the millionaire mindset. In a future ME-P, we’ll look at other ways you can build a fulfilling life by thinking like a millionaire.

PART TWO: Developing the Millionaire’s Mindset [Part 2]

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Communithy Health Center Funding Under Current Law

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FY 2010-16 in $-Billions

http://www.MCOL.com

Funding

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On Setting Your Household Budget [ugh!]

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Trim Daily Expenditures or Don’t Sweat the Small Stuff?

By Lon Jefferies MBA CFP® http://www.NewWorthAdvice.com

Lon JefferiesHow often do you see articles containing money saving tips? Make dinner at home more often and eat out less, rent movies rather than going out, bring lunch to work rather than visit a restaurant, take advantage of coupons, and brew your coffee rather than driving-through Starbucks.

Do Advice Tips Work?

Are these tips worthwhile? If we spare the $8 expense of a lunch five days per week, 50 weeks per year, we could save $2,000 – nothing to scoff at!

However, what’s the cost of these savings? Eating at our desk everyday removes our ability to get outside and away from our work for that important hour, and prevents us from spending time, talking to, and laughing with friends. Is there a better way?

The DOL Report

According to a new study released by the Department of Labor, the average U.S household earns $65,132 per year before taxes, and spends an average of $50,631 on annual expenditures (excluding taxes and savings). Of that spending, $20,093, or 39.7%, goes towards housing expenses.

Additionally, $11,211, another 22.1%, goes towards transportation and automobiles. Combined, those elements make up 61.8% of the average household’s spending!

By comparison, only $10,835, or 21.4%, of our spending goes toward food, apparel and services, and entertainment combined. If we are going to explore ways to reduce spending, shouldn’t we start with the elements that are costing us the most?

Example:

For instance, most financial professionals say only 28% of our gross income should be committed to housing costs. Of the average $65,132 gross income, 28% would mean reducing our housing spending from $20,093 to $18,236, saving us $1,857 per year.

Assuming a 250-day work year, this savings could allow us to spend nearly $7.50 per day on lunch, enjoying our friends, and taking a break from the office.

More dramatically, reducing our mortgage payment by $500 per month, saving us $6,000 per year, pays for a whole lot of dinner and movie date nights.

Similarly, assume we spend $4 per day enjoying our morning coffee at Starbucks with friends five times a week, for 50 weeks a year. Annually this would cost us $1,000. Now suppose we purchase a nice used automobile for $15,000 rather than a new car for $25,000. This saves us $10,000 or 10 years worth of coffee breaks with friends (plus interest!).

Prioritize

Of course, everyone has different priorities. I suggest spending your money on what you are passionate about. For the occasional car fanatic, perhaps spending more on a car that makes you happy each day is preferable to other spending options.

Likewise, if homes happen to be your hot spot, heavy spending in this area makes sense.

Different Doctors?

However, I’d suggest that for most people, the experience of constantly eating with friends or spending a night out with your spouse is more likely to bring happiness than the possession of an expensive home or car. After all, would you rather eat out with friends or clip coupons alone in a large kitchen?

But, are doctors any different?

Budgets

Assessment

Consequently, reducing large expenses like a home mortgage or car loan may be the most effective way to stay within your budget and maintain your level of happiness – especially for docs!

Conclusion

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5 Car Interior Upgrades that Will Make Your Drive More Enjoyable

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I Love Used [Previously Owned] Cars –– But!

Dr. Marcinko

By Dr. David Edward Marcinko MBA CMP™

By Nalley Lexus Roswell

As a doctor and financial advisor, I love a good used car.

Why? Let some else take the monetary depreciation hit. A vehicle about 2-4 years old, depending on make or model, is usually about right.

Take my own favorite auto, for example. It is a Jaguar 2000 XJ-V8-L, and she is a classic beauty. My daughter even named her Ele; short for Elegant. And, I show her off every chance I get.

But, did I pay $90,000 for her as a new vehicle? No Way!

Ageism

Allow me to say it again.  I love a good used car. But unfortunately, cars like people, get old over time.

So, if your car is starting to look and feel a bit tired and you don’t have the cash, or are too smart to go for a new one, you can consider investing in some car interior upgrades. An interior upgrade doesn’t need to cost a fortune, and you might be surprised at what a difference it can make. And it is a nice treat for your car as Fall approaches.

My Jaguar's engine after a steam

My Five Tips

Here are 5 car interior upgrades we at are confident will help make your ride more enjoyable without breaking the bank.

1. New seat covers

Car seats quickly get worn and tired, fabric can get ripped or stained, and leather or PVC can age and crack, making the seats rather less comfortable. New seat covers could make a big difference. There are a huge variety of different covers on the market with styles to suit all budgets and tastes. If you want to spend a bit more, consider having some or all of the seats completely re-upholstered. You’ll soon be enjoying a much more comfortable drive.

2. Driver’s seat upgrades

If the driver’s seat really isn’t comfortable any more, then a more viable option might be to upgrade the whole seat. A sports seat will provide a more comfortable, responsive driving position, offering much more support to different parts of your body.

3. Upgraded audio system

Music can make even the longest car journeys more bearable, so why not consider investing in an upgraded audio system? Talk to your local dealer, or neighborhood kid, about getting a price on a new system and having it fitted. You may be quite limited by the dimensions of the cavity on your dashboard, so make sure you measure accurately and opt for a device that you can secure when the car is not in use to minimize the risk of theft.

4. Air purifier

Although you may use your air conditioner, the air in the cabin of your car can still get stale. Unless you open your car windows all the time, the chances are that you are continually breathing dead air. An air purifier can be bought cheaply, and in most cases, installs easily into the cigarette lighter socket.

5. Car mounts

Car mounts are an increasingly popular way for drivers and their passengers to make better use of their gadgets on the move. A dashboard car mount can help you store and use your iPhone or iPod Touch on the go. A mount on your sun visor can be used to keep your sunglasses safe and secure. You can even get a mount, which attaches to the back of the driver or front passenger seat and then folds down into a table for the rear passenger to use for a laptop.

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Jaguar Touring sedan XJ-V8-LWB

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Jaguar front seat

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On Overspending and Overeating?

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Is there a Causal Relationship?

Rick Kahler CFPBy Rick Kahler CFP® http://www.KahlerFinancial.com

Over the years, I’ve noticed a commonality among people with money problems. Many of them are also overweight. Is there a relationship between overspending and overeating?

Behavioral science

Until now, I couldn’t be sure my experience was anything more than circumstantial. But I recently read about a 2009 study done by Dr. Eva Munster at the University of Mainz in Germany. It found that people who were in deep consumer debt were 2.5 times more likely to be overweight than those who were debt free. This confirms what I’ve observed over the past 15 years.

It isn’t possible to pinpoint one simple reason for this link. Among the causes I’ve seen suggested are overeating because of the stress of being in debt, difficulty buying healthful food with limited income, or an inability to delay gratification in both spending and eating.

Based on my work with people in financial trouble, however, I suspect a deeper root cause. Just as chronic money problems aren’t about the money, chronic weight problems probably aren’t about the food.

Evidence?

For supporting evidence, I went to an expert: my daughter. London recently took a graduate level course in previewing medicine. I asked her what the medical link between overspending and overeating might be. She explained that sugar is addictive and lights up the same part of the brain that narcotics do. It produces a euphoric response within the brain that calls for more of the substance when the euphoria subsides.

She wondered whether people addicted to sugar might overspend on junk food to feed their addiction. They might also spend money they really don’t have on diets, fitness centers, and the higher medical costs associated with being overweight.

I pointed out that I spend a lot on healthy food that costs more than junk food. I also spend money on a fitness center and medical costs to pay for the damage I do to my body compulsively working out. “Well, I guess my argument doesn’t hold much weight,” she quipped.

She pondered for a moment. “Oh, I think I got it. I’ll bet for some people spending money lights up the same part of the brain as sugar and narcotics?”

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Obesity in the USA

###

Bingo!

That is why the key to changing any addictive behavior—eating, drinking, using drugs, or overspending—is not simply about eliminating the substance or the activity. Something else just pops up to take its place. That’s why many people who successfully stop drinking gain weight or get into serious money problems. The brain just substitutes one dopamine producer for another.

The ultimate answer is a sort of “rewiring” of the brain to create new neuropathways that do not require the harmful substance or activity to produce the same euphoric event. The latest research on the brain tells us this rewiring is completely doable.

I’ve seen that permanently changing the most entrenched damaging money behaviors takes more than knowledge about money or budgeting. Experts on obesity tell us the solution to permanently losing weight rarely lies with learning more about nutrition or finding the right diet. Making deep life changes such as these requires looking into the past. This recovery process takes time, effort, and money. It’s a path that many people are just not willing to follow.

Assessment

But there may be some good news. If the underlying causes for overeating and overspending are the same, then doing the work to recover from one is likely to help someone recover from the other, as well. It’s a sort of “two for the price of one” sale. In terms of long-term financial, physical, and emotional well-being, it seems like a bargain.

More: Are Doctors Spenders or Savers?

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Doctors as Private Financiers?

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Doctors Acting as Lenders, White-Knights and Venture Capitalists

By Rick Kahler CFP® http://www.KahlerFinancial.com

Rick Kahler CFP

Every now and then I get a call from a doctor client wanting my opinion about starting a business with a friend, investing money in a business owned by a family member, or co-signing a loan to help a family member buy a business. Being in business with family is something I know a little bit about, having been in partnership with my father and brother for 40 years. Going into business with family members or close friends can carry a high degree of risk, both financially and emotionally.

In part this is because it is uncomfortable or difficult to ask the necessary dollars-and-cents questions. We don’t want to seem uncaring, unsupportive, or untrusting. We are concerned about damaging the relationship. Yet the relationship is far more likely to suffer if we don’t ask those questions and the venture fails.

My Rules

The following are some things to consider before you invest or go into business with someone close to you:

1. Don’t even consider putting money into a business without seeing a detailed business plan. Ask the same questions about risks, costs, and potential profits that you would ask if this person were not a family member.

2. Insist that the person at least talk to other possible investors who aren’t emotionally involved. This will give both of you some feedback from neutral third parties about the validity of the opportunity. A banker or a potential investor who isn’t a family member will ask questions you may not even think of asking.

3. Do your own research and seek out some independent advice. A financial advisor or someone with a lot of business experience can be a valuable source of questions, information, and alternatives.

4. Ask yourself whether you want to be involved in this business. Does it support your own goals? Do you know anything about this field or have any interest in it? Sometimes people invest on behalf of family members because they feel they “should.” Yet, had those same proposals come from acquaintances or business colleagues, they would almost certainly have said no without a second thought.

5. Try to think of other ways you might be supportive without putting money into the venture. Maybe you can think of lower-risk alternatives or other possible sources of funding. Remember, too, that if your wish is to support and encourage family members, helping them jump into an unacceptably risky investment isn’t exactly doing them any favors.

6. Pay close attention to any difficult feeling you are experiencing when considering investing in this enterprise. Explore any feelings like fear, anxiety, or sadness to determine if there is further wisdom to be gleaned. Perhaps you may be unconsciously ignoring some crucial warning signs.

7. Communicate clearly. Emphasize from the beginning that protecting the relationship is your most important consideration. If you decide not to get involved, be direct about it. Saying no right away is more respectful than is stringing the person along because you don’t want to hurt someone’s feelings. Yes, choosing not to invest in a family member’s project may cause some tension in the relationship. That’s minor compared to the damage the relationship could incur if you invest and the business fails.

###

Achievement

Assessment

Sometimes, the best way for a successful doctor to support a family member’s financial well-being is to turn down an investment request. If outside parties are not willing to commit funds to a project, maybe there’s a message there that both of you need to hear. If you wouldn’t make an investment on its own merits, you almost certainly shouldn’t make it just because it involves a friend or family member.

Conclusion

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Be Your Own Banker?

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BYOB—or not

By Rick Kahler MS CFP® ChFC CCIM www.KahlerFinancial.com

Rick Kahler CFPDoctors – I’m not inviting you to a “bring your own beverage” party. I’m warning you away from a get-rich scheme called “Be Your Own Banker.”

This idea has floated around the Internet and late-night television for a while now. One of the latest versions is touted on a website that I’m not going to name because I don’t want anyone getting sucked into what is essentially one step from being a scam.

Once you drill down past the initial layers of ambiguity, the basic concept seems simple enough. You buy a large whole-life insurance policy. After you pay into it for several years, it will accumulate a cash value. Then, any time you make a major purchase like a new car, you can borrow against your insurance policy instead of going to a bank.

Paying Your Self

According to the people selling this concept, you are the big winner here because you’re paying interest to yourself, not the bank.

The BYOB salespeople are incredible marketers. This must be where political campaign managers ply their trade in between elections. They blast our financial system, banks and bankers, mutual fund managers, and financial advisors. They profess to care about the customers they call “clients.”

The half-truths and misstatements from these sellers are enough to elevate the blood pressure of any fee-only financial planner. They use terms like “depositing cash into a life insurance policy” and “having control of your own banking system.”

Amid all this unbelievable double-talk, they forget to mention one little detail. All that money that you “invest” in your whole life insurance policy is paid in the form of premiums. You aren’t paying it to yourself. You’re paying it to large life insurance companies—which, by the way, are an integral part of the financial system they blast.

###

good news

A Closer Look

Let’s look at some actual numbers. You pay $12,500 a year in premiums for a $125,000 whole life insurance policy. In four years, after paying in a total of $50,000, you would have $46,110 dollars in your account. Yes, this is less than you put in, as the fees and premiums add up to be more than the growth rate. You can borrow up to 90% of the net value, or $41,500.

You will pay the company 5% for borrowing your own money. Supposedly, the interest is paid to yourself and adds to the cash value of the policy. But a deeper look shows that the interest you pay yourself must be over and above the interest paid to the company, which is just another name for “premium.” The insurance company charges you interest regardless of the “interest” you pay yourself.

What happens if you don’t pay back the loan? The interest keeps compounding, adding to the amount of the loan and eating up the cash value of the policy. This could eventually leave you facing some nasty tax consequences, potentially including having to pay income taxes on phantom income.

Instead of paying that $12,500 a year in premiums, you could put it into a deductible 401(k) plan and invest the funds in a diversified portfolio. You’d even be better off to put it into a taxable account. Then if you needed a new car or water heater, you’d have cash and wouldn’t have to borrow from yourself or anyone else.

Assessment

After spending hours researching “being your own banker,” my staff and I understand what BYOB really means. It stands for “Bring Your Own Bottle”—of pain reliever. You’ll need it for the headache of trying to understand this slick advertising scheme. It makes no sense for anyone except those selling the life insurance policy.

Conclusion

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CLINICS: http://www.crcpress.com/product/isbn/9781439879900
BLOG: www.MedicalExecutivePost.com
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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Are Doctors Protecting their Credit Standing?

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Avoiding Credit Errors

By Lon Jefferies, MBA CFP™  http://www.NetWorthAdvice.comLon Jefferies

A clean, accurate credit history is a critical piece of the personal finance puzzle for doctors and us all. Staying on top of your credit standing over time can mean big savings since credit scores often determine your access to loans, interest rates, and monthly payments. An error on the report of any of the three major credit agencies – Experian, Equifax, or TransUnion – could be catastrophic next time you apply for a loan.

The Services

There are multiple credit-monitoring services you can utilize that charge approximately $15 per month, but these fees likely aren’t necessary. You can order a free credit report from each of the three major credit agencies every year by visiting AnnualCreditReport.com.

Additionally, several services will send you updates from the credit bureaus at no cost. Credit Sesame will track data on your Experian report daily and instantly email you if anything suspicious pops up. There are over 35 triggers for alerts, including new accounts opened, late payments, credit inquires, and address changes. The website also provides a running credit score daily.

Credit Karma has a similar tool that provides free daily monitoring of your TransUnion report. This tool also provides valuable data such as how many lines of credit are evaluated on your credit report and your auto insurance score (used to determine your insurance premiums).

Again, both monitoring tools are free, don’t require a credit card, and take no longer than a couple minutes to sign up for.

stand-out

Assessment

Getting an instant heads-up that there’s been a change in your report could help you fix errors quickly, catch an identity theft at work, or get on top of a delinquent account. As a doctor, you’ve worked hard to establish your credit, so make sure you protect it.

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.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

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:

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

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

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

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

Hospitals: http://www.crcpress.com/product/isbn/9781439879900

Physician Advisors: www.CertifiedMedicalPlanner.org

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Strategic Importance of Healthcare Capital Investing

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For Leaders, Governors, Physicians and Hospital Executives

[By Calvin Weise CPA, CMA]

Some of the most important strategic decisions hospital executives make are related to capital expenditures. Almost every hospital has capital investment opportunities that are far in excess of their capital capacity. Capital investments are bets on the future. How these capital bets are placed has long-lasting implications. It is of utmost importance that hospitals bet right.

Hospitals as Business Entity

Hospitals are capital intensive businesses. Hospital buildings are unique structures that require large amounts of capital to construct and maintain. Inside these buildings are pieces of expensive equipment that have fairly short lives. Technological innovations continually drive demand for new and more expensive equipment and facilities. The ability to continually generate capital is the lifeblood of hospitals. In order to compete and succeed, it’s imperative for hospitals to continually invest in large amounts of capital equipment and expensive facilities.

Capital investment is fueled by profit. In order to continually make the necessary capital investments, hospitals must be profitable. Hospitals unable to generate sufficient profit will fail to make important capital investments, weakening their ability to compete and survive.

Hospital managers bear important responsibility in choosing which capital investments to make. There are always more capital opportunities than capital capacity. In many cases, capital opportunities not taken by hospitals create openings for others with capital capacity to fill the vacuum. By not taking such opportunities, hospitals are weakened, and their operating risk increases.

Responsibility

Stewardship is a term that aptly describes the responsibility borne by hospital managers in making capital investments. The New Testament parable of the talents describes this kind of stewardship. In this story, a merchant entrusted three managers with money to invest. One manager was given five units, another two, and a third one. At the end of the investment period, the two managers given five units and two units reported a 100% return. The manager given one unit reported zero return — he was fired and his unit was given to the first manager.

Healthcare Investment Risks

Leadership

This is stewardship — and hospital managers are stewards of their organizations’ assets. Too often, not-for-profit hospital managers hold an erroneous view of the returns expected of them. Like the third manager in the parable, they think zero return on equity is acceptable. They understand capital investment funded by debt needs to cover the interest on the debt, but they view capital investments funded by equity as having no cost associated with the equity. From an accounting perspective, they are right. From a stewardship perspective they are dead wrong — just like the third manager in the parable.

Here’s why: as stewards, they are responsible for managing the entrusted assets. They can either put these assets at risk themselves, or they can put those assets in the market and let other managers put them at risk. If they choose to put them at risk themselves, then they have the mandate of creating as much value from putting them at risk as they would realize if they put them in the market for other managers to put at risk. They have the duty to realize returns that are equivalent to the returns they could realize in the market; otherwise, they should just put them in the market. They can either invest in hospital assets or work the assets themselves, or they can invest in financial market assets so others can work the assets. When they choose to invest in hospital assets, the required return is not zero. That’s the return they get fired for. The required return is equivalent to market returns.

Assessment

Thus, when evaluating performance of hospital management teams, the minimum acceptable performance level is return on equity that is equivalent to the return that could be realized by investing the hospital assets in the market. And when evaluating a capital investment opportunity, it is important to apply a capital charge equivalent to the hospital’s weighted cost of capital — a measure that imputes an appropriate cost to the equity portion of the capital along with the stated interest rate for the debt portion of the capital structure.

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.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

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:

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

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

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

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

Hospitals: http://www.crcpress.com/product/isbn/9781439879900

Physician Advisors: www.CertifiedMedicalPlanner.org

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