Financial Advisor’s are Not Doctors!

http://www.CertifiedMedicalPlanner.org

By Dr. David Edward Marcinko MBA MEd CMP™

The decision to sell, buy or merge a medical practice, while often financially driven, and is inherently an emotional one for these impact investors who went into the profession largely because of a deep seated zeal to help others.

Still, beyond impact investing musings, there are other economic reasons for a practice valuation that include changes in ownership, determining insurance coverage for a practice buy-sell agreement or upon a physician-owner’s death, organic growth meter, establishing stock options, or bringing in a new partner; etc.

Practice appraisals are also used for legal reasons such as divorce, bankruptcy, breach of contract and minority shareholder complaints. In 2002, the Financial Accounting Standards Board (FASB) issued rules that required certain intangible assets to be valued, such as goodwill. This may be important for practices seeking start-up, service segmentation extensions, or operational funding. Some other reasons for a medical practice appraisal, and the considerations that go along with them, are discussed here.

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

Estate Planning

Medical practice valuation may be required for estate planning purposes. For a decedent physician with a gross estate of more than current in-place tax limits, his or her assets must be reported at fair market value on an estate tax return. If lifetime gifts of a medial practice business interest are made, it is generally wise to obtain an appraisal and attach it to the gift tax return.

Note that when a “closely-held” level of value (in contrast to “freely traded,” “marketable,” or “publicly traded” level) is sought, the valuation consultant may need to make adjustments to the results. There are inherent risks relative to the liquidity of investments in closely held, non-public companies (e.g., medical group practice) that are not relevant to the investment in companies whose shares are publicly traded (freely-traded). Investors in closely-held companies do not have the ability to dispose of an invested interest quickly if the situation is called for, and this relative lack of liquidity of ownership in a closely held company is accompanied by risks and costs associated with the selling of an interest said company (i.e., locating a buyer, negotiation of terms, advisor/broker fees, risk of exposure to the market, etc.). Conversely, investors in the stock market are most often able to sell their interest in a publicly traded company within hours and receive cash proceeds in a few days. Accordingly, a discount may be applicable to the value of a closely held company due to the inherent illiquidity of the investment. Such a discount is commonly referred to as a “discount for lack of marketability.”

Discount for lack of marketability is typically discussed in three categories: (1) transactions involving restricted stock of publicly traded companies; (2) private transactions of companies prior to their initial public offering (IPO); and, (3) an analysis and comparison of the price to earnings (P/E) ratios of acquisitions of public and private companies respectively published in the “Mergerstat Review Study.”\

With a non-controlling interest, in which the holder cannot solely authorize and cannot solely prevent corporate actions (in contrast to a controlling interest), a “discount for lack of control,” (DLOC), may be appropriate. In contrast, a control premium may be applicable to a controlling interest. A control premium is an increase to the pro rata share of the value of the business that reflects the impact on value inherent in the management and financial power that can be exercised by the holders of a control interest of the business (usually the majority holders). Conversely, a discount for lack of control or minority discount is the reduction from the pro rata share of the value of the business as a whole that reflects the impact on value of the absence or diminution of control that can be exercised by the holders of a subject interest.

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

Several empirical studies have been done to attempt to quantify DLOC from its antithesis, control premiums. The studies include the Mergerstat Review, an annual series study of the premium paid by investors for controlling interest in publicly traded stock, and the Control Premium Study, a quarterly series study that compiles control premiums of publicly traded stocks by attempting to eliminate the possible distortion caused by speculation of a deal.

Buy-Sell Agreements

The ideal situation is for physician partners to put in place a buy-sell agreement when practice relationships are amicable. This establishes the terms for departure before they are required, and is akin to a prenuptial agreement in the marriage contract. Disagreements most often occur when a doctor leaves the group, often acrimoniously. Business operations of the practice decline, employee and partner morale suffers, feuding factions develop spilling over into the office, and the practice begins to implode creating a downward valuation spiral. And so, valuations should be done every 2-3 years, or as the economic circumstances of the practice change. Independence and credibility are provided, and emotional overtones are purged from the transaction.

Physician Partnership Disputes

Medical practice appraisals are often used in partnership disputes, such as breach-of-contract or departure issues. Obvious revenue declinations are not difficult to quantify. But, revenues may not immediately fall since certain Current Procedural Terminology [CPT®] code reimbursements may actually increase. Upon verification however, lost business may be camouflaged as the number of procedures performed, or number of patients decrease after partner departure.

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

Divorce

Physicians getting divorced should get a practice appraisal, and either side may hire the appraiser, although occasionally the court will order an expert to provide a neutral valuation. Such valuations should be done in light of both court discovery rules and IRS requirements for closely held businesses. Generally, this requires the consideration of eight elements:

• Practice specialty and operating history
• Economic and healthcare industry condition
• Estimates of practice risks and future returns
• Book value and financial condition of the practice
• Practice future earning capacity
• Physician bonuses, dividends and distributions
• Intangible assets
• Comparable practice sales

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

Assessment

Sometimes, the non-physician spouse may even desire a lifestyle analysis to evaluate the potential for under reported income, by a forensic accountant, or appraiser. A family law judge is often the final arbiter of different valuations, and because of varying state laws there may be 50 different nuances of what the practice is really worth.

MORE: Valuation

Conclusion

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Contact: MarcinkoAdvisors@msn.com

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Filed under: "Doctors Only", Accounting, Career Development, Estate Planning, Health Economics, Healthcare Finance, iMBA, Inc., Insurance Matters, Touring with Marcinko | Tagged: business valuations, CMP™ Course, David E. Marcinko, divorce, Estate Planning, FASB, Financial Accounting Standards Board, Practice Worth | Leave a comment »

Selecting a Medical Practice Business Entity?

Posted on August 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By http://www.MarcinkoAssociates.com

Incorporating a practice is something many doctors are unaware but at Marcinko Associates, Inc., we are here to help you in getting your medical practice or clinical business up and running. We believe this category is by far the most important when acquiring or starting a new practice as well as a continuing practice. Selecting a business entity that will be the most conducive to your overall clinic or medical practice objectives is vital.

For example, clinic or medical business entity selection would include: Sole Proprietorship, Limited Liability Company, S-Corporation, C-Corporation, Professional Association or Non-profit organization.

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Filed under: "Ask-an-Advisor", "Doctors Only", Career Development, iMBA, Inc., Insurance Matters, Touring with Marcinko | Tagged: C-corp, limited liability corporation, LLC, non-profit, S-corp, sole proprietor, sole proprietorship | Leave a comment »

PHYSICIAN ACQUISITION: The Art of Acquiring Your Medical Practice

Posted on August 21, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Part Two: Medical Practice Valuation

By Dr. David Edward Marcinko, MBA, MED, CMP

www.CertifiedMedicalPlanner.org

In Part 1, we discussed how to establish fair market value (FMV) for a medical practice in the article, “Establish Your Practice’s Fair Market Value.” This time, we’ll review important terms and conditions for the sale acquisition and transaction.

LINK: https://medicalexecutivepost.com/2023/02/02/establish-your-practices-fair-market-value/

Valuation Types

Unfortunately, as a general rule, medical practice worth is presently deteriorating. A good medical practice is no longer a good business necessarily, and selling doctors can no longer automatically expect to extract a premium sale price. Nevertheless, appraising your medical practice on a periodic basis can play a key role in obtaining maximum value for it.

Competent practice valuation specialists typically charge a retainer to cover out-of-pocket expenses. Fees should not be based on a percentage of practice value, and may take 30-45 days to complete. Flat fees should be the norm because a sliding scale or percentage fee may be biased toward over-valuation in a declining marketplace. Fees range from $7,500-$50,000 for the small to large medical practice or clinic.

Expect to pay a retainer and sign a formal, professional engagement letter. Seek an unbiased and independent viewpoint. Buyer and sellers should each have their own independent appraisal done, using similar statistics, accounting measures, and economic assumptions.

At the Institute of Medical Business Advisors, Inc www.MedicalBusinessAdvisors.com we use three engagement levels that vary in intensity, purpose, and cost:

1. A comprehensive valuation provides an unambiguous value range. It is supported by most all procedures that valuators deem relevant, with mandatory onsite review. This gold standard is suitable for contentious situations. A written “opinion of value” is applicable for litigation support activities like depositions and trial. It is also useful for external reporting to bankers, investors, the public, Internal Revenue Service (IRS), etc.

2. A limited valuation lacks additional suggested Uniform Standards of Professional Appraisal Practice (USPAP) procedures. It is considered to be an “agreed upon engagement,” when the client is the only user. For example, it may be used when updating a buy/sell agreement, or when putting together a practice buy-in for a valued associate. This limited valuation would not be for external purposes, so no onsite visit is necessary and a formal opinion of value is not rendered.

3. An ad-hoc valuation is a low level engagement that provides a gross non-specific approximation of value based on limited parameters or concerns involved parties. Neither a written report nor an opinion of value is rendered. It is often used periodically as an internal organic growth/decline gauge.

Structure Sales Transactions and Acquisitions

When the practice price has been determined and agreed on, the actual sales deal can be structured in a couple of ways:

(1) Stock Purchase v. Asset Purchase

In an asset transaction, the buyer will receive a tax amortization benefit associated with the intangible value of the business. This tax amortization represents a non-cash expense benefiting the buyer. In this case, the present value of those future tax benefits is added to the business enterprise value.

(2) Corporate Transactions

Typical private deals in the past involved some multiple (ratio) of earning before income taxes (EBIT)—usually a combination of cash, restricted stock, notes receivable, and possibly assumption of liabilities. For some physician hospital organizations, and public deals, the receipt of common stock can increase the practice price by as much as 40-50 percent (to accept the corresponding business risk, in lieu of cash).

Complete the Deal

The deal structure will vary depending on whether the likely buyer is a private practitioner, health system or a corporate partner. Some key issues to consider in the “art of the deal” include:

Working capital (in or out?): Including working capital in the transaction will increase the sale price.
Stock vs. asset transaction: Structuring the deal as an asset purchase will increase practice value due to the tax amortization benefits received by the buyer for intangible assets of the practice.
Common stock premium: The total sale price can be significantly higher than a cash equivalent price for accepting the risk and relative illiquidity of common stock as part of the payment.
Physician compensation: If your goal is to maximize practice value, take home a lower salary to increase practice sale price. The reverse is also true.

Understand Private Deal Structure

Assuming a practice sale is a private transaction, deal negotiations are based on the following pricing methodologies:

Seller financing: Many transactions involve an earn-out arrangement where the buyer puts money down and pays the balance under a formula based on future revenues, or gives the seller a promissory note under similar terms. Seller financing decreases a buyer’s risks (the longer the terms, the lower the risk). Longer terms demand premiums, while shorter terms demand discounts. Premiums that buyers pay for a typical seller-financed practice are usually more than what you would expect from a simple time value of money calculation, as a result of buyer risk reduction from paying over time, rather than up front with a bank loan or all cash. Remember to obtain a life insurance policy on the buyer.

Down payment: The greater the down payment for acquisition of a medical practice, the greater the risk is to the buyer. Consequently, sellers who will take less money up front can command a higher than average price for their practice, while sellers who want more down usually receive less in the end.

Taxation: Tax consequences can have a major impact on the price of a medical practice. For instance, a seller who obtains the majority of the sales price as capital gains can often afford to sell for a much lower price and still pocket as much or more than if the sales price were paid as ordinary income. Value attributed to the seller’s patient list, medical records, name brand, good will, and files qualifies for capital gains treatment. Value paid for the selling doctor’s continuing assistance after the sale and value attributed to a non-compete agreement are taxed at ordinary income. A buyer willing to allocate more for items with capital gains treatment, or a seller willing to take more in ordinary income, can frequently negotiate a better price. This is the essence of economically prudent practice transition planning.

Sidestep Common Buyer Blunders

Here are 10 blunders to avoid, as a buyer:

1. Believing the selling doctor’s attestations. Always verify data through an independent appraisal.

2. Wanting to change the culture of the practice. Be careful: Patients may not adjust quickly to change.

3. Using all available cash without keeping a reserve for potential contingencies.

4. Creating a conflict with the seller by recognizing a weakness and continually focusing on it for a bargain price.

5. Failing to realize that managed care plan contracts can be lost quickly or may not be always transferable.

6. Suffering from analysis paralysis. Money cannot be made by continually checking out a medical practice, only by actually running one.

7. Not appreciating the uniqueness of each practice, and using inaccurate “rules of thumb” from the golden age of medicine.

8. Not realizing that practice worth and goodwill value have plummeted lately and continue to decline in most parts of the country.

9. Not understanding that practice brokers may play both sides of the buy/sell equation for profit. Brokers usually are not obligated to disclose conflicts of interest, are not fiduciaries, and do not provide testimony as a court-approved expert witness.

10. Not hiring an appraisal professional who will testify in court, if need be, using the IRS-approved USPAP methods of valuation. Always assume that the appraisal will be contested (many times, it is).

After pricing and contracting due diligence has been performed, the next step in the medical practice sale process—as Donald Trump might say—is just good, old-fashioned negotiation.

Electronic Downloads

Part I: Part I

Part II: Part II

Additional Reading:

Cimasi, R.J., A.P. Sharamitaro, T.A. Zigrang, L.A.Haynes. Valuation of Hospitals in a Changing Reimbursement and Regulatory Environment. Edited by David E. Marcinko. Healthcare Organizations: Financial Management Strategies. Specialty Technical Publishers, 2008.

Marcinko, D.E. “Getting it Right: How much is a plastic surgery practice really worth?” Plastic Surgery Practice, August 2006.

Marcinko, D.E., H.R. Hetico. The Business of Medical Practice (3^rd ed). Springer Publishing,New York,N.Y., 2011.

Marcinko, D.E. and H.R. Hetico. Risk Management and Insurance Planning for Physicians and Advisors. Jones and Bartlett Publishers, Sudbury, Mass., 2007.

Marcinko, D.E. and H.R. Hetico. Financial Planning for Physicians and Advisors. Jones and Bartlett Publishers, Sudbury, Mass., 2007.

Marcinko, D.E. and H.R. Hetico. Dictionary of Health Insurance and Managed Care. Springer Publishers, New York, N.Y., 2007.

Marcinko, D.E. and H.R. Hetico. Dictionary of Health Economics and Finance. Springer Publishers,New York,N.Y., 2007.

Filed under: Accounting, CMP Program, Experts Invited, iMBA, Inc., LifeStyle, Practice Worth, Risk Management, Sponsors, Taxation, Touring with Marcinko | Tagged: certified medical planner, CMP, david marcinko, FMV, medical practice valuation, medical practice worth, Uniform Standards of Professional Appraisal Practice, USPAP | 3 Comments »

REAL ESTATE Investing for Physicians

Posted on August 19, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

SOME GUIDELINES FOR COLLEAGUES

Touring with Marcinko | The Leading Business Education ...

By Dr. David Edward Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

According to Rick Kahler MS CFP® ChFC CCIM [www.KahlerFinancial.com] real estate is one of the largest asset classes in the world. The family home is the largest asset many middle-class Americans own. And, real estate makes up a significant portion of the net worth of many wealth accumulators. Directly owning real estate is not an investment for the faint of heart, the armchair investor, or the uneducated. Most wealth accumulators would do well to leave direct ownership of real estate to the pros and invest in real estate investment trusts (REITs) instead [personal communication].

Still, as we have seen, the lure of investing in a tangible asset like real estate is enticing for high risk tolerant physician-investors who need a sense of control and interaction with their investments. If you are among them, here are a few guidelines that may keep you on a profitable path.

1. Don’t attempt to purchase investment real estate without the help of a commercial real estate specialist who is a fiduciary bound to look out for your best interest. Engage a Certified Commercial Investment Member (CCIM) with years of training and experience in analyzing and acquiring investment real estate. To find a CCIM near you, go to http://www.ccim.com.

2. You will sign a disclosure agreement that will tell you who the Realtor represents. Be sure the Realtor you engage represents you and not the seller, both parties, or neither party.

3. Never trust the income and expense data provided by the seller’s Realtor. While a seller represented by a CCIM will have a greater chance of supplying you with accurate data, most will significantly understate expenses and overstate the capitalization rate. Selling Realtors often understate the average annual cost of repairs and maintenance. I estimate this annual expense at 10%.

4. Another often understated expense is management. Many owners manage their own properties, so the selling broker doesn’t include an estimate for management expenses. They should. Real estate doesn’t manage itself, ever. You will either need to hire professional management or do your own management (always a scary proposition). Even if you do it yourself, you have an opportunity cost of your time, so you must include a management fee in the expenses. Most small residential apartments and single-family homes will pay 10% of their rents to a manager.

5. You must verify all the costs presented to you by the seller’s Realtor. Demand copies of at least the last three and preferably five years of tax returns. Research items like utility bills, property taxes, legal fees, insurance costs and repairs, maintenance costs, replacement reserves, tax preparation and all management fees. As a rule of thumb, expenses will average 40% of rental income on average-aged properties where the tenants pay all utilities except water. Newer properties may have expenses as low as 35%, while older properties can be as high as 50%.

6. By subtracting the vacancy rate and stabilized expenses from the rent, you will find the net operating income. This is the income you will put in your pocket—assuming the property is paid for. By dividing the net operating income by the purchase price, you will find the return you will receive on your investment, called the capitalization or “cap” rate. In Rapid City SD, for example, the cap rate tends to be 4% for single-family homes, 5% to 8% for duplexes to eight-plexes, and 8% to 12% for larger residential and commercial properties.

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

ASSESSMENT: Yes, physician-investors and all of us can build wealth with real estate. You just need to educate yourself, work hard, start conservatively, think long-term, and be prepared for lean years. This is not a quick or easy path to riches. Your comments are appreciated. Thank You.

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

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INVITE DR. MARCINKO: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

THANK YOU

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Filed under: CMP Program, Experts Invited, iMBA, Inc., Investing, Sponsors, Touring with Marcinko | Tagged: Certified Medical Planner™, CMP Program, Marcinko, Non-Publicly Traded REITS, real-estate, REITS, Rick Kahler CFP® | Leave a comment »

KEY PRINCIPLES: Assessing Medical Practice Financial Value via U.S.P.A.P. Rules

Posted on August 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Invite Dr. Marcinko | The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

BY DR. DAVID EDWARD MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

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

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When it comes to purchasing a medical practice, there are a variety of factors that one must consider in evaluating the worth of the practice. Assessing the value of a practice is fraught with potential landmines if one does not go into the process with a strong understanding of some key principles to medical practice valuation.

According to the Dictionary of Health Economics and Finance, practice valuation is the “formal process of determining the worth of healthcare or other medical business entity at a specific point in time and the act or process of determining fair market value.” Fair market value is defined as “ … the price at which a willing buyer will buy and a willing seller will sell an asset in an open free market with full disclosure.”

The Internal Revenue Service (IRS) Revenue Ruling 59-60 clearly states that fair market value “is essentially a future prophecy and must be based on facts available at the required date of appraisal.”

Unfortunately, one cannot directly observe the value of a medical practice as there are a number of underlying issues. Obviously, the buyer and seller are pursuing opposite objectives, and this reality is not necessarily conducive to facilitating clarity on those issues.

Accordingly, let us consider a few mistakes that are commonly made by physicians who are considering the purchase of a medical practice.

A Guide To The Myths And Realities Of Medical Practice Valuation

   • Valuations are material representations providing a range of transferable worth.
   • Valuations are reproducible estimates based on economic assumptions.
   • Valuations are not “back of the envelope multiples” using specious benchmarks.
   • Valuations are defensible and should be “signed off” by the completing firm attesting to origination guidelines and in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP) and IRS formats as needed.
   • Financial accounting value (book value) is not fair market value.
   • Professional valuators represent only one party. The buyer or seller-owner is the client.
   • Unbiased valuators do not provide financing or equity participation schemes.

Knowing The Distinctions Among Engagement Types

The Institute of Medical Business Advisors uses three levels that approximate engagement types for the industry. These levels are comprehensive valuation, limited valuation and ad-hoc valuation.

A comprehensive valuation is an extensive service designed to provide an unambiguous opinion of the value range. It is supported by all procedures that valuators deem relevant with mandatory onsite review. This gold standard is suitable for contentious situations like divorce, partnership dissolution, estate planning and gifting, etc. The written opinion of value is applicable for litigation support activities like depositions and trial. It is also useful for external reporting to bankers, investors, the public and IRS, etc.

A limited valuation lacks additional suggested USPAP procedures. It is considered to be an “agreed upon procedure,” which is used in circumstances in which the client is the only user. For example, one may use the limited valuation when updating a buy-sell agreement or when putting together a practice buy-in for a valued associate. This limited valuation would not be for external purposes. No onsite visit is needed. A formal opinion of value is not rendered.

An ad-hoc valuation is a low level engagement that provides a gross and non-specific approximation of value based on limited limited parameters or concerns by involved parties. Neither a written report nor an opinion of value is rendered. The ad-hoc valuation is often used periodically as an internal organic growth/decline gauge.

Are You Following Industry Standards And Rules?

Specifically, when it comes to USPAP transactions involving physician practices, the following points are implied by the industry and the IRS.

   • Discounted cash flow analysis is the most relevant income approach and must be done on an “after-tax” basis. It generally produces a higher value but is costly, detail-oriented and time consuming.
   • Project practice collections based on reasonable assumptions for the practice and market, etc.
   • Physician compensation is based on market rates consistent with age, experience and productivity.
   • Majority (control) premiums and minority (lack of control) discounts are also to be considered. A majority premium is the amount paid to gain enough ownership to set policies, direct operations and make decisions for the practice. A minority discount for partial ownership does not allow this power. Thus, majority ownership is valuated higher than minority ownership purchase.

What About Personal Goodwill And Practice Goodwill?

Goodwill represents the difference between practice purchase price and the value of the net assets. Personal goodwill results from the charisma, skills and reputation of a specific doctor. These attributes accrue solely to the individual, are not transferable and cannot be sold. Personal goodwill has little or no economic value.

Transferable medical practice goodwill has value, may be transferred and is defined as the unidentified residual attributes that contribute to the propensity of patients and managed care contracts (and their revenue streams) to return in the future.

However, bear in mind that the Goodwill Registry, an older source used to determine the average percentage of revenue contributed to practice goodwill, has sparse to no podiatry input, may be dated for some specialties and leads to abnormally high values.

In addition to various multiple factors, one must also appreciate the impact of a changing environment and practice transfer in a local market, which can augment or blunt goodwill value. It is also important to determine whether patients or HMOs return because of true goodwill or are mandated to do so by contractual obligations.

Now to further confuse the issue, how each kind of goodwill is allocated in situations like divorce depends on state law. For example, some courts weigh in on the apportionment of both kinds of goodwill, other courts exclude both kinds of goodwill and other courts pursue a case-by-case approach.

Understanding ‘Excess Earnings Capitalization’ And Compensation Issues

Another way to determine goodwill value is through “excess earnings capitalization.” This economic method looks at the difference between salary and what you would have to pay a comparable doctor replacement.

As an example, when you subtract the numbers and divide the result by 20 percent, an important percentage referred to as the capitalization rate emerges. The final number gives a dollar value for practice goodwill. Courts seem to prefer this method in divorce situations because it tends to reflect a practice’s current value.

Regardless of the practice business model, physician compensation is inversely related to practice value. In other words, the more a doctor takes home in above average salary, the less the practice is generally worth and vice versa.

Emphasize Practice Specifics Over Benchmarks And Formulas

In the stable economic past, physicians may have used industry benchmarks as quick and inexpensive substitutes for professionally prepared valuations. However, this practice can be fraught with peril if challenged. The courts seem to frown on this simplistic and dated methodology. Moreover, generic benchmark formulas assume a financial statement reporting standard that just does not exist with contemporary professional valuations.

Therefore, almost every competitive issue that impacts value should be addressed with each practice engagement. This includes but is not limited to:

   • contemporary dislocations by third parties, Medicare and commercial payers;
   • retail clinics and changes in supply/ demand and specialty trends;
   • the rise of ambulatory surgery centers, walk-in clinics and specialty hospitals;
   • outsourced care and medical tourism;
   • alterations in resource based-relative value units, ambulatory payment classifications (APCs), diagnosis-related groups (DRGs) and newer Medicare-severity diagnosis-related groups (MS-DRGs); and
• the Medicare Modernization Act, HIPAA, OSHA, the EEOC and other regulations.

One must also consider the impact of current employee trends to high-deductible health care plans and private concierge medicine. Another consideration is employer shifts away from defined benefits plans to defined contribution plans.

Aggregating Or ‘Normalizing’ Financial Information: What You Should Know

In addition to possibly conducting employee interviews, one must gather appropriate financial information in order to properly value a practice. As a starting point, interested physician buyers should be able to see the following information for the most recent three-year period.

   • Practice (corporate) tax returns
   • Equipment/automobile leasing and/or tax depreciation schedules
   • Accounts receivable aging schedule
   • Consolidated financial statements (P&L, cash flow, balance sheet and retained earnings)
   • Prior buy-sell and/or non-compete agreements

It is especially important to eliminate one-time, non-recurring practice expenses. These are adjusted for excessive or below normal expenses on the profit and loss statement. Such “normalization” can produce a big surprise for benchmark proponents and formula-driven advocates when a selling doctor runs personal expenditures through the practice that a buyer or court would not consider legitimate. Of course, one is less likely to encounter such shenanigans when the valuation is conducted according to professional USPAP and IRS style guidelines.

For example, we recall one doctor who painted his home and wrote it off as a valid business expense. Deleting other major expenses such as country club memberships make a practice look more profitable. This is good news if you are selling it. It is bad news if you are getting a divorce.

Conversely, you may have to defend legitimate business expenses that an appraiser may seek to normalize. For example, doctors may pay for a vehicle through their practice. If they use the vehicle to travel between multiple offices and hospitals, the expense may be legitimate.

Also realize that the appraiser may also add expenses that have not been incurred. For example, the appraiser may add an office manager’s salary if your spouse is in that role for free. This produces a lower appraised value and is common in small podiatry practices. Honorarium is another example that does not figure into value calculations.

Of course, normalization is a sophisticated and time intensive process. However, the expert earns his or her professional fee, and defends the resulting valuation range when challenged.

Keys To Selecting The Right Valuator Professional

The most important credentials to look for are fiduciary level experience, specificity and independence. Some doctors mistakenly turn to those who may have never appraised a practice before. Just because an appraiser has initials behind his or her name, it does not mean he or she understands the peculiarities of medical specialties. Agents, brokers, solicitors and other intermediaries are not fiduciaries.

Physicians looking to assess a practice for possible sale/purchase should only select an independent health economist, who will be your advocate under Securities Exchange Commission (SEC), IRS or other relevant managerial accounting guidelines.

Moreover, be very wary if the valuation is not done in an independent manner or, worse, performed for both parties simultaneously.

Essential Insights On Professional Fees And What You Can Expect

Of course, it is almost impossible to answer concerns regarding fees without specific information. The cost of a valuation can range from $0 to $50,000 for an onsite team of experts for behemoth practices and ambulatory surgery centers. Keep in mind that in most cases you want to ensure the value determination will stand up to IRS scrutiny so the $0 rule of thumb approach is not an option.

However, most reputable firms use a blended fee schedule of fixed and hourly rates (plus expenses). Internists should expect to spend approximately $5,000 to $10,000 for an average sized practice and a limited appraisal that is completely suitable for most internal activities.

External appraisals or poorly aggregated financial information, onsite reviews and litigation support services incur additional costs. However, most doctors find the money well spent. Expect to pay a retainer and sign a formal professional engagement letter.

Finally, once the practice price is agreed upon, sales contract terms and agreements present a plethora of financing challenges for both parties to consider. For example, one must negotiate bank loans (if they are even available), payment rates and length, personal promissory guarantees, down payment offsets, earn-out arrangements and Uniform Commercial Codes.

Final Notes

Do not be surprised if a sales broker does not consider the aforementioned issues as the modern health era emerges. Most agent-appraisers are predominantly concerned with earning commissions by working both transaction parties and may not represent your best interests. Also be aware that they are usually not obliged to disclose conflicts of interest and do not provide testimony as a court approved expert witness.

However, it is a fait accompli that medical practice worth is presently deteriorating. As the population ages and third-party reimbursements plummet, doctors are commoditized and traditional retail medicine is replaced by more efficient wholesale business models like workplace health clinics. The subprime mortgage default fiasco, credit freeze, potential tax reform law expiration, the ACA, VBC, capitation payments and the political specter of a nationalized healthcare system only add fuel to the macroeconomic fires of uncertainty. Do not forget the corona pandemic.

As a result, a good medical practice is no longer good business necessarily and retiring doctors can no longer automatically expect to extract premium sales prices. Moreover, uninformed young physicians should not be goaded to overpay.

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Dr. Marcinko is a nationally known speaker and the founding partner of the iMBA Inc and http://www.MedicalExecutivePost.com He is also the Academic Provost for http://www.CertifiedMedicalPlanner.org

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DAILY UPDATE: The US Economy of KH and Medicare [Part C] with Mixed Stock Markets

Posted on July 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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The Wall Street Journal explores what Kamala Harris as president would mean for the economy. (the Wall Street Journal)

Q2 GDP was shockingly strong, with today’s reading of 2.8% growth outpacing the 2.1% economists expected.
The Japanese yen is rising while US tech stocks are falling.
You’re in my seat: Southwest Airlines is getting rid of its open seating arrangement and shifting to assigned seats.
32 charts that tell you everything you need to know about markets midway through 2024 at a glance.
The Fed should cut interest rates at next week’s meeting, according to the former president of the Federal Reserve Bank of New York.
Bill Ackman is trying to turn social media stardom into profit.

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

Here’s where the major stock market benchmarks ended:

The S&P 500^® index (SPX) fell about 28 points (0.5%) to 5,399.22; the Dow Jones Industrial Average^® ($DJI) rose 81 points (0.2%) to 39,935.07; the NASDAQ Composite ended 161 points lower (0.9%) at 17,181.72.
The 10-year Treasury note yield (TNX) dropped four basis points to 4.255%.
The CBOE Volatility Index^® (VIX)declined 0.6% to 17.94.

What’s up

IBM popped 4.36% after it crushed earnings expectations thanks to high AI bookings.
Tesla recovered 1.97% after yesterday’s terrible day as investors continue to digest a mixed earnings report.
ServiceNow soared 13.19% thanks to a strong earnings report that solidified the software company’s position as beneficiary of the AI trade.
Viking Therapeutics exploded 28.31% today due to the pharma company moving its weight-loss drug into Phase 3 clinical trials.
Airline stocks flew higher today thanks to good news from two big players. Southwest Airlines ascended 5.64% on better-than-expected earnings, while American Airlines rose 4.23% in spite of issuing a profit warning for the coming quarter.

What’s down

Universal Music Group tumbled 23.54% after subscription and streaming revenues fell well short of analyst expectations.
Ford plummeted 18.40% for the automaker’s worst day of trading since 2009 after it missed profit expectations and provided no positive forecast for the quarters ahead.
Lululemon slid 9.09% thanks to a downgrade from Citi analysts from “buy” to “neutral” predicated on a sales slowdown.
Royal Caribbean sank 7.61% after the company indicated that it’s facing a slowdown in demand.
Edwards Lifesciences crashed 31.27% thanks to a mixed earnings report, as well as management’s guidance that sales for its key heart valve replacement therapy will sink next quarter.

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Thousands of seniors are losing coverage at local hospitals as problems plague Medicare Advantage. Lower payout rates for Medicare and Medicaid are sparking insurance companies to leave certain areas and change coverage options across the country.

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DAILY UPDATE: UnitedHealth, Aetna, Long Covid and Physician Burnout as NASDAQ Collapses

Posted on July 18, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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The Dow surged another 240 points as the cyclical rotation continues, sending the index to its 22nd record closing high of the year. The S&P 500 had its worst day since late April, while the NASDAQ slumped to its worst finish since December 2022. The last time the Dow rose on the same day the S&P 500 fell by more than 1% was all the way back in 1999. Gold hit a record high yesterday on hopes of a rate cut, not a hike. Oil bubbled up thanks to an Energy Information Administration report highlighting higher demand and lower crude inventories. Bond yields stayed steady throughout the trading session before sinking slightly 20-year Treasury bond auction.

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) fell 78.93 points (–1.39%) to 5,588.27; the Dow Jones Industrial Average added 243.6 points (0.59%) to 41,198.08; the NASDAQ Composite plunged 512.41 points (–2.77%) to 17,996.92.
The 10-year Treasury note yield (TNX) dropped just below 4.15%.
The CBOE Volatility Index jumped sharply to 14.48.

What’s up

VF Corp. rose 13.64% on the news that it is selling its Supreme brand to EssilorLuxottica for $1.5 billion.
Roche soared 7.55% after the Swiss pharmaceutical company announced it has made strides in developing a weight-loss and diabetes treatment that uses a pill rather than an injection. Competitors sank on the news, with Eli Lilly declining 3.78% and Novo Nordisk falling 3.87%.
GitLab popped 9.34% on a report that the software developer is exploring a sale, potentially to cloud company Datadog, whose shares fell 7.35%.
Johnson & Johnson rose a tepid 3.67% thanks to a mixed earnings announcement that included beating expectations this quarter but warning of lower profits ahead.

What’s down

Spirit Airlines descended 10.76% to a new all-time low after warning that both earnings and revenue will come in lower than expected this coming quarter.
Five Below plummeted 25.05% after its CEO, who has helmed the company for over a decade, announced his departure smack in the middle of a very difficult year.
J.B. Hunt tanked 6.88% thanks to a poor second-quarter earnings report in which earnings and revenue came in well below analyst expectations.
Charles Schwab fell yet another 5.34% as the hits keep coming. Today, the culprit was a price target downgrade from Bank of America analysts.
Elevance Health slipped 5.96% despite beating analyst expectations this quarter, but warning that Medicaid membership declined.

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UnitedHealth Group has bounced back in the second quarter, reaffirming its guidance for the year as it posts a profit of $4.2 billion.

An audit of Aetna Health of Texas found significant errors in how the health plan calculated the qualifying payment amount for air ambulance services, raising more questions over broader noncompliance in the industry for the No Surprises Act.

And … clinical decision software company Regard pocketed $61 million in series B funding to scale its reach in healthcare as investors have a growing appetite for AI-powered startups.

A study published in JAMA this month found that nearly 7% of the US population (or roughly 18 million people) have had long Covid. Symptoms of the condition vary widely, but often include fatigue, brain fog, and post-exertional malaise (meaning symptoms worsen after minimal exertion), according to the CDC. Booster shots may help protect against long Covid, the JAMA study suggested.

And, President Joe Biden tested positive for COVID-19 while campaigning in Las Vegas with ‘mild symptoms’.

Physician burnout is on the decline after spiking to unprecedented levels during the Covid-19 pandemic, according to a survey from professional group the American Medical Association (AMA).

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DAILY UPDATE: Apple, Macy’s, Goldman, Banks, Companies and the Roaring DJIA

Posted on July 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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The Dow jumped 700 points at one point today, its biggest single-day surge this year. The S&P 500 spent the entire trading session in positive territory, ending the afternoon at another record close, while the NASDAQ was flat most of the day as tech stocks sat out the rally.
Bitcoin continued to surge, rising as high as $65,191 as predictions of a second Trump presidency helped erase the cryptocurrency’s recent losses.
Gold hit a new record as hopes of a rate hike continue to rise, while oil sank on the news of slower economic growth in China translating to lower demand for crude.
The Russell 2000 enjoyed its 5th straight gain of 1% or more for the first time since 1979 as small caps make their comeback (more on that below).

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Apple released public beta versions of the newest software for iPhone, Mac, iPad, and Apple Watch. Macy’s ended talks of a buyout with investment firms Arkhouse Management and Brigade Capital Management after months of wrangling. Goldman Sachs was the latest big bank to benefit from rebounding investment banking fees as deals start making a comeback.

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Despite such challenges as high interest rates, a sluggish M&A market, and increased regulatory scrutiny, bank executives are feeling optimistic about the road ahead. That’s according to KPMG’s 2024 US Banking Industry Outlook Survey, published last month, which polled 200 senior executives at US banks of varying sizes in March 2024.

CITE: https://tinyurl.com/2h47urt5

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 35.98 points (0.64%) to 5,667.20; the Dow Jones Industrial Average^® ($DJI) climbed 742.76 points (1.85%) to 40,954.48; the NASDAQ Composite^® ($COMP) added 36.77 points (0.2%) to 18,509.34.
The 10-year Treasury note yield (TNX) fell slightly to just under 4.17%.
The CBOE Volatility Index^® (VIX) ticked up to 13.19, still near three-week highs.

What’s up

Match Group climbed 7.46% after activist investor Starboard Value revealed it has taken a 6.6% stake in the matchmaking company.
Bank of America rose 5.35% on strong earnings, and management’s expectation that the bank’s net interest income will rise this year.
UnitedHealth Group popped 6.49% after beating analyst earnings estimates, missing revenue expectations, and most importantly, avoided higher costs after a recent cyberattack.
Shopify surged 8.57% thanks to an analyst upgrade from “neutral” to “buy” on the company’s turnaround efforts. Shares of Etsy rose 6.33% in sympathy.
GRAIL boomed 24.76% on the news that it is kicking off the clinical trials of its new cancer detection test.
Home builders’ hot streak continues: Hopes of a rate cut are fueling a rally for home builder stocks, with D.R. Horton up 6.64%, Lennar rising 6.55%, KB Home gaining 7.17%, and Builders FirstSource popping 8.11%.

What’s down

Trump Media & Technology Group fell 9.09%, sinking back to Earth after yesterday’s big pop on the news that the company is reselling 38 million shares of common stock.
Reddit was downvoted 3.43% thanks to a downgrade from “buy” to “hold” by Loop Capital analysts.
Charles Schwab sank 10.19% after its CEO declared the bank will have to downsize in order to maintain profitability.

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DAILY UPDATE: PBMs Scrutinized as Companies Report and Stock Markets Rotate

Posted on July 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Though the accountant shortage is still a concern, a shortage of AI and tech skills might be a more pressing issue right now. That’s according to a pulse survey by consulting firm RGP and YouGov, which polled 213 US financial professionals at the director level and above this June.

Read: What do you do when you hit your insurance deductible? Some people throw parties. (the New York Times)

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 15.87 points (0.28%) to 5,631.22; the Dow Jones Industrial Average^® ($DJI) climbed 210.82 points (0.53%) to 40,211.72, a new record-high close; the NASDAQ Composite^® ($COMP) added 74.12 points (0.4%) to 18,472.57.
The 10-year Treasury note yield (TNX) gained four basis points to just below 4.23%.
The CBOE Volatility Index^® (VIX) increased to 13.14, its highest close since June 24.

What’s up

Bitcoin-related stocks rose alongside the crypto rally today, with Coinbase up 11.39% and Microstrategy climbing 15.36%.
Gun manufacturers always rise after a major shooting incident, and the assassination attempt on Donald Trump certainly meets that criteria. Sturm, Ruger & Company jumped 5.44%, and Smith & Wesson rose 11.38%.
Stelco Holdings rocketed 73.98% higher on the news that the Canadian steelmaker will be acquired by Cleveland Cliffs for $2.8 billion.
AutoNation popped 2.01% on the news that it’s cutting $1.50 off of its EPS for the latest quarter due to the CDK cyberattack. Apparently getting ahead of the bad news is actually good news?

What’s down

Macy’s sank 11.76% after the department store’s board voted to end acquisition negotiations with activist investors Arkhouse and Brigade.
Burberry fell 16.08% after a poor quarterly report, a profit warning, and the ousting of its CEO.
AES plummeted 10.01% thanks to a storm cutting power to thousands of the utility company’s customers throughout Ohio.
SolarEdge Technologies dropped 15.36% after the company announced it will lay off 400 employees to improve profitability. Shares of solar competitors slumped in sympathy: First Solar fell 8.50%, Sunrun sank 8.95%, and Sunnova Energy fell 9.96%.

CITE: https://tinyurl.com/2h47urt5

The Federal Trade Commission (FTC) frequently sets its sights on healthcare, which has previously included efforts to crack down on data privacy and ban noncompetes in contracts. Lately, the agency has turned its attention to pharmacy benefit managers (PBMs)—the groups that negotiate drug prices between insurers and pharmaceutical manufacturers—to shed light on how they impact the healthcare industry.

Stat: 23.5%. That’s how much Covid-related emergency room visits increased in a week at the beginning of this month. (CDC)

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HUMAN TOUCH: Needed in Medicine

Posted on July 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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According to Fierce Healthcare, 60% of patients say they are willing to switch doctors for a better communications experience, according to a survey. Patients want more of a “human touch” when texting their providers, like conversational message exchanges.

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PODCAST: Shortages in Healthcare

Posted on July 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Eric Bricker MD

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MORE: https://www.healthcare-brew.com/stories/2023/03/16/non-mds-will-provide-primary-care?cid=31157347.24865&mid=349b552221c994e2540a304649746d7c&utm_campaign=hcb&utm_medium=newsletter&utm_source=morning_brew

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MDs RETIRING: 23,000 Physicians Will Retire by 2026

Posted on July 13, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Thousands of doctors are expected to reach retirement age in the next three years, and their replacements won’t be physicians.

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Instead, physician assistants (PAs) and nurse practitioners (NPs) will increasingly provide primary care services, according to a report from consulting firm Mercer.

***

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DAILY UPDATE: Mike Bloomberg, Arianna Huffington and Andreessen Horowitz as Stock Markets Tread Lightly

Posted on July 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Most medical students at Johns Hopkins University won’t have to pay tuition anymore thanks to a $1 billion gift from Michael Bloomberg.

Here’s where the major benchmarks ended:

The S&P 500 index^®(SPX) rose 4.13 points (0.1%) to 5,576.98; the Dow Jones Industrial Average^® ($DJI) fell 52.82 points (0.1%) to 39,291.97; the NASDAQ Composite^® ($COMP) climbed 25.55 points (0.1%) to 18,429.9.
The 10-year Treasury note yield increased two basis points to 4.29%.
The CBOE Volatility Index^® (VIX) inched up to 12.49, still near recent lows.

What’s up

Tesla rose 3.71%, putting the company squarely in the green year to date as investors continue to celebrate the automaker’s strong delivery numbers.
Corning rose yet another 3.76%, extending the glassmaker’s gains as it quickly becomes the new hot AI stock du jour.
Kymera Therapeutics shot 23.40% higher after its partner Sanofi gave the go-ahead for further studies of its experimental skin disease treatment.
Jumia Technologies soared 29.79% after Benchmark analysts initiated coverage of the African e-commerce company with a “buy” rating.
Sony rose 4.46% on the news that it has nothing to do with the merger of Paramount and Skydance as shareholders celebrate dodging a Paramount-shaped bullet.

What’s down

Albemarle dropped 8.76% after Baird analysts warned that lower lithium demand will translate to lower profits for the miner in its upcoming second quarter.
BP sank 4.80% after management warned of lower-than-expected profits and a writedown of its German refining facility to the tune of up to $2 billion.
Helios Technologies fell 10.94% on the news that the CEO of the industrial manufacturer had been placed on paid leave for potentially violating the company’s code of ethics.
Helen of Troy plummeted 27.73% after the Hydro Flask maker announced terrible earnings and lowered its fiscal year outlook.
UiPath fell 6.90% on the announcement that the software company will cut 10% of its workforce.

CITE: https://tinyurl.com/2h47urt5

OpenAI’s venture fund and Arianna Huffington’s Thrive Global are jointly funding a new startup that aims to build an AI health coach to promote healthier lifestyles.

Function Health, a health tech company focused on preventive medicine, recently closed a series A round led by Andreessen Horowitz (a16z) Bio + Health along with a slew of celebrity investors.

And … made possible by the American Rescue Plan, the Biden administration is putting $27.5 million toward women’s behavioral health.

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CYBERSECURITY: Healthcare Podcast

Posted on July 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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“Victims of cyber extortion and ransomware increase in 2024”

By Dan Raywood for SC Magazine, July 8, 2024.
https://www.scmagazine.com/news/victims-of-cyber-extortion-and-ransomware-increase-in-2024

“…small businesses with fewer than 1,000 employees are four times more likely to be impacted by attackers than medium and large businesses.” That’s us, Doc. (You might not get this kind of news from the American Dental Association).

DARRELL PRUITT DDS

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Protecting Healthcare: Unveiling the Cybersecurity Imperative

Podcast: A Conversation with Dan Dotson

RICH HELPPIE The Common Bridge

EDITOR’S NOTE: I first met Rich in B-school, when I was a student, back in the day. He was the Founder and CEO of Superior Consultant Holdings Corp. Rich graciously wrote the Foreword to one of my first textbooks on financial planning for physicians and healthcare professionals. Today, Rich is a successful entrepreneur in the technology, health and finance space.

-Dr. David E. Marcinko MBA MEd CMP®

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SECOND OPINIONS: Secure Investment Advisory -OR- Medical Practice Management Advice

Posted on July 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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MARCINKO & ASSOCIATES, Inc.

Dr. David Edward Marcinko MBA MEd CMP®

Certified Medical Planner®

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FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

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2nd OP

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DAILY UPDATE: Health Insurers & Hospital Mergers with Light Stock Market Trading

Posted on July 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Here’s where the major benchmarks ended:

The CBOE Volatility Index^® (VIX) climbed slightly to 12.37.

The S&P 500 index^®(SPX) rose 5.66points (0.1%) to 5,572.85; the Dow Jones Industrial Average^® ($DJI) dropped 31.08 points (0.1%) to 39,344.79; the NASDAQ Composite^® ($COMP) gained 50.98 points (0.3%) to 18,403.74.

The 10-year Treasury note yield (TNX) was roughly flat at 4.27%.

What’s up

Intel popped 6.15% after an analyst at Melius Research declared the company could be one of the big AI winners in the second half of this year.
Morphic Holding skyrocketed 75.06% on the news that Eli Lilly will acquire the drugmaker for $3.2 billion in cash.
SolarEdge climbed 9.26% thanks to an upgrade from “underperform” to “neutral” by Bank of America analysts, who see big upside and few downside risks ahead.
Corning rose 11.98% after management raised earnings guidance for the coming quarter thanks to higher demand due to the AI boom.
Lucid rose 7.85% on the news that its deliveries rose 70% in the second quarter.

What’s down

ServiceNow dipped 5.04% after Guggenheim analysts downgraded the cloud computing company to “sell,” citing growing risks in the second half of this year.
Greenbrier Companies sank 9.10% after the rail transportation company missed Wall Street’s earnings expectations.
Devon Energy fell 1.11% on the news that it is acquiring portions of Grayson Mill Energy for $5 billion in cash and stock.

CITE: https://tinyurl.com/2h47urt5

Stat: 27. That’s a tally of some of the hospital mergers, acquisitions, joint ventures, affiliations, and partnerships that have been canceled since January 2022. (Becker’s Hospital Review)

Read: Health insurers received $50 billion from Medicare for diseases that doctors did not treat over three years, according to a recent analysis. (Wall Street Journal)

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Novant/CHS Deal Scrapped after FTC Intervenes

Posted on July 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Health Capital Consultants LLC

In February 2023, Novant Health, a 19-hospital, non-profit health system operating throughout the Carolinas, agreed to acquire two North Carolina hospitals – Davis Regional Medical Center and Lake Norman Regional Medical Center – from Community Health System (CHS), a publicly-traded mega-system operating in 15 states.

After the $320 million deal was announced, the Federal Trade Commission (FTC) began an extensive review of the acquisition, and concluded that: (1) the transaction may substantially reduce competition; (2) create a monopoly; and (3) constitute an unfair method of competition. (Read more…)

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SPONSOR & ADVERTISE on the MEDICAL EXECUTIVE-POST

Posted on July 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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INFLUENCERS

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Thank you for your interest in advertising on, or sponsoring the ME-P, the web’s only site integrating medical practice management with personal financial planning for all industry professionals.

Why should your company sponsor or advertise on the ME-P?

• Reader loyalty. Not only does the ME-P receive a mind-boggling number of page views and visits each month, its readers are loyal.
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• Supporting the ME-P makes a big difference and costs only a fraction of other online publications with far fewer readers.
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E-mail us for a full packet, but give a look to these results from the ME-P’s annual reader survey:

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On Nursing Capitation Reimbursement?

Posted on July 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Partial-Risk Medicare Nursing Capitation Economics is Still Not Working!

By Dr. David E. Marcinko MBA MEd CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

Capitated reimbursement is predominantly, but not exclusively, within the realm of physician providers. But, a decade ago Community Nursing Organization project examined an innovative approach to community nursing and ambulatory care services for Medicare beneficiaries. The hypothesis was that provision of such services would promote the timely and appropriate use of health care and to reduce the use of costly acute care services.

Organizations participating in the CNO demonstration were paid a fixed per-member-per-month capitated rate for covered services. But, the participating CNOs were only at risk under capitation for a subset of Medicare benefits [partial-capitation or carve-out]. The financial incentive was to minimize utilization covered under the capitated payment, but not necessarily to minimize utilization of services not covered because traditional Medicare, not the CNO, would be at risk.

Assessment

Final results indicated that the CNO model under partial capitation led to increased Medicare costs based on findings consistent across several analytic approaches. The cost differences between treatment and control or reference groups persisted after the application of increasingly complex risk-adjustment methods.

Moreover, the differences increased over time and were robust to changes in the way CNO participation was defined.

Lastly, there was no statistically significant evidence of increase in physical or social functioning of the treatment group, as compared with the control group. CNOs cost more without providing any health benefits along dimensions measured

[Source: Voluntary Partial Capitation: The CNO Medicare Demonstration Project, Austin Frakt, Steve Pizer, Robert Schmitz, and Soeren Mattke – Health Care Financing Review 2005).

Your thoughts are appreciated.

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DAILY UPDATE: Home Health and Nurse Vacancies as Stock Markets Reach New Highs

Posted on July 6, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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As home hospital programs continue to grow—employment in the home health industry is projected to increase by nearly 30% by 2029—so does the concern that home healthcare professionals are increasingly vulnerable to assault and harassment.

Here’s where the major benchmarks ended:

The S&P 500 index^®(SPX)rose 30.17 points (0.54%) to 5,567.19; the Dow Jones Industrial Average^® ($DJI) rose 67.87 points (0.17%) to 39,375.87; the NASDAQ Composite^® ($COMP) climbed 164.46 points (0.9%) to 18,352.76.
The 10-year Treasury note yield (TNX) dropped nearly seven basis points to just below 4.28%.
The CBOE Volatility Index^® (VIX) increased slightly to 12.45.

What’s up

Meta Platforms rose 5.88% a day after CEO Mark Zuckerberg posted a video of himself wearing a tux, holding an American flag and a beer, and wakeboarding. Shareholders apparently approve of such an absolute stud running the company.
Koss Corp. rose another 25.68% as the latest meme stock continues to rally for no reason at all.
Macy’s popped 9.48% after bidders looking to acquire the beleaguered retailer raised their offer from $6.6 billion to $6.9 billion.
Smith & Nephew rose 6.67% on the news that activist investor Cevian Capital has taken a 5% stake in the medical device maker.
Instructure Holdings rose 5.25% on the news that a bidding war is building for the education software company.

What’s down

Nvidia fell 1.91% after it received a rare analyst downgrade due to the company’s valuation.
Southwest sank 5.67% on the first full trading day after the company adopted a “poison pill” to fend off activist investor Elliott Management.
Budget airline companies took a blow after a Raymond James analyst downgraded the industry due to a “clear as mud” outlook for the third quarter. Frontier Group fell 6.79%, while Spirit Airlines dropped 8.70%.
Crypto-related stocks tumbled after bitcoin fell below $54,000 at one point today, though they recovered alongside the cryptocurrency later in the trading session. Coinbase Global fell 0.56%, Robinhood Markets dropped 0.98%, and MicroStrategy fell 1.56%.

CITE: https://tinyurl.com/2h47urt5

Stat: 9.9%. That’s the current vacancy rate for nurses in the US, down from 15.7% in 2023. (2024 NSI National Health Care Retention & RN Staffing Report)

PBMs: How pharmacy benefit managers are “driving up drug costs for millions of people, employers, and the government.” (the New York Times)

Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants

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PODCAST: How Financial Advisors Acquire Physician Clients

Posted on July 6, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

It’s About Deep Niche Knowledge [An AV Presentation]

By Vicki Rackner MD

Enter the CMPs

AUDIO-VIDEO PRESENTATION

PODCAST; https://www.youtube.com/watch?v=W0SGlL0UzXE#t=22

More:

http://www.CertifiedMedicalPlanner.org

About the Author

Vicki Rackner MD, author, speaker, ME-P thought-leader and President of Targeting Doctors, helps financial advisors accelerate their practice growth by acquiring more physician clients. She calls on her experience as a practicing surgeon, clinical faculty at the University of Washington School of Medicine and nationally-noted expert in physician engagement to offer a bridge between the world of medicine and the world of business.

Conclusion

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors
Dictionary of Health Economics and Finance
Dictionary of Health Information Technology and Security
Dictionary of Health Insurance and Managed Care

Front Matter with Foreword by Jason Dyken MD MBA

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JULY FOURTH WEEKEND READING LIST 2024

Posted on July 4, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Happy Independence Weekend Greetings to our Readers and Subscribers for 2024

From the Medical Executive-Post

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Comprehensive Financial Planning 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™

INVITE DR. MARCINKO: https://medicalexecutivepost.com/dr-david-marcinkos-

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DAILY UPDATE: Nurses & AI, Private Equity & CPAs, Public Companies and the Hot July Stock Markets

Posted on July 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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Private equity gets a big accounting firm yet. The March story about private equity firm New Market Capital buying a $2.8 billion stake in accounting firm Grant Thorton was a big story. Private equity is gobbling up accounting firms, signaling a potential sea change in how accounting firms will operate in the future, with “more than half” of the top 20 accounting firms in talks with private equity.

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 14.61 points (0.27%) to 5,475.09; the Dow Jones Industrial Average^® ($DJI) climbed 50.66 points (0.13%) to 39,169.52; the NASDAQ Composite^® ($COMP) added 146.70 points (0.83%) to 17,879.30.
The 10-year Treasury note yield (TNX) rose 12 basis points to 4.47%, the highest level since May 30 and back above its 50-day moving average, a technically important move.
The CBOE Volatility Index^® (VIX) slipped to 12.19.

Crude oil is up sharply over the last month amid rising Middle East tensions.

What’s up

Tesla drove 6.05% higher ahead of its second-quarter deliveries report as Chinese competitors released strong numbers. Nio was one such competitor, with shares rising 6.61% after deliveries skyrocketed 98% year-over-year.
Spirit AeroSystems Holdings rose 3.35% on the news that Boeing plans to acquire the airplane parts supplier. Boeing shares rose a tepid 2.58%.
Birkenstock climbed 1.78% after UBS analysts rated the stock a “buy” and increased their price target 63% due to the company’s expansion plans.
French stocks rose on snap election results that showed the far-right National Rally may be unable to form a majority after the next round of elections on July 7.

What’s down

Chewy stock popped then dropped 6.63% after Roaring Kitty revealed a 6.6% stake in the pet products company.
GameStop shares fell 5.35% after CEO Ryan Cohen posted on Twitter/X for the first time in months to advertise a job opening.
Uber fell 2.17% and Lyft fell 0.92% on the news that Massachusetts now requires both companies to pay rideshare drivers $32.50 an hour, plus benefits.
Cruise stocks sank on the news that Hurricane Beryl is stronger than expected and will disrupt service throughout the Caribbean. Norwegian Cruise Line fell 5.86%, Carnival fell 5.40%, and Royal Caribbean fell 1.86%.

CITE: https://tinyurl.com/2h47urt5

The largest nursing union in the US, National Nurses United (NNU), is sounding the alarm about the use of artificial intelligence (AI) in healthcare. In April, the union’s affiliate California Nurses Association (CNA) protested an AI conference helmed by managed care consortium Kaiser Permanente. Like workers in other sectors who are worried about AI encroachment, the nurses fear that the tech is contributing to the devaluation of their skills amid what they say is already a “chronic” understaffing crisis, nurses reported in an NNU survey of 2,300 registered nurses and members in early 2024.

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HEALTH INSURANCE: Benefits Costs are Up!

Posted on July 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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Employers expect health benefit costs to rise by more than 5% on average in 2024 as factors like high inflation, health labor shortages, and expensive new therapies put pressure on plan spending after years of 3%–4% annual growth, early data suggests.

Preliminary results from Mercer’s 2023 National Survey of Employer-Sponsored Health Plans found that total health benefit costs could increase by as much as 6.6% per employee if companies do nothing to control spending, or an average of 5.4% if employers take steps to hold down costs.

That slight gap suggests most employers don’t plan to make cost-cutting changes to their plans—likely due to concerns about healthcare affordability, the analysis noted. Many large companies (with 500+ employees) have avoided shifting costs to employees over the last five years, resulting in little growth in deductibles and other cost-sharing requirements.

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DAILY UPDATE: Wall Street Stocks, Dow Dogs, Commodities, Gold, the Fed, Yen and Bitcoin

Posted on July 1, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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If you can believe it, Friday was the final trading day of the first half of 2024. It might be a good time to reflect on your New Year’s resolutions to see how you’re measuring up halfway through the year.

Dogs of the Dow: The 139-year-old index has never looked more its age, with components Nike, Intel, and Boeing all down more than 30% in 2024. The Dow has gained less than 4% this year.

CITE: https://tinyurl.com/2h47urt5

But, the S&P 500 gained a sublime 15% in H1, and Nvidia alone was responsible for more than a third of that gain. The maker of AI chips surged ~150% since Jan. 1st to become the most valuable company in the USA at one point.

Going into 2024, investors were expecting the Fed to cut interest rates six times. There hasn’t been a single rate cut yet, but that hasn’t stopped the S&P from notching 31 all-time closing highs, good for the second-best tally of records this century. Stocks have overcome the Fed’s delay thanks to strong earnings, a sturdy economy, and AI fever.

Commodities soar and a currency plummets. Cocoa boomed nearly 85% over shortage concerns. Gold hit a record high last month. The Japanese yen has slumped to a 38-year low against the US dollar.

Bitcoin got a boost from new ETFs, but it’s getting boring.

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DAILY UPDATE: Stock Market Review

Posted on June 30, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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The S&P 500 and NASDAQ shot to record highs last week on a solid PCE reading. But all three indexes spent Friday hovering around flat levels before they all fell into the red by the end of the trading session.

Treasury yields and gold prices alike popped higher on PCE news, with traders hoping that the Fed now has good reason to cut interest rates sooner rather than later. Despite this decline, oil wrapped up a fantastic month, with prices rising for a third straight week on higher demand this summer in the US and higher risks to supply given geopolitical turmoil between Israel and Lebanon.

But, Bitcoin continued to fall, with the crypto inching closer to the all-important $60,000 price point—a line in the sand that traders are desperate not to cross for fear of further declines.

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ARTIFICIAL INTELLIGENCE: Healthcare

Posted on June 29, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

By Staff Reporters

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***

The healthcare industry has tried for years—but to little avail—to figure out how artificial intelligence (AI) can be used to make work easier and improve patient care.

Despite the middling success healthcare has had with AI, Andreessen Horowitz (a16z), the largest venture capital firm in the US, has bet big on healthcare AI startups in the past year. The firm has invested in at least four startups and co-led three funding rounds totaling $328 million.

Investment partner Daisy Wolf and general partner Vijay Pande at a16z wrote in an August blog post that the VC firm is aware that “the AI hype cycle has hit healthcare before.” But, the two partners wrote, “we’re excited by today’s overlap of data availability, public foundation models, and widespread interest.”

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DAILY UPDATE: Walgreens, Healthcare Fraud and Opioids as Stock Markets Hurt

Posted on June 29, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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In an interview with the Wall Street Journal, CEO Tim Wentworth said the pharmacy chain Walgreens will shutter a significant share of its 8,600 locations in the US. The closures are part of a broader attempt to boost the ailing company, which also includes reducing its stake in the primary care business VillageMD. Wentworth said the company can reassign most employees instead of conducting layoffs. Shares cratered yesterday after Walgreens whiffed on Wall Street’s earnings projections due to weak consumer spending.

And, read how some counties reduced opioid overdose deaths during the pandemic. (Politico)

What’s up

Oliveda International, which makes beauty products from olive oil, rose 38.33% for no apparent reason. Maybe people just really like the feel of extra virgin olive oil on their skin?
Infinera popped 16.38% after Nokia announced it would acquire the telecommunications hardware manufacturer for $2.3 billion.
Synchrony Financial rose 6.17% after a Baird analyst initiated coverage of the financial services company with an outperform rating.
Regional banking stocks rose on the hopes that a good PCE reading means a better chance of the Fed cutting rates soon. Regions Financial rose 3.83%, while Citizens Financial Group rose 3.16%.

What’s down

Trump Media & Technology Group fell 18.09%, despite initially popping this morning after the first presidential debate.
First Solar fell another 8.81% due to a Supreme Court ruling reducing federal agencies’ ability to regulate, which could negatively affect climate change efforts.
Foot Locker shares fell 2.96% in sympathy with Nike’s terrible earnings report.
Accolade bombed 44.29% after the health tech company reported decent earnings but revealed lower guidance for the year ahead than Wall Street expected.
Kura Sushi USA, which is in fact a publicly traded sushi company, plummeted 24.04% due to worse-than-expected earnings, as well as poor full-year guidance.

A late round of selling in the Treasury market sent yields to fresh highs as the day ended so here’s where the major benchmarks ended:

The S&P 500^® index (SPX) dipped 22.39 points (0.41%) to 5,460.48; the Dow Jones Industrial Average^® ($DJI) fell 45.20 points (0.12%) to 39,118.86; the NASDAQ Composite^® ($COMP) lost 126.08 points (0.71%) to 17,732.6.
The 10-year Treasury note yield climbed nine basis points to 4.38%.
The CBOE Volatility Index^® (VIX) moved up slightly to 12.43.

Nearly 200 people have been charged for their roles in various health care fraud schemes across the U.S. that federal authorities say amounted to over $2.7 billion in intended losses, the Justice Department announced. Attorney General Merrick Garland said charges against 193 people, including 76 doctors, nurse practitioners, and other licensed medical professionals in 32 different federal districts. The defendants were charged over a two-week sweep involving numerous law enforcement agencies nationwide, resulting in the seizure of more than “$231 million in cash, luxury vehicles, gold, and other assets,” according to Garland.

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DAILY UPDATE: Tenet, Rivian, Yen, Public Companies and the Light Stock Markets

Posted on June 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Stat: 40%. That’s how much Tenet Healthcare’s shares jumped in Q1. (Yahoo Finance)

Stat: 12%. This is how much the yen has weakened so far this year against the US dollar, which has people wondering whether the Japanese government will need to intervene. (Bloomberg)

Quote: “We believe the opportunity ahead is significant.”—RJ Scaringe, CEO and co-founder of Rivian, commenting on Volkswagen Group’s plans to invest as much as $5 billion in the EV company. (CNBC)

What’s up

McCormick & Co rose 4.34% after the company posted spicy earnings results, absolutely crushing estimates.
Arista Networks rose 3.92% after Citigroup reiterated its buy rating for the cloud company but increased its price target from $330 to $385.
BlackBerry is still a company, and rose 10.41% after a berry good first quarter.

What’s down

Walgreens Boots Alliance plummeted 22.16% due to a worse-than-expected earnings report that saw the company slash its full-year guidance.
Hims & Hers dropped 7.19% after Hunter Growth Capital accused the company of using a shady supplier for its new weight-loss drugs.
Levi Strauss crashed 15.27% in a denim downfall for the ages, with second quarter earnings missing expectations after consumers spent less on blue jeans.
Micron Technology slid 7.12% despite beating analyst expectations in the third quarter. Unfortunately, management isn’t as bullish as analysts about the rest of the year.
Chewy fell 0.03% despite a tweet from Roaring Kitty of a cartoon dog—which is apparently all it takes to move markets these days.

The U.S. government’s final gross domestic product (GDP) estimate announced early Thursday included a downward revision to quarterly consumer spending.

Treasury yields could move on the data, especially if the report is “hotter” than expected. Yields fell Thursday following mostly soft U.S. economic readings this morning.

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 4.97 points (0.1%) to 5,482.87; the Dow Jones Industrial Average^® ($DJI) rose 36.26 points (0.1%) to 39,164.06; the NASDAQ Composite^® ($COMP) rose 53.53 points (0.3%) to 17,858.68.
The 10-year Treasury note yield lost two basis points to 4.29%.
The CBOE Volatility Index^® (VIX) fell to 12.29, its lowest close since June 13.

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On Purchasing Individual BONDS!

Posted on June 27, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

A Seldom Discussed Investing Topics for Doctors and All Investors – Until Now?

By Dr. David Edward Marcinko MBA MEd CMP®

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Now – Trading individual bonds is not like trading stocks. Stocks can be bought at uniform prices and are traded through exchanges. Most bonds trade over the counter, and individual brokers price them. But, price transparency has gotten better in the last decade.

For example, in 1999, the bond markets gained clearness from the House of Representatives’ Bond Price Competition Improvement Act of 1999. Responding to this pioneering law, the site http://www.investinginbonds.com was established. This site provides current prices on bonds that have traded more than four times the previous day. With the advent of Investinginbonds.com and real-time reporting of many trades, investors are much better off today. Many well regarded brokers including Schwab, Ameritrade, and Fidelity Investments now have dedicated websites devoted to bond trading and pricing.

Fidelity Investments chose to disclose its fee structure for all bonds, making it clear what it will cost you per trade. Fidelity charges $1 per bond trade. Some on-line brokers charge a ﬂat fee as well, ranging from $10.95 at Zions Direct to $45 at TD Ameritrade. Depending on the number of bonds trading, one may be more complimentary than another. The trading fee disclosures, however, do not divulge the spreads between the buy and sell price embedded in the transaction that some dealer is making in the channel. Keep in mind that only by comparison shopping can assist you in finding the best transaction price, after all fees are taken into account. Other sites may not charge any fee, but rather embed the profit in the spread.

Despite the difficulty in pricing and transparency, investing in individual bonds offers several rewards over purchasing bond mutual funds.

First, bond mutual funds never mature.

Second, you know exactly what you will be receiving in interest each year. You will also know the exact maturity date.

Furthermore, your individual investment is protected against interest rate risk, at least over the full term to maturity. Both individual bonds and bond funds share interest-rate risk (the risk of locking up an investment at a given rate, only to see rates rise). This pushes bond prices down. At least with an individual bond, you can re-invest it at the higher, market rate once the bond matures.

But, the lack of a fixed maturity date on a bond mutual fund causes an open ended problem; there is no promise of the original investment back. Short of default, an individual bond will return all principal and pay all interest assuming you hold it to maturity. Bond funds are not likely to default as most funds maintain positions in hundreds of individual bonds. The force of interest rate risk to individual bond or bond mutual fund prices depends on the maturity of a bond investment: the longer the maturity of a bond or bond fund (average), the more the price will drop due to rising rates. This is known as duration.

Duration is a statistical term that measures the price sensitivity to yield, is the primary measurement of a bond or bond fund’s sensitivity to interest rate changes. Duration indicates approximately how much the price of a bond or bond fund will adjust in the reverse direction given a rise in interest rates. For instance, an individual bond with an average duration of five years will fall in value approximately 5% if rates rise by 1% and the opposite is accurate as well.

Although stated in years, duration is not simply a gauge of time. Instead, duration signals how much the price of your bond investment is likely to oscillate when there is an up or down movement in interest rates. The higher the duration number, the more susceptible your bond investment will be to changes in interest rates. If you have money in a bond or bond fund that holds primarily long-term bonds, expect the value of that fund to decline, perhaps significantly, when interest rates rise. The higher a bond’s duration, the greater its sensitivity to interest rates alterations. This means fluctuations in price, whether positive or negative, will be more prominent.

For example, a bond fund with 10-year duration will diminish in value by 10 percent if interest rates increase by one percent. On the other hand, the bond fund will rise in value by 10 percent if interest rates descend by one percent. The important concept to remember is once you recognize a bond’s or bond fund’s duration, you can forecast how it will react to a change in interest rates.

UPDATE:

The yield on the 10-year Treasury note serves as a benchmark for interest rates across the US economy. Since bond prices and yields move in opposite directions, falling yields signal higher demand for Treasuries.

Why it matters: At the most basic level, the 10-year yield is a key indicator of investors’ confidence in future US economic growth. As the Delta variant spreads and threatens to slow the economic recovery, the fall in yields means investors are souring on a mega growth spurt and snapping up safer assets rather than riskier stocks.

What does this mean for inflation? Because investors sell bonds when they think inflation is coming, the runup in bond prices means the worst of Wall Street’s inflation concerns may be over. “It feels like we have moved from thinking inflation will be transitory, to fearing growth will be transitory,” Art Hogan, chief marketing strategist at National Securities, said.

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DAILY UPDATE: MSFT Teams, Deloitte, HealthcCare Cyber Attacks as Markets Lift

Posted on June 27, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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The EU says Microsoft violated its antitrust laws by bundling Teams with Office, potentially setting the stage for a major fine.

And, Deloitte has billions of dollars’ worth of Medicaid contracts, but the consultancy’s eligibility systems are full of errors. (KFF Health News)

Here’s where the major benchmarks ended:

The S&P 500^® index (SPX) rose 8.6 points (0.16%) to 5,477.9; the Dow Jones Industrial Average^® ($DJI) added 15.64 points (0.04%) to 39,127.8; the NASDAQ Composite^® ($COMP) climbed 87.5 points (0.49%) to 17,805.16.
The 10-year Treasury note yield rose 8 points to 4.32%.
The CBOE Volatility Index^® (VIX) eased to 12.5

What’s up

FedEx shipped 15.52% directly to your portfolio after beating fourth-quarter earnings expectations and guiding for higher-than-expected earnings in the coming fiscal year.
Grindr rose 15.22% after management raised their fiscal guidance at the company’s first-ever investor day.
Whirlpool popped 16.63% after reports emerged that it may be a takeover target for German engineering company Bosch.
Campbell Soup rose 3.28% thanks to an analyst upgrade from JPMorgan after the food company’s recent acquisition of Sovos Brands.
Vista Outdoor rose 9.09% after MNC Capital raised its bid to acquire the ammunition maker to $3.2 billion.

What’s down

General Mills dipped 4.58% thanks to a poor quarterly earnings report, with lower sales due to lower demand from consumers.
Paychex fell 6.11% despite beating earnings estimates this quarter. The problem is slower growth ahead due to small and mid-sized businesses struggling with high inflation.
Aptiv dropped 7.93% after news of the Rivian-Volkswagen deal prompted Piper Sandler analysts to downgrade the stock and lower their price target.

The disastrous ransomware attacks on Change Healthcare and Ascension this year ran up staggering costs and put a spotlight on the healthcare sector’s vulnerability. But healthcare orgs are hardly new to eye-popping bills after a major hack. Analyzing attacks on organizations in 16 countries, IBM/Ponemon Institute has shown healthcare to be the industry with the highest cost per data breach for over a decade, coming in at an average hit of $10.93 million in 2023.

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DAILY UPDATE: Gun Violence, Health & Public Companies as Technology Stocks Rebound

Posted on June 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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The U.S. surgeon general just declared gun violence a public health crisis, driven by the fast-growing number of injuries and deaths involving firearms in the country. The advisory issued by Dr. Vivek Murthy, the nation’s top doctor, came as the U.S. grappled with another summer weekend marked by mass shootings that left dozens of people dead or wounded.

Here’s where the major benchmarks ended:

The S&P 500 index rose 21.43 points (0.39%) to 5,469.30; the Dow Jones Industrial Average^® ($DJI) fell 299.05 points (0.76%) to 39,112.6; the NASDAQ Composite^® ($COMP) gained 220.84 points (1.26%) to 17,717.65.
The 10-year Treasury note yield (TNX) fell slightly to 4.24%.
The CBOE Volatility Index^® (VIX) dropped to 12.84.

What’s up

Nvidia rose 6.76% as investors realized they could buy shares of the world’s biggest semiconductor company at a discounted price.
Trump Media & Technology Group rose another 8.50% today on the hopes of a cash infusion, as well as hype ahead of Thursday’s presidential debate.
Carnival popped 8.85% after it beat analyst expectations for the second quarter, and raised its profit forecast for the rest of the year.
Novo Nordisk rose 3.25% after its weight-loss drug Wegovy was approved in China.
Enovix soared 35.05% on the news that it signed a major deal to provide VR headset batteries for an as-yet-unnamed California company.

What’s down

Pool Corp., maker of…pools, fell 8.04% today after cutting guidance for the year ahead.
SolarEdge Technologies dropped 20.60% through no fault of its own—instead, a key customer declared bankruptcy, and will be unable to pay the solar power company the $11.4 million it is owed.
Airbus fell 9.41% after the company announced it is cutting financial guidance for the remainder of 2024 thanks to supply chain snarls and higher costs.
Auto dealer stocks continue to suffer the effects of a massive cyberattack on CDK, a key supplier of dealership management software. The company says its systems will remain down until June 30, but in the meantime shares of Autonation fell 2.04%, Sonic Automotive dropped 2.56%, and Group 1 Automotive slid 2.49%.

Digital health company Sharecare has agreed to be acquired by private equity firm Altaris for $1.43 in cash per share, or about $518 million.

Nearly three months after Kaiser Permanente’s Risant Health acquired Geisinger Health, the group has now agreed to terms with Cone Health in North Carolina.

And ... UnitedHealthcare says its Surest unit improves spending and utilization across all age groups and for people with various conditions.

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DAILY UPDATE: Dental Staffing, Various Companies & the Stock Markets

Posted on June 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Here’s where the major benchmarks ended:

The S&P 500 index lost 16.75 points (0.31%) to 5,447.87; the Dow Jones Industrial Average ($DJI) gained 260.88 points (0.67%) to 39,411.21; the NASDAQ Composite ($COMP) dropped 192.54 points (1.09%) to 17,496.82.
The 10-year Treasury note yield (TNX) fell one basis point to 4.25%.
The CBOE Volatility Index^® (VIX) ended slightly up at 13.47, the highest close since May 30.

What’s up

Trump Media & Technology Group soared 36.15% today after the company announced it expects to receive over $69.4 million from recently exercised stock warrants.
Target rose 2.44% on the news that it has teamed up with Shopify to allow vendors to sell on Target’s third-party website, Target Plus. Shopify shares fell 1.11%.
Affirm popped 12.82% after Goldman Sachs analysts initiated coverage of the buy now, pay later stock with a “buy” rating.
Alnylam Pharma popped 34.52% after trial results revealed its new drug to treat a rare form of heart disease cuts the risk of death and cardiovascular events by up to 33%.
RXO rose 23% after UPS agreed to sell its freight-brokerage business to the company for $1 billion.

What’s down

Nvidia dropped 6.68% as the semiconductor stock continues to fall, with the stock entering correction territory earlier today—a sentence we never thought we’d write.
Eli Lilly’s weight-loss drug Zepbound can also help people with sleep apnea, cutting into the sleep-aid market, sending shares of ResMed down 11.40% and Inspire Medical Systems down 16.45% on the news.
Bitcoin-connected stocks are taking a hit as the crypto selloff continues. Coinbase Global fell 6%, while MicroStrategy fell 7.52%.

The dental industry—like other parts of healthcare—is facing significant staffing challenges. The US is in need of nearly 10,000 dental professionals and has more than 6,800 health professional shortage areas (HPSAs), which the US Department of Health and Human Services defines as “a geographic area, population, or facility with a shortage of primary care, dental, or mental health providers and services.”

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DAILY UPDATE: Genome Testing, the Stock Markets and Microsoft, Apple & Meta

Posted on June 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Apple and Meta are considering an AI partnership. The two tech giants are discussing integrating Meta’s generative AI model into Apple’s new AI platform, Apple Intelligence, the WSJ reports. Instead of building an in-house AI model, Apple opted for the partnership route and previously announced a deal with OpenAI to bring ChatGPT to iPhones. Apple has also reportedly held talks with AI startups Anthropic and Perplexity to fuse their AI models with Apple Intelligence and get that sweet, sweet distribution Apple provides.

Genome testing can spot rare disease risks at birth. Newborn babies typically get blood tested for dozens of diseases, but some parents living in North Carolina and New York have recently been able to get their bundles of joy screened for hundreds of potentially life-threatening medical conditions that regular tests can’t catch thanks to a growing field called genomic medicine. Early results from two ongoing studies are very promising, the Washington Post reported, but scaling the new type of testing could be tricky: A full genome read (which covers all of your DNA) costs around $1,000 per patient. Still, research into the cost-benefit of genome sequencing has found that it can ultimately save families money on hospital care.

Markets: Sweating the upcoming election? Investors aren’t. The S&P 500 is on track for its best first-half performance in an election year going back to 1976, per Dow Jones Market Data. And as trading begins Monday morning, Microsoft is back on the Iron Throne as the US’ most valuable company following Nvidia’s stumbles at the end of last week.

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BANKS: Eight Types; plus 1

Posted on June 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

DOCTORS NEED TO KNOW

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A general understanding of these bank types is suggested for any medical professional prior to launching a self-directed [ME, Inc] medical practice, clinic, guided investment strategy, personal financial plan or wealth building portfolio effort; etc.

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DAILY UPDATE: Reverse Aging, Credit Card Competition Act, Nvidia and a Market Re-Cap

Posted on June 23, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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The de-aging biz: Time to pull back the hospital curtain and see who’s behind the booming longevity market. This article, sponsored by Timeline, lays out who’s making $$$ on “reverse aging.*

The S&P 500 and NASDAQ have often outperformed the Dow in recent years thanks to their focus on tech, as well as their market-cap weighting vs the Dow’s price weighting. When tech stocks roar higher, the younger indexes rise above their older peer—but the last few days have seen a sell off of tech stocks led by NVIDIA, bringing the S&P 500 and NASDAQ lower to end the week while the Dow has continued to rise.
Bonds remained unchanged for most of the day, ending the trading session flat as investors parse through a week of economic data and prepare for next week’s PCE report.
Gold plunged after the dollar rose, making it more expensive for gold bugs to hold the precious metal.
As for oil, read on to learn why crude has high hopes today but may not be a smart investment tomorrow.

Nvidia faltered for the second day in a row, falling off the world’s most valuable company perch and shedding $220+ billion in market cap. But the S&P 500 has gone 377 days without a 2.05% sell-off, the longest streak since the 2008 financial crisis, per CNBC.

The Credit Card Competition Act is proposed legislation in Congress that could fundamentally change credit card systems. If passed, it could devastate the future of cash-back and travel rewards.

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DAILY UPDATE: Amazon Pharmacy, Healthcare Spending Boom, Companies and the Bi-Hybrid Markets

Posted on June 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

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Amazon Pharmacy announced on June 18 that, effective immediately, its RxPass medication delivery service will be available to more than 50 million Medicare beneficiaries, a move the company says could save up to $2 billion annually for the federal health insurance program.

Here’s where the major benchmarks ended:

The S&P 500 index fell 8.55 points (0.2%) to 5,464.62, up 0.6% for the week; the Dow Jones Industrial Average^® ($DJI) gained 15.57 points (0.04%) to 39,150.33, up 1.5% for the week; the NASDAQ Composite^® ($COMP) shed 32.23 points (0.2%) to 17,689.36, little changed for the week.
The 10-year Treasury note yield (TNX) was little changed at 4.255%.
The CBOE Volatility Index^® (VIX) dipped 0.06 to 13.22.

What’s up

Sarepta Therapeutics soared 30.14% thanks to FDA approval of Elevidys, its new Duchenne muscular dystrophy treatment.
Zealand Pharma rose 18.62% after Phase 1b trial results revealed its new weight-loss drug could compete with Ozempic.
Asana jumped 14.95% on the news that its board has approved a share repurchase program of up to $150 million of its own stock.
CarMax shares rose 0.37% after the company reported first-quarter earnings. The number isn’t big, but the performance is impressive considering the used car company posted a 33% decline in profits.
Hertz Global popped 15.95% after the company announced it was raising the size of its bond offering to $1 billion as it looks to update its fleet of rental cars.

What’s down

Nvidia fell another 3.22% today as the sell off continued, with investors taking profits after a record run higher.
Smith & Wesson Brands dropped 12.87% after the gun maker beat earnings forecasts but announced that next quarter’s sales will be lower than expected.
LendingTree slid 2.48% after a Bloomberg report revealed that hackers are auctioning off stolen customer data.
Palantir fell 6.78% after the company earned an analyst downgrade for its “gluttonous valuation,” a phrase you never want to hear as an investor.
Bitcoin mining stocks took a hit today, selling off after popping higher yesterday after bitcoin prices rallied. Marathon Digital Holdings dropped 7.02%, Riot Platforms fell 8.35%, and CleanSpark sank 9.81%.

With a record number of people insured and seeking healthcare services post-pandemic, US health spend growth is outpacing GDP growth, and is expected to keep doing so through 2032, according to a June 12 report from actuaries at the Centers for Medicare and Medicaid Services (CMS). By 2032, CMS actuaries project healthcare spending will total $7.7 trillion and make up 19.7% of total US GDP, compared to $4.8 trillion and 17.6% of GDP in 2023.

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

Posted on June 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Demanding High Moral Standards of Self … and Economic HEALTHCARE Organizations

Dr. David Edward Marcinko MBA MEd CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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

Experts Speak

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

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

Evolution

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

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

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

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

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

ASSESSMENT

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

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DAILY UPDATE: Bilt, Mortgage Rates, Private Equity in Behavioral Health and the Stock Markets

Posted on June 21, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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Wells Fargo is losing $10 million per month on its partnership with Bilt, whose credit card offers users reward points for paying rent, and is looking to renegotiate, the WSJ reports. Apple has stopped offering its buy now, pay later program, Apple Pay Later, after partnering with outside companies, including Affirm.

Private equity (PE) is all over healthcare, with investment firms owning more than 400 hospitals around the US. But as the country faces a mental health crisis—US Surgeon General Vivek Murthy called it the “the defining public health crisis of our time”—PE has its sights set on one of the fastest-growing areas of the industry: behavioral health care. PE has accounted for over 60% of all behavioral health deal flow since 2018, and firms like Thurston Group and Five Points Capital now own about a quarter of facilities offering behavioral health care in some states, according to a recent cross-sectional study published in JAMA Psychiatry.

U.S. markets were closed Wednesday for the Juneteenth holiday. Here’s where the major benchmarks ended:

The S&P 500 index fell 13.86 points (0.3%) to 5,473.17; the Dow Jones Industrial Average^® ($DJI) gained 299.90 points (0.8%) to 39,134.76; the NASDAQ Composite^® ($COMP) dropped 140.64 points (0.8%) to 17,721.59.
The 10-year Treasury note yield (TNX) climbed about 4 basis points to 4.257%.
The CBOE Volatility Index^® (VIX) rose 0.80 to 13.28.

What’s up

Gilead jumped 8.46% after clinical data revealed that its new twice-a-year shot prevents 100% of HIV cases.
Penn Entertainment rose 9.93% on the news that Boyd Gaming has approached its competitor with an acquisition offer.
Accenture rose 7.30% after the IT consulting company missed earnings estimates but more than made up for it with bullish bookings data thanks to AI.
Darden Restaurants rose 1.53% after a mixed earnings report. Its acquisition of Ruth’s Chris Steak House propped up earnings, while Olive Garden’s same-store sales came in flat, probably because I eat several hundred free breadsticks there every month.

What’s down

Trump Media & Technology Group fell 14.56% after the SEC ruled that early shareholders can resell their stock in the company, diluting new shareholders—though providing upward of $247 million in funding for the beleaguered company.
Nikola plummeted 31.46% after the company announced a 1-for-30 stock split in a bid to stay listed on the Nasdaq.
Kroger fell 3.27% despite beating analyst revenue estimates in its fiscal first quarter as investors digest the chances of the company sealing a deal to buy Albertsons.
Tempest Therapeutics dropped 29.47% upon the release of the latest trial data for its liver cancer treatment.
Jabil fell 11.45% today after the electronics supplier beat earnings estimates but warned of softer growth in the year ahead.

Mortgage rates fell below 7% last week to their lowest level since March, but this didn’t spur much extra demand.

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Whither the CERTIFIED MEDICAL PLANNER™ Marks?

Posted on June 20, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Wither the CERTIFIED MEDICAL PLANNER™ Professional Certification?

DEAR INVESTMENT ADVISORS, CPAs, FINANCIAL PLANNERS, FINANCIAL ADVISORS & INSURANCE AGENTS

We believe that:

If you do not have a market niche; you are not deeply informed
If you are not deeply informed; you can’t different yourself
If you can’t differentiate yourself; you can’t differentiate price
If you can’t differentiate price; you have no market power
If you have no market power; you have no unique knowledge
If you have no unique knowledge; you have fewer profits

If you have fewer profits; you are not likely a CMP™

PROGRAM CURRICULUM: Enter the CMPs

Dean Gene Schmuckler PhD MBA MEd CTS
http://www.CertifiedMedicalPlanner.org

THANK YOU

***

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DAILY UPDATE: Wells Fargo, Public Companies as Stock Markets Extend Rally

Posted on June 19, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“

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***

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Here’s where the major benchmarks ended:

The S&P 500 index gained 13.80 points (0.3%) to 5,487.03; the Dow Jones Industrial Average^® ($DJI) added 56.76 points (0.2%) to 38,834.86; the NASDAQ Composite^® ($COMP) rose 5.21 points (0.03%) to 17,862.23, a record close for the seventh day in a row.
The 10-year Treasury note yield (TNX) dipped more than 6 basis points to 4.215%.
The CBOE Volatility Index^® (VIX) fell 0.45 to 12.30.

What’s up

La-Z-Boy, your dad’s favorite recliner/stock, rose 19.39% after beating analyst expectations in the fourth quarter and issuing upbeat guidance for the year.
Dell rose 5.13% a day after Morgan Stanley analysts named the company one of their top stock picks thanks to its focus on servers powering AI.
Silk Road Medical exploded 24.04% higher upon the announcement that it will be acquired by Boston Scientific for $27.50 per share.
Chegg popped 3.26% after announcing a restructuring plan that will see the online learning platform cut 23% of its global workforce.
Nvidia only rose 3.51% today, but it was enough to push the semiconductor company’s market cap above Microsoft’s, making it the most valuable public company in the world.

What’s down

Aerovate Therapeutics dropped another 14.55% today, a day after the company announced a failure in the phase 2 trial of its new blood pressure medication.
Lennar sank 4.96% after announcing lower-than-expected home deliveries last quarter in yet another sign that the housing market is in the dumps.
NextEra Energy fell 2.54% due to the company’s announcement it will issue $2 billion worth of new shares.
Zentalis Pharmaceuticals plummeted 50.66% after it halted clinical trials of cancer treatments due to two deaths among patients being studied.

And … precision medicine company Tempus AI is going public, raising $410.7 million through its initial public offering.

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

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Guidelines for Using an Equity Analyst’s Report

Posted on June 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

Trusting and Testing Fundamental Research

By Dr. David Edward Marcinko; MBA, MEd, CMP™

[Publisher-in-Chief]

It is not unreasonable to doubt the research of some security analysts; as evidenced by Wall Street’s recent upward implosion.

And so, trust but verify with your on research is always a good idea for the physician or lay investor in 2024.

25 Questions to Ask and Answer

Now, as a former financial planner, and professional investment advisor, please allow me to suggest the following before purchasing any equity:

How recent is the stock price on the report? If it is not recent, what is the current price? What is the current price relative to the 52-week high and low?
What is the P/E on trailing earnings per share? What is the stock’s projected price, based on estimated earnings for the periods shown?
What is the cash flow per share and the price-to-cash-flow ratio?
What is the book value? Price to book?
What is the trading volume relative to the number of shares outstanding?
How many shares are outstanding? What is the market capitalization based on current stock price and current shares outstanding? Is it a small, medium, or large-cap company?
Is the number of shares on a fully diluted basis shown? Is the fully diluted P/E shown? If there is a significant difference, read the report to find out where the extra shares will come from (convertible stock, a new or re-issue) and what the likelihood is that a conversion or a new issue or re-issue will occur.
What is the company’s earnings growth history? Is it a growth company or a cyclical company?
Does the company pay a dividend? If so, what is the dividend history and the payout ratio?
What is the debt-to-equity ratio? What kind of debt is it (publicly owned bonds, loans, etc.), and when does it have to be paid? What is the annual interest expense?
What are the cash ratios? Can the company cover its current liabilities easily? What is the ratio of annual earnings to interest expense?
What business is the company in? Are there comparisons to other companies in the same business? Are they similar in size? What is the outlook for the industry?
What is the company’s share of the market for its product? Does it have a particular niche? Does it have patents or protected rights on a special product? When do they expire?
How do the company’s financial ratios compare to those of other companies in its industry? How do the company’s ratios compare to those of the market as a whole or to narrower industry indexes?
Who are the company’s competitors? What advantages does the company have over its competitors?
How old is the company? How long has it been public? How long has the current management been running it? Who is the current management, and have there been significant management changes in the recent past?
How much of the company’s stock is owned by management? How much is owned by large institutional investors?
What kind of labor force does the company rely on? Where is it located?
Who are the company’s major customers? Is one customer very important?
Who are the company’s major suppliers? Is the company very dependent on one supplier?
How is the product distributed? Are there important relationships with distributors? How many different distributors are there?
What are the profit margins of the company? Where do they come from (incremental sales over break-even, or are they directly related to sales, no matter what level)?
What is the inventory turnover? Is there a lot of old, highly valued (on-the-books) inventory?
What is the history of sales revenue growth? What is the history of product mix in sales revenue?
Did the company issuing the research report also serve as investment banker?

Assessment

What did we miss – please advise?

Conclusion

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

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Filed under: Financial Planning, iMBA, Inc., Investing, Marcinko Associates, Portfolio Management | Tagged: cyclical stock, david marcinko, debt to equity ratio, fundamental equity analysis, fundamental stock analysis, growth stock, PE ratio, price to cash flow ratio, www.healthcarefinancials.com | 4 Comments »

The Diderot Effect?

Posted on June 17, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

What is it?

[By staff reporters]

The Diderot Effect is a social phenomenon related to consumer goods. It is based on two ideas.

The first idea is that goods purchased by consumers will align with their sense of identity, and, as a result, will complement one another.

The second idea states that the introduction of a new possession that deviates from the consumer’s current complementary goods can result in a process of spiraling consumption.

The term was coined by anthropologist and scholar of consumption patterns Grant McCracken in 1988, and is named after the French philosopher Denis Diderot, who first described the effect in an essay.

MORE: https://medicalexecutivepost.com/2021/01/25/the-prosperity-paradox/

Assessment

Your thoughts are appreciated.

Thank You

***

Filed under: Glossary Terms, Health Economics, iMBA, Inc. | Tagged: Diderot Effect, Thorstein Veblen, Veblen’s Theory | Leave a comment »

DAILY UPDATE: Father’s Day, Medical Debt and USAA

Posted on June 16, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

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HAPPY FATHER’S DAY

News 4 in San Antonio Texas organized a video call with several USAA members who lost funds due to fraud — and have been left with little to no recourse. Some of them also belong to the Facebook group, USAA Fraud and Victims, which has 2,900 members. A few USAA members even reported being asked by the institution to cover the negative balances on their accounts after their money was stolen.

The race to a $3 trillion market cap seemed like it would always be between Apple and Microsoft. But over the last twelve months, Nvidia has come roaring to the front of the pack, neck and neck with the big tech incumbents. In the last two weeks alone it has replaced Apple in the #2 spot, only to be supplanted earlier this week when Apple’s AI plans propelled it back ahead. Now, it’s anybody’s race to the next big benchmark: a $4 trillion market cap.

In a move that could be good for patients but bad for hospitals, the Consumer Financial Protection Bureau (CFPB) on Tuesday proposed regulation that would wipe medical debt from many consumers’ credit reports. The rule is meant to help the 15 million people in the US who creditors say still have a combined $49 billion of medical debt that negatively affects their credit scores, Rohit Chopra, director of the CFPB, said during a June 11 press briefing. About 100 million people in the US have some amount of medical debt, which totals roughly $220 billion, according to data from the Peterson-KFF Health System Tracker. The proposed regulation comes after three credit-reporting conglomerates—Equifax, Experian, and TransUnion—removed paid-off medical debt and medical debts under $500 from credit reports in 2022 and 2023, respectively.

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DAILY UPDATE: Sat Healthcare Private Equity, Elder Abuse Awareness Day

Posted on June 15, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“

A Partner of the Institute of Medical Business Advisors , Inc.

SPONSORED BY: Marcinko & Associates, Inc.

***

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Quote: “When private equity gets hold of healthcare systems, it is literally a matter of life and death, so if you drive a hospital like Steward into bankruptcy, putting patients and communities at risk, you should face real consequences.”—Sen. Elizabeth Warren on a proposed federal bill to impose jail time on executives who “loot” health systems, leading to patient harm (Fierce Healthcare)

Here’s where the major benchmarks ended:

The S&P 500 index fell 2.14 points (0.04%) to 5,431.60, up 1.6% for the week; the Dow Jones Industrial Average^® ($DJI) lost 57.94 points (0.2%) to 38,589.16, down 0.5% for the week; the NASDAQ Composite gained 21.32 points (0.1%) to 17,688.88, up 3.2% for the week.
The 10-year Treasury note yield (TNX) fell more than 2 basis points to 4.215%, after earlier dropping under 4.19%, its lowest since late March.
The CBOE Volatility Index^® (VIX) rose 0.72 to 12.66.

What’s up

Adobe soared 14.51% today after crushing analyst expectations when it announced earnings late yesterday.
Shopify rose 4.59% after it received yet another analyst upgrade. JPMorgan analysts gave the stock an overweight rating on June 11, while today Evercore analysts upgraded the company to outperform.
Hasbro popped 6% after the toy maker earned an upgrade to “buy” from Bank of America predicated on the company’s digital gaming strategy.

What’s down

Cruise stocks took a major blow today after a Bank of America report revealed that there was softer-than-expected pricing across the industry in May. Carnival fell 7.09%, Norwegian Cruise Line dropped 7.43%, and Royal Caribbean fell 4.35%.
RH plummeted 17% after the furniture maker reported a larger-than-expected loss in the previous quarter.
Stellantis fell 4.08% after the company’s CEO announced it will cut costs to compete with Chinese EV makers.
Penn Entertainment sank 8.66% on the news that competitor Boyd Gaming has voted in an M&A expert to its board of directors, which, combined with activist investors pushing Penn to put itself up for sale, could indicate an acquisition ahead.

June 15th marks an important day on our calendar – Elder Abuse Awareness Day. It is a day for communities worldwide to unite in bringing attention to the challenges and difficulties faced by elders and our collective responsibility to protect and support them.

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DAILY UPDATE: Flag Day, KKR, Wells Fargo and the S&P 500

Posted on June 14, 2024 by Dr. David Edward Marcinko MBA MEd CMP™

MEDICAL EXECUTIVE-POST – TODAY’S NEWSLETTER BRIEFING

***

Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants

“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“

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***

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HAPPY FLAG DAY

***

Wells Fargo found that some of its employees were pretending to work — and sent them packing. More than a dozen employees in the bank’s wealth and investment management divisions were discharged last month “after review of allegations involving simulation of keyboard activity creating impression of active work,” Bloomberg reported citing disclosures filed with the Financial Industry Regulatory Authority (FINRA).

Here’s where the major benchmarks ended:

The S&P 500 index gained 12.71 points (0.2%) to 5,433.74; the Dow Jones Industrial Average lost 65.11 points (0.2%) to 38,647.10; the NASDAQ Composite rose 59.12 points (0.3%) to 17,66756.
The 10-year Treasury note yield (TNX) fell about 5 basis points to 4.246%.
The CBOE Volatility Index^® (VIX) declined 0.10 to 11.94.

What’s up

Broadcom rose 12.27% to a new all-time high after a great quarterly earnings report and the announcement of a 10-for-1 stock split.
Super Micro Computer popped 12.44% as it rode AI hype and Broadcom’s coattails higher today.
GameStop rose 14.18% after Keith Gill, aka Roaring Kitty, seemingly closed out a large chunk of his options position in the stock. Oh, and the company’s servers crashed during its shareholder meeting today due to overwhelming interest.
John Wiley & Sons rose 12.11% after the publisher of the beloved For Dummies book series announced it’s using its content to train AI models. Is there nothing AI can’t do???

What’s down

Virgin Galactic fell 14.28% after the company announced a 1-for-20 reverse stock split, a necessary evil in order to remain listed on the NYSE.
Warner Bros Discovery sank 6.66% after the company announced a deal to sell its shares of the Formula E racing series to Liberty Global.
Signet Jewelers plunged 14.93% after the company announced lower-than-expected sales and earnings last quarter.
Sirius XM fell 3.61% on speculation that the once-hot stock could be cut from the Nasdaq 100 in an upcoming rebalancing.
Dave & Busters Entertainment slumped 10.94% after it missed on top and bottom line earnings expectations this quarter. No word yet if gambling on skee ball games with your buddies can save the company.

On Monday, private equity giant KKR jumped 12% after S&P Dow Jones Indices announced the company would be joining the index yesterday, along with CrowdStrike and GoDaddy, which saw their stocks jump 9% and 2%, respectively. The additions will be incorporated June 24.