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    As a former Dean and appointed University Professor and Endowed Department Chair, Dr. David Edward Marcinko MBA was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

    Professor David Marcinko was a board certified surgical fellow, hospital medical staff President, public and population health advocate, and Chief Executive & Education Officer with more than 425 published papers; 5,150 op-ed pieces and over 135+ domestic / international presentations to his credit; including the top ten [10] biggest drug, DME and pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published academic text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

    Later, Dr. Marcinko was a vital and recruited BOD  member of several innovative companies like Physicians Nexus, First Global Financial Advisors and the Physician Services Group Inc; as well as mentor and coach for Deloitte-Touche and other start-up firms in Silicon Valley, CA.

    As a state licensed life, P&C and health insurance agent; and dual SEC registered investment advisor and representative, Marcinko was Founding Dean of the fiduciary and niche focused CERTIFIED MEDICAL PLANNER® chartered professional designation education program; as well as Chief Editor of the three print format HEALTH DICTIONARY SERIES® and online Wiki Project.

    Dr. David E. Marcinko’s professional memberships included: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA, FPA and HIMSS. He was a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

    Marcinko is “ex-officio” and R&D Scholar-on-Sabbatical for iMBA, Inc. who was recently appointed to the MedBlob® [military encrypted medical data warehouse and health information exchange] Advisory Board.

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Professor V. Entrepreneur

Teaching / Educating

Bill Hennessey, M.D.

CEO at Pratter, Inc.

As a teacher educating is your job. It’s what you enjoy. There’s a fairly lax time schedule and resources are already built in the equation. Little accountability because the ultimate burden and measure of success is placed on the student to pass a test. If they don’t do well, it’s the student not directly the teacher who pays the price.

Now, I work with first year students who don’t know what a red blood cell looks like (biconcave disc, you thought I forgot, didn’t you) all the way to a chief resident who can probably do some surgeries better than me. It’s my job to take that first year student and turn them into a chief resident.

As an entrepreneur with limited resources, time, and energy, you don’t have the luxury to continuously teach, develop, and convince. You need people who simply get it especially in strategic positions. You don’t have the luxury of time or resources. You also are directly accountable if they don’t understand because you have a burn rate that probably just got worse. So how much “oxygen” do you allocate when trying to build your team?

Different story for Apple, Boeing and others that can create academies and educational tracks to teach and develop internally.

ASSESSMENT: Your thoughts are appreciated

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MID-YEAR FINANCIAL ROUND-UP: 2020

MID-YEAR ROUND-UP

DR. DAVID EDWARD MARCINKO MBA MEd CMP® 

STOCKS: A global stock market crash on March 12 set the worst single-day decline for stocks since 1987. But in Q2, major indexes clawed their way back on the promise of economic reopenings. Filled to the brim with tech companies, the Nasdaq has distanced itself from the Dow and the S&P.

FED: The Fed slashed interest rates in March to stem the economic bleeding, and in early June said it would hold rates near zero through 2022.

OIL: In late April, oil prices crashed below -$37 a barrel as plummeting demand from lockdowns left traders with nowhere to put their oil. Following an agreement by OPEC+ to reduce supply by 9.7 million barrels a day, prices are slowly rebounding back to March’s highs.

MORE: https://www.msn.com/en-us/money/markets/wall-street-is-wrapping-up-its-best-quarter-in-decades/ar-BB166FUU?li=BBnbfcN

“Medical Management and Health Economics Education for Financial Advisors”

CMP® CURRICULUM: https://lnkd.in/eDTRHex
CMP® WEB SITE: https://lnkd.in/guWSApq

Your thoughts and comments are appreciated.

BUSINESS, FINANCE, INVESTING AND INSURANCE TEXTS FOR DOCTORS:

1 – https://lnkd.in/ebWtzGg

2 – https://lnkd.in/ezkQMfR

3 – https://lnkd.in/ewJPTJs

THANK YOU

***

On Immigrant Entrepreneurs and the USA

Shape the Start-Up Economy

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Another CERTIFIED MEDICAL PLANNER® “In The News”

ANOTHER CERTIFIED MEDICAL PLANNER® “IN THE NEWS”

Courtesy: https://lnkd.in/eVGcji5

“Informed Voice and Next-Gen of Physician Fiduciary Advisors”

AMAURY CIFUENTES CFP® CMP®

“The extensive experience of our professional team allows us to implement a rigorous process to identify ‘Best in Class’ opportunities in our focus areas. We assist in providing capital, innovative solutions and strategic expertise to our portfolio throughout the investment cycle.”

LINK: https://lnkd.in/eBf-4vY

AMAURY has 30 years of experience in banking and finance; financial planning and investments with an emphasis on business lending, real estate and private investments. He is a licensed CERTIFIED MEDICAL PLANNER® giving him an enhanced knowledge of the medical industry’s specific needs.

PRESS RELEASE: https://lnkd.in/ecMbEsQ

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2 – https://lnkd.in/ezkQMfR

3 – https://lnkd.in/ewJPTJs

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

THANK YOU

Fifty Shades of Warren Buffet -OR- New Year in Omaha

A POD-Cast

By Vitaliy Katsenelson CFA

50 Shades of Warren Buffet or Next Year In Omaha

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

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Some Value-Focused Investing Interviews and Podcasts

By Vitaliy Katsenelson CFA

Dear ME-P Readers,

You might want to listen to some great interviews by Roben on investment topics (his shows cover a wide variety of themes).

  1. An interview with an acquaintance of mine, Saurabh Madaan, who went from working for Google to Markel (which is often called the “Baby Berkshire Hathaway”).
  2. Speaking of Markel, here Roben interviews Tom Gayner, Markel’s CIO. I have had the privilege of sharing a stage with Tom once a year for the last seven years in Omaha at the YPO event.
  3. Here Roben interviews my friend Jim Chanos –brilliant short seller and incredible human being. 

I am just scratching the surface here. You can listen to hundreds of other shows with Roben here, or look for Full Disclosure with Roben Farzad on your podcast app – just be careful, they are very addicting. 

stocks

Conclusion

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

Subscribe: MEDICAL EXECUTIVE POST for curated news, essays, opinions and analysis from the public health, economics, finance, marketing, IT, business and policy management ecosystem.

DOCTORS:

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

“Fiduciary Financial Planning for Physicians” https://tinyurl.com/y7f5pnox

“Business of Medical Practice 2.0” https://tinyurl.com/yb3x6wr8

HOSPITALS:

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

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

***

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

Dr. Marcinko Interviewed on the Physician Credit Crunch

Financial Experts Share Tips on Obtaining Loans to Start or Expand a Medical Practice

By Michael Gibbons

Editor: ADVANCE Newsmagazines

Maybe you’re a young dermatologist or plastic surgeon who dreams of starting your own practice. Or maybe you’re an established professional but want to expand your palette of anti-aging services. Either way, you’ve probably made an unpleasant discovery: Banks are leery about lending today. Global recessions with seemingly no end in sight tend to give loan officers sticky fingers.HO-JFMS-CD-ROM

Dermatologists and Plastic Surgeons

We have it on good authority that dermatologists and plastic surgeons as a group are less affected by this problem than physicians in some other branches of medicine. Still, there’s no better time than now to absorb some sound advice on how to approach banks for loans—whether you’re a fresh-faced newcomer to the fresh-face business or a wrinkled veteran at eliminating wrinkles.

Start Small

There’s no soft-soaping it: Starting a healthy aging practice is much harder than expanding an existing practice, even in the flushest of times.

“For young dermatologists starting out, I recommend you start small,” advises Jerome Potozkin, MD, who offers facial rejuvenation, liposuction, body contouring and dermatological care through his practice in Walnut Creek, CA. “You can always expand. Keep your overhead low. Know what your credit score is and do everything you can to improve it. Pay your bills on time.”

Lasers aren’t cheap. Besides the initial acquisition costs, a service contract can cost $7,000 to $12,000 a year, according to Dr. Potozkin. “Don’t feel you have to buy every new laser under the sun,” he says. “In fact, renting rather than purchasing is an option many companies offer. When your volume is low you can rent and schedule laser days—although the pitfall there is you don’t have lasers available whenever patients come in.”

Also, young dermatologists “will probably have an easier time getting a loan if they go to a relatively underserved area, as opposed to an area that has a large number of dermatologists per capita,” says Dr. Potozkin, who began practicing 10 years ago. “There are two schools of thought on this: Go where you want to live to start a practice or go to where there’s a need and be instantly successful. I chose the former. It took me longer to get started but I’m very happy where I am.”

Patience, Prudence and Passiondem2

Be patient, prudent, passionate—and start with a spare office and as little debt as possible, advises Dr. David E. Marcinko MBA, a financial advisor and Certified Medical Planner™. Marcinko, a health economist,  is CEO of the Institute of Medical Business Advisors Inc., a national physician and medical practice consulting firm based in Norcross, GA www.MedicalBusinessAdvisors.com

“Patients are looking for passion from you, not lavish trappings,” Dr. Marcinko says. “When a banker or a loan officer sees $175,000 or more of debt they are loath to give a loan—and it’s hard to blame them. Purchase a home after you become a private practitioner. You need to be as close to debt-free as you can be.

Exit Strategy

“Another thing bankers want to know is, ‘If we give you a loan and you start a practice and it fails, how will we be paid back?’ They want an exit strategy.”

The good news is dermatology “remains a very lucrative specialty, and in most parts of the country they are in a shortage position, particularly with the aging population,” says Sandra McGraw, JD, MBA, principal and CEO of the Health Care Group, a financial and legal consulting firm based in Plymouth Meeting, PA., that advises the American Academy of Dermatology, among other groups.

“I would start with a realistic business plan for why you think this practice can succeed, in the specific location,” McGraw says. “How many patients do you expect to see? How will they know you are there and available? Remember that banks lend to all kinds of people, so keep your numbers realistic. Overestimating expenses is as bad as underestimating them. Then determine how you want the money—usually a fixed loan for a period of time and then a line of credit as you get your practice going and sometimes need the cash flow.”biz-book

Expanding a Practice

Established dermatologists should have an easier time getting loans to expand their practices. They have, one hopes, a track record of success and assets to put up as collateral.

Mid-career physicians “have cash flow, physician assets and equity to some degree in a house and personal assets,” Dr. Marcinko observes. “Banks can attach loans to personal assets and savings accounts. Ninety-nine percent of times you must sign a personal asset guarantee. Mid-lifers have assets young ones don’t, so mid-lifers aren’t quite the risk. They have businesses that have value and cash flow. Banks like cash flow.”

However, even veterans must do some homework before approaching a bank. “You still want to establish why you want the money and how the expansion will increase your income,” McGraw says.

Another tip: If the bank has loans out with reputable vendors, you might ask the loan officer to recommend them to you as potential contractors. “Sometimes keeping it local and supporting others with loans at the bank can be helpful,” she says.

Assessment

Dr. Marcinko adds, “Bankers today want you to come in with a well-reasoned, well-thought-out and well-written business plan. Give bankers a 30-second elevator speech on why you are different. It’s really important to ask yourself, ‘What can I offer the community as a doctor in my specialty that nobody else can?’ If you bill yourself as the first dermatologist to do laser surgery, that’s a perceived advantage. You purchased the equipment and learned to use it. But anyone can do that. If you can come up with something that nobody else has or can do, that’s how you’re successful in anything.”

Link: Dr. Marcinko Interview

Link: https://healthcarefinancials.files.wordpress.com/2009/08/dr-marcinko-interview.pdf

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Tell us what you think. 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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Sponsors Welcomed

And, credible sponsors and like-minded advertisers are always welcomed.

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

Backward Market Business Research

Experimenting in Business

By Dan Ariely PhD

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 Part of the CAH Startup Lab Experimenting in Business Series

By Rachael Meleney and Aline Holzwarth

Missteps in business are costly—they drain time, energy, and money.

Of course, business leaders never start a project with the intention to fail—whether it’s implementing a new program, launching a new technology, or trying a new marketing campaign.

Yet, new…

Beginning at the End — Dan Ariely

Product DetailsProduct Details

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A Stock Market Top?

Happy eighth birthday of the bull market!

By Rick Kahler CFP®

March 9, 2017, was the eighth birthday of the bull market in the US S&P 500. In its lifetime it gained 314.4%, an average annual return of 19.4%. This raises a question as to how much longer it will last.

An article posted on MarketWatch.com, “Seven Signs We’re Near a Market Top and What to Do Now” gives some interesting perspective on what to look for to answer that question.

  1. Small investors begin pouring money into stock mutual funds out of fear they might miss out on another year of growth.
  2. Surveys of professional money managers show a declining number who are anticipating an imminent bear market, while more of them think the bull market will continue for a little longer.
  3. The VIX market index, which is a barometer of traders’ expectation of near term volatility (always present with a bear market), signals calm ahead.
  4. There are record price/earnings ratios, which means buyers are bidding up the price of stocks faster than earnings are rising.
  5. Investors have started to forget the pain of the last bear market and are becoming more complacent and optimistic.
  6. The Nasdaq index begins a bull run.
  7. Greed begins to outweigh fear, as investors start fearing missing out on further market gains instead of fearing future market losses.

Even to a casual observer, many of these signs look evident in the equity markets.

I’ve spoken with investors who have been on the sidelines but are thinking it’s time to get into the stock market, given its double-digit returns over the past 12 months along with the Trump rally. This is usually a reliable sign that markets are nearing a top as this new money drives the market to dizzying new highs.

When a market top looks inevitable—and we know the market will fall—what should investors do to protect their capital from being eroded away by a bear market? Selling out your stocks and moving the money to cash is always an option, but not a very good one. How do we really know this is the top and that the market won’t continue to go higher? Often the most profitable and exciting part of a bull market is the frothy run-up just before the fall.

Even more problematic, if you do get out in time to miss the crash, how will you know when it’s time to get back in? The most common answer I am given by investors to that question is, “When the economy looks good again.” That’s similar to a deer hunter saying he will load his gun when he sees a deer. By the time the economy looks good, the run up in stocks is usually nearing its end.

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Act?

The best course of action is to fasten your seat belt and get ready for some terrifying turbulence. Most bear markets drop quickly and recover quickly. Investors who get out usually do so near the bottom and completely miss the inevitable recovery. All bear markets have ended with a new bull market, although the bottom is not identified as such, but rather seen as a pause before another certain downturn.

One more thing!

Don’t feel that missing when to get out and when to get back in would make you inadequate. The majority of those who attempt to time the market for a living will miss it, too. That MarketWatch.com article that listed the seven signs of a market top? It advised investors to start edging out of the markets as soon as possible because red flags were everywhere. And it was published in March 2014—three years ago.

Conclusion

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

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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

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MARCINKO’s Upcoming WEBINARS from MentorHealth

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MentorHealth

MentorHealth, the sponsor of these ME-P webinars, is a comprehensive training source for healthcare professionals that is high on value, but not on cost. MentorHealth is the right training solution for physicians and healthcare professionals. With MentorHealth webinars, doctors can make the best use of time, talent and treasure to benefit their continuing professional education needs.

So, it is no wonder why they partnered up with the ME-P to produce these three exciting and timely Webinars, delivered by our own Publisher-in-Chief and Distinguished Professor David Edward Marcinko.

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A Medical Malpractice Trial From The Doctor’s POV

Even among the sciences, medicine occupies a special position. Its practitioners come into direct and intimate contact with people in their daily lives they are present at the critical transitional moments of existence.

For many people, they are the only contact with a world that otherwise stands at a forbidding distance. Often in pain, fearful of death, the sick have a special thirst for reassurance and vulnerability to belief.

When this trust is violated, whether rooted in factual substance or merely a conclusion lacking in reality, American jurisprudence offers several remedies with the core being civil litigation. We have personally witnessed a spectrum of reasons that prompts a patient to seek the counsel of an attorney.

Monday, February 6, 2017

10:00 AM PST | 01:00 PM EST

60 Minutes

$139.00

Medical Workplace Violence Issues

Violence in hospitals usually results from patients, and occasionally family members, who feel frustrated, vulnerable, and out of control. Transporting patients,long waits for service,inadequate security, poor environmental design, and unrestricted movement of the public are associated with increased risk of assault in hospitals and may be significant factors in social services workplaces as well.

A lack of staff training and the absence of violence prevention programming are also associated with the elevated risk of assault in hospitals.

Although anyone working in a hospital may become a victim of violence, nurses and aides who have the most direct contact with patients are at higher risk.

Wednesday, February 22, 2017

10:00 AM PST | 01:00 PM EST

60 Minutes

$139.00

Romantic Patient Advances

Within the medical practice, clinic, hospital or university setting, faculty and supervisors exercise significant power and authority over others. Therefore, primary responsibility for maintaining high standards of conduct resides especially with those in faculty and supervisor positions.

Members of the medical faculty and staff, including graduate assistants, are prohibited from having “Amorous Relationships”with students over whom they have “Supervisory Responsibilities.” “Supervisory Responsibilities”are defined as teaching, evaluating, tutoring, advocating, counseling and/or advising duties performed currently and directly, whether within or outside the office, clinic or hospital setting by a faculty, staff member or graduate assistant, with respect to a medical, nursing or healthcare professional student.

Such responsibilities include the administration, provision or supervision of all academic, co-curricular or extra- curricular services and activities, opportunities, awards or benefits offered by or through the health entity or its personnel in their official capacity.

Monday, March 13, 2017

10:00 AM PST | 01:00 PM EST

60 Minutes

$139.00

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MORE:

http://www.mentorhealth.com/control/webinarsearch?speaker_id=41224

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WEBINAR NOTE: These are online interactive training courses using which, professionals from any part of the world have the opportunity to listen to and converse with some of the best-known experts in the HR Industry. These are offered in live & recorded format for single & multiple users (corporate plans ). Under recorded format each user gets unlimited access for six months. Corporate plans give you the best return on your investment as we do not have upper limit on the number of participants who can take part in webinar.

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Penthouse Interviews Murray Rothbard

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Source: A Re-Post by MICHEL ACCAD, MD

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Penthouse Interviews Murray Rothbard

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Conclusion

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

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

[PRIVATE MEDICAL PRACTICE BUSINESS MANAGEMENT TEXTBOOK – 3rd.  Edition]

Product DetailsProduct Details

  [Foreword Dr. Hashem MD PhD] *** [Foreword Dr. Silva MD MBA]

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My Interview Request from The American College of Financial Services

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By Gary Arnesto

RE: Interview Request from The American College of Financial Services

Dr. Marcinko,

I work for the content marketing company Media Shower, and I’m writing on behalf of The American College of Financial Services, a school that offers education in the financial planning field, specifically to help students achieve professional designations such as: Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU), RICP (Retirement Income Certified Professional), and Financial Services Certified Professional (FSCP).

We’re starting a new Expert Interview series with important people in the financial professional industry, and we’d love to do an email interview with you to run on The American College blog!

We’ll send you a few interview questions, and we’ll turn your responses into a great article for our audience with a link back to The American College. All we ask for in return is a link posted on your site that promotes the interview to your audience.

You can see our website here: http://www.theamericancollege.edu/

If you’d like to discuss the program with someone at the company directly, feel free to contact Xand Griffin at: xgriffin@stratusinteractive.com.

Please let me know if you’d be interested in doing the email interview with us, and we’ll get moving on it right away!

Thank you,

Gary Arnesto

Assessment and RSVP

Many thanks for the invitation Gary, and yes I accept. My opinions may not always be correct; but I am never equivocal.

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DEM tie

David Edward Marcinko MBBS DPM MBA CMP®

http://www.CertifiedMedicalPlanner.org

cmp-logo16

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Conclusion

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

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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

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Video on The Current State Of The Stock Market

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Earnings Crisis!

By Chapwood Investments, LLC   

          ***             

MARKETS CLOSED TODAY!   

A Message From Ed Butowsky On The Current State Of The Stock Market

[2/11/2016]

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Click on this link to view video message

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Conclusion

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

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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Doctors Living With Higher Stock Market Volatility

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Change is afoot in the market, the rally of which lulled many into complacency

DG

By David Gratke

Volatility, on vacation for most of the past few years, is back this fall for physician investors and us all. It hit a new 52-week high in mid-October, double the level of August. That means change is afoot in the market, whose rally lulled many into complacency. So. this is a good time to see where your portfolio stands in risk terms.

The last time volatility really spiked, as measured by the Standard & Poor’s 500 volatility index, or VIX, was the fall of 2011 when the market last corrected by 20%. Then, the VIX level was twice as high as now. Volatility is market price fluctuation, and it signals greater risk.

Financial Risk

financial risk

The root cause of higher volatility is that the world’s major central banks, including our Federal Reserve, have flooded markets with liquidity – printing money, if you will. In other words, in an effort to jump-start local economies, they have kept rates so low that stocks are artificially higher, and thus ripe for a price-churning correction. The insidious side-effect of this money printing has been to greatly reduce, if not extinguish, historical, and normal, market price fluctuations.

As David Kotok, chairman and chief investment officer of Cumberland Advisors, puts it: “An era is ending: for over half a decade, nearly worldwide, zero interest rates suppressed volatilities. That is over.” The initial indication of this, Kotok says, was when then Fed-Chairman Ben Bernanke indicated that his bond-buying stimulus program was coming to an end. Well, now it’s over and the market fears interest rates are on the way up.

Investor Sentiment

Transferrable  Emotions

Stock market volatility can be measured and is used to gauge investor thinking, or what we call investor sentiment.

The VIX gauges investor sentiment. When volatility is low, the implication is that investors are complacent. Said differently, they are not paying attention to the underlying risks in the marketplace. Also during times of low volatility, markets are often fully valued, or even overvalued due to investor contentment.

When the VIX is high, as it was during the 2008-09 financial crisis, investors exhibited great amounts of fear. They sell out of their investments, and markets are typically undervalued.

Volatility was low prior to 2008, hovering around its historical average of 20. The index then zoomed to 90 during the 2008-09 stock market slide. In recent months, however, most notably June and July, we witnessed a historic low in this index, hovering near 10. Sure enough, there were high levels of margin balances and bullish investor sentiments, along with above-average stock valuations, as seen by lofty price/earnings ratios.

Now, the VIX is slightly below average, at about 15.

Since August, volatility rose from its sleepy historic mid-summer lows for many reasons: Middle East tensions, the Ebola outbreak, low gross domestic product growth, central bank stimulus slowing down, corporate stock buybacks, high P/E ratios, just to highlight a few.

Stock_Market

A New Normal?

Assuming this higher volatility is the new normal, what can you do about it? One alternative is to do nothing and ride this out. Another is to trade options, betting on which way the market will cut. But this is very risky and best done by professionals. Kotok says a volatility surge is a good time to examine your portfolio’s risk profile: His firm’s largest positions are in defensive stocks, like utilities and telecoms – ones that don’t tend to rocket around when the market gyrates.

During a recent volatility boost to the current level, in 2013, a Wall Street Journal story offered some market pros’ tips. Examples: putting money in a balanced fund, where stocks and bonds are in roughly equal proportion. Another warned that whenever stock holdings were over 70% of a portfolio, or under 30%, you are most vulnerable.

Regardless, Kotok cautions that “more and exciting volatilities lie ahead.”

Follow AdviceIQ on Twitter at @adviceiq.

About the Author

David Gratke is chief executive officer of Gratke Wealth LLC in Beaverton, Ore.

Conclusion

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

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Financial Planning MDs 2015

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

 

More on 401(k) Choices

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Studies, Research, Experiments and Experience

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

Rick Kahler MS CFPHere is a conversation I’ve had too many times: An acquaintance says proudly that he invests the maximum into his 401(k). I ask what allocation he’s made between equities and bonds.

He says he just divides his contributions equally among the four investment choices the plan offers. I cringe.

The Book

While it’s wise to put the maximum into your 401(k), it’s also important to choose the right investment options. This is difficult for most people, as shown in the 2004 book, Pension Design and Structure, by Olivia Mitchell and Stephen Utkus.

The Study

In one study, participants were asked to allocate their 401(k) contributions between two investment funds. The first group was given a choice of a bond fund and a stock fund. A second group was given the choice of a bond fund and a balanced fund (50% in stocks and 50% in bonds). A third group was given the choice of a stock fund and a balanced fund.

In all three cases, a common strategy was for participants to split their contributions equally between the two funds offered. Yet because of the difference in the funds, the asset allocations of each group differed radically. The average allocation to stocks was 54% for the first group, 35% for the second, and 73% for the third.

The Experiment

In another experiment, participants were asked to select investments from three different menus offering options with varying degrees of risk. Most made their choices simply by avoiding both the high-risk and the low-risk extremes. They didn’t select a portfolio from the available options based on the appropriateness of the risk each presented.

Investing your retirement funds in such a haphazard manner is almost the same as playing the roulette wheel. A portfolio with 35% in stocks will perform very differently than one with 73%. Especially if you’re young, holding the portfolio with the 35% stock allocation or the 73% may mean a significant difference in your retirement lifestyle.

Another Study

In another study, when employees were given a choice between holding their own portfolio or that of the average participant in the plan, about 80% chose the average portfolio. That’s like going into a clothing store and telling the sales clerk, “Just give me a suit in whatever size you sell the most.

Implications

These studies suggest ways employers can help employees make better investment decisions. One strategy is to reduce their investment choices to a small number of funds that offer portfolios with an asset allocation based on various target retirement dates. Another is to offer employees a variety of investment choices, along with guidance and education so they could make intelligent choices.

My Experiences

In my 30 years of investment experience, the strategy I’ve seen work the best is having a wide variety of asset classes (global stocks, global bonds, treasury inflation protected securities, real estate investment trusts, and commodities) that do well in a variety of economic scenarios. A study reported on by Peng Chen in Financial Planning in 2010 found that from 1970 to 2009, a portfolio with a minimum of 10% to a maximum of 30% in each of these asset classes out-performed portfolios that did not have commodity exposure. Splitting 401(k) contributions equally among these asset classes would provide a greater chance of having an appropriately well-balanced portfolio.

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Spreadsheet

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Assessment

Once you’ve chosen a variety of asset classes, then keep your hands off except for periodic rebalancing. True, this strategy means that in any given year your portfolio will always have winners and losers. Yet with a broad range of assets, the losers and winners tend to balance out. Over the long run the odds are good that you will do fine.

Note: Ditto for 403(b) plans.

More:

Conclusion

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IMPLICATION OF WITHDRAWALS IN A LOW INTEREST RATE ENVIRONMENT

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A SPECIAL ME-P REPORT

A Retrospective Review … and Implications for Modernity

[Copyright Manning & Napier Advisors, Inc.]

Dr. Jeff Coons

By Jeff Coons PhD CFA

By Dr. David Edward Marcinko MBA CMP

The general trend of declining interest rates experienced over the last several decades, part of a long-term trend Manning & Napier Advisors, Inc. and others have focused on since the early 1980’s, created new challenges for managing investment portfolios with regular and significant cash withdrawals.

Historical Review

This continuing report, first prepared 15 years ago, will provide an analysis of the investment implications of withdrawals in light of the secular shift in the economic and market conditions today. This analysis and historical review aims to guide decisions as to the appropriate level of withdrawals from an account in the more current low interest rate environment of 2014; and thru currently to 2019.

The Questions

Declining interest rates restrict the ability to generate income from high quality investments, so a greater proportion of a given withdrawal requirement must come from the potential price appreciation of the securities.  Of course, the inherently volatile nature of the financial markets makes price appreciation the less predictable of the sources of total return available to fund withdrawal needs.

The natural questions that arise from this observation include:

  • What withdrawal rate inhibits the ability to pursue long-term capital growth as a primary investment objective?
  • What withdrawal rate may create a significant risk of a sustained deterioration of capital?
  • What is a reasonable range of withdrawal rates given the relatively low interest rate environment that we face? 

The answer to the first question can be derived from interest rates and dividend yields.  With a dividend yield of 1.0%-2.0% on stocks (e.g., the yield on the S&P 500 Index as of December 2000 was 1.2%) and yields on intermediate-term and long-term fixed income securities between 5.0% and 6.0% (e.g., as of December 2000, a one-year Treasury Bill had a yield of 5.4% and a thirty-year Treasury bond had a yield of 5.5%), growth-oriented portfolios should generally produce a level of income adequate to allow 2.5%-3.5% withdrawals on an annual basis.

Thus, rates of withdrawal of less than 3.5% generally should not inhibit the pursuit of long-term capital growth as a primary investment objective.

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Portfolio analysis

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Management Aproach

To establish the high end of the achievable withdrawals under a management approach pursuing long-term capital growth, consider some historical evidence.

Assume that withdrawals are taken from each of three portfolios (i.e., 100% stocks, 80% stocks/20% bonds, and 50% stocks/50% bonds using data from Ibbotson Associates, Inc.) starting at the beginning of 1973.  How many years did it take to regain the original capital of the portfolio?

As can be seen in the following table, it took between 4-8 years for these portfolios to recover from the 1973-74 bear market with a 5.0% withdrawal rate.  If withdrawals are at a 7.5% rate per year, over ten years elapsed before the original capital was restored.

Finally, with a 10.0% withdrawal rate, it took between 13-15 years to restore the capital.  While the 1973-74 bear market was severe, it is not the worst bear market that can be used to illustrate the risk of significant withdrawals taken when the portfolio’s market value is depressed.

The clear conclusion is that withdrawals of greater than 5.0% are a potential impediment to pursuing long-term capital growth, given the long periods required to restore capital for the various growth-oriented asset mixes offered in this analysis.

***

When Was Original (12/72) Capital Restored?
  1. 0% W/D
 

  1. 5% W/D
 

  1. 0% W/D
 100% Stock  9/80(7.75 years) 6/83(10.5 years) 6/86(14.5 years)
80% Stock/ 20% Bond  9/80(7.75 years) 3/83(10.25 years) 6/86(14.5 years)
50% Stock/ 50% Bond  12/76(4.0 years) 3/83(10.25 years) 3/87(15.25 years)

***

Another key issue to remember is that the withdrawal rates above are a percentage of current market value, so the dollar value of the cash withdrawn from the account is assumed to decline in a bear market.  However, most of us think of our withdrawal needs in terms of dollars instead of percentages (e.g., $50,000 from a $1,000,000 account, which translates to 5%).

If we attempt to maintain the dollar value of withdrawals in bear market periods, the percentage of current market value being withdrawn actually increases, and the impact on the portfolio far exceeds the example provided above.

SAMPLE:

To demonstrate, consider maintaining withdrawals of $50,000, $75,000 and $100,000 on an account with a $1,000,000 market value as of 12/72 (see table below).

In the case of a $50,000 annual withdrawal, approximately 8-10 years elapse before the original $1,000,000 market value is restored.  If the withdrawals are $75,000 per year, 13 years elapse for the 50/50 asset mix and almost 19 years pass for the 80/20 asset mix before the $1,000,000 is restored.  For the 100% stock portfolio, nearly 25 years elapse before the original $1,000,000 is restored.

Finally, for $100,000 withdrawals off of a $1,000,000 market value in 1972, all capital in the account is depleted within 10-15 years given these withdrawals.  Thus, the risk of significant cash withdrawals having a detrimental impact on the ability to preserve and grow capital is much more pronounced when withdrawals remain high in dollar terms.

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When Was Original Capital ($1,000,000 in 12/72) Restored?
$50,000 W/D  $75,000 W/D  $100,000 W/D
 100% Stock  3/83(10.25 years) 9/97(24.75 years) Capital Depleted9/83
80% Stock/ 20% Bond  12/80(8.0 years) 9/91(18.75 years) Capital Depleted3/85
50% Stock/ 50% Bond  9/80(7.75 years) 3/86(13.25 years) Capital Depleted9/87

***

So far, the major point we have established is that a withdrawal rate of 2.5%-3.5% may be achievable without hampering the pursuit of long-term capital growth, but withdrawals of 5% or greater may have a significant impact on the ability to manage for growth.  Therefore, accounts expected to experience withdrawals of 4%-5% (or greater) should be managed with a goal of satisfying these withdrawal needs on a regular basis first, with the pursuit of capital growth taking secondary importance.

However, the analysis provided above also implies that there is a rate of withdrawals that forces us to focus on capital preservation, because depletion of capital is a likely outcome.  For withdrawals in the range of 10.0%, the example above shows that the risk of depletion of capital is significant at these high annual levels, especially if the withdrawals are on a dollar basis and not adjusted by the decline of current market value in a bear market.

In fact, with long-term U.S. government bond yields at approximately 5.0%-6.0%, annual withdrawals greater than 7.5% are likely to be too high to allow a manager to effectively pursue long-term capital growth without a high degree of risk to the capital of the account.  That is, since attempts to provide returns above the current Treasury yields imply risk of volatility, and volatility can lead to the examples provided above, withdrawals at 7.5% or more and maintained on a dollar basis imply a high likelihood that original capital will be depleted over a 15-20 year period.

In general, the current level of yields in the market imply that management of a portfolio requiring over 7.5% per year in withdrawals faces a strong possibility of depleting capital under any scenario, and so portfolio management should focus on dampening market volatility so as to extend the life of the capital for as long as possible as it is drawn down.

Final Questions

The final question[s] (i.e., the appropriate level of withdrawals) is driven by both the client’s need for the assets and the parameters outlined above:

  1. Withdrawals less than 3.5% of current market value should not inhibit the pursuit of long-term capital growth as a primary objective.
  2. Withdrawal rates between 3.6% and 7.4% require a primary focus on satisfying withdrawal needs over the market cycle, possibly with a secondary goal of long-term capital growth to protect future withdrawal needs.
  3. Withdrawal rates greater than 7.5% are likely to result in a depletion of capital, so the goal should be to manage the drawdown of capital by dampening year-to-year volatility of the portfolio.

While we all would like to achieve capital growth, the ability to pursue growth-oriented strategies depends on the flexibility to moderate withdrawals, if required by market conditions, and on the overall reliance on these assets.

As another example, an endowment can control its withdrawals to some extent, but there is a level beyond which the belt cannot be tightened without harming the services being funded.

Yet another example comes from a physician-executive or someone living primarily on an IRA account, especially after becoming accustomed to the high (and falling) interest rate/high asset return environment of the last fifteen years.  Aggressively pursuing capital growth in the face of large withdrawals may result in exposure to significant risk of depletion of the IRA assets when other sources of income are unavailable.

If, on the other hand, the IRA was a small part of the wealth available in retirement, then there is some flexibility to work towards long-term capital growth.

Financial Planning MDs 2015

Implications for defined benefit retirement plans

A defined benefit retirement plan may have an outside source of funding to help restore capital (i.e., contributions from the employer), but defined contribution and Taft-Hartley plans have much less of a safety net.  As a result, the risk taken to pursue growth in the face of significant withdrawals must take into account the nature of the assets and the problems associated with a deterioration of capital in the account.

Assessment

And so, withdrawals can have a significant impact on the ability of a manager to preserve capital and pursue long-term capital growth.  However, while lessening the level of withdrawals will help provide flexibility for the manager to pursue these goals, the need for the assets may require that withdrawals are maintained at a certain level.  Once withdrawals are minimized, the manager should focus on investment goals that correspond with this minimum level.

If withdrawals are below 3% of current market value, pursuit of long-term capital growth can be a primary objective.  Withdrawals between 4% and 7.5% of market value on an annual basis require a focus on working towards satisfying these annual needs.  Long-term capital growth, in this case, should be a secondary goal.

Finally, if withdrawals are above a 7.5% annual rate, then the investment management approach should focus on preserving capital and dampening market volatility so as to work towards allowing the assets to last as long as possible as they are drawn down.

NOTE: The 10-year Treasury rate’s just fell below 2% after Fed, ECB nominees; today.

Conclusion

This historical review paper provides a retrospective review of IRs and implications for modernity.

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

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

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Stock Market at New Highs!

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Is this a Bubble?

[A SPECIAL R&D REPORT FOR THE ME-P]

By David K. Luke MIM, MS-PFP, CMP™ [Certified Medical Planner™] http://www.networthadvice.com

David K. LukeThe market news has been replete with the phrase “new market high“ in the business news every couple of weeks as of late. The corresponding message is often that the stock market is likewise in a bubble. The S&P 500 index and the Dow Jones Industrial Average index are at all-time highs. The indexes have surpassed the 2007 peak.

The reality is however that the S&P 500 is up less than 6% from the beginning of the year, and the Dow is up about 2%. Most investors, of course, do not invest just in these two indexes, as these two indexes represent very large capitalized companies.

I am reminded of the customer in 1995 when I worked at a national brokerage firm that called me to liquidate his entire stock portfolio. “The stock market was too high,” he said. He was 5 years too early.

Risk Mitigation

Most investors will have a diversified portfolio that includes mid-cap stocks, small-cap stocks, and international stocks as well as large cap stocks such as found in the S&P 500.

Of course, these equity investments are also typically subdivided into the broader categories of “Growth” and “Value.” Which means most investors that believe in diversification will own four different “types” of stock, each divided into two different categories for eight different baskets of stock if you will. The typical daily news will focus only perhaps on the S&P 500, which is a portfolio of large capitalized growth stocks. This is only one of the eight different types of stock that an investor would typically own.

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In strong bull markets, typically all eight categories of stock go up together with some degree of correlation. This is also true in strong bear markets with all eight categories of stock going down in some degree of correlation. Portfolio managers typically try to offset high correlation of investments by owning investments in asset classes that typically do not all correlate together. This is a major technique used to reduce the volatility in an account.

However as you can see so far this year, most all of the eight stock indexes with the exception of small-cap growth are up slightly in line with the S&P index.

***

[As of June 13, 2014] 

Name Ticker % Total Return YTD % Total Return 12 Month
Large Cap iShares S&P 500 Growth IVW 5.59 22.55
iShares S&P 500 Value IVE 5.76 18.39
Mid Cap iShares S&P MidCap 400 Growth IJK 2.69 18.24
iShares S&P Mid-Cap 400 Value IJJ 7.66 23.19
Small Cap iShares S&P Small-Cap 600 Growth IJT -0.52 20.8
iShares S&P Small-Cap 600 Value IJS 2.3 21.37
Foreign Large Blend iShares Core MSCI EAFE IEFA 3.75 19.25
Barclays Aggregate Bond Index iShares Core US Aggregate Bond AGG 3.26 2.39

Source: Morningstar

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Inflation

The buying power of the US Dollar has changed over the years. The Consumer Price Index (CPI), a common measure of inflation, has averaged around a 3% annual increase from 1913 – 2014 according to the U.S. Department of Labor Bureau of Labor Statistics.

In fact, an item purchased for $5.00 in 1913 would have a cost of $119.73 today, or a cumulative rate of inflation for the past 100 years of 2,294.7%. The cost of living rising each year is a safe bet. Inflation has increased every year in the past 50 years with one exception: 2009 when inflation fell -0.4%.

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Update: 06/17/2014 04:10 ET

[Market Update]
Symbol Last Change
DOW 16,808.49 +27.48
NASDAQ 4,337.23 +16.13
S&P 1,941.99 +4.21

Conclusions:

  1. The Market Indexes at new highs does not indicate a bubble. In fact, the market should, relatively speaking, regularly be hitting new highs because of the consistency of positive inflation. Prices of goods and services today are at all-time highs. Does that mean we are in an “inflation” bubble? No. This is normal.
  2. The S&P 500 is not an accurate measure of the US economy. While the S&P 500 is the common “market” indicator in the US, only about 55% of the earnings of the index come from the US. (Source: RBC Capital Markets Research, Capital IQ 2012). This is because mainly large multinational companies such as Google, IBM, and Apple that have a significant amount of overseas revenues weight the index.
  3. The S&P 500 or the Dow Jones Industrial Average (DJIA – 30 stocks) is most likely not an exact reflection of your personal stock portfolio, which would expectantly be more diversified. A typical well-diversified long-term investment portfolio would include not just large cap stocks (such as found in the S&P 500 or DJIA), but mid, small, and international stocks from the growth and value camp, as well as a diversified bond holding.
  4. Overpriced stocks, just like overpriced real estate, are more prudently ascertained by value measures, not simply by raw index numbers. A stock hitting new highs could still be quite undervalued. Meaningful variables such as earnings growth, price to earnings ratio, dividend yield, price-to-book, price-to-sales, and other metrics should be considered.

Conclusion

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

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

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How Much is a Financial Advisor Really Worth?

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And … Can it be Quantified?

Doctors and FAs

[By Staff Reporters]

How much of a boost in net returns can financial advisors add to client portfolios? According to Vanguard Brokerage Services®; maybe as much as 3%?

The Study

In a recent paper from the Valley Forge, PA based mutual fund and ETF giant, Vanguard said financial advisors can generate returns through a framework focused on five wealth management principles:

Being an effective behavioral coach: Helping clients maintain a long-term perspective and a disciplined approach is arguably one of the most important elements of financial advice. (Potential value added: up to 1.50%).

Applying an asset location strategy: The allocation of assets between taxable and tax-advantaged accounts is one tool an advisor can employ that can add value each year. (Potential value added: from 0% to 0.75%).

Employing cost-effective investments: This component of every advisor’s tool kit is based on simple math: Gross return less costs equals net return. (Potential value added: up to 0.45%).

Maintaining the proper allocation through rebalancing: Over time, as investments produce various returns, a portfolio will likely drift from its target allocation. An advisor can add value by ensuring the portfolio’s risk/return characteristics stay consistent with a client’s preferences. (Potential value added: up to 0.35%).

Implementing a spending strategy: As the retiree population grows, an advisor can help clients make important decisions about how to spend from their portfolios. (Potential value added: up to 0.70%).

Source: Financial Advisor Magazine, page 20, April 2014.

networking advisors

The Fine-Print

But, Vanguard notes that while it’s possible all of these principles could add up to 3% in net returns for clients, it’s more likely to be an intermittent number than an annual one because some of the best opportunities to add value happen during extreme market lows and highs when angst or giddiness [fear and greed] can cause investors to bail on their well-thought-out investment plans.

More: http://www.CertifiedMedicalPlanner.org

Assessment

Most retail financial services products are designed to enhance the well-being of the Financial Advisor and/or vendor at the expense of clients. The clients get only the leftovers. Of course, no one tells them that secret. They have to figure it out for themselves. As the old line goes, “Where are the customers’ boats?”

Source: Rowland, M: Planning Periscope [Where Advisors are the Clients]. Financial Advisors Magazine; page 36, April 2014

Conclusion

Are doctors different than the average investors noted in this essay?

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

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On New Issues and Securities Stabilization

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A Primer for Physician Investors and Medical Professionals

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

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

[PART 3 OF 8]

NEU Dr. Marcinko

NOTE: This is an eight part ME-P series based on a weekend lecture I gave more than a decade ago to an interested group of graduate, business and medical school students. The material is a bit dated and some facts and specifics may have changed since then. But, the overall thought-leadership information of the essay remains interesting and informative. We trust you will enjoy it.

Introduction

Some securities issues move very well, like traditional blue chips stocks (ie., Wallgreen). Some are dogs, like smaller dot.com companies (iixl.com). Then, there are issues that are former darling, but are now ice cold; like PPMCs (i.e., Phycor) and internet stocks (i.e., Dr. Koop).  How far can an underwriting manager go in nudging along an issue that’s not selling well? SEC rules do permit a certain amount of help by the manager, even if this takes on the appearance of price-fixing. This help is called stabilizing the issue.

Simply put, if shortly after a new offering begins, supply exceeds demand, there will be downward pressure on the price. But, the law requires that all purchasers of the new issue pay the official offering price on the prospectus. If public holders of the stock become willing to bail out and accept a low selling price, the investor looking to buy will find he is able to buy stock of the issuer cheaper in the open market than buying it new from the syndicate members.

To prevent such a decline in the price of a security during a public offering, SEC rules permit the manager to offer to buy shares in \ the open market at a bid price at, or just below, the official offering price of the new issue. This is referred to as stabilizing and his bid price is called the stabilizing bid. There is always the risk, in a firm commitment underwriting, that the underwriters will have difficulty selling the new issue. What they can’t sell, they’re “stuck” with. That’s where the term “sticky issue” comes from.

As a physician executive, or potential investor in a new issue, be aware that the best way to get an issue to sell is to increase the compensation to the sales force (i.e., stock broker or Registered Rep).

Another choice is through stabilization. Stabilizing is a permitted form of market manipulation which tends to protect underwriters against loss. It allows the underwriting syndicate (usually through the efforts of the syndicate manager) to stabilize (peg or fix) the secondary market trading price in a new issue at the published public offering price. It works something like this.

When a new issue is selling slowly, some of the investors who initially purchased, may be dissatisfied with the performance of the stock (if it is selling slowly and the underwriters have plenty to sell at the public offering price, this is anything but a hot issue and the security price will not have risen).

This dissatisfaction with performance leads to these investors desiring to sell the securities they have just purchased. If the underwriters are unable to sell at the public offering price, certainly an individual investor will have to take less when bailing out. As market makers begin to trade the stock in the secondary market, they would only be able to compete with the underwriters by offering the stock at a lower price than the public offering  price. This would make it difficult (if not impossible) for the underwriters to distribute the remaining new shares.

In order to prevent this from happening, the managing underwriter (who is usually the one to assume the role of stabilizing underwriter), agrees to purchase back any of the new shares at or just slightly below the public offering price. That is a higher price than any market maker could, in all practicality, bid for the shares. When the shares are repurchased by the stabilizing underwriter, it is as if the initial trade were annulled and never took place so that these new shares are now placed back into the distribution and are sold as new shares at the public offering price. SEC rules do, however, require disclosure of this practice.

Therefore, no syndicate manager may engage in stabilizing unless the following phrase appears in bold print on the inside front cover page of the prospectus:

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF (XYZ COMPANY) AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON (NYSE) STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Of course, it would be manipulation and, therefore, a violation of law, if this “price-pegging” activity continued after the entire new issue was sold out. This activity costs the syndicate manager money which is recouped by levying a syndicate penalty bid against those members of the syndicate whose clients turn shares in on a stabilizing bid.

One way to avoid stabilization is to over allot  to each of the syndicate members. This is the same concept as “over booking” that’s done by the airlines. Most airlines typically sell 5% to 10% more seats than the airplane has knowing that there will be last minute cancellations and no shows. This tends to ensure that the plan will fly full. In the same manner, managing under-writers frequently over allot an additional 10% to each of their syndicate members so that last minute cancellations should still leave the syndicate with sell orders for 100% of the issue. If there are no “drop outs”, one of two things may happen.

  1. The issuer will issue the additional shares (which results in it raising more money).
  2. The issuer will not issue the additional shares and the syndicate will have to go short. Any losses suffered by the syndicate through taking of this short position are shared proportionately by the syndicate members.

Now, what if market conditions and the fervor surrounding a new issue like e-commerce company Ariba,  in 1999, remain so that the issue doesn’t cool down during the cooling off period? Such hot issues are a mixed blessing to be sure.

On the one hand, the issue is a sure sell-out. On the other hand, just how many healthcare investors are going to be told by brokers that additional shares can not be obtained.

Furthermore, the SEC and the NASD/FINRA are vigorous [or should be] in their scrutiny of  proper distribution channels for hot issues. Just what is a “proper” distribution?  It can be summed up in one sentence. Member firms have an obligation to make a “bona fide” public distribution of all the shares at the public offering price. The key to this rule lies within the definition of bona fide public distribution.

While the underwriting procedures for corporate bonds are almost identical to corporate stock, there are significant differences in the underwriting of municipal securities. Municipal securities are exempt from the registration filing requirements or the Securities Act of 1933. A state or local government, in the issuance of municipal securities, is not required to register the offering with the SEC, so there is no filing of a registration statement and there is no prospectus which would otherwise have to be given to investors.

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Municipal Underwriting

There are two main methods of financing when it comes to municipal securities. One method is known as negotiated. In the case of a negotiated sale, the municipality looking to borrow money would approach an investment bank and negotiate the terms of the offering directly with the firm. This is really not very different from the above equity discussions.

The other type of municipal underwriting is known as competitive bidding. Under the terms of competitive bidding, an issuer announces that it wishes to borrow money and is looking for syndicates to submit competitive bids. The issue will then be sold to the syndicate which submits the best bid, resulting in the municipality having the lowest net interest cost (lowest expense to the issuer).

If the issue is to be done by a competitive bid, the municipality will use a Notice of Sale to announce that fact. The notice of sale will generally include most or all of the following information.

  • Date, time, and place. This does not mean when the bonds will be sold to the public, but when the issue will be awarded (sold) to the syndicate issuing the bid.
  • Description of the issue and the manner in which the bid is to be made (sealed bid or oral). Type of bond (general obligation, revenue, etc.)
  • Semi-annual interest payment dates and the denominations in which the bonds will be printed.
  • Amount of good faith deposit required, if any.
  • Name of the law firm providing the legal opinion and where to acquire a bid form.
  • The basis upon which the bid will  e awarded, generally the lowest net interest cost.

Since municipal securities are not registered with the SEC, the municipality must hire a law firm in order to make sure that they are issuing the securities in compliance with all state, local and federal laws. This is known as the bond attorney, or independent bond counsel. Some functions are included below:

    1. Establishes the exemption from federal income tax by verifying  requirements for the exemption.
    2. Determines proper authority for the bond issuance.
    3. Identifies and monitors proper issuance procedures.
    4. Examines the physical bond  ertificates to make sure that they are proper
    5. Issues the debt and a legal opinion, since municipal bonds are the only securities that require an opinion.
    6. Does not prepare the official statement.

When medical investors purchase new issue municipal securities from syndicate or selling group members, there is no prospectus to be delivered to investors, but there is a document which is provided to purchasers very similar in nature to a prospectus. It is known as an Official Statement. The Official Statement contains all of the information an investor needs to make a prudent decision regarding a proposed municipal bond purchase.

The formation of a municipal underwriting syndicate is very similar to that for a corporate  issue. When there is a negotiated underwriting, an Agreement Among Underwriters (AAU) is used. When the issue is competitive bid, the agreement is known as a Syndicate Letter. In the syndicate letter, the managing underwriter details all of the underwriting agreements among members of the syndicate. Eastern (undivided) and Western (divided) accounts are also used, but there are  several different types of orders in a municipal underwriting. The traditional types of orders, in priority order, are:

Pre-Sale Order: Made before the syndicate actually offers the bonds. They have first priority over any other order turned in.

Syndicate (group net) Order: Made once the offering is under way at the public offering price. The purchase is credited to each syndicate member in proportion to its allotment. An institutional buyer will frequently purchase” group net”, since many of the firms in the syndicate may consider this buyer to be their client and he wishes to please all of them.

Designated Order: Sales to medical investors (usually healthcare institutions) at the public offering price where the investor designates which member or members of the syndicate are to be given credit.

Member Orders: Purchased  by members of  the syndicate at the take-down price (spread). The syndicate member keeps the full take-down if the bonds are sold to investors, or earns the take-down less the concession if the sale is made to a member of the selling group. Should the offering be over-subscribed, and the demand for the new bonds exceeds the supply, the first orders to be filled are the pre-sale orders. Those are followed by the syndicate (sometimes called group net) orders, the designated orders, and the last orders filled are the member’s.

Finally, be aware that the term bond scale, is a listing of coupon rates, maturity dates, and yield or price at which the syndicate is re-offering the bonds to the public. The scale is usually found in the center of a tombstone ad and on the front cover of the official statement.

One of the reasons why the word “scale” is used is, that like the scale on a piano, it normally goes up. A regular or positive scale is one in which the yield to maturity is lowest on the near term maturities and highest on the long term maturities. This is also known as a positive yield curve, since the longer the maturity, the higher the yield. In times of very tight money, such as in 1980-81, one might find a bond offering with a negative scale.

A negative (sometimes called inverted) scale is just the opposite of a positive one, with, yields on the short term maturities are higher than those on the long term maturities.

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Passive Investing with a “Steroid Twist”

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A Core and Satellite Philosophy

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

Rick Kahler CFP“Keep your hands away from your investments and back away from the market reports.”

That pretty much sums up passive investing, the approach I have practiced for years. I’ve preached it for years, too, and did so in a recent column. The wisest way to build wealth is by investing in a variety of asset classes, setting target allocations in each asset class, and then taking your hands off except to periodically rebalance to the original target allocations.

For most of us, including doctors, the best way to invest in an asset class is to give our funds to a mutual fund manager who will purchase the appropriate investments. Mutual fund managers have a choice of actively or passively managing the money you give them to invest.

Passivity 

Passive managers try to match market indexes, which are groups of companies representing a cross-section of a certain type of investment. The most popular index in the world is probably the S&P 500 index, which consists of the largest 500 companies in the United States. Another popular index is the Dow Jones Industrial Index which is made up of 30 companies. When we consider the US has almost 10,000 companies, we can quickly see that many indexes represent just a segment of the entire market.

Research indicates it is very hard to beat an index, especially with stocks, bonds, real estate investment trusts, and commodities. I prefer to keep about 80% of my investment portfolio in a broad variety of passively managed investments in these asset classes.

Timing or Strategy?

Where do I put the other 20%? In mutual funds with active managers who try to earn returns similar to stocks and bonds and that are not correlated to either.

This may seem to make me a hypocrite. I’ve been saying for years not to be a market timer, and now here I am suggesting you do just the opposite with a portion of your portfolio. Not hypocrisy at all. What I’ve preached for many years is that neither you nor I have any business timing investments. That doesn’t mean no one should ever do it.

So, is it timing or strategy?

Core and Satellite Philosophy

It can be wise to put a small portion [satellite] of our portfolios [core] into various investment strategies with active managers. The key is to find managers who have a disciplined approach that eliminates emotion and who have long-term track records of success. These strategies include managers who attempt to time markets by shorting stocks they think will decline in value and buying stocks they think will rise.

It also includes one investment strategy, managed futures, that I call “timing on steroids.”

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Bull markets

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Rationale

My reason for including some actively managed funds is to have part of my investment portfolio that is not correlated to stocks. I want these investments to have a positive return over a long period, but also to move in opposition to other major asset classes, especially stocks. So when stocks are up, I am not fazed if my managed futures are down. And, when stocks are down, I am thankful when my managed futures are up. If both asset classes earn 6 to 9% over a long period of time, I’m happy.

So, call it … passive investing with a steroid twist.

Assessment

So I stand by my commitment to passive investing. It’s based on research suggesting that timing the markets is a loser’s game.

Yet part of passive investing is having a fully diversified portfolio. This includes having a small portion—20% or less—in mutual funds with disciplined, successful active managers. My job is to research and find those managers. Then it’s okay to let them time their hearts out. I just make sure I don’t try to time the timers.

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Dr. Marcinko Interviewed on Physician Retirement and Succession Planning

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Physicians Have Unique Challenges, Opportunities

By Ann Miller RN MHA

[Executive-Director]

Medical Executive-Post Publisher-in-Chief, Dr. David Edward Marcinko MBA CMP™, and financial planner Paul Larson CFP™, were interviewed by Sharon Fitzgerald for Medical News, Inc. Here is a reprint of that interview.

Doctors Squeezed from both Ends

Physicians today “are getting squeezed from both ends” when it comes to their finances, according Paul Larson, president of Larson Financial Group. On one end, collections and reimbursements are down; on the other end, taxes are up. That’s why financial planning, including a far-sighted strategy for retirement, is a necessity.

Larson Speaks

“We help these doctors function like a CEO and help them quarterback their plan,” said Larson, a Certified Financial Planner™ whose company serves thousands of physicians and dentists exclusively. Headquartered in St. Louis, Larson Financial boasts 19 locations.

Larson launched his company after working with a few physicians and recognizing that these clients face unique financial challenges and yet have exceptional opportunities, as well.

What makes medical practitioners unique? One thing, Larson said, is because they start their jobs much later in life than most people. Physicians wrap up residency or fellowship, on average, at the age of 32 or even older. “The delayed start really changes how much money they need to be saving to accomplish these goals like retirement or college for their kids,” he said.

Another thing that puts physicians in a unique category is that most begin their careers with a student-loan debt of $175,000 or more. Larson said that there’s “an emotional component” to debt, and many physicians want to wipe that slate clean before they begin retirement saving.

Larson also said doctors are unique because they are a lawsuit target – and he wasn’t talking about medical malpractice suits. “You can amass wealth as a doctor, get sued in five years and then lose everything that you worked so hard to save,” he said. He shared the story of a client who was in a fender-bender and got out of his car wearing his white lab coat. “It was bad,” Larson said, and the suit has dogged the client for years.

The Three Mistake of Retirement Planning

Larson said he consistently sees physicians making three mistakes that may put a comfortable retirement at risk.

  1. The first is assuming that funding a retirement plan, such as a 401(k), is sufficient. It’s not. “There’s no way possible for you to save enough money that way to get to that goal,” he said. That’s primarily due to limits imposed by the Internal Revenue Service, which allows a maximum contribution of $49,000 annually if self-employed and just $16,500 annually until the age of 50. He recommends that physicians throughout their career sock away 20 percent of gross income in vehicles outside of their retirement plan.
  2. The second common mistake is making investments that are inefficient from a tax perspective. In particular, real estate or bond investments in a taxable account prompt capital gains with each dividend, and that’s no way to make money, he said.
  3. The third mistake, and it’s a big one, is paying too much to have their money managed. A stockbroker, for example, takes a fee for buying mutual funds and then the likes of Fidelity or Janus tacks on an internal fee as well. “It’s like driving a boat with an anchor hanging off the back,” Larson said.

Marcinko Speaks

Dr. David E. Marcinko MBADr. David E. Marcinko MBA MEd CPHQ, a physician and [former] certified financial planner] and founder of the more specific program for physician-focused fiduciary financial advisors and consultants www.CertifiedMedicalPlanner.org, sees another common mistake that wreaks havoc with a physician’s retirement plans – divorce.

He said clients come to him “looking to invest in the next Google or Facebook, and yet they will get divorced two or three times, and they’ll be whacked 50 percent of their net income each time. It just doesn’t make sense.”

Marcinko practiced medicine for 16 years until about 10 years ago, when he sold his practice and ambulatory surgical center to a public company, re-schooled and retired. Then, his second career in financial planning and investment advising began. “I’m a doctor who went to business school about 20 years ago, before it was in fashion. Much to my mother’s chagrin, by the way,” he quipped. Marcinko has written 27 books about practice management, hospital administration and business, physician finances, risk management, retirement planning and practice succession. He’s the founder of the Georgia-based Institute of Medical Business Advisors Inc.

ECON

Succession Planning for Doctors

Succession planning, Marcinko said, ideally should begin five years before retirement – and even earlier if possible. When assisting a client with succession, Marcinko examines two to three years of financial statements, balance sheets, cash-flow statements, statements of earnings, and profit and loss statements, yet he said “the $50,000 question” remains: How does a doctor find someone suited to take over his or her life’s work? “We are pretty much dead-set against the practice broker, the third-party intermediary, and are highly in favor of the one-on-one mentor philosophy,” Marcinko explained.

“There is more than enough opportunity to befriend or mentor several medical students or interns or residents or fellows that you might feel akin to, and then develop that relationship over the years.” He said third-party brokers “are like real-estate agents, they want to make the sale”; thus, they aren’t as concerned with finding a match that will ensure a smooth transition.

The only problem with the mentoring strategy, Marcinko acknowledged, is that mentoring takes time, and that’s a commodity most physicians have too little of. Nonetheless, succession is too important not to invest the time necessary to ensure it goes off without a hitch.

Times are different today because the economy doesn’t allow physicians to gradually bow out of a practice. “My overhead doesn’t go down if I go part-time. SO, if I want to sell my practice for a premium price, I need to keep the numbers up,” he noted.

Assessment

Dr. Marcinko’s retirement investment advice – and it’s the advice he gives to anyone – is to invest 15-20 percent of your income in an Vanguard indexed mutual fund or diversified ETF for the next 30-50 years. “We all want to make it more complicated than it really is, don’t we?” he said.

QUESTION: What makes a physician moving toward retirement different from most others employees or professionals? Marcinko’s answer was simple: “They probably had a better shot in life to have a successful retirement, and if they don’t make it, shame on them. That’s the difference.”

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But …. enough about me!

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Dr. David Edward Marcinko MBA

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DEM 2013

AMA News:

Goodwill hunting – what’s your medical practice worth?

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Best practices can help hospitals in recession

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Arkansas Medical News Interviews Dr. Marcinko

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Morgan Stanley Peddled Security Its Own Employee Called ‘Nuclear Holocaust’

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An Explosive Charge
By Jesse Eisinger Pro Publica
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A new lawsuit suggests employees at Morgan Stanley understood the housing market was in trouble and exploited that knowledge to bet against securities and unload garbage investments on the unsuspecting.

The bank denies wrongdoing.

Bank

Link: Explosive Charge: Morgan Stanley Peddled Security Its Own Employee Called ‘Nuclear Holocaust’

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A Brief Interview on Investing with Dr. David E. Marcinko MBA CMP™

On Opportunities for Risk Tolerant and Investment Minded Physicians

Sponsored by: www.CertifiedMedicalPlanner.org

By Hope R. Hetico RN MHA [Managing Editor]

This is my second interview with ME-P Founder and Publisher-in-Chief, David Edward Marcinko. Our first formal interview was during the Thanksgiving weekend of 2007. I caught up with him recently on client engagements, in Chicago, Illinois.

And, while he may not always be right; he is never equivocal with his opinions, and is always passionate about them.

HETICO: Well, David, what have you been up to since our last interview?

MARCINKO: The usual; writing, editing, teaching, speaking, consulting engagements and servicing private clients. All noted on this blog forum, of course.

HETICO: So, refresh our readers, and tell us a little bit about yourself

MARCINKO: A doctor, surgeon, and bone and joint lower extremity specialist by training, I took down my medical shingle in 2000 and sold my ASC to become a full-time health 2.0 consultant that never looked back. I’ve also got an MBA degree in marketing and micro-economics, and was a registered BD representative, RIA rep, insurance agent, Series #7, #63 and #65 licensee and, certified financial planner for almost 15 years before eschewing them all. I then started the www.CertifiedMedicalPlanner.com online educational and certification program for physician focused financial advisors and fiduciary medical management consultants. My CV, fingerprints and DNA, are all over this e-publication.

HETICO: So, back on point. What is your investment style and where do you see market opportunities today?

MARCINKO: I am a non-conformist and contrarian by nature; when others zig; I zag. I use ETFs and index funds, and as a strategic investor have a personal ten-year time line, at least. I like cash-on-hand, too.

HETICO: I know you like international investing; when did this proclivity start.

MARCINKO: I did very well investing in long term Federal and state municipal bonds back in the early 1980’s. This was against the investment advice of everyone I spoke to at the time; except my mother – a banker. Interest rates were sky-high, so listening to her was a no-brainer. I then saw an international opportunity right after the Asian contagion crisis back in 1997-98. I lost a bit with Japan, but more than made up most everywhere else. I’m still underweighted in the US, and must admit, I missed the bottom-feeder boat domestically back during the flash-crash of 2008.

HETICO: How have your international products changed over time?

MARCINKO: I used ADRs and index funds, at first, mostly Vanguard. But, I moved to ETFs as they emerged. I stay away from individual foreign or international stocks

HETICO: What kind of foreign assets do you prefer?

MARCINKO: Equities strictly; no foreign bonds or currencies.

HETICO: What about gold?

MARCINKO: Nope, missed the run-up, but I hate commodities based solely on the supple-demand curve.

HETICO: What parts of the world do you see as hot investing opportunities, right now?

MARCINKO: The Middle-East, and Singapore which provide higher dividend returns than most US equities. I’m patiently waiting for Europe to implode.

HETICO: What kind of research do you do?

MARCINKO: I read everything written and online, but try to follow the massive macro-economic trends and demographics. For example, now is not the time to invest in US bonds as IRs are near historical lows, and cannot go much further, I think.

HETICO: Any other domestic opportunities?

MARCINKO: Not that I can see. Horde cash! Maybe domestic equity based REITs with the real estate lows.

HETICO: How often do you adjust your portfolio?

MARCINKO: Every 3-5 years I might buy if the opportunity [screams] presents itself. Generally, we never sell.

HETICO: Do you believe in asset allocation and balanced investment portfolios?

MARCINKO: No. It is the surest way I know to mediocre returns.

HETICO: Do you believe in dollar cost averaging?

MARCINKO: No, it is a theoretical artifice – merely a mechanism to “keep you in the game” so that mutual fund companies, SBs and BDs, RIAs, IAs and FAs can earn commissions, trails, 12b-1 fees and/or AUM percentage revenues, etc. It gets and keeps [your] money rolling into their coffers. And,  it smooths out their cash flow. Remember, DCA is a no brainer – and it is fit for those with no brains.

HETICO: What is your forecast for 2012?

MARCINKO: I’m with Bill Gross, who runs the world’s biggest bond fund at PIMCO, and thinks the global economy and financial markets are at risk in 2012.

HETICO: If you and Bill are correct, what will you do?

MARCINKO: Yawn!

HETICO: Who is your favorite health economist?

MARCINKO: Noble prize winner Ken Arrow PhD, of course. He is the god-father of the industry.

HETICO: Where do you see yourself in 5 or 10 years; or thereafter?

MARCINKO: Well, in five years my daughter will be out of college. In ten years, I see myself doing the same things I do now. And, I just love my engaged clients at: www.MedicalBusinessAdvisors.com Then, perhaps some private philanthropy work.

HETICO: Who is your financial investing hero?

MARCINKO: My colleague and former hedge fund manager Mike Burry, MD.

Link: https://medicalexecutivepost.com/2010/03/24/video-on-hedge-fund-manager-michael-burry-md/

Assessment

Thank you; David!

Conclusion

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How Investment Professionals Evaluate Time Periods for Portfolio Comparison

On Capturing a Full Range of Market Environments

By Dr. David Edward Marcinko MBA, CMP™

[Publisher-in-Chief]

What is the appropriate time period for portfolio growth comparison? 

Performance measurements over trailing calendar periods, such as the last one, three, five or 10 years, are often used in the mutual fund and investment industry.  While three-to-five-to-ten years may seem like a long enough time for an investment strategy to show its value added, these time periods will often be dominated by either a bull or bear market environment, and/or a large cap or small cap dominated environment, etc. 

Market Cycles

One way to lessen the possibility of the market environment biasing a performance comparison is to focus on a time period that captures full range of market environments; a market cycle. 

The market cycle is defined as a market peak, with high investor confidence and speculation, through a market trough, in which investor bullishness and speculation subsides, to the next market peak. 

A bull market is a market environment of generally rising prices and investor optimism.  While there have been several definitions of a bear market based upon market returns (e.g., a decline of –15 percent or more, two consecutive negative quarters, etc.), the idea implied by its name is a period of high pessimism and sustained losses. 

Thus, one returns-based rule-of-thumb that can be used to identify a bear market is a negative return in the market that takes at least four quarters to overcome. 

http://www.amazon.com/Financial-Planning-Handbook-Physicians-Advisors/dp/0763745790/ref=sr_1_1?ie=UTF8&s=books&qid=1276795609&sr=1-1

Assessment

The stock market has been booming lately. Up almost 100% since March 2009, after being down almost 50%. And so, perhaps this is a good time to re-evaluate the performance of your investment portfolio[s].

And so, by examining performance over a full market cycle, there is a greater likelihood that short-term market dislocations like the “flash crash” of 2009 will not bias the performance comparison.

Conclusion

Your thoughts and comments on this ME-P are appreciated. What is your time period for portfolio evaluation? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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Introducing Dr. Joshua Goldman MBA

Meet Our Newest ME-P “Thought-Leader”

By Ann Miller RN, MHA

Joshua Goldman, MD, MBA is a resident physician at the University of California, Los Angeles pursuing post-graduate training in family medicine with subsequently plans to complete a Sports Medicine fellowship. He attended graduate school at the University of Southern California, completing his Medical Degree at the Keck School of Medicine concurrent with his Master of Business Administration at the Marshall School of Business. He is functioning as the Director of Strategy for Insight Oncology, an oncology consulting and management firm.

USC Days

While at USC, Josh served as the student body President of the Keck School of Medicine, a teaching assistant in the department of Anatomy and Physiology and held board positions at the USC Stevens Institute for Innovation, the Biomedical Association at the Marshall School of Business, and the Curriculum Committee at the Keck School of Medicine. He was selected as the Keck School of Medicine Student Teacher of the Year for 2009-2010. He has also served as the Vice President of the American Cancer Society at the University of California, Los Angeles. He completed an internship with the Cedars-Sinai Orthopedic Center Trauma Team and with the University of Southern California Athletic Department’s Team Physicians, working with the USC Trojan Football team during their summer training camp.

Undergraduate Days

Joshua received his Bachelor of Science degree from the University of California, Los Angeles in 2005 graduating Magna cum Laude and Phi Beta Kappa with a major in Psychobiology and a minor in English Literature. While at UCLA, Josh was a member of the men’s crew team.

A PE Devotee’

Joshua is very physically active, weight training or running daily. He is also an aspiring tri-athlete, training both on a bike and in the water recently. He also enjoys playing football, tennis, beach volleyball and sailing in his free time in between his many home improvement projects.

Website

Josh is also the Founder and CEO of: www.MyHouseCallMD.com

Conclusion

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Disorganization at Banks

Causing Mistaken Foreclosures

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By Paul Kiel, ProPublica – May 4, 2010 9:20 pm EDT

Millions of people face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.

ProPublica is matching local journalists with homeowners having trouble getting loan mods.

Are you a homeowner with a story to tell?
Are you a reporter and want to cover it?

Sometimes the communication breakdown within the banks is so complete that it leads to premature or mistaken foreclosures. Some homeowners, with the help of an attorney or housing counselor, have eventually been able to reverse a foreclosure. Others have lost their homes.

“We believe in many cases people are losing their homes when they should not have,” said Kevin Stein, associate director of the California Reinvestment Coalition, which counts dozens of nonprofits that work with homeowners among its members.

In the worst breakdowns, banks — and other companies that service loans — actually work at cross-purposes, with one arm of the company foreclosing on the home while the other offers help. Servicers say such mistakes are rare and result from the high volume of defaults and foreclosures.

The problems happen even among servicers participating in the administration’s $75 billion foreclosure-prevention program [1]. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending. It happens anyway.

Consumer advocates say the lapses continue because they go unpunished. “We’ve had too much of the carrot, and we need a stick,” Stein says. The Treasury Department has yet to penalize a servicer for breaking the program’s rules. The program provides federal subsidies to encourage modifications.

Treasury officials overseeing the program say they’re aware of the problems and have moved to fix them. But some states are going further to protect homeowners, with recent rules that stop the foreclosure process if the homeowner requests a modification.

Many homeowners, seeing no other option, have gone to court to reclaim their homes. At least 50 homeowners have recently filed lawsuits alleging the servicer foreclosed with a loan mod request pending or even while they were on a payment plan.

Homeowners have long waits for help

In good times, banks and other servicers — Bank of America is the biggest, followed by Chase and Wells Fargo — were known mainly to homeowners simply as where they sent their monthly mortgage payments. But the companies have been deluged over the past couple of years by requests for help from millions of struggling homeowners.

Homeowners commonly wait six months for an answer on a loan mod application. The federal program for encouraging loan mods includes a three-month trial period, after which servicers are supposed to decide whether to make the modifications permanent. But some homeowners have waited as long as 10 months [2] for a final answer.

Communication breakdowns occur because of the way the servicers are structured. One division typically deals with modifications and another with foreclosures. Servicers also hire a local trustee or attorney to actually pursue foreclosure.

“Often they just simply don’t communicate with each other,” said Laurie Maggiano, the Treasury official in charge of setting policy for the modification program. Such problems were particularly bad last summer, in the first few months of the program, she said. “Basically, you have the right hand at the mortgage company not knowing what the left hand is doing,” said Mark Pearce, North Carolina’s deputy commissioner of banks. Communication glitches and mistakes are “systemic, more than anecdotal” among mortgage servicers, he said.

“We’ve had cases where we’ve informed the mortgage company that they’re about to foreclose on someone.” The experience for the homeowner, he said, can be “Kafkaesque.”

“We’re all human, and the servicers are overworked and trying their best,” said Vicki Vidal, of the Mortgage Bankers Association. She said foreclosure errors are rare, particularly if struggling homeowners are prompt in contacting their servicer.

The Human Face

Frances Gomez, of Tempe, Ariz., lived in her house for over 30 years. Three years ago, she refinanced it with Countrywide, now part of Bank of America, for nearly $300,000. The home’s value has declined dramatically, said Gomez, who put some of the money from the refinancing into her hair salon.

Last year, the recession forced her to close her shop. Gomez fell behind on her mortgage, and after striking out with a company that promised to work with Bank of America to get her a loan mod, she learned in December that her home was scheduled for foreclosure.

So Gomez applied herself. She twice succeeded in getting Bank of America to postpone the sale date and said she was assured it would not happen until her application was reviewed. Gomez had opened a smaller salon and understood there was a good chance she would qualify.

She was still waiting in March when a Realtor, representing the new owner of her home, showed up. Her house had sold at auction — for less than half of what Gomez owed. “They don’t give you an opportunity,” she said. “They just go and do it with no warning.”

It’s not supposed to work that way.

Federal Programs

Under the federal program, which requires servicers to follow a set of guidelines for modifications, servicers must give borrowers a written denial before foreclosing. When Gomez called Bank of America about the sale, she said she was told there was a mistake but nothing could be done. She did get a denial notice [3] — some three weeks after the house was sold and just days before she was evicted.

“I just want people to know what they’re doing,” Gomez, now living with family members, said.

After being contacted by ProPublica, Bank of America reviewed Gomez’s case. Bank spokesman Rick Simon acknowledged that Gomez might not have been told her house would be sold and that the bank made a mistake in denying Gomez, because it did not take into account the income from her new salon business. Simon said a Bank of America representative would seek to negotiate with the new owner of Gomez’s house to see if the sale could be unwound.

Simon said the bank regrets when such mistakes happen due to the “very high volume” of cases and that any errors in Gomez’s case were “inadvertent.”

Timeline: How Michael Hill Almost Lost His Home [4]

Even avoiding a mistaken sale can also be a stressful process.

One day in February, a man approached Ron Bermudez of Emeryville, Calif., in front of his house and told him his home would be sold in a few hours. This came as a shock to Bermudez; Bank of America had told him weeks prior that he’d been approved for a trial modification and the papers would soon arrive. He made a panicked phone call to an attorney, who was able to make sure there was no auction.

Last November, Michael Hill of Lexington, S.C., finally got the call he’d been waiting for. Congratulations, a rep from JPMorgan Chase told him, your trial mortgage modification is approved. Hill’s monthly payment, around $900, would be nearly halved.

Except there was a problem. Chase had foreclosed on Hill’s home a month earlier, and his family was just days away from eviction.

“I listened to her and then I just said, ‘Well, that sounds good,’” recalled Hill, who is married and has two children. “‘Tell me how we’re going to do this, seeing as how you sold the house.’” That, he found out, was news to Chase.

Hill was able to avoid eviction — for now. Chase reversed the sale by paying the man who’d bought the home an extra $19,500 on top of the $86,000 [5] he’d paid at the auction.

After the mistaken foreclosure, he began the trial modification last December. He made those payments, but two months after his trial period was supposed to end, Hill is still waiting for a final answer from Chase.

The miscommunications have continued. He received a letter in January saying that he’d been approved for a permanent modification, but he was then told he’d received it in error.

His family remains partially packed, ready to move should the modification not go through. “I’m on pins and needles every time someone’s knocking on the door or calling,” he said.

Christine Holevas, a Chase spokeswoman, said that Chase had “agreed with Hill’s request to rescind the foreclosure” and was “now reviewing his loan for permanent modification.” She said Chase services “more than 10 million mortgages — the vast majority without a hitch.”

HOPE Hotline

To contest a foreclosure under the federal program, Maggiano, the Treasury official, said a homeowner should call the HOPE Hotline, 888-995-HOPE, a Treasury Department-endorsed hotline staffed by housing counselors. Those counselors can escalate the case if the servicer still won’t correct the problem, she said.

That escalation process has saved “a number” of homeowners from being wrongfully booted out of their homes, Maggiano said. Hill, the South Carolina homeowner, is an example of someone helped by the HOPE Hotline.

Of course, the homeowner must know about the hotline to call it. Gomez, the Arizona homeowner who lost her home to foreclosure, said she’d never heard of it.

Many homeowner advocates say the government’s effort has been largely ineffective at resolving problems with servicers.

“I uniformly hear from attorneys and counseling advocates on the ground that the HOPE Hotline simply parrots back what the servicers have said,” said Alys Cohen, an attorney with the National Consumer Law Center. Cohen said she’d voiced her concerns with Treasury officials, who indicated they’d make improvements.

Bank

New rules to offer more protection

Under the current rules for the federal program, servicers have been barred from conducting a foreclosure sale if the homeowner requested a modification, but are allowed to push along the process, even set a sale date. That allows them to foreclose more quickly if they determine the homeowner doesn’t qualify for a modification.

As a result, a homeowner might get a modification offer one day and a foreclosure notice the next. As of March, servicers were pursuing foreclosure on 1.8 million residences, according to LPS Applied Analytics.

Maggiano, the Treasury official, said that’s been confusing for homeowners. Some “just got discouraged and gave up.”

New rules issued by the Treasury in March say the servicer must first give the homeowner a shot at a modification before beginning the process that leads to foreclosure.

They also require the servicer to adopt new policies to prevent mishaps. For instance, the servicer will be required to provide a written certification to its attorney or trustee that the homeowner does not qualify for the federal program before the house can be sold.

Maggiano said the changes resulted from visits to the servicers’ offices last December that allowed Treasury officials to “much better understand (their) inner workings.”

The rules, however, don’t take effect until June. Nor do they apply to hundreds of thousands of homeowners seeking a modification for whom the process leading to foreclosure has already begun. And Treasury has yet to set any penalties for servicers who don’t follow the rules.

Maggiano said Treasury’s new rule struck a balance to help homeowners who were responsive to servicer communications to stay out of foreclosure while not introducing unnecessary delays for servicers. Some borrowers don’t respond at all to offers of help from the servicers until they’re faced with foreclosure, she said.

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States Differ

Some states, such as North Carolina, have recently gone further to delay moving toward foreclosure if a homeowner requests a modification. State regulators there passed a law that requires a servicer to halt the process if a homeowner requests a modification.

Pearce, the North Carolina official, said the rule was prompted by the delays homeowners have been facing and puts the burden on the servicers to expeditiously review the request. “They’re in total control.”

Stopping the process not only removes the possibility of a sudden foreclosure, he said, but also stops the accumulation of fees, which build up and can add thousands to the homeowner’s debt as the servicer moves toward foreclosure.

In California, state Sen. Mark Leno, a Democrat from San Francisco, is pushing a bill that would do something similar. The servicers “should be working a lot harder to keep homeowners in their home,” he said.

Assessment

Original article: http://www.propublica.org/feature/disorganization-at-banks-causing-mistaken-foreclosures-050410

Conclusion

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FINANCE: Financial Planning for Physicians and Advisors
INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

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Video on Hedge Fund Manager Michael Burry MD

In The Subprime of His Life – My Story

By Dr. David Edward Marcinko MBA, CMP™

[Editor-in-Chief]

I am a long time fan of financial industry journalist Michael Lewis [Liars’ Poker, Moneyball and others] who just released a new book. The Big Short is a chronicle of four players in the subprime mortgage market who had the foresight [and testosterone] to short the diciest mortgage deals: Steve Eisner of FrontPoint, Greg Lippmann at Deutsche Bank, the three partners at Cornwall Capital, and most indelibly, Wall Street outsider Michael Burry MD of Scion Capital.

They all walked away from the disaster with pockets full of money and reputations as geniuses.

About Mike

Now, I do not know the first three folks, but I do know a little something about my colleague Michael Burry MD; he is indeed a very smart guy. Mike is a nice guy too, who also has a natural writing style that I envy [just request and read his quarterly reports for a stylized sample]. He gave me encouragement and insight early in my career transformation – from doctor to “other”.

And, he confirmed my disdain for the traditional financial services [retail sales] industry, Wall Street and their registered representatives and ‘training’ system, and sad broker-dealer ethos [suitability versus fiduciary accountability] despite being a hedge fund manager himself.

I mentioned him in my book: “Insurance and Risk Management Strategies” [For Physicians and their Advisors].

http://www.amazon.com/Insurance-Management-Strategies-Physicians-Advisors/dp/0763733423/ref=sr_1_2?ie=UTF8&s=books&qid=1269254153&sr=1-2

He ultimately helped me eschew financial services organizations, “certifications”, “designations” and ”colleges”, and their related SEO rules, SEC regulations and policy wonks; and above all to go with my gut … and go it alone!

And so, I rejected my certified financial planner [marketing] designation status as useless for me, and launched the www.CertifiedMedicalPlanner.org on-line educational program for physician focused financial advisors and management consultants interested in the healthcare space … who wish to be fiduciaries.

And I thank Mike for the collegial good will. By the way, Mike is not a CPA, nor does he posses an MBA or related advanced degree or designation. He is not a middle-man FA. He is a physician. Unlike far too many other industry “financial advisors” he is not a lemming.

IOW: We are not salesman. We are out-of-the-box thinkers, innovators and contrarians by nature. www.MedicalBusinessAdvisors.com

From a Book Review

According to book reviewer Michael Osinski, writing in the March 22-29 issue of Businessweek.com, Lewis is at his best working with characters and Burry is rendered most vividly.

A loner from a young age, in part because he has a glass eye that made it difficult to look people in the face, Burry excelled at topics that required intense and isolated concentration. Originally, investing was just a hobby while he pursued a career in medicine. As a resident neurosurgeon at Stanford Hospital in the late 1990s, Burry often stayed up half the night typing his ideas onto a message board. Unbeknownst to him, professional money managers began to read and profit from his freely dispensed insight, and a hedge fund eventually offered him $1 million for a quarter of his investment firm, which consisted of a few thousand dollars from his parents and siblings. Another fund later sent him $10 million”.

“Burry’s obsession with finding undervalued companies eventually led him to realize that his own home in San Jose, Calif., was grossly overpriced, along with houses all over the country. He wrote to a friend: “A large portion of the current [housing] demand at current prices would disappear if only people became convinced that prices weren’t rising. The collateral damage is likely to be orders of magnitude worse than anyone now considers.” This was in 2003.

“Through exhaustive research, Burry understood that subprime mortgages would be the fuse and that the bonds based on these mortgages would start to blow up within as little as two years, when the original “teaser” rates expired. But Burry did something that separated him from all the other housing bears—he found an efficient way to short the market by persuading Goldman Sachs (GS) to sell him a CDS against subprime deals he saw as doomed. A unique feature of these swaps was that he did not have to own the asset to insure it, and over time, the trade in these contracts overwhelmed the actual market in the underlying bonds”.

“By June 2005, Goldman was writing Burry CDS contracts in $100 million lots, “insane” amounts, according to Burry. In November, Lippmann contacted Burry and tried to buy back billions of dollars of swaps that his bank had sold. Lippmann had noticed a growing wave of subprime defaults showing up in monthly remittance reports and wanted to protect Deutsche Bank from potentially massive losses. All it would take to cause major pain, Lippmann and his analysts deduced, was a halt in price appreciation for homes. An actual fall in prices would bring a catastrophe. By that time, Burry was sure he held winning tickets; he politely declined Lippmann’s offer”

And the rest, as they say, is history.

Link: http://www.businessweek.com/magazine/content/10_12/b4171094664065.htm

My Story … Being a Bit like Mike

I first contacted Mike, by phone and email, more than a decade ago. His hedge fund, Scion Capital, had no employees at the time and he outsourced most of the front and back office activities to concentrate on position selection and management. Early investors were relatives and a few physicians and professors from his medical residency days. Asset gathering was a slosh, indeed. And, in a phone conversation, I remember him confirming my impressions that doctors were not particularly astute investors. For him, they generally had sparse funds to invest as SEC “accredited investors” and were better suited for emerging tax advantaged mutual funds. ETFs were not significantly on the radar screen, back then, and index funds were considered unglamorous. No, his target hedge-fund audience was Silicon Valley.

And, much like his value-hero Warren Buffett [also a Ben Graham and David Dodd devotee], his start while from the doctor space, did not derive its success because of them.

Moreover, like me, he lionized the terms “value investing”, “margin of safety” and “intrinsic value”.

Co-incidentally, as a champion of the visually impaired, I was referred to him by author, attorney and blogger Jay Adkisson www.jayadkisson.com Jay is an avid private pilot having earned his private pilot’s license after losing an eye to cancer.

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Mike again re-entered my cognitive space while doing research for the first edition of our successful print book: “Financial Planning Handbook for Physicians and Advisors” and while searching for physicians who left medicine for alternate careers!

In fact, he wrote the chapter on hedge funds in our print journal and thru the third book edition before becoming too successful for such mundane stuff. We are now in our fourth edition, with a fifth in progress once the Obama administration stuff [healthcare and financial services industry “reform” and new tax laws] has been resolved

http://www.amazon.com/Financial-Planning-Handbook-Physicians-Advisors/dp/0763745790/ref=sr_1_1?ie=UTF8&s=books&qid=1269211056&sr=1-1

Assessment

News: Dr. Burry appeared on 60 Minutes Sunday March 14th, 2010. His activities with Scion Capital are portrayed in Michael Lewis’s newest book, The Big Short.  An excerpt is available in the April 2010 issue of Vanity Fair magazine, and at VanityFair.com 

Video of Dr. Burry: http://www.cbsnews.com/video/watch/?id=6298040n&tag=contentBody;housing

Video of Dr. Burry: http://www.cbsnews.com/video/watch/?id=6298038n&tag=contentBody;housing

PS: Michael Osinski retired from Wall Street and now runs Widow’s Hole Oyster Co. in Greenport, NY http://www.widowsholeoysters.com

And, our www.MedicalBusinessAdvisors.com related books can be reviewed here: http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=david+marcinko

Assessment

Visit Scion Capital LLC and tell us what you think http://www.scioncapital.com.

And to Mike himself, I say “Mazel Tov” and congratulations? I am sure you will be a good and faithful steward. The greatest legacy one can have is in how they treated the “little people.” You are a champ. Call me – let’s do lunch. And, I am still writing: www.BusinessofMedicalPractice.com for the conjoined space we both LOVE.

Conclusion

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

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

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

[Dr. Cappiello PhD MBA] *** [Foreword Dr. Krieger MD MBA]

***

A Doctor – Economist’s Solution for Health Reform

My Laundry Wish List for all US Healthcare Stakeholders

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]Fox News

As President Obama speaks, prods and cajoles, and Congress returns to session to begin work again on HR 3200-3400 or similar, I believe that for any healthcare reform effort to work successfully for the American people – not necessarily be adopted – we need to consider the following in no particular prioritized order:

  • Insurance portability uncoupled from patient employment
  • Health insurance regional exchanges with inter-state purchase competition
  • Doctor, drug, DME and hospital pricing and payment transparency for HSAs, and all of us
  • Modifying or eliminating AMA owned CPT Codes®; a huge money maker for them
  • Abandoning ala’ carte medicine for values-based outcomes
  • Reduce JCAHO influence; encourage competition from Norwegian Det Norske Veritas [DNV]
  • Reduce big-pharma influence thru-out the entire medical education, career and care pipeline
  • End DTC advertising from big-pharma
  • Promote wholesale drug purchase competition, MC bidding and generic drugs
  • Encourage evidence-based medicine, not expert-based medicine
  • Less pay for medical specialists with a  re-evaluation of the hospitalist concept
  • Advance the dying art of physical diagnosis, teach and embrace Paretto’s 80/20 rule for clinic issues
  • Reduce lab test, diagnostic imaging and testing
  • Encourage private 24/7/365 medical offices and clinics; and on-site and retail clinics
  • Abandon P4P, medical homes and disease management ideas
  • Give more economic skin-in-game to patients relative to health benchmarks
  • Concretize the “never-event” prohibitions and include a list of patient health responsibilities
  • More pay for primary care docs and internists
  • Adopt digital records and cloud computing for patients
  • Phase in true eHRs incrementally; and abandon CCHIT for open source SaaS
  • Promote Health 2.0 social media.
  • Augmented scope of practice, numbers and pay for NPs and DNPs, etc
  • Reduce pay for CRNAs and increase it for staff RNs
  • Develop step down triage and treatment units to reduce the number of full service ERs
  • Increase medical, osteopathic, dental, optometric and podiatric medical school classes
  • Increased practice scope for dentists, podiatrists and optometrists
  • Make some sort of catastrophic HI mandatory, much like auto insurance for all
  • End pre-existing conditon health insurance contract clauses
  • More choice  and end of life control for the terminally ill patient
  • Increase marketplace competition with fewer political and financial “externalities”.
  • Teach basic healthcare topics in school and encourage physical exercise
  • Health and insurance education should be, but is not, the “answer” for Americans
  • Protect borders and discourage undocumented illegals
  • Adopt medical malpractice tort reform
  • Make all stakeholders fiduciaries 
  • No public “option” unless you like food stamps, Section 8 housing, public transportation and schools
  • Budget deficit neutrality
  • Joe Wilson is both a bright guy – and a jerk
  • Slow down!

Assessment

Recently, while in the Baltimore/Washing area, I was asked by several reporters to opine on the healthcare debate; which I did so freely having never been known as the shy type. And, regular readers will note that many of these items have been used as posts or comments on this ME-P. Unfortunately, my “laundry list” interview was pre-empted by two local but boisterous town-hall meetings with respective passionate politicians. It was redacted no doubt, but never broadcast. Thus, I missed the potential for my “five minutes” of fame. C’est la vive!

Conclusion

There you have it; direct and straight forward. And so, your thoughts and comments on this Medical Executive-Post 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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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com 

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Borges versus Kvedar Video eHR Debate

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The Great HIT Debate

[By Staff Reporters]Boxing Gloves

All ME-P subscribers and readers are invited to watch a debate between Dr. Alberto Borges and Dr. Joseph Kvedar. In the original broadcast, by HCPLive, both participants were asked some very interesting questions about health information technology [HIT] when posed to them. And so, if you were unable to attend the live event, it is now re-broadcasted in podcast form for your review.

About Alberto A. Borges; MD

Al Borges is Founder and CEO of the MS Office eMR Project http://www.msofficeemrproject.com He is the project author, visionary and main content developer for the independent website. As a board certified physician, he practices oncology, hematology, and internal medicine in Arlington, Virginia. He is also a clinical professor at the George Washington University Medical School. Dr. Borges is a colleague and thought-leader for the ME-P

About Joseph C. Kvedar; MD

Joe Kvedar is the Founder and Director of the Center for Connected Health http://www.connected-health.org The Center is known for applying communications technology and online resources to increase access and improve the delivery of quality medical services and patient care outside of the traditional medical setting.  A division of Partners HealthCare; the Center for Connected Health works with Harvard Medical School-affiliated teaching hospitals, including Massachusetts General and Brigham and Women’s Hospitals. Dr. Kvedar is also a board-certified dermatologist and Associate Professor of Dermatology at Harvard Medical School

Podcast Link: http://www.hcplive.com/hcplive/great_debate

Assessment

Feel free to email questions, or to post follow-up comments, for all our viewers to consider and respond. The principals are asked to weigh-in, as well.

And the Winner is … ?

Conclusion

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

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About the MS Office® eMR Project

Programming a Powerful eMR – or – Jumping the Shark?

By Ann Miller; RN, MHA

Recently we communicated with Al Borges MD, founder of the Office eMR Project. He is quite an innovative guy. His passion – eMRs for the physician masses – through an infra-structure already largely in place?DrBHP2

The Problem: You want to use a great eMR but you can’t afford to pay for it.

You have a growing medical office that is completely paper based, and wish to capture the efficiencies of an electronic medical record (eMR) system. But, many eMR systems on the market are complicated, expensive and have been known to actually slow down the typical office workflow. You have used the MS Office® suite of software products in the past and appreciate its power, but you don’t know how to use it to set up a great eMR that perfectly suits your needs.

An Alternative

Alternatively, you can purchase an inexpensive MS Office® based proprietary eMR, but you might wish to write an add-in to incorporate add certain features to this basic, but excellent eMR platform. So, what do [can] you do?

CCHIT Takes a Hit

http://www.emrupdate.com/blogs/emrinterviews/archive/2006/10/09/CCHIT-takes-a-hit-from-Washington_2C00_-D.C.-area-doctor-who-claims-new-certification-group-restrains-free-trade-in-EMR-_2800_Electronic-Medical-Record_2900_-software.aspx

https://healthcarefinancials.wordpress.com/2009/03/02/cchit-is-prejudiced-and-lacks-diversity-%e2%80%93-an-indictment/

A Solution: Open Source Programs

According to Dr. Borges, one may use his web site to get the answers to program your eMR. His site discusses these very issues. It is continuously growing, with a host of free programs, position papers and forum discussions that touch on a wide variety of topics. These include general information on the use of MS Office® in the medical office, programming the various components of MS Office®, and those political topics that affect how we use health information technology [HIT].

Two Program Versions

There are 2 major eMR programs available – the MS Word® eMR Project (MSWP) and the MS Access® eMR Project (MSAP). But, is the Office eMR Project of Alberto truly an interoperable solution – a digital solution – or something else?

Website: http://www.msofficeemrproject.comThe Shark

Jumping the Shark

Jumping the Shark is a phrase coined by Jon Hein and used by TV critics to denote the point in a show where the plot veers off into absurd story lines in a desperate attempt to attract viewers. Shows that have “jumped the shark” are typically deemed to have passed their peak. On the other hand, is Dr. Borges a Cassandra at his peak … who just happens to be correct? 

MSFT Discussion Groups for Al Borges, MD

http://www.microsoft.com/office/community/en-us/default.mspx?query=alborg&dg=&cat=en-us-office&lang=en&cr=US&pt=3a4e9862-cdce-4bdc-8664-91038e3eb1e9&catlist=&dglist=&ptlist=&exp=&sloc=en-us

Making eHRs Illegal?

For example, did you know that the democrats want to make use of non certified eHRs illegal in NJ? The bill allegedly provides specifically as follows:

“On or after January 1, 2011, no person or entity is permitted to sell, offer for sale, give, furnish, or otherwise distribute to any person or entity in this State a health information technology product that has not been certified by CCHIT.  A person or entity that violates this provision is liable to a civil penalty of not less than $1,000 for the first violation, not less than $2,500 for the second violation, and $5,000 for the third and each subsequent violation, to be collected pursuant to the “Penalty Enforcement Law of 1999,” P.L.1999, c.274 (C.2A:58-10 et seq.).”

Link: http://www.njleg.state.nj.us/2008/Bills/A4000/3934_I1.HTM

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Is the Office eMR Project a panacea to the eMR conundrum, or a hybrid? What about CCHIT; is it certified – does it have to be? Users and early-adopters, we need your opinions! Has the “shark been jumped” here; or not? Tell us what you think. 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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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Sponsors Welcomed

And, credible sponsors and like-minded advertisers are always welcomed.

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

Essential Insights on Successful Physician Budgeting

fp-book5Special Report for all Medical Professionals

By Dr. David Edward Marcinko; MBA

By Hope Rachel Hetico; RN, MHA

What: A Special Report Prepared upon the Request of “Podiatry Today”

Who: Dr. David E Marcinko and Hope Rachel Hetico; MHA

 

Topic: Essential Insights on Successful Budgeting

Reporter: Jeffrey Hall [Editor “Podiatry Today” Magazine]

Where: Internet Ether

Although some doctors might view a budget as unnecessarily restrictive, sticking to a spending plan can be a useful tool in enhancing the wealth of a medical practice. These authors emphasize keys to smart budgeting and how to track spending and savings in these tough economic times. The universal applicability to all doctors is obvious.

Read the Report Here

Link: http://www.podiatrytoday.com/essential-insights-on-successful-budgeting

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated?

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Interview with Jack Levy of Securebill, Inc

President – Securebill, IncMeeting

What: An Interview and Special Report Exclusively Prepared for the ME-P
Who: Mr. Jack Levy, CISSP [President – Securebill, Inc]
Topic: Physician Selection of eHRs
Reporter: Amaury Cifuentes; CFP®
Where: Internet Ether

Although skeptics of eHRs abound, President Barack H. Obama’s signing of the American Recovery and Reinvestment Act [ARRA] of 2009 has created a massive push for their implementation. The Act provides $19.2 billion, including $17.2 billion for financial incentives to be administered by Medicare and Medicaid. This assistance of up to $40 to $65 thousand per eligible physician, and up to $11 million per hospital, begins in 2011.

Link: https://healthcarefinancials.files.wordpress.com/2009/05/jack-levy-interview.pdf

Conclusion

And so, your thoughts and comments on this Medical Executive-Post 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.

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

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

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

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

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Sponsors Welcomed

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Allscript’s Glenn Tullman is Video Interviewed

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Video Clip from the HIMSS Meeting

By Ann Miller; RN, MHA

[Executive-Director]

stk323168rknThere is a major controversy in the modern healthcare community over eMRs and how to pay for them; or even if they are effective in improving medical outcomes. Of course, by eMRs we mean interoperable medical records that span the pan-healthcare ecosystem; and not just the stand-alone digital records that many, if not most, physicians use in their daily practices to some degree or another.

Link: https://healthcarefinancials.wordpress.com/2009/03/10/on-the-hitech-act-of-2009/

Proponents

As readers of the ME-P are aware, one vocal camp supports certification and eMR industry mandates, standards, and governmental initiatives, etc. The recent $20 billion taxpayer input from the Obama Administration, courtesy of HITECH, further emboldens CCHIT and related wonks.

Opponents

One the other hand, one vocal ME-P opponent is dentist Darrell Pruitt. He and many others believe that current eMRs may be too expensive, unwieldy, and counter-productive. This camp advocates a mix of other data sources, technology processes and doctor/patient education to get us where we need to be in terms of improving medial outcomes; quicker and less expensively.

Assessment

Rather than read, research and write more on this controversy, which was apparently a red-hot topic at the recent HIMSS meeting, we have embedded a video link of Glen Tullman [CEO of Allscripts] and Mark Leavitt, [Chair of CCHIT], below.

Link: https://healthcarefinancials.wordpress.com/2009/03/02/cchit-is-prejudiced-and-lacks-diversity-%e2%80%93-an-indictment/

It even includes a clip of Jonathan Bush, CEO of AthenaHealth. And, although they don’t all agree; some common ground may be developing in this controversial issue.

Source: This link originally appeared on The Health Care Blog [THCB], by Matthew Holt.

Link: http://www.thehealthcareblog.com/the_health_care_blog/2009/04/cats-and-dogs-on-film–tullman-leavitt-bush.html#comments

Disclaimer:We are members of AHIMA, HIMSS, MS-HUG and SUNSHINE. We just released the Dictionary of Health Information Technology and Security, with Foreword by Chief Medical Information Officer Richard J. Mata; MD MS MS-CIS, of Johns Hopkins University; and the second edition of the Business of Medical Practice with Foreword by Ahmad Hashem; MD PhD, who was the Global Productivity Manager for the Microsoft Healthcare Solutions Group at the time.

Conclusion

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

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

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Medical News of Arkansas Interviews Dr. Marcinko

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Current Status of Hospitals and the Economy [Op-Ed]

[By Steve Brawner]

atlanta-skylineWhat: An exclusive telephonic and email interview.

Who: Dr. David Edward Marcinko; FACFAS, MBA [Editor, administrator and health economist]

Topic: The recession and economy, hospital operations, and the Obama administration.

Where: The telephone and internet virtual ME-P ether.

Why: To forecast informed opinions and pontifications on the healthcare industrial complex.

Among the dilemmas in healthcare, we seek answers to queries like:

• When will the recession end, and how will it affect hospitals and physicians?
• What operations and organizational policies can hospitals pursue to survive?
• How will the Obama stimulus affect hospitals and healthcare organizations?

Now, in as much as this controversy affects patients, administrators, politicians, Wall Street, nurse-executives and physicians alike, we went right to the source for up-to-date information regarding this current topic.

Assessment

Get ready for this controversial [unedited] interview and Q-A session, with Dr. David Edward Marcinko; Publisher-in-Chief, of this ME-P.

Arkansas Medical News Interviews Dr. Marcinko

Read it Here: interview-dr-marcinko1

Sponsored Link: www.MedicalBusinessAdvisors.com

Conclusion

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

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

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[HOSPITAL OPERATIONS, ORGANIZATIONAL BEHAVIOR AND FINANCIAL MANAGEMENT COMPANION TEXTBOOK SET]

Product DetailsProduct Details

***

Battered Health Journalists

9 of 10 Would Repeat Career Choice

By Staff Reportersred-appple

According to the Association of Health Care Journalists on March 12, 2009 pia@healthjournalism.ccsend.com, and on behalf of the Association of Health Care Journalists news@healthjournalism.org; a new survey cited newsroom cutbacks, lack of time for research and travel, and fewer opportunities for training at their news organization as factors making their jobs more challenging than ever; so says the recently released survey in conjunction with the Kaiser Family Foundation.

Fewer Drawbacks in Health Reporting

Moreover, while about 3 in 4 respondents said that US journalism was headed in the wrong direction, just more than half felt that way about health journalism. And two-thirds of respondents said health care journalism was headed in the right direction at their media outlet.

A Hardy Career

Fortunately, health journalists are a hardy bunch. Nearly three-quarters of health journalists surveyed said the amount of coverage given to health care topics has stayed the same or increased at their news organization and two-thirds said the quality of coverage has been stable or gotten better over the past few years.

Link: http://www.healthjournalism.org/resources-articles-details.php?id=94

Assessment

Despite the challenges and the uncertain times, 88 percent of respondents said if they had to make their career choice over again they would still go into health journalism. Interestingly, that was the same percentage of respondents who said they had health insurance.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Does this positive career choice percentage for health journalists match that of physicians today? Was this career choice query even asked of doctors two decades ago?

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

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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Upcoming Health Economics Interview with Dr. David Marcinko

Coming Soon from Medical Business News, Inc

By Ann Miller; RN, MHA

ME-P Executive-Directordr-david-marcinko22

Medical Business News, Inc., the publisher of Medical News of Arkansas, is a leading source for healthcare industry news that is truly useful. With a professional readership comprised of physicians and key industry decision makers, Medical News publications are devoted entirely to healthcare issues that impact both clinical and administrative best practices. Written and edited specifically for healthcare professionals, MBN writers work with experts at the local, regional and national level to keep stakeholders informed about the ever-evolving healthcare system.

Out Reach

It is no wonder then, why local market MNA editor Jennifer Boulden recently contacted us to arrange an interview with Dr. David Edward Marcinko, our Publisher-in-Chief, who is also a former insurance agent, registered investment advisor, health economist and Certified Financial Planner™

Link: www.MedicalBusinessAdvisors.com  

Interview Topics

The wide open topic in this environment of medically specific lethargy and macro economic insecurity – personal and business planning for physicians. Of course, since this is a broad field, we will use the rating and ranking system of this blog to help Jennifer and her staff, winnow down categories to top-of-mind concerns of our ME-P subscribers and her MNA readers.

Link: www.HealthcareFinancials.com

Assessment

But, we also ask you to send in any particular issues that you may have in order to make the interview helpful and exciting for all concerned.

Link: www.HealthDictionarySeries.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated.

Link: www.CertifiedMedicalPlanner.com

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

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Health HR Webinar Invitation Credibility?

Reaching-Out for ME-P Subscriber Advice?

secova1

Dear Dr. David E. Marcinko,

One of my political friends mentioned that you would be a perfect candidate for an informational Webinar we will be hosting. With you being a thought-leader on healthcare, we would be honored if you could be a co-presenter for a complimentary webinar we will be hosting on the stimulus package relating to healthcare, and what it means to companies today. As you know the stimulus package is making its way through congress. Currently the House and the Senate passed their version and currently the conference committee is making one version.

Your Input Requested

Where do you fit in? Many health issues, including health insurance assistance for the unemployed are heavily being discussed. We and other HR professionals would like to hear your thoughts on this tentative new health care policy, before it is too late. What does this mean for businesses today?

Our Mission 

The mission of our company is to support, educate and inform companies on how to control and drive down the cost of delivering Human Resources and Employee Benefit Services. Shortly after you speak we will provide administrative tips and ideas for those who are going to have to deal with the administrative burden of covering all those uninsureds dating back a year ago.

The Oportunity 

We hope your interest in the problems of, and opportunities for educating, company HR executives will be helpful. We would be happy to provide feedback from our attendees for you if you would like. With your busy schedule we will make this as seamless as possible. We will schedule a short interview with you, ask you questions, write the power point, have you approve it, and provide your transportation to our office; or we will go to yours.

Assessment 

I look forward to a favorable reply, and as soon as I receive it, I will reply accordingly. 

Yours Sincerely,

Sarah Soss

Marketing & Business Development

5000 Birch Street, East Tower Suite 300

Newport Beach, CA 92660

office – direct: 714-384-0590

internal ext. 4590

secure fax: 714-384-0600

email: sarah.soss@secova.com

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Is this organization credible? How about the invitation; real or sham? Have any ME-P readers or subscribers ever heard-of, or dealt-with, this company? Should the invitation be accepted? Please advise prudently.

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

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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An Interview with Bennett Aikin AIF®

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On Financial Fiduciary Accountability

[By Prof. Hope Rachel Hetico; RN, MHA, CMP™]

[By Ann Miller; RN, MHA]

Currently, there is a growing dilemma in the financial sales and services industry. It goes something like this:

  • What is a financial fiduciary?
  • Who is a financial fiduciary?
  • How can I tell if my financial advisor is a fiduciary?

Now, in as much as this controversy affects laymen and physician-investors alike, we went right to the source for up-to-date information regarding this often contentious topic, for an email interview and Q-A session, with Ben Aikin.ben-aikin

About Bennett Aikin AIF® and fi360.com

Bennett [Ben] Aikin is the Communications Coordinator for fi360.com. He oversees all communications for fi360. His responsibilities include messaging, brand management, copyrights and trademarks, and publications. Mr. Aikin received his BA in English from Virginia Tech in 2003 and is currently an MS candidate in Journalism from Ohio University.

Q. Medical Executive Post 

You have been very helpful and gracious to us. So, let’s get right to it, Ben. In the view of many; attorneys, doctors, CPAs and the clergy are fiduciaries; most all others who retain this title seem poseurs; sans documentation otherwise.

A. Mr. Aikin

You are correct. Attorneys, doctors and clergy are the prototype fiduciaries. They have a clear duty to put the best interests of their clients, patients, congregation, etc., above their own. [The duty of a CPA isn’t as clear to me, although I believe you are correct]. Furthermore, this is one of the first topics we address in our AIF training programs, and what we call the difference between a profession and an industry.  The three professions you name have three common characteristics that elevate them from an industry to a profession:

  1. Recognized body of knowledge
  2. Society depends upon practitioners to provide trustworthy advice
  3. Code of conduct that places the clients’ best interests first

Q. Medical Executive Post 

It seems that Certified Financial Planner®, Chartered Financial Analysts, Registered Investment Advisors and their representatives, Registered Representative [stock-brokers] and AIF® holders, etc, are not really financial fiduciaries, either by legal statute or organizational charter. Are we correct, or not? Of course, we are not talking ethics or morality here. That’s for the theologians to discuss.

A. Mr. Aikin

One of the reasons for the “alphabet soup”, as you put it in one of your white papers [books, dictionaries and posts] on financial designations, is that while there is a large body of knowledge, there is no one recognized body of knowledge that one must acquire to enter the financial services industry.  The different designations serve to provide a distinguisher for how much and what parts of that body of knowledge you do possess.  However, being a fiduciary is exclusively a matter of function. 

In other words, regardless of what designations are held, there are five things that will make one a fiduciary in a given relationship:

  1. You are “named” in plan or trust documents; the appointment can be by “name” or by “title,” such as CFO or Head of Human Resources
  2. You are serving as a trustee; often times this applies to directed trustees as well
  3. Your function or role equates to a professional providing comprehensive and continuous investment advice
  4. You have discretion to buy or sell investable assets
  5. You are a corporate officer or director who has authority to appoint other fiduciaries

So, if you are a fiduciary according to one of these definitions, you can be held accountable for a breach in fiduciary duty, regardless of any expertise you do, or do not have. This underscores the critical nature of understanding the fiduciary standard and delegating certain duties to qualified “professionals” who can fulfill the parts of the process that a non-qualified fiduciary cannot.

Q. Medical Executive Post 

How about some of the specific designations mentioned on our site, and elsewhere. I believe that you may be familiar with the well-known financial planner, Ed Morrow, who often opines that there are more than 98 of these “designations”? In fact, he is the founder of the Registered Financial Consultants [RFC] designation. And, he wrote a Foreword for one of our e-books; back-in-the-day. His son, an attorney, also wrote as a tax expert for us, as well. So, what gives?

A. Mr. Aikin

As for the specific designations you list above, and elsewhere, they each signify something different that may, or may not, lend itself to being a fiduciary: For example:

• CFP®: The act of financial planning does very much imply fiduciary responsibility.  And, the recently updated CFP® rules of conduct does now include a fiduciary mandate:

• 1.4 A certificant shall at all times place the interest of the client ahead of his or her own. When the certificant provides financial planning or material elements of the financial planning process, the certificant owes to the client the duty of care of a fiduciary as defined by CFP Board. [from http://www.cfp.net/Downloads/2008Standards.pdf]

•  CFA: Very dependent on what work the individual is doing.  Their code of ethics does have a provision to place the interests of clients above their own and their Standards of Practice handbook makes clear that when they are working in a fiduciary capacity that they understand and abide by the legally mandated fiduciary standard.

• FA [Financial Advisor]: This is a generic term that you may find being used by a non-fiduciary, such as a broker, or a fiduciary, such as an RIA.

• RIA: Are fiduciaries.  Registered Investment Advisors are registered with the SEC and have obligations under the Investment Advisers Act of 1940 to provide services that meet a fiduciary standard of care.

• RR: Registered Reps, or stock-brokers, are not fiduciaries if they are doing what they are supposed to be doing.  If they give investment advice that crosses the line into “comprehensive and continuous investment advice” (see above), their function would make them a fiduciary and they would be subject to meeting a fiduciary standard in that advice (even though they may not be properly registered to give advice as an RIA).

• AIF designees: Have received training on a process that meets, and in some places exceeds, the fiduciary standard of care.  We do not require an AIF® to always function as a fiduciary. For example, we allow registered reps to gain and use the AIF® designation. In many cases, AIF designees are acting as fiduciaries, and the designation is an indicator that they have the full understanding of what that really means in terms of the level of service they provide.  We do expect our designees to clearly disclose whether they accept fiduciary responsibility for their services or not and advocate such disclosure for all financial service representatives.

Q. Medical Executive Post 

Your website, http://www.fi360.com, seems to suggest, for example, that banks/bankers are fiduciaries. We have found this not to be the case, of course, as they work for the best interests of the bank and stockholders. What definitional understanding are we missing?

A. Mr. Aikin

Banks cannot generally be considered fiduciaries.  Again, it is a matter of function. A bank may be a named trustee, in which case a fiduciary standard would generally apply.  Banks that sell products are doing so according to their governing regulations and are “prudent experts” under ERISA, but not necessarily held to a fiduciary standard in any broader sense.

Q. Medical Executive Post 

And so, how do we rectify the [seemingly intentional] industry obfuscation on this topic. We mean, our readers, subscribers, book and dictionary purchasers, clients and colleagues are all confused on this topic. The recent financial meltdown only stresses the importance of understanding same.

For example, everyone in the industry seems to say they are the “f” word. But, our outreach efforts to contact traditional “financial services” industry pundits, CFP® practitioners and other certification organizations are continually met with resounding silence; or worse yet; they offer an abundance of parsed words and obfuscation but no confirming paperwork, or deep subject-matter knowledge as you have kindly done. We get the impression that some FAs honesty do-not have a clue; while others are intentionally vague.

A. Mr. Aikin

All of the evidence you cite is correct.  But that does not mean it is impossible to find an investment advisor who will manage to a fiduciary standard of care and acknowledge the same. The best way to rectify confusion as it pertains to choosing appropriate investment professionals is to get fiduciary status acknowledged in writing and go over with them all of the necessary steps in a fiduciary process to ensure they are being fulfilled. There also are great resources out there for understanding the fiduciary process and for choosing professionals, such as the Department of Labor, the SEC, FINRA, the AICPA’s Personal Financial Planning division, the Financial Planning Association, and, of course, Fiduciary360.

We realize the confusion this must cause to those coming from the health care arena, where MD/DO clearly defines the individual in question; as do other degrees [optometrist, clinical psychologist, podiatrist, etc] and medical designations [fellow, board certification, etc.]. But, unfortunately, it is the state of the financial services industry as it stands now.

Q. Medical Executive Post 

It is as confusing for the medical community, as it is for the lay community. And, after some research, we believe retail financial services industry participants are also confused. So, what is the bottom line?

A. Mr. Aikin

The bottom line is that lay, physician and all clients have a right to expect and demand a fiduciary standard of care in the managing of investments. And, there are qualified professionals out there who are providing those services.  Again, the best way to ensure you are getting it is to have fiduciary status acknowledged in writing, and go over the necessary steps in a fiduciary process with them to ensure it is being fulfilled.

Q. Medical Executive Post 

The “parole-evidence” rule, of contract law, applies, right? In dealing with medical liability situations, the medics and malpractice attorneys have a rule: “if it wasn’t written down, it didn’t happen.”  

A. Mr. Aikin

An engagement contract accepting fiduciary status should trump a subsequent attempt to claim the fiduciary standard didn’t apply. But, to reiterate an earlier point, if someone acts in one of the five functional fiduciary roles, they are a fiduciary whether they choose to acknowledge it or not.  I have attached a sample acknowledgement of fiduciary status letter with copies of our handbook, which details the fiduciary process we instruct in our programs, and our SAFE, which is basically a checklist that a fiduciary should be able to answer “Yes” to every question to ensure the entire fiduciary process is being covered.

Q. Medical Executive Post 

It is curious that you mention checklists. We have a post arguing that very theme for doctors and hospitals as they pursue their medial error reduction, and quality improvement, endeavors. And, we applaud your integrity, and wish only for clarification on this simple fiduciary query?

A. Mr. Aikin

Simple definition: A fiduciary is someone who is managing the assets of another person and stands in a special relationship of trust, confidence, and/or legal responsibility.

Q. Medical Executive Post 

Who is a financial fiduciary and what, if any, financial designation indicates same?

A. Mr. Aikin

Functional definition: See above for the five items that make you a fiduciary.

Financial designations that unequivocally indicate fiduciary duty: Short answer is none, only function can determine who is a fiduciary. 

Q. Medical Executive Post 

Please repeat that?

A. Mr. Aikin

Financial designations that indicate fiduciary duty: none. It is the function that determines who is a fiduciary.  Now, having said that, the CFP® certification comes close by demanding their certificants who are engaged in financial planning do so to a fiduciary standard. Similarly, other designations may certify the holder’s ability to perform a role that would be held to a fiduciary standard of care.  The point is that you are owed a fiduciary standard of care when you engage a professional to fill that role or they functionally become one.  And, if you engage a professional to fill a non-fiduciary role, they will not be held to a fiduciary standard simply because they have a particular designation.  One of the purposes the designations serve is to inform you what roles the designation holder is capable of fulfilling.

It is also worth keeping in mind that just being a fiduciary doesn’t equate to a full knowledge of the fiduciary standard. The AIF® designation indicates having been fully trained on the standard.

Q. Medical Executive Post 

Yes, your website mentions something about fiduciaries that are not aware of same! How can this be? Since our business model mimics a medical model, isn’t that like saying “the doctor doesn’t know he is doctor?” Very specious, with all due respect!

A. Mr. Aikin

I think it is first important to note that this statement is referring not just to investment professionals.  Part of the audience fi360 serves is investment stewards, the non-professionals who, due to facts and circumstances, still owe a fiduciary duty to another.  Examples of this include investment committee members, trustees to a foundation, small business owners who start 401k plans, etc.  This is a group of non-sophisticated investors who may not be aware of the full array of responsibilities they have. 

However, even on the professional side I believe the statement isn’t as absurd as it sounds.  This is basically a protection from both ignorant and unscrupulous professionals.  Imagine a registered representative who, either through ignorance or design, begins offering comprehensive and continuous investment advice.  Though they may deny or be unaware of the fact, they have opened themselves up to fiduciary liability. 

Q. Medical Executive Post 

Please clarify the use of arbitration clauses in brokerage account contracts for us. Do these disclaim fiduciary responsibility? If so, does the client even know same?

A. Mr. Aikin

By definition, an engagement with a broker is a non-fiduciary relationship.  So, unless other services beyond the scope of a typical brokerage account contract are specified, fiduciary responsibility is inherently not applicable.  Unfortunately, I do imagine there are clients who don’t understand this. Furthermore, AIF® designees are not prohibited from signing such an agreement and there are some important points to understand the reasoning.

First, by definition, if you are entering into such an agreement, you are entering into a non-fiduciary relationship. So, any fiduciary requirement wouldn’t apply in this scenario.

Second, if this same question were applied into a scenario of a fiduciary relationship, such as with an RIA, this would be a method of dispute resolution, not a practice method. So, in the event of dispute, the advisor and investor would be free to agree to the method of resolution of their choosing. In this scenario, however, typically the method would not be discussed until the dispute itself arose.

Finally, it is important to know that AIF/AIFA designees are not required to be a fiduciary. It is symbolic of the individuals training, knowledge and ongoing development in fiduciary processes, but does not mean they will always be acting as a fiduciary.

Q. Medical Executive Post 

Don’t the vast majority of arbitration hearings find in favor of the FA; as the arbitrators are insiders, often paid by the very same industry itself?

A. Mr. Aikin

Actual percentages are reported here: http://www.finra.org/ArbitrationMediation/AboutFINRADR/Statistics/index.htm However, brokerage arbitration agreements are a dispute resolution method for disputes that arise within the context of the securities brokerage industry and are not the only means of resolving differences for all types of financial advisors.  Investment advisers, for example, are subject to respond to disputes in a variety of forums including state and federal courts.  Clients should look at their brokerage or advisory agreement to see what they have agreed to. If you wanted to go into further depth on this question, we would recommend contacting Brian Hamburger, who is a lawyer with experience in this area and an AIFA designee. Bio page: http://www.hamburgerlaw.com/attorneys/BSH.htm.

Q. Medical Executive Post 

What about our related Certified Medical Planner® designation, and online educational program for financial advisors and medical management consultants? Is it a good idea – reasonable – for the sponsor to demand fiduciary accountability of these charter-holders? Cleary, this would not only be a strategic competitive advantage, but advance the CMP™ mission to put medical colleagues first and champion their cause www.CertifiedMedicalPlanner.org above all else. 

A. Mr. Aikin

I think it is a good idea for any plan sponsor to demand fiduciary status be acknowledged from anyone engaged to provide comprehensive and continuous investment advice.  I also think it is a good idea to be proactive in verifying that the fiduciary process is being followed.

Q. Medical Executive Post 

Is there anything else that we should know about this topic?

A. Mr. Aikin

Yes, a further note about fi360’s standards. I wrote generically about the fiduciary standard, because there is one that is defined by multiple sources of regulation, legislation and case law.  The process defined in our handbooks, we call a Fiduciary Standard of Excellence, because it covers that minimum standard and also best practice standards that go above and beyond.  All of our Practices, which comprise that standard, are legally substantiated in our Legal Memoranda handbook, which was written by Fred Reish’s law firm, who is considered a leading ERISA attorney.

Additional resources:

Q. Medical Executive Post 

Thank you so much for your knowledge and willingness to frankly share it with the Medical-Executive-Post.

Assessment

All are invited to continue the conversation with Mr. Aikin, asynchronously online, or thru this contact information:

fi360.com
438 Division Street
Sewickley, PA 15143
412-741-8140 Phone
866-390-5080 Toll-free phone
412-741-8142 Fax

Conclusion

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

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

WorldFocus Interviews Uwe Reinhardt PhD

How We Compare to Canada’s Healthcare System

Staff Reporters56359795

WorldFocus interviewed Uwe Reinhardt PhD on January 28, 2009.

In this extended interview, Dr. Reinhardt, a leading adviser on health care economics and professor of political economy at Princeton University, compares the Canadian and American health care systems.

Reinhardt criticizes the US health care culture and expresses his optimism about the new Obama administration.

Video: http://worldfocus.org/blog/2009/01/28/how-the-us-measures-up-to-canadas-health-care-system/3783/#comments

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Decide for yourself; is Uwe correct; or not? Why, or why not? Despite Democratic control, is healthcare reform even likely?

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

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Q & A Interview on Medical Practice Valuations

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An Interview with Dr. David Edward Marcinko; MBA, CMP™
[By
Karen Caffarini: Reporter: American Medical News]

Hot Topic

Dr David E Marcinko MBAMedical Practice Appraisals and Valuations

[Unedited Question-Answer Interview]

Excerpt

The allocated purchase price must be reported to the IRS. Goodwill is considered a capital asset. Therefore, the seller will want to allocate as much of the selling price to goodwill as possible. The buyer will want to allocate more of the selling price to non-goodwill assets because goodwill amortization is not tax deductible while depreciation and amortization of other assets is tax deductible. This “negotiated” goodwill will stand as the IRS value.“

Assessment

Thus, the IRS has effectively forced the controversial goodwill determination on practice buyers and sellers. This makes it even more imperative for buyers to specifically identify any hidden practice assets they are acquiring at the time of purchase; or for purchasers to discover them.

Humor

Q: What asset might have less value than a toxic credit-debt-obligation [CDO]?

A: A private medical practice

Conclusion

Your comments are appreciated; especially if you have bought, sold or merged a medical practice recently.

Read it here: ama-news-reply

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Adam Smith on Health Economics

A Fictional Interview

By Darrell Pruitt; DDSpruitt

Adam Smith, former 18th century Scottish economist, is with me in the cyber-world today.  He wrote his theories on economics around the time of the birth of our nation. His book, “An Inquiry into the Nature and Causes of the Wealth of Nations,” predates the word “capitalism” as well as “economist,” by several decades. 

Yet his common sense wisdom, like that of many post-Renaissance thinkers of his day, still stands tall and true against time. 

Welcome Mr. Smith:

Q: I have just a few questions that I was hoping you could help me with. The first question is one that is so basic, yet it causes more acute embarrassment than most doctors can tolerate.  I happen to have lifelong immunity to such silly feelings. 

Mr. Smith, why are professionals paid so much in comparison to other trades?  Please use the English you are comfortable with.

A: “We trust our health to the physician; our fortune and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires. The long time and the great expense which must be laid out in their education, when combined with this circumstance, necessarily enhance still further the price of their labour.”  [Smith (1776) Book I, Chapter 10]

http://www.econlib.org/library/Smith/smWN4.html#B.I,%20Ch.10,%20Of%20Wages%20and%20Profit%20in%20the%20Different%20Employments%20of%20Labour%20and%20Stock

Q: I’m glad you said that instead of me (someone in the room chuckles.)  For whatever reason, doctors in modern society have remained silent while stakeholders, who are not accountable to patients, crowded them away from the bargaining table.  To tell the truth, what you might call stakeholders’ unenlightened self-interest seems a lot like tyranny.  What can doctors do about it?  I know that in your day, organizing labour (oops, you got me doing it now) could get one quickly killed.  Since then labour movements have come and gone in American society.  What are your thoughts about unionized healthcare professionals?

A: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.”[ibid]

Comment: If I understand you correctly, Mr. Smith, you are saying that even though law should not deprive citizens of the freedom to assemble, which, by the way is now a civil right over here in the new world, the government would be wise to not render it necessary for professionals to do so because it would be impossible to prevent conspiracy against the public.  Let’s hope it doesn’t come to that. 

Now, let me show you evidence that our nation’s leaders, in an honorable effort to hold down the cost of healthcare for the common good, actually forgot that part of your lesson sometime over the last couple of centuries. It is thru a contrivance known as pay-for-performance [P4P}.

P4P

Pay for Performance (P4P), not known in your time, is one of the four cornerstone goals for healthcare reform that our President Bush described in his Executive Order.  He officially calls it “Aligning incentives so that payers, providers, and patients benefit when care delivery is focused on achieving the best value of health care at the lowest cost.”  I know you probably have never experienced the magic quality of “buzzwords” before, and the whole sentence is probably leaving with a dry mouth, wondering what “Aligning incentives” is really about.  Don’t feel bad.  This dialect of modern English is difficult for modern doctors to understand as well. 

To put it simply, Bush and his buddies put together an intricate artificial market system where the quality, price and demand will all be controlled by people other than doctors and their customers. 

Wait.  Please, don’t hang up on me.  I can completely understand why you don’t like it, Mr. Smith.  Get this:  I hear Stalin is pissed that Bush stole his idea of vertical collectivism.  I also think it smells a lot like borscht with turnips.  So, let’s move on.

Q: Finally, Mr. Smith, considering there is already unwanted and expensive interference in our nation’s healthcare system that eliminates natural competition between healthcare providers even before our nation turns to universal care, do you think it is unrealistic to imagine that a year from now consumers could demand black market dentistry rather than wait in lines for regulated dentistry?

A: “Particular acts of parliament, however, still attempt sometimes to regulate wages in particular trades and in particular places. Thus the 8th of George III prohibits under heavy penalties all master tailors in London, and five miles round it, from giving, and their workmen from accepting, more than two shillings and sevenpence halfpenny a day, except in the case of a general mourning.

Whenever the legislature attempts to regulate the differences between masters and their workmen, its counselors are always the masters. When the regulation, therefore, is in favor of the workmen, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.”  [ibid]

Assessment

Damned counselors! 

Thank you; Adam Smith! 

Conclusion 

Your thoughts and comments on this artifice are appreciated.

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Evolutionary Shifts in the Primacy of Medical Ethical Principles

Philosophic Ruminations and Personal Interviews

[By Render S. Davis; MHA, CHE]

Crawford Long Hospital at Emory University

Atlanta Georgia USA

For more than 2000 years, the principle of beneficence, the profession’s obligation to be of service to others, was the foundation of the practice of medicine.

In taking the Hippocratic Oath, physicians swore that they would “perform their art solely for the cure of patients,” and patients viewed their doctors as wise, caring, and paternalistic healers unwaveringly committed to their welfare.

Until the era of modern medicine dawned in the early Twentieth Century, sincere caring and compassionate service probably were the most effective instruments in the physician’s meager armamentarium.

Post WWII Period

World War II and the decades that followed saw an unprecedented explosion in medical knowledge and technology. As a direct consequence, physicians were called upon to become increasingly sophisticated technicians and specialists, demands that pulled them farther from the bedside and diminished the close, personal relationship with patients they once enjoyed.

This increasingly impersonal relationship, combined with the starkness and technically intimidating nature of hospitals, led to a dramatic shift in the traditional patient-physician relationship. No longer did the patient see the family doctor as the caring paternalistic figure that held his or her interests foremost.  Instead, an overwhelming array of specialists appeared before the patient to explore illness etiology or examine a particular body part – too often appearing more interested in the malady than in the person afflicted with it.

The Lost Covenant

The covenant of trust that once bonded the physician and patient was rapidly eroding and, amid the social turmoil of the 1960s, patients began to demand that physicians treat them as equal partners, both informing them of the nature of their disease and seeking their permission to initiate treatment. After all patients reasoned, they should have the final say regarding what was done to their own bodies. 

Consequently, the principle of respect for autonomy, an acknowledgment of an individual’s right to self determination, slowly took precedence over, but did not eclipse, beneficence. Physicians still cared for their patients, only now they were obligated to take extra steps to bring patients directly into the decision-making process by explaining treatment options and requesting “informed consent” on the plan of care from the patient

Impending Economic Disaster

Both principles were supported in the prevailing system of fee-for-service, private-practice medicine.  There were few constraints on physicians’ clinical autonomy and their professional judgment remained, for the most part, unquestioned. In this climate, physicians reasoned that patients would likely benefit from more tests and procedures; patients, especially the well insured, demanded almost unregulated autonomy over their health care choices. For those with the means to pay, access to nearly all that medicine had to offer was considered an unquestioned right.

This proved to be a formula for potential economic disaster. There was an explosion in new and expanded facilities and unwavering demand for the latest technological innovations, much of it supported by the government as vital to a healthy economy. Nonetheless, a fundamental problem existed because health care was being delivered in a financial vacuum, where both physicians and patients had only a vague understanding of, or interest in, the economic consequences of the services they felt either obligated to provide or entitled to receive.

Beneficence and Autonomy

Both beneficence and respect for autonomy could be invoked to support this nearly unbridled use of health care resources in the care and treatment of individual patients. 

Insurers, both private and governmental, paid “reasonable, usual and customary” charges, almost without argument; while as patients’ advocates, physicians could garner six-figure incomes from fees generated in providing virtually unlimited care.  

Inevitable Financial Fallout

Yet, the inevitable financial fallout from medicine guided by these laissez-faire rules eventually led to an unsustainable inflationary spiral in medical costs.

In the forty plus years following the passage of the Medicare Act in 1965, the health care sector of the American economy soared from 4% of Gross Domestic Product (GDP) to over 15-16% in 2008, and there is no clear end in sight to the upward rise.

Nevertheless, a growing number of Americans actually saw their access to medical care diminish due to rising costs of employer-paid insurance (when it was offered at all) and tightening restrictions in eligibility requirements for Medicaid and other government safety-net programs.  Even as the nation increased overall spending for medical care, many Americans were losing access to the system. 

This trend has continued, and even accelerated, during the recessionary period that has just begun. An especially troubling characteristic of the increasing number of Americans now without health insurance is that, for the first time, it includes expanding segments of the middle class – white collar executives, middle managers, and skilled workers who had, historically, been immune from such cutbacks. 

Today, lack of access to affordable medical care is no longer just the domain of the working poor. It is the purview of the middle class.

Sounding the Alarm

Alarm over rising health care costs began to spread in the 1970s, as both private and government payers sought any means possible to stem the hemorrhaging outflow of dollars.  President Richard Nixon tried unsuccessfully to implement wage and price controls to slow it; a few years later, President Jimmy Carter attempted to cap Medicare expenditures. Both efforts failed for two primary reasons.

First was a fundamental misunderstanding of the nature of healthcare competition. Health care providers did not compete directly for patients, but rather for physicians who held the legal authority to admit patients. As independent contractors, physicians could, for the most part choose to join the staff of institutions that provided the latest technology, the most-up-do-date facilities, and even the most luxurious amenities. Consequently, hospitals competed fiercely for doctors, a process that actually caused prices to rise, not fall.

Second, the dominant, indemnity-based, fee-for-service approach to medical care remained fundamentally intact, continuing to insulate both physicians (the consumer’s agent) and patients (consumers of care) from the true costs of the services provided. But economic concerns arising from double-digit inflation and business downturns in the late 1970s assured that fundamental and inevitable changes in the financing and practice of medicine were on the horizon. 

Cost Constraint Initiatives

The first major initiative to have a significant cost constraining effect occurred in the early 1980s with the implementation of the Medicare Prospective Payment System (PPS) and its healthcare provider payments pegged to Diagnosis Related Groups (DRGs); now Medical Severity-DRGs. This system ushered in a new era of controlled, predetermined prices for health care services. The inflationary spiral of government payments for health care slowed and soon private payers also were considering adopting alternatives to traditional insurance.  Slowly, the concept of prepaid, fixed or capitated managed health care provided by health maintenance organizations (HMOs), a concept developed by the Kaiser Foundation and other organizations on the West Coast in the 1940s (and first strongly opposed by organized medicine) began to spread nationwide as a possible answer to the country’s healthcare ills.

Enter the HMOs

By the 1990s, HMOs and other types of managed care organizations that provided integrated healthcare services and financing through insurance or other means, had gained a serious foothold and were in positions of dominance in American medical care.  The growth in the popularity of managed care signaled the next evolutionary change in the predominance of the key ethical principles.

Severing the Link 

Just as respect for autonomy super-ceded beneficence, the principle of justice, representing a new approach of balancing the health needs of an individual with the availability of finite resources for the larger population, rose to take its place as the primary principle, becoming the vanguard force driving the movement toward managed care. 

Physician-ethicist, John LaPuma M.D., in his book Managed Care Ethics, writes that managed care has gone so far as to “sever the link between autonomy and justice that once existed to support the care of individuals.”

Fairer Distribution       

Embedded within this drive toward a fairer distribution of healthcare resources was the urgent, but highly controversial desire to rein in costs. Despite years of active suppression and condemnation by health professionals and providers, the hard economic realities of American society’s love-hate (love to have it, hate to pay for it) relationship with health care had finally reached the bedside. The result has been an irrevocable sea-change in the landscape of American medicine.

***

Residents

***

Developing Healthcare Delivery Skills for Modernity

As we have seen, medical practice today is vastly different from a generation ago, and physicians need new skills to be successful.  In order to balance their obligations to both individual patients and to larger groups of plan enrollees, physicians now must become more than competent clinicians.

Traditionally, the physician was viewed as the “captain of the ship,” in charge of nearly all the medical decisions, but this changed with the new dynamics of managed care.  Now, as noted previously, the physician’s role may be more akin to the ship’s navigator – or health economist allocator – utilizing his or her clinical skills and knowledge of the health care environment to chart the patient’s course through a confusing morass of insurance requirements, care choices, and regulations to achieve the best attainable outcome.  Some of these new skills include:  

  • Negotiation – working to optimize the patient’s access to services and facilities beneficial to their treatment;
  • Team Play – working in concert with other care givers, from generalist and specialist physicians to nurses and therapists, to coordinate the delivery of care within a clinically appropriate and cost-effective framework;
  • Working within the limits of professional competence – avoiding the pitfalls of payer arrangements that may restrict access to specialty physicians and facilities, by clearly acknowledging when the symptoms or manifestations of a patient’s illness require this higher degree of service, then working on behalf of the patient to seek access to them.
  • Respecting different cultures and values – inherent in the support of the Principle of Autonomy is acceptance of values that may differ from one’s own.  As the United States becomes a more culturally heterogeneous nation, health care providers are called upon to work within and respect the socio-cultural framework of patients and their families;
  • Seeking clarity on what constitutes marginal care – within a system of finite resources, physicians will be called upon to carefully and openly communicate with patients regarding access to marginal and/or futile treatments.  Addressing the many needs of patients and families at the end of life will be an increasingly important challenge in both communications and delivery of appropriate, yet compassionate care. 
  • Exercising decision-making flexibility – treatment algorithms and clinical pathways are extremely useful tools when used within their scope, but physicians must follow the case managed patient closely and have the authority to adjust the plan if clinical circumstances warrant. 

Re-Fostering Social Responsibility

The erosion of trust expressed by the public for the health care industry may only be reversed if those charged with working within or managing the system place community and patient interests before their own.

We must foster an ethical corporate culture within health care that rewards leaders with integrity and vision; leaders who encourage and expect ethical excellence from themselves and others; and who recognize that ethics establishes the moral framework for all organizational decision making.

Healthcare Ethics

In a presentation to the Health Care Ethics Consortium of Georgia, Dr. Paul Hoffman, vice president of Provenance Health Partners, spoke of the importance of nurturing and sustaining an “ethical organizational culture” where high standards of ethics and morality govern the behavior of all participants, from senior management and physicians, to nurses and technical staff. 

In such cultures, the ethical dimensions of decisions are weighed as heavily as the financial or operational factors and actions are not taken if the outcome would conflict with the organization’s stated values and mission.

To assess the climate of an organization, Hoffman recommends conducting an “ethics audit” that would reveal real and perceived problems within the system; provide insights into ethical deficits that may exist; identify opportunities for education; and provide feedback from staff on their support for the organization’s ethical culture.

Enterprise Wide Integration

Most importantly, Hoffman stressed that ethics must be integrated into every aspect of organizational work, calling for “a systems-oriented, proactive approach to improving an institution’s health care practices, including both administrative and clinical practices.” 

He went on to say that this “integrated ethics approach anticipates and responds to recurring ethical situations and applies a continuous quality improvement philosophy. This approach unites ethics activities throughout the organization.”  

Whether your workplace is a 500-bed academic medical center or a small internal medicine practice, the purpose is the same – to foster and maintain an organization that is grounded in ethical behavior and dedicated to providing the highest quality of patient care.  

Assessment

In an article published in the Journal of the American Medical Association [JAMA], authors Ezekiel Emanual, M.D. and Nancy Dubler, L.L.B. cited what they call the “Six C’s” of the ideal physician-patient relationship: Choice, Competence, Communications, Compassion, Continuity, and [no] Conflict of interest.  Physicians who accept a seventh and eighth “C” – the Challenge and Collaboration, and are imbued with the moral sensitivity embodied in their solemn oath, have an obligation to serve as the conscience of this new system dedicated toward caring for all Americans.

Writer and ethicist Emily Friedman said it best when she wrote,  

“There are many communities in health care. 

But three to which I hope we all belong are the communities devoted to improving the health of all around us, to achieving access to care for all, and to providing our services at a price that society can afford. 

These interests are, of course, expressions of the deeper community of values that states that healing, justice, and equality must guide what we believe and do”. 

Conclusion

While the above may not solve the current philosophical and economic crisis, or provided needed answers to the domestic health insurance quagmire, we believed the problem has been reframed for further discussion and frank discourse.

And so, please add to the needed debate with your informed thoughts, opinions and comments. All are greatly appreciated?

Acknowledgements

Partial excerpt, updated from the best selling book, with permission.

The Business of Medical Practice [Profit Maximizing Skills for Savvy Physicians]

© Springer Publishing, New York, NY 2005

http://www.springerpub.com/prod.aspx?prod_id=23759

Citations:

Back to Reform: Values, Markets, and the Healthcare System.  Dougherty, Charles J., Ph.D.  Oxford University Press, New York, 1989.

“Beyond Ethics Committees,” Hoffman, Paul, Dr. P.H. Presentation at the Annual Conference of the Health Care Ethics Consortium of Georgia, April 2, 2003.

“The Doctor as Double Agent”: Angell, Marcia, M.D.  Kennedy Institute of Ethics Journal, Vol. 3, No. 3, September 1993.

“Ethical Issues in Managed Care”:  Report from the American Medical Association’s Council on Ethical and Judicial Affairs.  JAMA, Vol. 273, No. 4, January 25, 1995.

“Ethical Issues in Managed Care”: Wicclair, Mark R., Ph.D.  Remarks at Fifth Annual Retreat of the Consortium Ethics Program, October 1995.

“Ethics of Managed Care”: Philip, Donald J., FACMPE.  Medical Group Management Journal, November – December 1997.

Ethics, Trust, and the Professions: Philosophical and Cultural Aspects.  Pelligrino, Edmund D., M.D., Veatch, Robert M., Ph.D., Langan, John P., S.J.  Georgetown University Press, Washington, D.C., 1991

“The End of Health Insurance – Part II” Brody, William R., M.D., Ph.D. Crossroads: Essays on Health Care in America, Johns Hopkins University School of Medicine, June 5, 2002.

“ER’s Cut Back as Patient Loads Rise,” Kellerman, Arthur, M.D. The Atlanta Journal-Constitution, June 5, 2003.

Managed Care Ethics: Essays on the Impact of Managed Care on Traditional Medical Ethics, LaPuma, John, M.D.  Hatherleigh Press, New York, 1998.

“Managed Health Care: A Brief Glossary,” Integrated Healthcare Association, Pleasonton, CA, 1997.  Website: www.iha.org.

Medical Management Signature Series, Managed Care Resources, Inc. 1997.  Website: www.mcres.com).  Carefoote, Roberta L., R.N.:http://www.mcres.com.

Medicine At The Crossroads.  Konnor, Melvin, M.D., Vintage Books, New York, 1994.

“Poll: Health Advice Ignored,” Duffy, James A.  The Atlanta Journal-Constitution, November 20, 1998.

“Outside the Box”: Zwolak, Judith.  Tulane Medicine, September 1995.

“Preserving the Physician-Patient Relationship in the Era of Managed Care,” Emanual, Ezekiel J. M.D., Dubler, Nancy N., LL.B.  JAMA, Vol. 273, No. 4, January 25, 1995.

Principles of Biomedical Ethics:  Beauchamp, Thomas L., Ph.D., Childress, James F., Ph.D.  Oxford University Press, New York, 1989.

“Principles of Managed Healthcare”: Integrated Healthcare Association, 1997.  www.iha.org.

The Right Thing: Ten Years of Ethics Columns from The Healthcare Forum Journal.  Friedman, Emily.  Jossey-Bass Publishers, San Francisco, 1996

“Understand Guiding Principles When Mixing Business, Medicine,” LaPuma, John, M.D.  Managed Care Magazine, July 1998

“What Could Have Saved John Worthy?” The Hastings Center Report, Special Supplement, Vol. 28, No. 4, July-August 1998.

Personal Interviews:

Frank Brescia, M.D: Professor, Medical University of South Carolina, Charleston, SC.

Joseph DeGross, M.D: Professor, Mercer University School of Medicine, Macon, GA.

David DeRuyter, M.D: Pulmonologist, Atlanta, GA.

Daniel Russler, M.D: Vice President, HBOC, Inc., Atlanta, GA.

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Role of Retail Medical Clinics

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Transformation [Symposium on Innovative Healthcare Delivery: Mayo Clinic]

Reprinted: October 15, 2007

http://transformationsymposium.wordpress.com

With a million visits a year and a satisfaction rate of 97% to 100%, those patients who experience MinuteClinic (www.minuteclinic.com) seem to love it. But in the world of retail clinics, does more convenient care mean better care?

The CEO Opinion

Michael Howe, the CEO of MinuteClinic, believes it does. Nicholas F. LaRusso, Chair, Mayo Clinic Department of Medicine, talked with Howe, a speaker at last year’s Transformation Symposium, about his organization’s effort to transform the delivery of health care.

Howe explained, “The broadest perspective to start with is redefining the word ‘integration’ in health care. Typically when we think about integration in health care we think about it from the standpoint of bringing all the solutions to a single point, and as long as the patient comes to that location, providers can solve most, if not all, of their issues. MinuteClinic really looked at it the other way and asked how would you integrate high-quality, simple health care solutions into a consumer’s lifestyle. Our goal is to put access to health care professionals into the pathway of the consumer.”

Growing Concept

With 200 clinics around the country and plans to double that, Howe is well on his way. Found in CVS stores, MinuteClinic’s team of board-certified practitioners are trained to diagnose, treat and write prescriptions for a variety of common family illnesses for patients 18 months and older.

Accredited

But, it is not all about convenience for Howe. He points out that MinuteClinic spent a year and a half working with The Joint Commission to become fully accredited. And, though they are the only retail provider at this point to be accredited, he thinks retail clinics should seek accreditation to really define themselves at the highest level of care.

Best-of-Breed and EMRs

By building a health care service based on best-practice protocols for focused conditions and through leveraging their electronic medical record (EMR) to measure their providers’ adherence to these guidelines, Howe believes that the retail clinic model delivers higher-quality care at a lower price that is more accessible and more convenient for patients than traditional primary care practices.

Assessment

During the last symposium, Howe shared his vision of a truly integrated health care system and the retail clinic’s role within it.

Transformation: A Symposium on Innovative Healthcare Delivery Mayo Clinic. Nicholas F. LaRusso; Chair, Mayo Clinic Department of Medicine.

Link: http://transformationsymposium.wordpress.com/2007/10/15/the-role-of-the-retail-clinic-michael-howe/

Conclusion

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FORWORD

Financial Planning for Physicians and Advisors

fp-book

Medical management is already one of the most complex businesses, with advances in science, technology, and consumer awareness often eclipsed by regulation, rights, and financial restrictions.

Navigating a course where sound practice management is intertwined with personal financial security requires a blue print designed by subject matter experts. Financial Planning for Physicians and Healthcare Executives [third edition] provides that blueprint.

The timeliness of this book is underscored by the current state of the health care industry in the United States. Healthcare in the United States is, by design, a system of independent and interrelated organizations. Demand for health care services is escalating due to the demographics of an aging population, advances in medical technology and new courses of treatment. Concurrently, financial resources allocated to health care services are not rising as rapidly as the demand for services.

As a consequence of the unusual economics of today’s health care industry, physicians and health care professionals must plan financially successful professional practices and construct financial security in a manner that is markedly different from that of other businesspersons and professionals.

Financial planning for physicians and health care professionals is not intuitive, nor is it a logical extension of professional pursuits. Physicians are usually motivated by a need to serve humankind and by scientific and intellectual curiosity. Economics and finance are secondary to the pursuits of clinical excellence, service and scientific expansion.

Consider some of the financial aspects unique to health care providers: unlike most other businesses or professions, doing more does not necessarily translate into earning more; providing superior quality service does not necessarily translate into better prices for those services; and abandoning service lines or “markets” with inferior financial yield is anathema to the health care professional’s commitment to patients.

Peak earning years may also be shorter for health care providers than other professionals. Consider that physicians typically enter careers at later ages, often with larger debts from training. Some specialties may not lead a case until 10 years of practice, and many specialties have limited longevity. Financial survival skills are paramount for converting the limited earnings time period to personal financial security.

Financial Planning for Physicians and Healthcare Executives confronts the reality that business management in health care is decidedly more complex than most other businesses or professions. To illustrate, in what other industry can participants debate the simple question, “who is the customer?”

The same business management intricacy gives rise to an information model that is exclusive in its complexity. The fragmented-by-design health care delivery system, rising consumer expectations, and rampaging information technology advances all serve to compound the degree of difficulty in effective use of information technology.

The industry’s track record regarding information systems in terms of increased efficiency, ease-of-use and improved margins has been short of expectations. Information systems aimed at improving workflows, connecting to trading partners and taking advantage of new technologies are still in development. The opportunity remains attractive to information technology providers, as evidenced by a near-continual flow of business venture announcements from technology companies and various industry participants. While the information systems puzzle remains unsolved, the need for skillful management of information systems is an immediate imperative.

This book provides a description of communication systems, data storage and retrieval systems, and health care-specific data sets. Chapters declare that patient safety and quality of care depend on accurate, complete information. Moreover, information systems must reflect that the real-world events that are digitally stored are longitudinal in nature and that privacy and security requirements are paramount.

Government and payer-led initiatives to control health care costs and manage care have resulted in a multifarious regulatory environment. New legislation under consideration covering such areas as patient rights could create new liabilities for physicians and other health care providers. This book describes a medical office compliance program to help avoid the perils of non-compliance.

Of particular note is the new section on HIPAA. When fully implemented, HIPAA will require standard transaction sets, as well as privacy and security mandates. HIPAA legislation is rife with penalties for non-compliance. This book enlightens and instructs by providing a framework for operating in the expected HIPAA world.

Selecting a personal financial strategy requires contracting with other professionals. Just as patients are becoming more informed about a growing range of diagnosis and treatment options, physician providers are learning of a growing range of financial vehicles available to them.

In medicine, the “right” course of diagnosis and treatment is one that balances the risk, cost, time horizon, outcome and personal preferences of the patient. In the world of personal finance, the physician plays the role of patient to the professional advisor who may be from one of many sub-disciplines in the financial world – advisor, broker, insurance agent, attorney or accountant.

The physician must be more informed about the growing range of analysis and investment options in order to choose the “right” course that balances risk, cost, time horizon, outcome and his or her own personal style.

Richard D. Helppie
Former: CEO and Founder
Superior Consultant Company, Inc.
[SUPC-NASD]

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Interview with Dr. David E. Marcinko of iMBA Inc [Part 2]

THANKSGIVING DAY INTERVIEW [continued from December, 2007]

INTERVIEW: Dr. David Edward Marcinko; iMBA Founder and CEO: www.MedicalBusinessAdvisors.com, a private health economics and consulting firm with no debt, no investors and no plans to go public.

 TOPIC: Medical Unions, Collectivism and Related Competitive Thoughts Part II

 REPORTER: Hope Hetico; RN, MHA Consulting Professor for: www.CertifiedMedicalPlanner.com and Managing Editor of our companion print guide HealthCare Organizations [Financial Management Strategies].

LOCATION:  A local restaurant in Atlanta, Georgia, serving deep fried turkey, a Southern delicacy and tradition.

TRANSCRIPTION: Ann Miler, RN

 EPILOGUE: Last month, in Part I, we initiated a riveting discussion on the impact of medical unions, collectivism and related competitive thoughts on the healthcare industrial complex, with Dr. David Edward Marcinko, Founder and CEO of iMBA, Inc. The topic inquiry was suggested by a reader. We now conclude that controversial interview.

Ms. Hetico: As we press on; what about public sympathy for medical unions? 

Dr. Marcinko: Almost a decade ago in 1998, Fortune magazine carried the headline “When Six Figured Incomes Aren’t Enough. Now Doctors Want a Union.”  Rightly or wrongly, the public has no sympathy for affluent doctors. Public support, as seen in a UPS strike about the same time, is not in favor of organizing physicians. To the man in the street, it’s just a matter of the rich getting richer. After all – MDs were not crying under the traditional fee-for-service system; it was just when managed care adversely impacted incomes that the imbroglio began. The doctors, on the other hand, want to unionize to get MCOs to return to them the power to practice medicine as they see fit, not money.  

Ms. Hetico: But, isn’t perception – often reality? 

Dr. Marcinko: Indeed, perception is often the reality in many cases. Moreover, the AMA discouraged unions and past president Tom Reardon, MD opined that unions can’t do any more for physicians than their county or state medical associations can. 

Ms. Hetico: OK. Medicine is different as a “leaned profession”; but what about the medical unions that did organize? 

Dr. Marcinko: As of a few years ago, these unions were still in existence although not flourishing and my statistics may be a bit old: 

·  National Doctors Alliance [affiliated with the Salaried Employees International Union (SEIU)] an umbrella group for: 

·  Committee of Interns and Residents

Membership: > 11,000 Growth: 1,000 Dues: 1.375% – 1.5000% of salary  

·  Doctors Council

Membership: > 3,500 Growth: 1,000 Dues: $ 720 / year 

·  United Salaried Physicians and Dentists

Membership: 1,200 Growth: 300 Dues: .85% salary with $ 650 annual ceiling 

·  Federation of Physicians and Dentists

Membership: 8,500 Growth: 250 Dues: $ 672 / year 

·  Physicians for Responsible Negotiations (MD/DO only)

Membership: N/A Growth: N/A Dues: $ 300-$720 / year

·  Union of American Physicians and Dentists

Membership: 6,000  Growth: 15-17% annually  Dues: $ 465 initial fee, plus $ 400/year, plus $ 100 annual IPA surcharge.

Ms. Hetico: What were some of the psychological barriers to the formation of medical unions for doctors and medical professionals?

Dr. Marcinko: I recall William F. Shea, President of the Shea Companies, who wrote in Managed Healthcare News that there are numerous psychological barriers against the formation of physicians union.

These include (1) the public perception of medical professionals as a “cut above” ordinary workers, (2) doctor’s attempts to wrap collective bargaining within the mantle patients rights will lack credibility, and (3) the highly educated physician’s ability to re-engineer and seek alternate employment opportunities rather than accept the salary scale or lack of autonomy present in restricted HMOs.

In other words, MD resignation through individual re-deployment might be the most effective “strike,” if called by one practitioner at a time.

Ms. Hetico: So, what can be done for physicians – if anything – about their medical union education and re-education? 

Dr. Marcinko: “We are living in a world where what you earn is a function of what you learn”, former President Bill Clinton was fond of saying. This statement has become one of the truisms of the information age and by extension, hopefully the medical establishment. Correspondingly, it might be added that “it’s not so much what you learned in medical school yesterday, but what you will continued to learn today and tomorrow, that really counts.” 

For example, in the golden age of medicine (about 1965-1985), the wage premium enjoyed by physicians, over college graduates and other laborers (union and non-union), increased by about 35-55 percent. But a new type of medical professional, the paraprofessional [LPN, nurse practitioner, CNA, PA, nurse-midwife, healthcare technician or electronic expert (i.e., Google search engine, etc.] arrived on the healthcare scene.

Using powerful computer software, massive medical databases and sophisticated treatment algorithms, these networks possessed the potential to reduce the huge economic edge of traditional educated and professionally degreed physicians, over less educated caregivers. These decision support systems (DSS) and evidence based medicine [EBM) parameters are already dramatically decreasing the amount of formal education and mental skills needed to perform many medical tasks. Combined with other medical educational software, makers of online and interactive computer based internet testing (CBIT) material could significantly increase the pool of nonprofessionals qualified to compete for healthcare jobs (www.HealthDictionarySeries.com)

In the process, wage premiums would shrink not only for practitioners, but for tenured teaching physicians with years of accumulated experience, as well.

Ms. Hetico: Do say! What a diatribe? 

Dr. Marcinko: Here is the bottom line: the days of wanting “experienced grey hair” in medicine may soon be over. Patients may chant instead, give me the young “spike-haired” technologist doctor. Of course, no decision support system can replace judgment, experience and wisdom, but they can reduce the considerable monetary premium many doctors earn by knowing medical facts and processes that – while simple – might often be difficult or time consuming for students, residents or interns to find out about and learn.

It all goes back to the 80/20 rule, again. Because we are a nation that champions the weak – with a collective ennui that favors the underdog – the healthcare systems tends to deal much better with the vital 20% few, than the trivial 80% many. We love John Wayne, Rocky Balboa, organ transplants, and other medical heroics, etc. 

Ms. Hetico: But, you seem to be saying that doctors aren’t special, anymore? 

Dr. Marcinko: No, docs are very special. But, “among professional people, such as accountants, attorneys and especially physicians, there is a misconception that whatever they do is so uniquely creative and important that it can’t possibly be reproduced or put into a computer, where it can be easily and cheaply accessed by mere mortals.” When, in fact, it increasingly can.  

Obviously, this is bad news for doctors and medical students who spent a lot of money, time and energy to acquire medical degrees with the expectation of high salaries.  

Ms. Hetico: Is there a parallel somewhere in another industry that we can learn form?

Dr. Marcinko: Of course; just look at the off-shore hiring experience and visa problem of the IT pros [information technology]. Like us, they just can’t get used to the idea that they aren’t replaceable in the workplace anymore? 

Ms. Hetico: Please elaborate? 

Dr. Marcinko: We doctors got used to being overpaid when Medicare began because we had the government and private payers over a knowledge-based barrel. Now, rather than face the reality that our economic glory days are behind us – it is a new era – and be satisfied with a reasonable wage base; we tend to delude ourselves into thinking that we are getting ripped off. 

Ms. Hetico: So, doctors aren’t used to mere mortal status after so many years of being pampered? 

Dr. Marcinko: Yes! And, as Frank Levy, PhD of the Massachusetts Institute of Technology noted, the educational premium has not only remained flat in recent years, it has actually shrunk among medical professionals. In 1995-96, for the first time in a generation, blue collared technical, not labor, employment and real wages have begun to rise without a reason to believe that the gap between labor and technical skills won’t expand indefinitely. DITTO with medicine, I think. 

Ms. Hetico: In other words, wages like trees, don’t grow into the sky forever? 

Dr. Marcinko: Exactly, throughout most of the 19th century, quasi (blue collared) professionals, such as engineers, teachers, carpenters, and mechanics enjoyed a pay advantage over laborers, even as the relative wages of many other traditional (white collared) professionals began to substantially decline … so     

Ms. Hetico: How does the retail 2 wholesale payment shift impact unions?

Dr. Marcinko: Although the term paradigm shift was seldom used buzzword in contemporary medicine, it is a popular term in corporate America, which is entirely comfortable with the profound changes which constantly occur in its competitive climate.  The term merely denotes a fundamental change in the way business was done from a previous methodology.  Such core changes prompt hiring and firings, deployments and re-employments, education and re-education, on an almost daily basis. It’s just that to U.S. physicians – toppling from intellectual and economic grace is particularly hard to swallow after so many decades – and from such a seemingly arrogant and self important breed of worker.  

Nevertheless, according to Harvard economist Claudia Goldin PhD – “the lesson of the past is that we have to remain sanguine about income inequality.”  The current competitive crisis is not intrinsic to medicine and will surely pass, ingratiating those courageous and risk tolerant enough to change, while steam rolling over those who are too weak or risk adverse accommodate to new ideas. 

Of course, just how sanguine and optimistic you should be depends on how you practiced medicine today, or how you hope to practice in 2010 and beyond. History does seem to suggest however, that it is clearly possible for the wage premiums enjoyed by today’s cognitive “physician elite” to shrink, and that labor unions to the contrary, will have no impact one way or the other, on physician economic survival in the future. 

Ms. Hetico:  What then is the vision of medicine, if collectivism and unionization is not in the future of the profession?  

Dr. Marcinko: Many business experts believe the answer lies in consolidation into larger groups, Independent Practice Associations (IPAs) or major provider networks. Others believe in the new corporate medical business models known as 6th generation professional practice management corporations (PPMCs), despite the economic debacles on Wall Street, circa 2000 – or – perhaps even electronically connected medical and patient networks; with each serving as a collaborative compilation of all stakeholders through an open technology platform.  

Ms. Hetico: Any concrete examples or just theoretical at this point? 

Dr. Marcinko: One www.Sermo.com represented by founder and CEO Daniel Palestrant is for licensed physicians. The other, www.OrganizedWisdom.com represented by Co-Founder and President Unity Stoakes, is for patients. Both are getting at something that was never really made accessible before; information. Its goal is collecting, rating, codifying, ranking and making available the informal but very important experiences, wisdoms and discoveries of doctors and patients; again really interesting stuff. 

Ms. Hetico: You led a small regional PPMC in the late 90’s correct?  

Dr. Marcinko: Yes I did, and it was very hard, but we consolidated about a 95 single specialty practices before the implosion on Wall Street. But, our business model was based on debt, not equity. So, no one ever cashed out rich, or lost their money or livelihood, either. 

Ms. Hetico: How were you e-connected way back then? 

Dr. Marcinko: ISDNs; ugh! 

Ms. Hetico: Wasn’t it a private union of sorts? How did it work? 

Dr. Marcinko: Not really. Our PPMC was a corporate entity that provided administrative and management services to medical practices such as financial, marketing, human resources, contract negotiations, and information technology solutions. The goal was to achieve the economies of scale and profits not otherwise attainable by solo or the independent small group practice. 

The concept itself involved a vertically integrated network of practices, physical therapy centers, ambulatory surgery centers, prosthetic centers, wound care centers, clinical trials and outcomes centers, nursing and medical specialists; joint ventured together as a single corporate entity to provide comprehensive patient needs. Information from each location was to be electronically shared, integrated and compiled into a repository, allowing each diagnosis and treatment service to be tracked within the entire continuum of care. The practitioner was thus freed from the management, financial, purchasing, business and administrative burdens of daily medical practice. He or she was freed to practice the art of medicine and surgery. 

Ms. Hetico: That didn’t work out so well, then. What can be done today?

Dr. Marcinko: In our case, we were a little late to the Wall Street party, and a little early for the technology explosion. The roll-up model IPO attempt was aborted due to adverse market conditions, in 1999, and most folks only lost start-up organizational money.

Ms. Hetico: Did you survive the debacle?

Dr. Marcinko: My ego tanked; however I‘ve recovered. I am now a writer, speaker, financial and medical management consultant and journalist; among other things. I also like to think of myself as a health-economics thought-leader. Although, I do keep my license as a back-up.

Ms. Hetico: What is a health-economics thought-leader?

Dr. Marcinko: It’s someone who opines to the point where others are interested in listening to, or laughing at him; a visionary.

Ms. Hetico: You mean a know-it-all. Be careful, I remember you back in your clinical practice days.

Dr. Marcinko: Believe me, I am being very careful.

Ms. Hetico: So, what are physicians – and nurses – to do today? I was originally a nurse by training, and you originally a doctor. This discussion relates to me, too! We have both re-engineered and re-trained.

Dr. Marcinko: Today, if you are not a managerially astute practitioner, at least consider re-joining national medical organizations such as the ADA, AOA or AMA, which has been seriously under represented the last few years.  The AMA now has about 190,000 members and represents about 22 percent of America’s doctors (the closet thing we have to a medical union).

Ms. Hetico: What a boring idea from such an innovative guy like yourself?

Dr. Marcinko: You are right; boring. On the other hand, is joining such organizations another form of “thinking inside the box?”  You decide, but consider what have they done for you, lately? Even the AMA admitted that it has not be market responsive to its members for more than a decade, but finally made membership a top priority in 2002 going forward.  Still, it hasn’t done very well, and most folks think it won’t with all the infighting, ageism, etc. It does seem to do a nice job of political lobbying and cozying-up to the past generation of politicians, however. 

Ms. Hetico: Are you a member of the AMA? 

Dr. Marcinko: No. 

Ms. Hetico: Regardless of the future, in the ever-changing business model of medicine, unionization is not the structure of choice – is it?

Dr. Marcinko: No, I don’t think so. A more laissez-faire and highly competitive business model should be accepted.

Ms. Hetico: Yet, physicians have been slow to accept this philosophy. Much like a fad diet, new wonder drug or pop psychology guru, American doctors are trolling for a quick fix to the corporate crisis of managed care rather than adding innovation to their services through sweat equity.

Dr. Marcinko: Yep! More than most with a healthcare interest at stake, MDs/DOs have too often engaged in bashing others, railing about falling incomes, whining and assuming a posture of resistance in order to wear down perceived opponents.  Joining a labor union is just too easy, and, like most worthwhile things in life, true value is only realized only through hard work, re-engineering and risk taking, not signing a union membership application with no strategic competitive advantage or operational synergy. 

Ms. Hetico: What do you think about the new P4P initiatives; not very collective are they?

Dr. Marcinko: First off, I do like the idea of individuality. But yes, they are not very socialistic. And, my great fear is that they will become an excuse for doctors to abandon the sickest or most challenging patients; despite risk-adjustments, etc. Thus, the altruistic basis for the entire profession may be jeopardized. IOW: I fear a direct relationship between P4P and increased medical commercialization. I call it the medical merchant syndrome because that’s what some docs will become; “Merchants of Medicine.” 

Ms. Hetico: So, it sounds as though you favor social medicine or national healthcare.
Dr. Marcinko: No, what I am saying is that there must be a balance between medical collectivism for caregivers and the common good – and – capitalism with rewards for the innovative and competitive risk takers who are the deserved … or lucky few. 

Ms. Hetico: What is your answer to our domestic healthcare insurance conundrum and the uninsured crisis?

Dr. Marcinko: That’s way-off topic point, but we do have a healthcare safety-net in this country. The system is not always like Michael Moore portrayed in Sicko; but it’s just not always economically optimized either.

Ms. Hetico: Such an obtuse reply; just what does that mean? 

Dr. Marcinko:  Well, as an economist, just let me say that healthcare is not always delivered to the right patient, for the correct reason, at the most appropriate venue, by the right provider, or in the most efficacious route or cost effective manner.  Nevertheless, the demographics are against us making our task Sisyphus-like unless there is a paradigm-shift in medicine; rather than incremental adjustments.  

Ms. Hetico: So, just like the gods who had condemned Sisyphus to ceaselessly rolling a rock to the top of a mountain, where it would fall back again repeatedly of its own weight – we are doomed in healthcare?  

Dr. Marcinko: Not at all – prologue is not epilogue – but the analogy seems a good temporary one.  

Ms. Hetico: Who is your favorite philosopher?

Dr. Marcinko: Well, I am partial to several related healthcare ideas of Ann Rynd who postulated the existence of managed care and restrictive HMO-like entities more than half-century ago. Not only were many of her thoughts about it negative, some have come to fruition in one-way or another. 

Ms. Hetico: Her broad philosophy was one of objectivism, wasn’t it? 

Dr. Marcinko: That’s right; and objectivism encompasses positions on metaphysics epistemology, ethics, politics and aesthetics.  As a health economist, I interpret it aggregate the morality of rational self-interest and how society – or even an industry like healthcare – can stagnate when independent productive achievers (think doctors) begin to be socialized and even punished for accomplishments, even though society is more healthy and prosperous by allowing, encouraging and rewarding such self-reliance and individual achievement. 

Ms. Hetico: So, now you are an ethicist, too? 

Dr. Marcinko: Hardly, but independence and personal happiness flourish to the extent that we are free; and achievement rewarded to the extent that individual ownership of ideas and innovation is respected.

Ms. Hetico: Shall I add the moniker of “philosopher-ethicist” to your credentials?  

Dr. Marcinko: Not at all. Sorry, my Jesuit background from Loyola College, and the Woodstock Theological Seminary in DC, bleeds-through sometimes. Actually, my favorite medical ethicist is John LaPuma MD, in Chicago.

Ms. Hetico: Good pun – with the “bleeds-through.” 

Dr. Marcinko: It wasn’t intentional. 

Ms. Hetico: Any last thoughts on medical unionization? 

Dr. Marcinko: Remember, if you merely want a static job with promised security, pledged retirement benefits, limited goals and structured regulations; join a medical union [HMO, or privately accept any and all healthcare and/or governmental plans] and be mental laborer. 

However, if you desire more, such as the possibility of a dynamic medical career, the unlimited security of your brainpower, defined retirement contributions, infinite potential with risks and rules you can create along the way; don’t join the union, remain a real professional and be a physician. 

Ms. Hetico: Thank you Dr. Marcinko. It was the most unusual interview I have ever done. 

Dr. Marcinko: And, thank you too! It’s an important topic that has not been addressed much on the blogs!  

Ms. Hetico: I’m sure this discussion will change all that. I can see the avalanche of email opinions, text messages and blog reactions now; both for and against. 

Dr. Marcinko: I hope so, too!  BTW: Who do you interview next? 

Ms. Hetico: That information is confidential. 

Dr. Marcinko: OK then: What’s for dessert? Peach-cobbler, I hope. 

THE END

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