PODCAST: Financial Planning and Medical Business Management Mistakes of Independent Doctors

By Entrepreneurial MD

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In this episode, host Christopher Hughey talks to Steven Huskey about the financial, management and planning mistakes many independent doctors make when setting up their own medical practice.

PODCAST: https://www.theentrepreneurmd.com/search?query=mistakes

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FINANCIAL PLANNING: Strategies for Doctors and their Advisors

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BY DR. DAVID E. MARCINKO MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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REVIEWS:

Written by doctors and healthcare professionals, this textbook should be mandatory reading for all medical school students—highly recommended for both young and veteran physicians—and an eliminating factor for any financial advisor who has not read it. The book uses jargon like ‘innovative,’ ‘transformational,’ and ‘disruptive’—all rightly so! It is the type of definitive financial lifestyle planning book we often seek, but seldom find.
LeRoy Howard MA CMPTM,Candidate and Financial Advisor, Fayetteville, North Carolina

I taught diagnostic radiology for over a decade. The physician-focused niche information, balanced perspectives, and insider industry transparency in this book may help save your financial life.
Dr. William P. Scherer MS, Barry University, Ft. Lauderdale, Florida

This book was crafted in response to the frustration felt by doctors who dealt with top financial, brokerage, and accounting firms. These non-fiduciary behemoths often prescribed costly wholesale solutions that were applicable to all, but customized for few, despite ever-changing needs. It is a must-read to learn why brokerage sales pitches or Internet resources will never replace the knowledge and deep advice of a physician-focused financial advisor, medical consultant, or collegial Certified Medical Planner™ financial professional.
—Parin Khotari MBA,Whitman School of Management, Syracuse University, New York

In today’s healthcare environment, in order for providers to survive, they need to understand their current and future market trends, finances, operations, and impact of federal and state regulations. As a healthcare consulting professional for over 30 years supporting both the private and public sector, I recommend that providers understand and utilize the wealth of knowledge that is being conveyed in these chapters. Without this guidance providers will have a hard time navigating the supporting system which may impact their future revenue stream. I strongly endorse the contents of this book.
—Carol S. Miller BSN MBA PMP,President, Miller Consulting Group, ACT IAC Executive Committee Vice-Chair at-Large, HIMSS NCA Board Member

This is an excellent book on financial planning for physicians and health professionals. It is all inclusive yet very easy to read with much valuable information. And, I have been expanding my business knowledge with all of Dr. Marcinko’s prior books. I highly recommend this one, too. It is a fine educational tool for all doctors.
—Dr. David B. Lumsden MD MS MA,Orthopedic Surgeon, Baltimore, Maryland

There is no other comprehensive book like it to help doctors, nurses, and other medical providers accumulate and preserve the wealth that their years of education and hard work have earned them.
—Dr. Jason Dyken MD MBA,Dyken Wealth Strategies, Gulf Shores, Alabama

I plan to give a copy of this book written
by doctors and for doctors’ to all my prospects, physician, and nurse clients. It may be the definitive text on this important topic.
—Alexander Naruska CPA,Orlando, Florida

Health professionals are small business owners who need to apply their self-discipline tactics in establishing and operating successful practices. Talented trainees are leaving the medical profession because they fail to balance the cost of attendance against a realistic business and financial plan. Principles like budgeting, saving, and living below one’s means, in order to make future investments for future growth, asset protection, and retirement possible are often lacking. This textbook guides the medical professional in his/her financial planning life journey from start to finish. It ranks a place in all medical school libraries and on each of our bookshelves.
—Dr. Thomas M. DeLauro DPM,Professor and Chairman – Division of Medical Sciences, New York College of Podiatric Medicine

Physicians are notoriously excellent at diagnosing and treating medical conditions. However, they are also notoriously deficient in managing the business aspects of their medical practices. Most will earn $20-30 million in their medical lifetime, but few know how to create wealth for themselves and their families. This book will help fill the void in physicians’ financial education. I have two recommendations: 1) every physician, young and old, should read this book; and 2) read it a second time!
—Dr. Neil Baum MD,Clinical Associate Professor of Urology, Tulane Medical School, New Orleans, Louisiana

I worked with a Certified Medical Planner™ on several occasions in the past, and will do so again in the future. This book codified the vast body of knowledge that helped in all facets of my financial life and professional medical practice.
Dr. James E. Williams DABPS, Foot and Ankle Surgeon, Conyers, Georgia

This is a constantly changing field for rules, regulations, taxes, insurance, compliance, and investments. This book assists readers, and their financial advisors, in keeping up with what’s going on in the healthcare field that all doctors need to know.
Patricia Raskob CFP® EA ATA, Raskob Kambourian Financial Advisors, Tucson, Arizona

I particularly enjoyed reading the specific examples in this book which pointed out the perils of risk … something with which I am too familiar and have learned (the hard way) to avoid like the Black Death. It is a pleasure to come across this kind of wisdom, in print, that other colleagues may learn before it’s too late— many, many years down the road.
Dr. Robert S. Park MD, Robert Park and Associates Insurance, Seattle, Washington

Although this book targets physicians, I was pleased to see that it also addressed the financial planning and employment benefit needs of nurses; physical, respiratory, and occupational therapists; CRNAs, hospitalists, and other members of the health care team….highly readable, practical, and understandable.
Nurse Cecelia T. Perez RN, Hospital Operating Room Manager, Ellicott City, Maryland

Personal financial success in the PP-ACA era will be more difficult to achieve than ever before. It requires the next generation of doctors to rethink frugality, delay gratification, and redefine the very definition of success and work–life balance. And, they will surely need the subject matter medical specificity and new-wave professional guidance offered in this book. This book is a ‘must-read’ for all health care professionals, and their financial advisors, who wish to take an active role in creating a new subset of informed and pioneering professionals known as Certified Medical Planners™.
—Dr. Mark D. Dollard FACFAS, Private Practice, Tyson Corner, Virginia

As healthcare professionals, it is our Hippocratic duty to avoid preventable harm by paying attention. On the other hand, some of us are guilty of being reckless with our own financial health—delaying serious consideration of investments, taxation, retirement income, estate planning, and inheritances until the worry keeps one awake at night. So, if you have avoided planning for the future for far too long, perhaps it is time to take that first step toward preparedness. This in-depth textbook is an excellent starting point—not only because of its readability, but because of his team’s expertise and thoroughness in addressing the intricacies of modern investments—and from the point of view of not only gifted financial experts, but as healthcare providers, as well … a rare combination.
Dr. Darrell K. Pruitt DDS, Private Practice Dentist, Fort Worth, Texas

This text should be on the bookshelf of all contemporary physicians. The book is physician-focused with unique topics applicable to all medical professionals. But, it also offers helpful insights into the new tax and estate laws, fiduciary accountability for advisors and insurance agents, with investing, asset protection and risk management, and retirement planning strategies with updates for the brave new world of global payments of the Patient Protection and Affordable Care Act. Starting out by encouraging readers to examine their personal ‘money blueprint’ beliefs and habits, the book is divided into four sections offering holistic life cycle financial information and economic education directed to new, mid-career, and mature physicians.

This structure permits one to dip into the book based on personal need to find relief, rather than to overwhelm. Given the complexity of modern domestic healthcare, and the daunting challenges faced by physicians who try to stay abreast of clinical medicine and the ever-evolving laws of personal finance, this textbook could not have come at a better time.
—Dr. Philippa Kennealy MD MPH, The Entrepreneurial MD, Los Angeles, California

Physicians have economic concerns unmatched by any other profession, arriving ten years late to the start of their earning years. This textbook goes to the core of how to level the playing field quickly, and efficaciously, by a new breed of dedicated Certified Medical Planners™. With physician-focused financial advice, each chapter is a building block to your financial fortress.
Thomas McKeon, MBA, Pharmaceutical Representative, Philadelphia, Pennsylvania

An excellent resource … this textbook is written in a manner that provides physician practice owners with a comprehensive guide to financial planning and related topics for their professional practice in a way that is easily comprehended. The style in which it breaks down the intricacies of the current physician practice landscape makes it a ‘must-read’ for those physicians (and their advisors) practicing in the volatile era of healthcare reform.
—Robert James Cimasi, MHA ASA FRICS MCBA CVA CM&AA CMP™, CEO-Health Capital Consultants, LLC, St. Louis, Missouri

Rarely can one find a full compendium of information within a single source or text, but this book communicates the new financial realities we are forced to confront; it is full of opportunities for minimizing tax liability and maximizing income potential. We’re recommending it to all our medical practice management clients across the entire healthcare spectrum.
Alan Guinn, The Guinn Consultancy Group, Inc., Cookeville, Tennessee

Dr. David Edward Marcinko MBA CMP™ and his team take a seemingly endless stream of disparate concepts and integrate them into a simple, straightforward, and understandable path to success. And, he codifies them all into a step-by-step algorithm to more efficient investing, risk management, taxation, and enhanced retirement planning for doctors and nurses. His text is a vital read—and must execute—book for all healthcare professionals and physician-focused financial advisors.
Dr. O. Kent Mercado, JD, Private Practitioner and Attorney, Naperville, Illinois

Kudos. The editors and contributing authors have compiled the most comprehensive reference book for the medical community that has ever been attempted. As you review the chapters of interest and hone in on the most important concerns you may have, realize that the best minds have been harvested for you to plan well… Live well.
Martha J. Schilling; AAMS® CRPC® ETSC CSA, Shilling Group Advisors, LLC, Philadelphia, Pennsylvania

I recommend this book to any physician or medical professional that desires an honest no-sales approach to understanding the financial planning and investing world. It is worthwhile to any financial advisor interested in this space, as well.
David K. Luke, MIM MS-PFP CMP™, Net Worth Advisory Group, Sandy, Utah

Although not a substitute for a formal business education, this book will help physicians navigate effectively through the hurdles of day-to-day financial decisions with the help of an accountant, financial and legal advisor. I highly recommend it and commend Dr. Marcinko and the Institute of Medical Business Advisors, Inc. on a job well done.
Ken Yeung MBA CMP™, Tseung Kwan O Hospital, Hong Kong

I’ve seen many ghost-written handbooks, paperbacks, and vanity-published manuals on this topic throughout my career in mental healthcare. Most were poorly written, opinionated, and cheaply produced self-aggrandizing marketing drivel for those agents selling commission-based financial products and expensive advisory services. So, I was pleasantly surprised with this comprehensive peer-reviewed academic textbook, complete with citations, case examples, and real-life integrated strategies by and for medical professionals. Although a bit late for my career, I recommend it highly to all my younger colleagues … It’s credibility and specificity stand alone.
Dr. Clarice Montgomery PhD MA,Retired Clinical Psychologist

In an industry known for one-size-fits-all templates and massively customized books, products, advice, and services, the extreme healthcare specificity of this text is both refreshing and comprehensive.
Dr. James Joseph Bartley, Columbus, Georgia

My brother was my office administrator and accountant. We both feel this is the most comprehensive textbook available on financial planning for healthcare providers.
Dr. Anthony Robert Naruska DC,Winter Park, Florida

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RECESSION: Healthcare Industry Layoffs

Not even the healthcare industry is recession-proof

By Staff Reporters

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According to Kristine White of Healthcare Brew, New York City-based Memorial Sloan Kettering Cancer Center (MSK), one of the country’s top cancer treatment facilities, laid off 337 employees on Jan. 17 in response to ongoing financial challenges, according to a New York State Department of Labor filing.

The 337 employees, who worked across 14 sites and in multiple departments, represent about 1.5% of MSK’s 22,500 employees. This is a slight decrease from the expected 3% of layoffs announced in November 2022.

“This reduction was necessary to ensure that MSK can continue to invest in the future of cancer care, research, and education for the benefit of generations to come, and every effort has been made to ensure that patient care is not impacted,” spokesperson John Connolly said in a statement shared with Healthcare Brew.

The institution’s operating losses totaled $116.1 million for Q3 of 2022, compared to a loss of $8.7 million during the same period in 2021, according to a quarterly financial report released in November last year.

Factors such as increased patient activity, wages, and supply costs from inflation pushed the system’s operating expenses up by 7.5% from Q3 of 2021 to Q3 of 2022. The cancer center hired more staff in 2022 with the expectation that patient volume would increase, according to the financial report.

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

Health systems like MSK often reevaluate their biggest expense (workers) when business is down, Lori Kalic, a healthcare senior analyst at consulting firm RSM, told Healthcare Brew.

Just this year, multiple hospitals and health systems have also announced layoffs, including Tufts Medicine in Boston and Integris Health in Oklahoma, according to White.

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INVITE: Professor Marcinko to Your Next Seminar or Event

See You Soon

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Colleagues know that I enjoy personal coaching and public speaking and give as many talks each year as possible, at a variety of medical society and financial services conferences around the country and world. All in a Corona safe environment.

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These include lectures and visiting professorships at major academic centers, keynote lectures for hospitals, economic seminars and health systems, end-note lectures at city and statewide financial coalitions, and annual lectures for a variety of internal yearly meetings.

LIVE or PODCAST enabled, as well.

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Teleconference: https://medicalexecutivepost.com/2020/10/14/me-marcinko-and-my-avatar/

My Fond Farewell to Tuskegee University

And so, we appreciate your consideration.

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CONTACT: ANN MILLER RN MHA CMP®

[ME-P Executive-Director]

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EM: MarcinkoAdvisors@msn.com

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Defining the Standard of Medical Practice Business Value

Understanding Terms and Definitions

Dr. David E. Marcinko; MBA, CMP™

[Editor-in-Chief]

The term “value” in and of itself is too broad to be useful in the business appraisal of a medical practice, ASC or clinic, etc.  It must be given a context. As a medical practice appraiser, the industry generally refers to four standards of value. 

Fair Market Value

This is the most common context given to the term value. Fair Market Value [FMV] is defined by the IRS through Revenue Ruling 59-60 as:

“the amount at which property would exchange hands between a willing buyer and a willing seller when the former is not under compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts.”

It is generally agreed that fair market value is based upon a hypothetical arm’s length transaction before direct consideration of taxes to be paid as a result the transaction.  That does not imply that taxes are not part of the relevant fact set that a willing doctor-buyer considers when determining the value.  Fair Market Value is the standard of value that is used in valuations for estate tax and generally for valuations related to divorce.

Investment Value        

Investment Value focuses on value to a specific buyer rather than value to a hypothetical buyer. For example, let us examine an owner of a medical office who is considering the acquisition of a competitor practice that operates in the same geographic market.  The doctor owner might calculate value based upon the knowledge that the combination of the two entities will create economies of scale and less competition. This would result in greater profitability per dollar of revenue.  Therefore, such a buyer, all else equal, may assess a greater value to the practice than a buyer who would expect to operate the office in its current free standing situation, without the expected cost saving and corresponding expectation of increased cash flow.

Intrinsic Value

Intrinsic Value is similar to investment value however the practice is typically viewed in a stand-alone mode as a going concern.  That is, value is based upon the expected cash flows of the firm based upon its current operating configuration.  However, changes in operating policy such as changing its financial structure can have an impact on its intrinsic value. 

Going Concern Value vs. Liquidation Value

A medical business cannot be worth less than its liquidation value. Thus, liquidation value sets a floor for value. Liquidation value assumes that a practice’s operations cease and assets are sold either piecemeal or in groups and obligations are satisfied. Liquidation value is generally based on an “orderly liquidation” process where assets are sold in manner to realize the greatest possible value for them. 

In contrast, a “forced liquidation” process is where practice assets are sold as quickly as possible often through an auction. Going Concern Value views a firm as a holistic combination of tangible and intangible assets in which the sum is often greater than its parts. This synergistic view of the practice is typically what is being valued.     

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Speaker: Dr. Marcinko is a highly sought after futurist and speaker in the areas of health economics, financial planning, medical practice management and related entrepreneurial e-insights for many intersecting sectors in the healthcare industrial complex. Contact the ME-P for availability and scheduling. 

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MEDICAL SCHOOLS: Why They Don’t Teach Business and How it’s Costing Physicians?

[THE MILLION DOLLAR MISTAKE]

By Curtis G. Graham MD

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The fact that every physician in private medical practice, without a business education, leaves approximately a million dollars on the table and is unaware of it is well known to business experts who work with medical doctors experiencing financial difficulties.

Business experts such as Dan S. Kennedy, Peter Drucker, Michael Gerber, Maxwell Maltz, Neil Baum, William Hanson, Huss and Coleman, Steven Hacker, Thomas Stanley, Chris Hurn, Napoleon Hill, and Dave Ramsey, among others, understand the financial problems faced by medical practices and how to solve them.

READ HERE: https://www.kevinmd.com/2023/01/the-million-dollar-mistake-why-medical-schools-dont-teach-business-and-how-its-costing-physicians.html

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PODCAST: How Doctors are Really Paid?

Learn the Incentives in Physician Compensation

BY ERIC BRICKER MD

RAND and Harvard University Researchers Recently Published a Study in the Journal of the American Medical Association Examining How Doctors are Paid by Hospital System-Owned Practices. The Study Found that only 9% of Primary Care Physician Compensation was Based on Value (Quality and Cost-Effectiveness) and only 5.3% of Specialist Compensation was Based on Value.

The Study Concluded: “The results of this cross-sectional study suggest that PCPs and specialists despite receiving value-based reimbursement incentives from payers, the compensation of health system PCPs and specialists was dominated by volume-based incentives designed to maximize health systems revenue.”

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RELATED: https://medicalexecutivepost.com/2008/09/12/how-doctors-get-paid/

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HOSPITALS: https://www.amazon.com/Financial-Management-Strategies-Healthcare-Organizations/dp/1466558733/ref=sr_1_3?ie=UTF8&qid=1380743521&sr=8-3&keywords=david+marcinko

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PRIVATE EQUITY: Ownership in Physician Practices

By NIHCM

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Private equity acquisition of physician practices continues to grow nationwide. New research focused on specialists in dermatology, gastroenterology, and ophthalmology shows the impact of the trend.

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

Novel evidence by NIHCM grantee Jane Zhu, MD, and her team, reveals shifts in workforce composition and hiring patterns after private equity firms obtain physician practices. The researchers’ findings are particularly important for policymakers and practices considering selling to private equity firms. Highlights include:

  • A significant yearly increase in the number of advanced practice providers at private equity-acquired practices, specifically nurse practitioners and physician assistants. 
  • In acquired practices, entering clinicians replaced exiting clinicians at a higher rate than at non-private equity-acquired practices.

This work adds to the research team’s previous findings, including the geographic variations in private equity ownership across six medical specialties, and the impact of private equity on health care costs and utilization.

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PODCAST: Farzad Mostashari MD and “Aledade”Primary Care

By Shahid N Shah

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Our guest on this episode is Dr. Farzad Mostashari. Farzad is the co-founder and CEO of Aledade, a primary care enablement company that partners with independent PCPs to transition to value-based care and, as a result, maintain their independence.

Founded in 2014, Aledade works with 11,000 physicians across 40 states and DC, accounting for 1.7M patients under management in Medicare, Medicare Advantage, Commercial and Medicaid contracts. Farzad previously served as the National Coordinator for Health IT in the Department of Health and Human Services, he completed medical school at the Yale School of Medicine and a Master’s in Population Health from Harvard’s T.H. Chan School of Public Health. Earlier this year, Aledade raised a $123M Series E round of funding led by OMERS Growth Equity.

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In this episode, colleague Shahid N. Shah will discuss with Farzad about (1) his journey to starting Aledade and the role policy expertise and evidence have played in the company’s success (2) why he and the company are betting on independent physicians as the drivers of change in value-based care and (3) how Aledade became the rare profitable health tech company.

-Dr. David Edward Marcinko MBA

PODCAST: https://soundcloud.com/wharton-pulse-podcast/mostashari-aledade

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PODCAST: Employee Engagement and Health Plans

By Eric Bricker MD

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

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Medical School Ethics VERSUS Business School Ethics

Is Business Finally Embracing Medical Values?

[By Render S. Davis MHA CHE]

[By David Edward Marcinko MBA]

dr-david-marcinko

In the evolutionary shifts in models for medical care, physicians have been asked to embrace business values of efficiency and cost effectiveness, sometimes at the expense of their professional judgment and personal values.

While some of these changes have been inevitable as our society sought to rein in out-of-control costs, it is not unreasonable for physicians to call on payers, regulators and other business parties to the health care delivery system to raise their ethical bar.

Tit-for-Tat

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

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face-off

[Medicine versus Business]

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Assessment

Within the framework of ethical principles, John La Puma, M.D., wrote in Managed Care Ethics, that “business’s ethical obligations are integrity and honesty.

Medicine’s are those plus altruism, beneficence, non-maleficence, respect, and fairness.”

About the Author

Render Davis was a Certified Healthcare Executive, now retired from Crawford Long Hospital at Emory University, in Atlanta, GA He served as Assistant Administrator for General Services, Policy Development, and Regulatory Affairs from 1977-95.  He is a founding board member of the Health Care Ethics Consortium of Georgia and served on the consortium’s Executive Committee, Advisory Board, Futility Task Force, Strategic Planning Committee, and chaired the Annual Conference Planning Committee, for many years.

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PODCASTS: The Physician-Patient Population Health Mis-Match

By Eric Bricker MD

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PODCAST: https://medicalexecutivepost.com/2022/10/23/podcast-help-your-medical-practice-embrace-population-health/

Population Health: https://medicalexecutivepost.com/2022/07/12/enter-population-health-management/

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Healthcare Leadership V.S. Management

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Understanding the Difference

[By Dr. David Edward Marcinko MBA]

DEM blueMany times, individuals will use the terms management and leadership synonymously. In actuality the terms have significantly different meanings.

For example, Warren Bennis describes the difference between managers and leaders as “Managers do things right, Leaders the right thing.”

Managers are those individuals who have as their primary function managing a team of people and their activities. In effect, managers are those who have been given their authority by the nature of their role and ensure that the work gets done by focusing on day to day tasks and their activities.

On other hand, a leader’s approach is generally innate in its approach. Good leadership skills are difficult to learn because they are far more behavioral in nature than those skills needed for management. Leaders are also very focused on change recognizing that continual improvement can be achieved in their people and their activities can be a great step towards continued success.

Training Camps

Perhaps some of the best training grounds for the development of leaders are the military. The Marine Corps slogan is “A Few Good Men” and the military academies at Annapolis (Navy), New London, Connecticut (Coast Guard), Colorado Springs (Air Force), and West Point (Army) all have as their main mission, the development of leaders.

This is done by a number of different techniques. At graduation, the new officers, regardless of the branch of service, have been taught, and more importantly, have internalized the following: communicate the missions, sensitivity matters, real respect is earned, trust and challenge your soldiers. It is due to these lessons that many graduates of the military academies go on to positions of leadership in the private sector as well as in government.  Communicating the mission refers to conveying to those who work with us what are practice is hoping to accomplish and the role of each employee in achieving that goal. Given an understanding and awareness of the mission, when confronted with a barrier, employees are able to face hard problems when there is no well-defined approach by which to deal with them.

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IRA advice and leadership

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Sensitivity Does Matter

This is my area to improve; as I can be glib on occasion.

A leader treats each employee with respect and dignity, regardless of race, gender, cultural background or particular role they actually perform in the practice. Consider how many legal suits are filed against any type of organization, whether it is a medical practice or a large manufacturing facility due to perceived disparate treatment towards the employee based on race, religion, gender sexual preference or other non-work related issues.

Real respect is earned – Having initials after one’s name and the wearing of a lab coat does not automatically entitle an individual to respect. Formal authority has been found to be one of the least effective forms of influence. Only by earning the respect of your staff as well as your patients can you be sure that your intent will be carried out when you are not present. Setting the example in performance and conduct, rather than ‘do as I say, not as I do,” level of activity enables one to exert influence far greater than titles.

Trust and challenge your employees – How many times have practices sought to hire the best and brightest only to second guess the employee. Eric Schmidt, the CEO of Google, describes his management philosophy as having “… an employee base in which everybody is doing exactly what they want every day.” Obviously there are certain policies and procedures, but at the same time, the leader enables decision making to the lowest possible level. This also enables employees to question why certain policies and procedures are still being followed when more effective and efficient methods are available.  (How the Army Prepared Me to Work at Google, Doug Raymond, Harvard Business)

The phrase “Physician, heal thyself” (Luke 4:23, King James Version) means that we have to attend to our own faults, in preference to pointing out the faults of others. The phrase alludes to the readiness of physicians to heal sickness in others while sometimes not being able or will to heal themselves.

By the same token, it now is necessary for us to learn how to manage ourselves. It suggests that physicians, while often being able to help the sick, cannot always do so, and when sick themselves are no better placed than anyone else (Gary Martin, phrases.org.uk/meanings/281850.html, 2010).

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Feet

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Self-Development

“We will have to learn how to develop ourselves. We will have to place ourselves outside the boundaries where we can make the greatest contribution. And we will have to stay mentally alert and engaged during a 50-year working life, which means knowing how and when to change the work we do” (Managing Oneself, Harvard Business Review – Jan. 2005 – pp 100-109, by Peter Drucker).

Although one’s IQ and certain personality characteristics are more or less innate and appear to remain stable over time there are individual capabilities that enable leadership and can be developed. Enhancement of these capabilities can lead to the individual being able to carry out the leadership tasks of setting direction, gaining commitment, and creating alignment. These capabilities include self-management capabilities, social capabilities and work facilitation capabilities.

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Assessment

Without question, while it is possible to cram for at test and graduate at the top of one’s class, that does not assure   leadership ability. We all know at least one person who scores at the highest levels on cognitive measures but would be incapable of pouring liquid out of a boot if the instructions were written on the heel.

So, here is my philosophy:

  • Leadership: By example and thru transparency with collaboration [Do the right thing]
  • Management: By walking-around thru tangible / intangible metrics [Doing things right].

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MEDICAL PRACTICE VALUATION BLUNDERS

COMMON MEDICAL PRACTICE VALUATION BLUNDERS TO AVOID?

Dr. David E. Marcinko MBA CMP

Courtesy: www.CertifiedMedicalPlanner.org

A Medical Practice business valuation is a set of procedures to estimate the economic value of a physician owner’s interests. Valuation is used to determine the price they are willing to pay or receive to affect a sale of the practice.

LINK: https://www.amazon.com/Dictionary-Health-Economics-Finance-Marcinko/dp/0826102549/ref=sr_1_6?ie=UTF8&s=books&qid=1254413315&sr=1-6

The same valuation tools are often used to resolve disputes related to estate and gift taxation, divorce litigation, allocated purchase price among business assets, establish a formula for estimating the value of partners’ ownership interest for buy-sell agreements, and other business and legal purposes.

QUERY: But, what are the most common medical practice valuation blunders to avoid? Written over a decade ago, this white paper highlights the most common mistake still seen today.

WHITE PAPER: https://healthcarefinancials.files.wordpress.com/2011/12/medical-practice-valuation-blunders1.pdf

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BUSINESS, FINANCE AND INSURANCE TEXTS FOR DOCTORS

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PODCAST: Hospital Financial Cross – Subsidization

By Eric Bricker MD

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SECOND OPINIONS: Physician Financial Planning, Investing, Medical Practice Management and Business Valuations; etc!

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Financial Planning for Medical Professionals

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HOSPICE: End-of-Care w/o Dignity

THE TERMINAL END GAME

By Staff Reporters

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How the visionary hospice movement became a for-profit hustle by Ava Kofman (ProPublica)

ProPublica’s unblinking, compassionate look at an industry that uncomfortably reminds us of our own mortality couldn’t have come at a more poignant time.

HISTORY: https://medicalexecutivepost.com/2009/01/14/hospice-care-flourishing/

The story shows how rampant fraud and malpractice have upended a “crusade to provide death with dignity.”

But what truly makes this piece is how the reporter handled such a difficult, heavy lift with so much grace!

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

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PODCAST: Healthcare is Great for People with Medicare.

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Greater than 90% of Medicare Beneficiaries Are Satisfied with Their Care

By Eric Bricker MD

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

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ORGANIZATIONS: https://www.amazon.com/Financial-Management-Strategies-Healthcare-Organizations/dp/1466558733/ref=sr_1_3?ie=UTF8&qid=1380743521&sr=8-3&keywords=david+marcinko

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ON THE RISE: Healthcare Consumerism!

By Staff Reporters

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As technology continues to rapidly evolve, a corresponding transformation in the healthcare industry is occurring. One of the most significant changes is the shift from traditional healthcare to healthcare consumerism. Patients now have more information available to them than ever before, and they are using this information to make more informed healthcare decisions. Patients are no longer passively accepting the care that is provided to them.

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

Instead, they are actively choosing the care that they receive, and are more selective about the providers that they use. As a result, healthcare providers must now focus on providing a better patient experience to attract and retain patients.

Source: Hari Prasad, Physicians Practice [12/8/22]

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“Rules-of-Thumb” and Medical Practice Valuation Benchmarks

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Busting another Myth of Medical Practice Appraisal

[By Dr. David Edward Marcinko; MBA, CMP™]

[Publisher-in-Chiefdr-david-marcinko]

For doctors, buying or selling a practice may be the biggest financial transaction of their lives. 

Reasons for appraising practice worth include: succession, retirement and estate planning; partnership disputes and divorce; or as an important tool for organic growth and strategic planning.

However, the transaction is fraught with many pitfalls to avoid and no medical specialty seems immune. 

Valuation Difficulties 

For example, we recall the MD who asked her accountant for the “value” of her practice and was correctly given its lower “book value”, rather than its higher “fair-market-value” as a profitable ongoing-concern. The doctor lost tens-of-thousands-of-dollars in a subsequent attorney-driven sales transaction.

Although her CPA produced correct figures for exactly what was requested, the doctor and attorney did not differentiate between the two terms-of-art.  Later legal mediation determined that neither was responsible for the linguistic error, as both parties acted in good-faith.

Of course, it was the doctor who paid dearly for her mistake in communication and business acumen.  

“Rules-of-Thumb” [aka: benchmark formulas or calculations] 

And so, in the stable distant past, physicians occasionally used “rules of thumb” formulas to value their medical practices. 

“Rules” typically were expressed as benchmark calculations, formulas or multipliers (e.g. “one times revenues” or “five times cash flow”).  

Today, because of the economic volatility in the healthcare industrial complex, “rules of thumb” should not be used to value any medical practice (other than as general internal managerial sanity checks).  

Moreover, they are fraught with legal liability should the deal sour, and such benchmarks general hold little to no weight with the IRS. 

Case example [the tale of two identical medical practices] 

Economically, for example, consider two medical offices, each earning $1 million in gross revenues; both worth $1.5 million (according to a “rule of thumb” that a medical practice is worth 1½ times annual revenues).  Yet, in reality Medical Office #1 is worth twice Medical Office #2.   

How is this possible?   

The answer is because Medical Office #1 is a newer practice in a hot neighborhood that did $500,000 last year, $1 million this year; and projects to do even more next year.  Its property, instruments, HIT and medical equipment is new; aggressive young physician-executive management and medical training is excellent.   

Medical Office #2 is an older practice located in a low-income area, revenues were $2 million a few years ago and have fallen to the current level; the practice has a leaky roof, old equipment and lots of deferred maintenance, etc.  HMO patients abound, with declining reimbursement rates and an older practitioner.  

Assessment 

So, although much more complicated than the above simple example, we can now see how “rule-of-thumbs” can mislead more often than inform. 

Yet, we might also ask why they are still used by some misinformed doctors?  

Simplicity and inertia is the answer, according to Hope Rachel Hetico; RN, MHA a valuation professional and Certified Medical Planner™ from the Institute of Medical Business Advisors Inc, in Atlanta GA www.MedicalBusinessAdvisors.com 

And, the cost of a benchmark “rule-of-thumb” valuation is hard to beat; $0. Keep in mind that in most cases, you will want to ensure the value determination will stand up to IRS scrutiny, so the $0 rule-of-thumb is not really an option  

The Case of Edgar versus Berg 

Legalistically, a landmark legal case in business valuation was the Estate of Edgar A. Berg v. Commissioner (T. C. Memo 1991-279). The Court criticized the CPAs as not being qualified to perform valuations, failing to provide analysis of an appropriate discount rate, and making only general references to justify their “Opinion of Value.”  

In rejecting these experts, the Court accepted the IRS’s expert because he possessed the background, education and training; and developed discounts, and demonstrating how reproducible evidence applied to the assets being examined.  

Assessment 

The Berg decision marked the beginning of the Tax Court leaning toward the side with the most comprehensive appraisal. Previously, it had a tendency to “split the difference.”  

Now, some feel the Berg case launched the business valuation profession.

MORE: https://medicalexecutivepost.com/2017/11/03/traditional-reasons-for-a-medical-practice-valuation/

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Medical Workplace Violence Prevention Guidelines

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Earliest Guidelines in California Program

By Eugene Schmuckler; PhD MBA MEd CTS

By Dr. David E. Marcinko MBA

UPDATE

At least 5 people are dead and multiple people are injured following a shooting at the Natalie Building at St. Francis Hospital in Tulsa, Oklahoma.

Link: https://apnews.com/article/tulsa-oklahoma-c29a239d1c2ac7f7f0bfdc161b72f6f2

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The impact of medical workplace violence became widely exposed on November 6, 2009 when 39 year old Army psychiatrist Maj. Nidal M. Hasan MD, a 1997 graduate of Virginia Tech University who received a medical doctorate in psychiatry from the Uniformed Services University of the Health Sciences in Bethesda, Maryland, and served as an intern, resident and fellow at the Walter Reed Army Medical Center in the District of Columbia, went on a savage 100 round shooting spree and rampage that killed 13 people and injured 32 others. In April 2010 he was transferred to Bell County Jail in Belton, Texas awaiting trial.

Federal Government Guidelines

The federal government and some states have developed guidelines to assist employers with workplace violence prevention. For instance, one of the earliest sets of guidelines for a comprehensive workplace violence prevention program was published in 1993 by California OSHA. This resulted from the murder of a state employee. In 1996, Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers was published by OSHA.

Book Link:  www.BusinessofMedicalPractice.com

OSHA Guidelines

In its guidelines, OSHA sets forth the following essential elements for developing a violence prevention program:

  • Management commitment — as seen by high-level management involvement and support for a written workplace violence prevention policy and its implementation.
  • Meaningful employee involvement — in policy development, joint management-worker violence prevention committees, post-assault counseling and debriefing, and follow-up are all critical program components.
  • Worksite analysis — includes regular walk-through surveys of all patient care areas and the collection and review of all reports of worker assault. A successful job hazard analysis must include strategies and policies for encouraging the reporting of all incidents of workplace violence, including verbal threats that do not result in physical injury.
  • Hazard prevention and control — includes the installation and maintenance of alarm systems in high-risk areas. It may also include the training and posting of security personnel in emergency departments. Adequate staffing is an essential hazard prevention measure, as is adequate lighting and control of access to staff offices and secluded work areas.
  • Pre-placement and periodic training and education — must include educationally appropriate information regarding the risk factors for violence in the healthcare environment and control measures available to prevent violent incidents. Training should include skills in aggressive behavior identification and management, especially for staff working in the mental health and emergency departments.

On May 17, 1999, Governor Gary Locke signed the New Workplace Violence Prevention Act for the state of Washington. This act mandates that each healthcare setting in the state implement a plan to reasonably prevent and protect employees from violence.

New Washington Workplace Violence Prevention Act

According to this act, prevention plans need to address security considerations related to:

  • physical attributes of the healthcare setting;
  • staffing, including security staffing;
  • personnel policies;
  • first aid and emergency procedures;
  • reporting of violent acts; and
  • employee education and training.

Prior to the development of an actual plan, a security and safety assessment needs to be conducted to identify existing or potential hazards. The training component of the plan must include the following topics:

  • general safety procedures;
  • personal safety procedures;
  • the violence escalation cycle;
  • violence-predicting factors;
  • means of obtaining a patient history form from a patient with violent behavior;
  • strategies to avoid physical harm;
  • restraining techniques;
  • appropriate use of medications as chemical restraints;
  • documenting and reporting incidents;
  • the process whereby employees affected by a violent act may debrief;
  •  any resources available to employee for coping with violence; and
  • the healthcare setting’s workplace violence prevention plan.

Assessment

The act further mandates that any hospital operated and maintained by the State of Washington for the care of the mentally ill is required to provide violence prevention training to affected employees identified in the plan on a regular basis and prior.

Front Matter: Front Matter BoMP – 3 

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How to NAME Your New Medical Practice?

PRAGMATIC BUSINESS – NOT PERSONAL – MANAGEMENT ADVICE

By Dr. David E. Marcinko MBA CMP®

CMP logo

SPONSOR: http://www.CertifiedMedicalPlanner.org

THE MEDICAL PRACTICE NAME

Did you know that most experts recommend against naming a practice with your own name because it limits future growth and you may lose the benefits that a more descriptive name would bring?

Your business name will likely be incorporated using your practice’s name, although larger (multi-specialty group) practices may use a more general name for the entire enterprise; and then having multiple “dba’s” (”Doing Business As”) for the individual practices under the umbrella. It is important to discuss these options with an attorney if you believe this arrangement has advantage; others find it confusing.

Healthcare Marketing: How to Name Your Medical Practice - The Medically

Usually, your medical specialty can be used as a base-name, and then some descriptor to differentiate it from local competing practices. Selecting a name like “The Allegiance Partners” does not indicate that medicine is your service. On the other hand, naming your practice “Podiatry Associates of Your Town” won’t be helpful to patients looking for you in the yellow pages, health insurance provider network list, or internet search engines, and finding your practice listed just before “Your Town Podiatry Partners”. It is therefore good to be cognizant of your competitors’ names when choosing your own. And, you should select a name that will hopefully grow with you into a larger enterprise.

For example, are you a solo doctor, but are pretty sure you’ll take on one or more partners in the future? Then besides not naming your practice after yourself, you may choose to add “Group” or “Partners” to your name initially even if you’re the only doctor. Is there any possibility you’ll open a second office in another town? Naming your medical practice something like the ”Apple Street Internal Medicine Group” may not make sense when your second office is opened on Main Street in a nearby city, in a few years.

Order Forms and Practice Stationary

Orders forms, invoices, purchase and estimate forms, business cards, envelopes, stationary and specialty labels can all be personalized for your medical practice name, script, colors and logo. Often, local or regional printers are the most cost effective and you support another entrepreneur, as well.

Well-know internet companies that print stationary are: www.nebs.com; www.paperdirect.com; and www.vistaprint.com

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PODCAST: “Real ACOs Haven’t Been Tried Yet!”

What is an Accountable Care Organization?

DEFINITION: ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their patients. The goal of coordinated care is to ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, the ACO will share in the savings.

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

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QUESTION: What happens when you’re a healthcare policy wonk and the pilot study for your pet program has failed miserably? 

ANSWER: You declare “Success!” in the editorial pages of the New England Journal of Medicine and demand that the program become nationwide and mandatory. I kid you not.  This is exactly what happens.

Thankfully, Anish Koka is vigilant and explains the blatant obfuscations and manipulations that the central planners engage in to have their way.

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And so, In this video, Anish and colleague Michel Accad, MD, will reveal the machinations, take the culprits to task, and discuss pertinent questions regarding health care organization: 

  • Does “capitation” reduce costs? 
  • Do employed physicians necessarily utilize fewer resources? 
  • What happens when a HMO and a traditional fee-for-service health system operate side-by-side in a community?
BMC and Accountable Care - Boston Medical Center

Enjoy!

PODCAST: http://alertandoriented.com/real-acos-havent-been-tried-yet/

Your thoughts are appreciated.

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How to THRIVE in Private Independent Medical Practice, Today?

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What is the Eisenhower Matrix?

What is the Eisenhower Matrix?

[By staff reporters]

The Eisenhower Matrix is a business management and strategic planning productivity tool that helps to sort tasks and spread them reasonably over time.

The sort out is based on the principals of urgency and importance. When assigned to each task, those two factors place the task to the relevant quadrant of the matrix.

After this routine is done, it’s enough to take a look at the matrix to visually estimate what you should start with.

***

Conclusion

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HOSPITALS

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Product DetailsProduct Details

What Is Health 2.0?

New-Wave Operative Definitions

By Jennifer Tomasik MS

Health 2.0 is participatory health care.

Enabled by information, software, and community that we collect or create, we the patients can be effective partners in our own health care, and we the people can participate in reshaping the health system itself.

   — Dr. Ted Eytan, Director, Permanente Federation, LLC

Potential

Health 2.0’s potential lies in enabling, catalyzing, and sustaining changes in the practice of healthcare.

Dr. Ted Eytan, a nationally recognized proponent of digitally-enhanced patient care with a particular interest in preventive care, has blogged the above “declaration of health care independence,” which we will use as our own working definition of Health 2.0.

A Human Space Defined by Engagement

We see Health 2.0 as a human space defined by engagement, aided by technology, in which information and accountability can flow between individuals and their care teams and between individuals and their social networks.

Assessment

The “practice” of healthcare can be understood as a set of “behaviors” that becomes embedded in daily life, plus the “supports” that provide the appropriate resources to achieve the desired outcomes.

Thus, changing a current practice (in pursuit of a different outcome) requires enabling the behavior you want to encourage by providing the necessary supports to make it happen. Health 2.0 has made new supports available for people to embed health-seeking behaviors and sustain practices that increase their involvement in their own health.

NOTES:


[i] Eytan T. “The Health2.0 Definition: Not just the Latest, The Greatest!,” Ted Eytan, MD (Blog).Online 13 Jun 2008. Accessed 1 Nov 2012. <http://www.tedeytan.com/2008/06/13/1089&gt;

[ii] Hawn C. “Take Two Aspirin and Tweet Me in the Morning: How Twitter, Facebook, and Other Social Media Are Reshaping Health Care.” Health Affairs 2009;28(2):361-8.

[iii] Moussa M, Tomasik JL. “Doctor-Patient Relationships in the Modern Era: Can We Talk—A Collaborative Shift in Bedside Manner.” Ch. 15 in Marcinko D.E. and Hope R. Hetico. The Business of Medical Practice: Transformational Health 2.0 Skills for Doctors. New York: Springer Pub. Co., 2011.

Conclusion

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“Giving Tuesday” and Pro Bono Medical Care?

For all Physicians and Medical Providers

[By Ann Miller RN MHA]

DID YOU PROVIDE PRO BONO MEDICAL CARE TODAY?

Giving Tuesday, often stylized as #GivingTuesday for the purposes of hashtag activism, refers to the Tuesday after U.S. Thanksgiving in the United States.

According to Wikipedia, it is a movement to create an international day of charitable giving at the beginning of the Christmas and holiday season. Giving Tuesday was initially started in 2011 and called Cyber Giving Monday and was the brain child of the non-profit Mary-Arrchie Theater Company and then Producing Director Carlo Lorenzo Garcia urging donors to take a different approach to filling up an online virtual cart with goods. The push was moved to Tuesday the following year as to not compete with Cyber Monday by the 92nd Street Y and the United Nations Foundation as a response to commercialization and consumerism in the post-Thanksgiving season (Black Friday and Cyber Monday).

The date range is November 27 to December 3, and is always five days after the holiday.

ESSAY: https://medicalexecutivepost.com/2007/11/26/pro-bone-medical-care/

VOTE: https://medicalexecutivepost.com/2019/05/18/are-you-providing-pro-bono-medical-care-a-voting-poll-and-survey/

Assessment: Your thoughts are appreciated.

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What is Medical Claim Denial Management?

Of Healthcare Claims [What it is – How it works]

Dr. David Edward Marcinko MBA

[Editor-in-Chief]

NEU Dr. MarcinkoTypically, denied and rejected healthcare claims quickly surface as a source of multi-millions in revenue leakage and unnecessary expense for doctors, clinics and hospitals, etc.

Why?

Payers have been struggling with increased costs.  They thoroughly inspect claims for errors and have become adept at using their rules to deny and delay claims.

For example, Zimmerman reported the denied percentage of gross charges climbed from 4% in 2000 to 11% in 2011.  In contrast, providers typically lack the tools to aggressively manage current denied claims and prevent future ones.

Financial Recognition

Without denial tracking, an organization may not recognize the heavy financial impact of denied claims.

A HARA [Hospital Accounts Receivable Analysis] report indicates that bad debt and gross days are declining. However, a majority of providers write off denials as contractual allowance, distorting the numbers but not the resulting lower margins and reduced cash.

H*Works reported that the typical 350-bed hospital loses between $4 million and $9 million each year in earned revenue from denials and underpayments (assume $103 million annual gross revenue and 40% contractual allowance). Recouping lost revenue from denials and underpayments will, according to H*Works, increase an organization’s operating margin by 2.6%.

Industry estimates report that at least 50% of denials are recoverable and 90% are preventable with the appropriate workflow processes, management commitment, strong change leadership, and the correct technology. H*Works estimates that for a revenue capture of $3 million from denials and underpayments, the recovery infrastructure costs are only about 3%.

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Assessment

With all this in mind, better management of rejections and denials, as well as the information necessary to resolve and prevent them, surfaces as probably the best strategy to improving financials. By streamlining the revenue cycle, managing rejections and denials proves to be less expensive and to provide faster returns than initiating new services.

Conclusion

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2022 Black Friday and the Physician Micro-Economy

Is it Good for Retailers … but Bad for Doctors and Consumers!

If Black Friday 2022 is anything like 2021, retailers may not be swimming in cash while shoppers bathe in savings. Black Friday deals drew 212 million shoppers to stores in fabulous 2010 and collectively spent $39 billion on products and services.

And, the average amount spent by a Black Friday shopper in 2010 was a whopping $365.34.

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Assessment

We predict Black Friday 2022 sales surpass 2021 with a slight increase over 2020 because of fewer shopping days; and the pandemic explosion..

But, is Black Friday good for the [healthcare] economics sector post [thu] the pandemic? Do patients go shopping rather than to the doctor? What about inflation?

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Should Doctors Protect their Turf?

Testing Free-Market Principles and Medical Licensing

By Mike Accad MD

It’s been a little over a 100 years since medical licensing laws were introduced in the US.  If people doubt that slippery slopes are real, they should reflect on that history.

In our latest video, Anish Koka and I discuss a “white paper” jointly written by Jeffrey Flier, former dean at Harvard Medical School, and Jared Rhoads from the Dartmouth Institute, calling for some deregulation of the apparatus that rules the supply of physicians and their scope of work. The paper gives an exhaustive account of the bureaucratic mess and offers some possible remedies.

LINK: http://alertandoriented.com/should-doctors-protect-their-turf/

RELATED: https://medicalexecutivepost.com/2014/09/26/is-medical-licensing-really-necessary/

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About iMBA Inc., Educational Events

Bridging the Medical School – Financial Services Industry & Business Education Gap

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[By Ann Miller RN MHA]

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iMBA Inc., routinely presents to residents and fellows across the country on a variety of medical, financial, accounting and practice management related topics.

Whether on-site or via webinar, our educational sessions are tailored to fill the finance, economic, practice management, business and practice management educational gap and to provide physicians and allied healthcare professionals with practical advice and strategies to help make sound financial and business decisions.

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Our firm works exclusively with physicians and their advisors, and we understand the stresses and financial pitfalls that are unique to the medical profession. We are doctors who are passionate about equipping, training, and advising physicians so they can work toward achieving their professional and financial goals.

We can tailor our presentations to the needs of the program or group. Above all, we aim to empower residents and fellows with the knowledge they’ll need to succeed financially as they begin their career in private practice or in academics.

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In addition to speaking with individual programs, we speak with House Officers Associations, Fellowship & Residency Associations, Spouse Support Groups, etc. We are regularly invited to present at Grand Rounds, weekly practice management gatherings, and after-hours dinners.

Educational sessions can be done either on-site or via webinar.

Assessment

To see a list of presentations and topics, click here:

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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.

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Wither DROP-IN Group Medical Appointments?

THE RE-EMERGING RE-VOLUTION!

By Dr. David Edward Marcinko MBA CMP®

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HISTORY

DIGMAs (Drop-In Group Medical Appointments) are medical office appointments with a patient’s physician that take place in a supportive group setting. The model, developed in 1996 by Kaiser Permanente psychologist Dr. Ed Noffsinger, is a combination of an extended medical appointment with the patient’s own physician and effective group learning and support.

The group consists of the physician, a behavioral health professional, and patients from the physician’s panel. DIGMAs are best suited for routine appointments. Unfortunately, the nascent concept was met with mockery and great derision after the PP-ACA era.

PRANKSTERS: https://medicalexecutivepost.com/2016/01/31/group-drop-in-doctor-visits-evolving/

Today, after the pandemic and with the rise of tel-health and tele-medicine, Shared Medical Appointments (SMAs), also known as Group Medical Visits [GMVs], are again a growing topic of discussion among providers and health economists, looking for ways to increase access to care and improve efficiency. The group visit format is also getting more attention in recent years as a strategy to add value for the patient. They typically involve up to a dozen patients or so and offer various efficiencies as well as benefits of shared discussion and experiences.

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Behavioral Changes

Moreover, physicians and medical providers know that simply telling patients what to do often does not improve their health. The basic premise of DIGMAs, SMAs and GMVs is to build more patient engagement and inspire lasting behavior change by offering patients the opportunity to share their personal experiences not only with their provider but also with other patients dealing with similar issues.

NEWER REALITY: https://www.hqontario.ca/Portals/0/Documents/qi/learningcommunity/Roadmap%20Resources/Advanced%20Access%20and%20Efficiency/Step%205/pc-nha-group-medical-appointments-manual-en.pdf#:~:text=DIGMAs%20%28Drop-In%20Group%20Medical%20Appointments%29%20are%20medical%20appointments,that%20take%20place%20in%20a%20supportive%20group%20setting.

BILLING: https://www.aafp.org/family-physician/practice-and-career/getting-paid/coding/group-visits.html

QUERY: Might this be an approach for tele-health visits as well as rural healthcare, etc.

ASSESSMENT: Your thoughts are comments are appreciated.

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SCM: Supply Chain Management in Healthcare

By Staff Reporters

Dr. David Edward Marcinko MBA

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One of the most iconic symbols of the COVID economy was the epic backlog of container ships waiting to dock at the ports of Los Angeles and Long Beach. At one point this year, that backup was longer than the line at Trader Joe’s on a Saturday, stretching 109 ships deep and almost 60 miles from the coast.

But now, the shipping situation is almost back to normal. As of last week, the number of ships waiting to drop off their goods stood at just four, according to the WSJ. Plus, the cost of sending a 40-foot container from Shanghai to LA has plummeted from its peak of more than $12,000 to almost $2,000, nearing its pre-COVID average.

The fact that goods are once again flowing smoothly through US ports is a hopeful sign that inflation, which was instigated in part by supply chain snarls, could start to abate.

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

READ MORE: https://medicalexecutivepost.com/2011/06/09/supply-chain-management-in-healthcare

WHITE PAPER: https://healthcarefinancials.files.wordpress.com/2011/06/scm-dr.-dem-sample.pdf

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PODCAST: Nine [9] Ways to Pay Doctors

“Behavioral Economic Strategies”

By Eric Bricker MD

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As Published in the Annals of Internal Medicine by an All-Star Cast of Researchers:

1) Limitations of Information
2) Inertia/Status Quo Bias
3) Choice Overload
4) Immediacy
5) Loss Aversion
6) Relative Social Ranking
7) Threshold Effect
8) Limits of Willpower
9) Mental Accounting

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Medical Managed Care IBNR Accounting Claims

Tax Savings Strategies

Claim Anatomy - ipitome

[By Ana Vassallo] AND [Dr. David E. Marcinko MBA]

Managed Care Organizations (MCOs) that accept capitated risk contracts face a potentially significant tax burden for Incurred but Not Reported (IBNR) claims. It is not uncommon that IBNR claims at the end of a reporting period equal one to two months premiums for MCOs under a fee-for-service model. The Internal Revenue Service (IRS) has taken a very strong position relative to the deductibility of these claims by saying that an MCO cannot deduct such losses if they are based on estimates.

Incurred But Not Reported [IBNR] Claims

IBNR is a term that refers to the costs associated with a medical service that has been provided, but for which the carrier has not yet received a claim. The carrier to account for estimated liability based on studies of prior lags in claim submission records IBNR reserves. In capitated contracts, MCOs are responsible for IBNR claims of their enrollees (Kennedy, 1). 

For example, if an enrollee is treated in an emergency room, a plan may not know it is liable for this care for at least 30-60 days. Well-run plans devote considerable attention to accurately estimating such claims because a plan can look healthy based on claims submitted and be financially unhealthy if IBNR claims experience is increasing substantially but is unknown.

Why a Problem for HMO’s/MCOs 

Section 809(d)(1) of the Code provides that, for purposes of determining the gain and loss from operations, a insurance company shall be allowed a deduction for all claims and benefits accrued, and all losses incurred (whether or not ascertained), during the taxable year on insurance and annuity contracts.  Section 1.809-5(a) (1) of the Income Tax Regulations provides that the term “losses incurred (whether or not ascertained)” includes a reasonable estimate of the amount of the losses (based upon the facts in each case and the company’s experiences with similar cases) incurred but not reported by the end of the taxable year as well as losses reported but where the amount thereof cannot be ascertained by the end of the year. By taking into account for its prior years only the reported losses but not the unreported losses, the taxpayer has established a consistent pattern of treating a material item as a deduction. The effect of the taxpayer’s claim for the first time of a deduction for an estimate of losses incurred but unreported under section 809(d)(1) of the Code, was to change the timing for taking the deduction for the incurred but unreported losses.

Due to the taxpayer consistently deducting losses incurred in the taxable year in which reported, a change in the time for deducting losses incurred under section 809(d)(1) is a change in the method of accounting for such losses to which the provisions of section 446(e) apply (IRS, 14-30). 

In order to qualify for an insurance company under the current IRS regulations, the MCO must have the following criteria (Kongstvedt, 235-256):

· At least 50% of the MCO must come from insurance related activities.

· The MCO must have an insurance company license.

If an MCO did not have these two criteria, the IRS will not deem the manage care company as an eligible insurance company.  Therefore, the MCO would not be able to file for IBNRs with the IRS.

How MCOs/HMOs Intensify IBRN Claims

There is a high degree of uncertainty inherent in the estimates of ultimate losses underlying the liability for unpaid claims.  The only reason the IRS would not allow an MCO to deduct IBNR because the financial statements is based on an estimate (IRS, 134-155).

Except through the insurance company exclusion IRS does not allow any taxpayer to deduct losses based on estimates. There has been some precedence set that the IRS will accept an amount for incurred but not reported claims if the amount is supported by valid receipts of claims that the company has in-house prior to the filing of the tax return.

There has been some controversy as to how long of a period of reporting time the IRS will allow you to include in those estimates. There are ranges from 3-6 months to file a claim (IRS, 137). The process by which these reserves are established requires reliance upon estimates based on known facts and on interpretations of circumstances, including the business’ experience with similar cases and historical trends involving claim payment patterns, claim payments, pending levels of unpaid claims and product mix, as well as other factors including court decisions, economic conditions and public attitudes.

There has been no clear indication from the IRS that it will accept an accrual for these losses and entities. Therefore, companies deducting such losses may eventually find themselves in a position where the IRS may challenge the relating deductibility of those losses.

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Evaluating IBNRs from a New Present Value Perspective

The best measure of whether or not a stream of future cash flows actually adds value to the organization is the net present value (NPV).  The best decision rule for NPV to accept or reject a decision problem is if the NPV is greater than zero, the project adds value to the organization.  Although – if the NPV is exactly zero it neither adds nor subtracts value from the organization (McLean 193).  In either case, the project is acceptable.  In addition, if the NPV is less than zero, the project subtracts value from the organization and should not be undertaken (McLean, 193).

The provision for unpaid claims represents an estimate of the total cost of outstanding claims to the year-end date. Included in the estimate are reported claims, claims incurred but not reported and an estimate of adjustment expenses to be incurred on these claims. The losses are necessarily subject to uncertainty and are selected from a range of possible outcomes (Veal, 11). During the life of the claim, adjustments to the losses are made as additional information becomes available. The change in outstanding losses plus paid losses is reported as claims incurred in the current period.

All but the smallest organizations have predictable and unpredictable losses. It is important mentally to separate the two since predictable losses are not risks but normal business expenses. Risk is the degree to which losses vary from the expected. If losses average $85,000 per year but could be as much as $20 million, the risk is $20 million minus $85,000. The $85,000 figure represents reasonably predictable losses (Veal, 12).

IBNR Challenges and Solutions

While I was unable to find an actual amount of the cost of the penalties that can be incurred, the IRS is able to impose penalty fees under Section 4958 of the IRS code (IRS, 255). While penalties differ depending on individual bases, MCOs will be penalizing for any misconduct either by IRS Codes or Court Jurisdiction.

It is prudent that MCOs ensure their organization that they will not incur a financial “meltdown”. They further need to ensure IBNR is funded for period of at least 2-3 months. In some states, the state laws make the MCO financially responsible to pay the providers for a second time if the intermediary fails to pay or becomes insolvent (Cagle, 1).

Paid losses, paid expenses and net premiums are usually deductible; reserves for incurred-but-unpaid losses generally are not, unless the taxpaying entity is an insurance company. Consequently, if a corporation has a high effective tax rate and concedes that it cannot deduct self-insured loss reserves, some of its more cost-effective options may be a paid-loss retro (if state rules are not too restrictive), a compensating balance plan, or the formation of a pool or industry captive. Even these plans may be subject to IRS challenge. To qualify as a tax-deductible expense, a premium or other payment must satisfy two criteria (Cagle, 2):

 

  • There must be transfer of risk: an insurance risk. This differs from investment risk, but there is no authoritative definition of “risk transfer” other than various court decisions (primarily Helvering v. Le Gierse, 312 US 531 — U.S. Supreme Court 1941).
  • There must be both risk shifting and risk distribution. “Risk shifting” means that one party shifts the risk of loss to another, generally not in the same corporate family. “Risk distribution” means that the party assuming the risk distributes the potential liability, in part, among others.

The deductibility of an insurance expense may also be questioned if it is contingent upon a future happening, such as a loss payment, right to a dividend or other credit, or possible forgiveness of future loans or notes (Cagle, 3). This may seem a broad statement, but the Cost Accounting Standards Board states in its Standards for Accounting for Insurance Expense that any expense which is recoverable if there are no losses shall be accounted as a deposit, not an expense. This is essentially the IRS position (IRS, 145).

Assessment

While there are a few solutions to this matter, the IRS is making sure that MCOs will be penalized if MCOs improperly handle IBNRs.  It is also important for organizations to understand the MCO’s policies regarding IBNR reserves and their contractual obligations. And, while the IRS has set limitations for MCOs to file their IBNR claims, MCOs have the major responsibility of allocating these IBNR claims appropriately.  There are severe penalties for not properly filing the IBNR claims appropriately.  However, there is several tax saving strategies to help MCOs properly file their IBNR claims with the IRS.  It imperative that MCO executives and accounting manager consult an expert to properly plan an ethical strategy that will help them build a stable business that is trustworthy and reliable.

Bibliography

1. Cagle, Jason, Esq., Interview, June 8, 2004, interview performed by Ana Vassallo.

2. McLean, Robert A., Net Profit Value, Pages 193-194, 2nd Edition, Thomson/Delmar Learning, Financial Management in Heath Care Organization, 2003.

3. Patient-Physician Network, Managed Care Glossary, Printed 6/11/04 http:/www.drppg.com/managed_care.asp.

4. Internal Revenue Services, IRS.Gov, Printed 6/12/04, http://www.irs.gov/

5. Internal Revenue Services, Revenue Ruling, Printed 6/11/04, http://www.taxlinks.com/rulings/1079/revrul179-21.thm

6. Kongstvedt, Peter R., Managed Care – What It Is and How it Works, Pages 235-256, Jones and Bartlett Publishers, 2003.

7. Veale, Tom, The Return of Captives in the Hard Market, Tristar Risk Management Aug. 22, 2002, San Diego RIMS.

Conclusion

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

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What is Medical Practice FINANCIAL RATIO ANALYSIS?

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BY DR. DAVID E. MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Financial ratio analysis typically involves the calculation of ratios that are financial and operational measures representative of the financial status of a clinic or medical practice enterprise.  These ratios are evaluated in terms of their relative comparison to generally established industry norms, which may be expressed as positive or negative trends for that industry sector. The ratios selected may function as several different measures of operating performance or financial condition of the subject entity.

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

Common types of financial indicators that are measured by ratio analysis include:

  • Liquidity. Liquidity ratios measure the ability of an organization to meet cash obligations as they become due, i.e., to support operational goals. Ratios above the industry mean generally indicate that the organization is in an advantageous position to better support immediate goals.  The current ratio, which quantifies the relationship between assets and liabilities, is an indicator of an organization’s ability to meet short-term obligations.  Managers use this measure to determine how quickly assets are converted into cash.
  • Activity. Activity ratios, also called efficiency ratios, indicate how efficiently the organization utilizes its resources or assets, including cash, accounts receivable, salaries, inventory, property, plant, and equipment.  Lower ratios may indicate an inefficient use of those assets.
  • Leverage. Leverage ratios, measured as the ratio of long-term debt to net fixed assets, are used to illustrate the proportion of funds, or capital, provided by shareholders (owners) and creditors to aid analysts in assessing the appropriateness of an organization’s current level of debt.  When this ratio falls equal to or below the industry norm, the organization is typically not considered to be at significant risk.
  • Profitability. Indicates the overall net effect of managerial efficiency of the enterprise. To determine the profitability of the enterprise for benchmarking purposes, the analyst should first review and make adjustments to the owner(s) compensation, if appropriate.  Adjustments for the market value of the “replacement cost” of the professional services provided by the owner are particularly important in the valuation of professional medical practices for the purpose of arriving at an ”economic level” of profit.

The selection of financial ratios for analysis and comparison to the organization’s performance requires careful attention to the homogeneity of data. Benchmarking of intra-organizational data (i.e., internal benchmarking) typically proves to be less variable across several different measurement periods.

However, the use of data from external facilities for comparison may introduce variation in measurement methodology and procedure. In the latter case, use of a standard chart of accounts for the organization or recasting the organization’s data to a standard format can effectively facilitate an appropriate comparison of the organization’s operating performance and financial status data to survey results.

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

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What is Health Insurance OUT OF NETWORK Medical Care?

By Staff Reporters

What does out of network [OON] really mean?

OON – This phrase usually refers to physicians, hospitals or other medical providers who do not participate in a health insurer’s provider network.

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

This means that the provider has not signed a contract agreeing to accept the insurer’s negotiated prices.

MORE: https://www.healthinsurance.org/glossary/out-of-network-out-of-plan/

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

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BUSINESS MEDICINE: https://www.amazon.com/Business-Medical-Practice-Transformational-Doctors/dp/0826105750/ref=sr_1_9?ie=UTF8&qid=1448163039&sr=8-9&keywords=david+marcinko

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HEALTHCARE: https://www.amazon.com/Financial-Management-Strategies-Healthcare-Organizations/dp/1466558733/ref=sr_1_3?ie=UTF8&qid=1380743521&sr=8-3&keywords=david+marcinko

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Ask About Our Medical Science Liaison Services

Dear Pharmaceutical Company, Financial Services Firm or Corporate Medical Vendor

We often serve as Medical Science Liaison [MSL] for pharmaceutical companies, at medical seminars and/or financial services organization meetings. Based on our education, experience and skills, we are confident that we would be a great addition to your team.

My Record

For example, I have a proven record in collaborative leadership with functional healthcare executive management experience to develop and implement coordinated strategies designed to deliver top line growth; drive organizational change and enhance competitive positioning within multiple key markets; enhance relationships and influence physicians; analyze financial, economics, operational and quality measures and ensure health practices are operating within goals and standards.

In this role, I can identify external experts (KOLs), and engage, enhance, and build relationships by listening and understanding the views of these experts.

An Independent Conduit Link

More importantly, I can bring value to external experts through excellent communication of scientific dialogue.  I see this position as a non-promotional conduit link between you and this community. It is one where I fuse scientific knowledge with business acumen to accelerate commercialization success. As a fully independent MSL, I can:

  • Serve as MC, key or end-note speaker
  • Integrate quickly within any existing internal MSL structure or culture
  • Train, develop and team build career path management processes
  • Offer modern and flexible health 2.0 solutions.

CV and Related Information

And, a formal CV with evidence of national notoriety and gravitas is available with related information online:

CV: Dr. David E. Marcinko CV 2017

Letterhead: Corporate Medical Science Liaison Opportunities

Informative Websites:

Travel is non-problematic from Atlanta. Teaching, speaking, writing and mentoring are areas of expertise.  Thank you in advance for your time. Please do not hesitate to contact me if you have any questions.

Cordially,

Dave

Dr. David Edward Marcinko; FACFAS, MBA, CMP™

  • Forner, Certified Financial Planner™
  • Former, Certified Physician in Healthcare Quality
  • Former, American Society of Health Economists (ASHE) member
  • Former, American Health Information Management Association (AHIMA) member
  • Former, Healthcare Information and Management Systems Society (HIMSS) member

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OVERUSE: How Health System Characteristics Impact Health Care

By Staff Reporters

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The high cost of health care in the United States is partially driven by an over-emphasis on low-value health care that is potentially harmful and offers little benefit to most patients.

New research by Jodi Segal, MD, and colleagues, advances efforts to solve the low-value care problem by placing a spotlight on health care system factors that likely contribute to an overuse of care. The work is analyzed in the latest NIHCM Research Insights. Key findings include:

  • Systems that are investor-owned, or have fewer primary care physicians, are more likely to be associated with the overuse of care. 
  • Systems that have major teaching hospitals are less likely to overuse care.  

To continue investigating, evaluating, and addressing the drivers of overuse, the research team updated their Overuse Index tool. This Index may be especially useful for health systems seeking to monitor care use performance over time. This study’s findings may support future research and interventions to increase the use of high-value care.

READ HERE: https://nihcm.org/publications/what-health-system-characteristics-are-associated-with-overuse-of-health-care-in-the-us

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

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ABOUT | DAVID EDWARD MARCINKO

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What is Hospital WACC?

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By Calvin Weise CPA and Dr. David E. Marcinko MBA

http://www.CertifiedMedicalPlanner.org

The Weighted Average Cost of Capital 

It is critical to understand and to measure the total cost of capital. Lack of understanding and appreciation of the total cost of capital is widespread, particularly among not-for-profit hospital executives. The capital structure includes long-term debt and equity; total capital is the sum of these two. Each of these components has cost associated with it. For the long-term debt portion, this cost is explicit: it is the interest rate plus associated costs of placement and servicing.

Equity portion

For the equity portion, the cost is not explicit and is widely misunderstood. In many cases, hospital capital structures include significant amounts of equity that has accumulated over many years of favorable operations. Too many executives wrongly attribute zero cost to the equity portion of their capital structure. Although it is correct that generally accepted accounting principles continue to assign a zero cost to equity, there is opportunity cost associated with equity that needs to be considered. This cost is the opportunity available to utilize that capital in alternative ways.

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In general, the cost attributed to equity is the return expected by the equity markets on hospital equity. This can be observed by evaluating the equity prices of hospital companies whose equity is traded on public stock exchanges. Usually the equity prices will imply cost of equity in the range of 10% to 14%.

Almost always, the cost of equity implied by hospital equity prices traded on public stock exchanges will substantially exceed the cost of long-term debt. Thus, while many hospital executives will view the cost of equity to be substantially less than the cost of debt (i.e., to be zero), in nearly all cases, the appropriate cost of equity will be substantially greater than the cost of debt.

http://www.HealthDictionarySeries.org

Hospitals need to measure their weighted average cost of capital (WACC).

WACC is the cost of long-term debt multiplied by the ratio of long-term debt to total capital plus the cost of equity multiplied by the ratio of equity to total capital (where total capital is the sum of long-term debt and equity).

WACC is then used as the basis for capital charges associated with all capital investments. Capital investments should be expected to generate positive returns after applying this capital charge based on the WACC. Capital investments that don’t generate returns exceeding the WACC consume enterprise value; those that generate returns exceeding WACC increase enterprise value.

Assessment

Hospital executives need to be rewarded for increasing enterprise value. 

Conclusion

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More on Medical Practice Business Costs for Entrepreneurial Physicians

Unknown and Under-Appreciated by Many

By Rick Kahler CFP®

I recently talked with an administrator of a private medical practice about some of the financial challenges she faces in dealing with the medical system, insurers, and patients.

Some of the insights she gave me into the realities that private physicians face in providing medical care were rather disturbing.

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Here are a few of them.

Let’s start with the insurers who account for the bulk of their revenue. Many payments for procedures from insurance companies (including Medicare) are below the cost of providing the service. This forces physicians to make up the difference on other procedures or find other sources of income to sustain the profitability of the practice.

Conversely, in markets that have just one hospital, the insurance companies have no leverage. If the insurers won’t pay what the hospitals demand, the hospitals can threaten to drop out of the network, leaving the insurers with nowhere to send their insureds in those markets. The insurers end up agreeing to pay the hospitals more.

Charges for services provided in-house at the hospital can end up being substantially higher than those same services done by outside providers.

Example:

She gave me an example of a lab test that cost $1,500 to $2,000 at the hospital lab but $35 to $80 at an independent lab. Patients do have the option to direct the hospital to use an independent lab. But, how many people know that and will have the presence of mind to make the request? While it makes financial sense to price-shop if you have a high deductible HSA plan, there isn’t much incentive if your plan has low deductibles.

Collections

Another challenge is collecting from patients. She says a surprising percentage of Americans maintain checking accounts with no money or keep checks from accounts which have long been closed. While writing bad checks is a crime, those who game the system know they can probably get by with writing a low-dollar check because the cost of pursuing justice is much more than the check is worth.

Most companies would never do business with such a person again. Healthcare professionals tend to have a bias toward giving everyone services, so these same people do return requesting care. She said she and her physician employer have had huge internal arguments about this. Her position is that these people take advantage of the physician in a premeditated fashion and don’t deserve to be extended services. The physician argues that everyone, even deadbeats, deserves healthcare. Since the practice doesn’t provide life-and-death services, she was able to get the physician to agree that if someone has an outstanding bill they need to settle it upfront, in cash, before any new services are provided.

Then there are those who use credit cards and then fraudulently dispute the charges. Some providers let this go because of the difficulty of proving that the charge is legitimate. It requires photographs of customers during the transaction, copies of driver’s licenses, customers’ signatures on the paperwork, and notarized statements from the provider verifying that this was the person who received services and presented the credit card.

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http://www.CertifiedMedicalPlanner.org

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SSNs

A final interesting point concerned patients’ Social Security numbers. She said the only time these are ever needed is when an outstanding bill is sent for collection. Otherwise, they are never accessed or used.

Assessment

Finally, she was quick to add that only a small fraction of their patients premeditate stealing from them. She also stressed that not all insurance companies or hospitals behave unethically, and some do wonderful, humane acts of kindness. Nevertheless, the lack of integrity that does occur on both sides is infuriating and adds to the cost of health services.

Conclusion

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

Contact: MarcinkoAdvisors@msn.com

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What Is an IBNR Medical Claim?

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Significance often under Appreciated

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chiefdem2]

As some Medical Executive-Post readers and subscribers are aware, hospitals that filed bankruptcy recently include: a two-hospital system in Honolulu; one in Pontiac, MI; Trinity Hospital in Erin, Tennessee; Century City Doctors Hospital in Beverly Hills, and four hospital system Hospital Partners of America, in Charlotte.

One can only wonder about the impact of Incurred But Not Reported claims on their plight?  

IBNR Definition

According to the www.CertifiedMedicalPlanner.org, an IBNR claim is a concept that signifies healthcare services have been rendered but not invoiced or recorded by the healthcare provider, clinic, hospital, or organization.

Cause and Affect

IBNRs are usually the result of a commercial prospective payment risk contract between managed care organizations and healthcare providers, an IBNR claim refers to the estimated cost of medical services for which a claim has not been filed, or monitored by an IBNR collection systems or control sheet.

IBNR Types

More formally, IBNRs are a financial accounting of all services that have been performed but, as a result of a short period of time or “lag,” have not been invoiced or recorded. The medical services that will not be collected should be accounted for using the following accrued but not recorded (ABNR) entry:

Debit — accrued payments to medical providers or healthcare entity

Credit — IBNR accrual account

Example:

An example of an IBNR is hospital Coronary Artery Bypass Graft [CABG] surgery for a managed care plan member. Out of the capitated or prospective payment funds, the surgeon and/or healthcare organization has to pay for all related physical and respirator therapy, and rehabilitation services, as well as ancillary providers, drugs, and durable medical equipment [DME], as contractually obligated. This may also include complication diagnosis and extensive follow-up treatment.

Accordingly, the health plan will not be completely billed until several weeks, months, or quarters later or even further downstream in the reporting year after the patient is discharged. In order to accurately project the health plan’s financial liability, however, the health plan and hospital must estimate the cost of care based on past expenses.

Accounting Cost Controls

Since the identification and control of costs are paramount in financial healthcare management, an IBNR reserve fund (an interest bearing account) must be set up for claims that reflect services already delivered but, for whatever reason, not yet reimbursed.

From the accounting perspective, IBNR is accrued as an expense and is related as a short-term liability each fiscal month or accounting period.

Otherwise, the organization may not be able to pay the claim, if the associated revenue has already been spent. The proper handling of these “bills in the pipeline” is crucial for proactive providers and health organizations that are exploring arrangements that put them in the role of adjudicating claims or operating in a sub-capitated system.

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Stetho-Claim

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Assessment

IBNRs are especially important with newer patients who may be sicker than prior norms.

Recoverables that hospitals post as part of their large reserve charges are also, in many cases, IBNR losses. They may be recorded as IBNR claims on their balance sheets. Once these losses start becoming actual losses, the hospital may look to the insurer to pay a part of the claim. This causes disputes between the payor, provider, and/or healthcare organization.

Conclusion

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FINANCE: Financial Planning for Physicians and Advisors
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Understanding the Mental Healthcare Regulatory Environment

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Appreciating the Rules

[By Carol Miller; RN, MBA]

Carol S. MillerLocal counties and municipalities are the primary providers of state mental healthcare for patients who lack private insurance coverage for such care.

Both children and adults may be eligible to receive assistance.

These counties provide a wide range of psychiatric and counseling services to the residents in their community as well as other types of assistance such as:

  • treatment services related to substance abuse;
  • housing;
  • employment services;
  • information and education service;
  • referrals;
  • consultative services to schools, courts and other agencies;
  • after-care services; and other related activities.

mental

Rules and Regulations

Accordingly, regulations from federal, state, and county governments have an impact on the day-to-day operations, procedures and processes of a county mental health center. Traditionally, there are three main types of regulations.

Federal Regulations — The United States healthcare system is guided by programs such as those established under the Centers for Medicare and Medicaid (in the case of county mental health programs, Medicaid is especially important), Americans with Disabilities Act (ADA), Occupational Safety and Health Administration (OSHA), Health Insurance Portability and Accountability Act (HIPAA), and others.

State Regulations — These include general legislative guidelines, state management of benefits and reimbursement of the Medicaid program, and state allocations of budgets, which impact the centers’ operations.

County Regulations — Each county defines its own County Mental Health Program and decides which services will be provided or excluded.

Assessment

County facilities generally include outpatient clinics, county mental health programs, short-term psychiatric facilities, day-care centers, de-toxification centers, residential rehabilitation centers for substance abuse, long-term care psychiatric facilities, and Veterans Affairs (VA) psychiatric centers. The county centers may be co-located with other county services such as social services, occupational rehabilitation services, information technology services, human resources, maintenance services, and others or may be independently located.

Conclusion

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PODCAST: The Real Secret About Why Corporate Mergers Fail

AN AUDIO PRESENTATION

 

By Vitaliy Katsenelson CFA

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Corporate acquisitions often fail for one simple reason: the buyer pays too much. An old Wall Street adage comes to mind: Price is what you pay, value is what you get.

It all starts with a control premium

When we purchase shares of a stock, we pay a price that is within pennies of the last trade. When a company is acquired, the purchase price is negotiated during long dinners at fine restaurants and comes with a control premium that is higher than the latest stock quotation.

How much above?

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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™

 

A “Six Sigma”© Primer for the Homecare Industry

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By: Christian Hernandez MBA – Apple Health Care Services
Richard Melnyck MBA MS
Mark Friedman PhD Department of Accounting
Howard Gitlow PhD Department of Management Science University Miami
christian hernandez
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BACKGROUND
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Homecare has long been one the most cost-effective methods of treating patients. Yet today, homecare providers face significant challenges: reimbursement cuts, mandatory accreditation, and influencing policy changes. So, how can homecare managers efficiently sustain a cutting edge, consistent and quality focused practice amidst this changing landscape?
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It is time the homecare industry tap into the high-tech tools and proven management theories that together make up “Six sigma” management. This article will provide a solid point of reference for managers interested in adopting “Six Sigma” management. In today’s stiff economic climate, organizations are once again turning to “Six Sigma”strategies as a means to reduce their bottom lines.
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However, its cost cutting aspect is technically more of a by product than the core of its theory. “Six Sigma” management is practiced in many organizations across all sectors of the global economy. Companies such as drug giant Merck, Cadbury, and Dunkin’ Brands are increasingly turning to Six Sigma to lift their bottom lines.
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The term “Lean Management” is an old buzz word that still excites managers. Lean Management stems from the term Lean Manufacturing, which was a derivative of Total Quality Management (TQM) —considered one of the earlier versions of “Six Sigma”.
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Over the years, “Six Sigma” has evolved from a ground-breaking management system to one of the most proven methods for instituting change, reducing errors and eliminating inefficiencies. These management utilities run through the entire spectrum of organizational applications, from confronting the serious issues mentioned above to routine business functions.
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The resurgence of Japan’s economy in the 70’s and 80’s is largely attributed to TQM. “In the auto industry, manufacturers such as Toyota and Honda became major players. In the consumer goods market, companies such as Toshiba and Sony led the way. These foreign competitors were producing lower-priced products with considerably higher quality.”
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Note: © Six Sigma is a trademark of the Motorola Corporation
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Conclusion

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

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

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