CASH FLOW ANALYSIS: Real Life ACO Accounting Example

ACCOUNTABLE CARE ORGANIZATION EXAMPLE

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BY DR. DAVID EDWARD MARCINKO MBA CMP®

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What is an ACO?

ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare 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 it achieves for the Medicare program.

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

Case Model

Now, suppose that in a new Accountable Care Organization [ACO] contract, a certain medical practice was awarded a new global payment or capitation styled contract that increased revenues by $100,000 for the next fiscal year. The practice had a gross margin of 35% that was not expected to change because of the new business. However, $10,000 was added to medical overhead expenses for another assistant and all Account’s Receivable (AR) are paid at the end of the year, upon completion of the contract.

Cost of Medical Services Provided (COMSP):

The Costs of Medical Services Provided (COMSP) for the ACO business contract represents the amount of money needed to service the patients provided by the contract.  Since gross margin is 35% of revenues, the COMSP is 65% or $65,000.  Adding the extra overhead results in $75,000 of new spending money (cash flow) needed to treat the patients. Therefore, divide the $75,000 total by the number of days the contract extends (one year) and realize the new contract requires about $ 205.50 per day of free cash flows.

Assumptions

Financial cash flow forecasting from operating activities allows a reasonable projection of future cash needs and enables the doctor to err on the side of fiscal prudence. It is an inexact science, by definition, and entails the following assumptions:

  • All income tax, salaries and Accounts Payable (AP) are paid at once.
  • Durable medical equipment inventory and pre-paid advertising remain constant.
  • Gains/losses on sale of equipment and depreciation expenses remain stable.
  • Gross margins remain constant.
  • The office is efficient so major new marginal costs will not be incurred.

Physician Reactions:

Since many physicians are still not entirely comfortable with global reimbursement, fixed payments, capitation or ACO reimbursement contracts; practices may be loath to turn away short-term business in the ACA era.  Physician-executives must then determine other methods to generate the additional cash, which include the following general suggestions:

1. Extend Account’s Payable

Discuss your cash flow difficulties with vendors and emphasize their short-term nature. A doctor and her practice still has considerable cache’ value, especially in local communities, and many vendors are willing to work them to retain their business

2. Reduce Accounts Receivable

According to most cost surveys, about 30% of multi-specialty group’s accounts receivable (ARs) are unpaid at 120 days. In addition, multi-specialty groups are able to collect on only about 69% of charges. The rest was written off as bad debt expenses or as a result of discounted payments from Medicare and other managed care companies. In a study by Wisconsin based Zimmerman and Associates, the percentages of ARs unpaid at more than 90 days is now at an all time high of more than 40%. Therefore, multi-specialty groups should aim to keep the percentage of ARs unpaid for more than 120 days, down to less than 20% of the total practice. The safest place to be for a single specialty physician is probably in the 30-35% range as anything over that is just not affordable.

The slowest paid specialties (ARs greater than 120 days) are: multi-specialty group practices; family practices; cardiology groups; anesthesiology groups; and gastroenterologists, respectively. So work hard to get your money, faster. Factoring, or selling the ARs to a third party for an immediate discounted amount is not usually recommended.

3. Borrow with Short-Term Bridge Loans

Obtain a line of credit from your local bank, credit union or other private sources, if possible in an economically constrained environment. Beware the time value of money, personal loan guarantees, and onerous usury rates. Also, beware that lenders can reduce or eliminate credit lines to a medical practice, often at the most inopportune time.

4. Cut Expenses

While this is often possible, it has to be done without demoralizing the practice’s staff.

5.  Reduce Supply Inventories

If prudently possible; remember things like minimal shipping fees, loss of revenue if you run short, etc.

6. Taxes

Do not stop paying withholding taxes in favor of cash flow because it is illegal.

Hyper-Growth Model:

Now, let us again suppose that the practice has attracted nine more similar medical contracts. If we multiple the above example tenfold, the serious nature of potential cash flow problem becomes apparent. In other words, the practice has increased revenues to one million dollars, with the same 35% margin, 65% COMSP and $100,000 increase in operating overhead expenses.  Using identical mathematical calculations, we determine that $750,000 / 365days equals $2,055.00 per day of needed new free cash flows!  Hence, indiscriminate growth without careful contract evaluation and cash flow analysis is a prescription for potential financial disaster.

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How to NAME Your New Medical Practice?

PRAGMATIC BUSINESS – NOT PERSONAL – MANAGEMENT ADVICE

By Dr. David E. Marcinko MBA CMP®

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

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PODCAST: 70% Doctors Owned by Private Equity and Hospitals

THE BUSINESS OF MEDICINE

By Eric Bricker MD

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FOR DOCTORS ONLY: Secure an Unbiased Second Opinion

Dr. David Edward Marcinko MBA

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FINANCIAL PLANNING

CAREER DEVELOPMENT

MEDICAL PRACTICE BUY IN / OUT

INVESTMENT ANALYSIS

PORTFOLIO MANAGEMENT

MERGERS AND ACQUISITIONS

PRACTICE APPRAISALS AND VALUATIONS

RETIREMENT PLANNING

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PODCAST: Healthcare Stocks, Investing & IPOs?

By Eric Bricker MD

Healthcare Stock and IPO Investing Can Be Confusing. The Story of Privia Health is a Good Case Study in Understanding the Underlying Economics in Healthcare Investing:

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

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Benefits of Healthcare Participation in Multiple Medical Payment Models

BY HEALTH CAPITAL CONSULTANTS, LLC

New Research Explores Benefits of Participation in Multiple Payment Models


An August 2021 study published in the Journal of the American Medical Association (JAMA) analyzed medical and surgical episodes of care in U.S. hospitals to determine whether outcomes differed in hospitals that participated in Medicare’s Bundled Payments for Care Improvement (BPCI) Initiative depending on whether the patient being treated was attributed to a Medicare Shared Savings Program (MSSP) accountable care organization (ACO).

This Health Capital Topics article will discuss the study’s findings and potential policy implications. (Read more…)

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

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

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PODCAST: Augmenting Physicians with Artificial Intelligence

BY ENTREPRENEUR MD

Well-Ai: Augmenting Physicians with AI

Artificial intelligence is all around us. From self-driving cars to shopping suggestions and everything in between.

In this episode of The Entrepreneur MD, we sit down with Sergei and Daniel from Well-Ai who share with us how their platform uses Artificial Intelligence to augment physicians and improve patient outcomes.

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AI FOR GOOD - AI and Medicine - YouTube

PODCAST: https://cdn.transistor.fm/file/transistor/m/shows/18272/c1ab340b1747ec2fc5f5315b476e026b.mp3

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About Medical Workplace Violence

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More than Physical Assault

[By Staff Reporters]

Business Med PracticeWorkplace violence is more than physical assault.

According to trauma specialist Eugene Schmuckler; PhD, MBA, CTS opining and writing in www.BusinessofMedicalPractice.com; workplace violence is any act in which a person is abused, threatened, intimidated, harassed, or assaulted in his or her employment. Swearing, verbal abuse, playing “pranks,” spreading rumors, arguments, property damage, vandalism, sabotage, pushing, theft, physical assaults, psychological trauma, anger-related incidents, rape, arson, and murder are all examples of workplace violence.

The RNANS

The Registered Nurses Association of Nova Scotia [RNANS], a leading study group, defines violence as “any behavior that results in injury whether real or perceived by an individual, including, but not limited to, verbal abuse, threats of physical harm, and sexual harassment.” As such, medical workplace violence includes:

· threatening behavior — such as shaking fists, destroying property, or throwing objects;

· verbal or written threats — any expression of intent to inflict harm;

· harassment — any behavior that demeans, embarrasses, humiliates, annoys, alarms, or verbally abuses a person and that is known or would be expected to be unwelcome. This includes words, gestures, intimidation, bullying, or other inappropriate activities;

· verbal abuse — swearing, insults, or condescending language;

· muggings — aggravated assaults, usually conducted by surprise and with intent to rob; or

· physical attacks — hitting, shoving, pushing, or kicking.

Cause and Affect

Workplace violence can be brought about by a number of different actions in the workplace. It may also be the result of non-work related situations such as domestic violence or “road rage.” Workplace violence can be inflicted by an abusive employee, a manager, supervisor, co-worker, customer, family member, patient, physician, nurse, or even a stranger.

The UI-IPRC 

The University of Iowa – Injury Prevention Research Center [UI-IPRC] classifies most workplace violence into one of four categories.

· Type I Criminal Intent — Results while a criminal activity (e.g., robbery) is being committed and the perpetrator had no legitimate relationship to the workplace.

· Type II Customer/Client — The perpetrator is a customer or client at the workplace (e.g., healthcare patient) and becomes violent while being assisted by the worker.

· Type III Worker on Worker — Employees or past employees of the workplace are the perpetrators.

· Type IV Personal Relationship — The perpetrator usually has a personal relationship with an employee (e.g., domestic violence in the workplace).

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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

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PODCAST: How Health Care Can Win by Adapting to Changes in Consumer Behavior

LESSONS FROM THE RETAIL SECTOR

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Discover how ProMedica uses customer feedback and a digital-first approach to consumers to achieve stellar results across more than 400 facilities in 28 states.

PODCAST: https://www.youtube.com/watch?v=861em_pJfVM&t=3070s

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PODCAST: Intentional Medical Practice Marketing

BY ENTREPRENEUR MD

Intentional and Not Reactive Medical Marketing

In this episode we talk about what it means to be intentional with your marketing.

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INDEPENDENT DENTAL PRACTICE: Start-Up Costs?

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BY THE INSTITUTE OF MEDICAL BUSINESS ADVISORS, Inc.

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

How much will it cost you to start a dental practice – with Business Plan? 

There are many costs to consider to set up a successful dental practice. Note that the following values are not the exact amount but an average of setting up a dental practice:

  • Purchase price – this includes valuation fees of between $1,000-4,500, solicitor fees of between $4,000 – 17,000, accountancy and bank fees of around $3,000, and bank solicitors, which can be up to $3,500. Many of these can be reduced or obliterated.
  • Materials – $40,000
  • Lab fees – $36,000
  • Staff costs – $82,000
  • Other costs (associates fees) – [$245,000 – $295,000]
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Other Factors

  1. “Big” Tech – Many startup doctors want to include CBCT or CAD/CAM or 3D printing in their startup, any of which can add $25,000-$175,000. In other situations, waiting is the best option.
  2. Cabinetry Preferences – Costs for cabinetry can range from $5,000 to $175,000.
  3. Practice Management Software (PMS) – Pricing will range from a few thousand dollars to $25,000; OR none at all.
  4. Mechanical Delivery – Typically referred to as chairs, lights, and units, this category of dental equipment costs will range between $5,000 and $100,000 based on your startup plans.

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

Vision – Ignore the so-called “experts” who will try to create a cookie-cutter model for your equipment costs. That is the thinking of corporate dentistry. You want a customized private practice vision that allows you to create a model matching your standards. Prioritize your vision, so your values and philosophy will lead your dental equipment budget and purchasing decisions. Your equipment budget will be—and should be—customized.

BUSINESS PLAN: https://medicalexecutivepost.com/2017/08/17/business-plan-for-creatives-and-doctors/

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PODCAST: NCQA and HEDIS [Health Effectiveness Data Information Set]

90 NCQI MEASUREMENTS

BY ERIC BRICKER MD

The Healthcare Effectiveness Data and Information Set (HEDIS) is a tool used by more than 90 percent of U.S. health plans to measure performance on important dimensions of care and service. More than 190 million people are enrolled in health plans that report quality results using HEDIS.

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HEDIS Explained - BHM Healthcare Solutions

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

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The National Committee for Quality Assurance is an independent 501 nonprofit organization in the United States that works to improve health care quality through the administration of evidence-based standards, measures, programs, and accreditation.

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

MORE: https://www.dhcs.ca.gov/provgovpart/Documents/6422/NCQAAccreditationOverview-1-21-20.pdf

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Qualit8 | Pulse8 | Revolutionizing Healthcare Analytics Platform

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PODCAST: https://www.ahealthcarez.com/how-hedis-quality-scores-work

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PODCAST: How Health Insurance Became America’s Biggest Hustle

BY ENTREPRENUER MD AND ROBERT PEARL MD

In this episode the Entrepreneur MD is joined by Dr Robert Pearl, MD, to talk about his latest book Uncaring and the need to stand up against the current healthcare model.

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

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Robert Pearl, MD: How Health Insurance Became America’s Biggest Hustle

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Physician Owned Hospitals Myths DeBunked

BY HEALTH CAPITAL CONSULTANTS, LLC

Literature Review Debunks Claims Against Physician-Owned Hospitals


Approximately 250 hospitals across the U.S. are completely or partially physician owned. These physician-owned hospitals (POHs) can offer a variety of services, from general care to specialty services, such as cardiovascular or orthopedic care, known as “focused factories.”

Over the past several decades, healthcare providers and policymakers have claimed that POHs have a negative impact on the healthcare industry, suggesting that: (1) POHs “cherry-pick” the most profitable patients; (2) the quality of care provided at POHs is substandard; and, (3) conflicts of interest exist due to the financial incentive for physician owners to refer patients to their POHs. (Read more…) 

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PODCAST: Healthcare Customer Service is Terrible!

WHY?

BY ERIC BRICKER MD

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PODCAST: The Case for Physician Entrepreneurship

BY Ismail Sayeed, MD

We are joined by Dr Ismail Sayeed, pediatrician and physician entrepreneur to talk about his cross-border telehealth communications platform Vios, why he transitioned away from clinical practice and how his entrepreneurial journey could not have been possible without that clinical background.

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Doctor Entrepreneur's Podcast | Libsyn Directory

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PODCAST: https://share.transistor.fm/s/f5691aea

RELATED: https://getpocket.com/explore/item/all-companies-should-live-by-the-jeff-bezos-70-percent-rule?utm_source=pocket-newtab

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On Private Equity-Owned Dental Practices

The boom and bust of private equity-owned dental practices in the U.K …. Lessons to be learned?

By Darrell Kellus Pruitt DDS

“Why the dental business became more and more like pulling teeth,” by Harry Wilson, City Editor of The Times (U.K.)

Describes problems caused by agreements made between investor-owned dental groups and the government. Neither the investors nor government officials – the stakeholders – will suffer the inevitable permanent harm. The losers are dentists and patients – the principals.

https://www.thetimes.co.uk/article/why-the-dental-business-became-more-and-more-like-pulling-teeth-vdrs0nwrr

Wilson:

If you are an NHS dental patient, there is a better than one in ten chance that you are a customer of Integrated Dental Holdings, better known as Mydentist.

The private equity-owned dental practice owner has grown nationwide in a dozen years of debt-fuelled buying that has made it the biggest dental services company not merely in Britain but Europe. In the past seven years alone, Mydentist has acquired 237 dental practices, increasing its network to more than 600.

Yet having grown so rapidly in the recent past, questions now are being asked about its future. Results last month showed why, as revenues fell for the third straight year, while pre-tax losses nearly doubled to £144 million. With more than £1 billion of debt, including hundreds of millions in shareholder loans to The Carlyle Group and Palamon Capital Partners, its private equity owners, Mydentist said that it would not be buying any more dentist surgeries for the time being. (more).

———————

Bringing it home:

Rumors of “Medicare for all” are in the air, making your support of Texas Dentists for Medicaid Reform very worthwhile, Doc.

https://www.tdmr.org/about-tdmr/

Conclusion

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

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

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

HOSPITALS:

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

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

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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™

 

Why Your Company Needs a Clear Mission Statement?

A QUARTET OF REASONS!

It’s going to be a good idea to do everything you can to help your company succeed. One good thing that you can do for your company is to create a clear mission statement.

Why is a mission statement so important for your company, though? Read on to learn exactly why your company needs a clear mission statement so much.

By Jonathan Mase MBA

Mission Statement

READ HERE: https://jonathanmase.wordpress.com/2021/09/01/why-your-company-needs-a-clear-mission-statement/

Your comments are appreciated.

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Activity Based Medical Cost Accounting and Management

NON-TRADITIONAL ACCOUNTING METHODS KNOWN IN THE BUSINESS COMMUNITY BUT NOT USED IN HOSPITALS OR HEALTH CARE ORGANIZATIONS

By Dr. David Edward Marcinko; MBA CMP® CPHQ

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Sooner or later – as a practicing physician – you will want to ascertain and then demonstrate the cost effectiveness of your medical care. By using the process of Activity Based Cost (ABC) Management, you will be able to do so.  

ALAS: But, if you’re using a traditional accounting system – like most all hospitals today that use the fictional “average wholesale cost” method – you won’t know a thing about your medical practice or clinic activity costs. Hence, again like most all hospitals, fees become simply vacuous.

Managerial Accounting Assignment Help in Australia

Here’s how: https://medicalexecutivepost.com/2007/12/15/activity-based-cost-medical-management/

HOW TO READ A SCIENTIFIC PAPER: https://medicalexecutivepost.com/2021/04/09/how-to-read-and-understand-a-scientific-paper/

DETAILED WHITE PAPERIN-PROGRESS [thru editing but before peer-reviewed publication]: https://healthcarefinancials.files.wordpress.com/2007/12/abcm.pdf

ASSESSMENT: Your thoughts are appreciated.

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A Brief History of Managed Medical Care in the USA

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By National Council on Disability

The origins of managed care can be traced back to at least 1929, when Michael Shadid, a physician in Elk City, Oklahoma, established a health cooperative for farmers in a small community without medical specialists or a nearby general hospital. He sold shares to raise money to establish a local hospital and created an annual fee schedule to cover the costs of providing care. By 1934, 600 family memberships were supporting a staff that included Dr. Shadid, four newly recruited specialists, and a dentist. That same year, two Los Angeles physicians, Donald Ross and Clifford Loos, entered into a prepaid contract to provide comprehensive health services to 2,000 employees of a local water company.endnote[i]

Development of Prepaid Health Plans

Other major prepaid group practice plans were initiated between 1930 and 1960, including the Group Health Association in Washington, DC, in 1937, the Kaiser-Permanente Medical Program in 1942, the Health Cooperative of Puget Sound in Seattle in 1947, the Health Insurance Plan of Greater New York in New York City in 1947, and the Group Health Plan of Minneapolis in 1957. These plans encountered strong opposition from the medical establishment, but they also attracted a large number of enrollees.

Today, such prepaid health plans are commonly referred to as health maintenance organizations (HMOs). The term “health maintenance organization,” however, was not coined until 1970, with the aim of highlighting the importance that prepaid health plans assign to health promotion and prevention of illness. HMOs are what most Americans think of when the term “managed care” is used, even though other managed care models have emerged over the past 40 years.

Public Managed Care Plans

The enactment of the Health Maintenance Organization Act of 1973 (P. L. 93-222) provided a major impetus to the expansion of managed health care. The legislation was proposed by the Nixon Administration in an attempt to restrain the growth of health care costs and also to preempt efforts by congressional Democrats to enact a universal health care plan. P. L. 93-222 authorized $375 million to assist in establishing and expanding HMOs, overrode state laws restricting the establishment of prepaid health plans, and required employers with 25 or more employees to offer an HMO option if they furnished health insurance coverage to their workers. The purpose of the legislation was to stimulate greater competition within health care markets by developing outpatient alternatives to expensive hospital-based treatment. Passage of this legislation also marked an important turning point in the U.S. health care industry because it introduced the concept of for-profit health care corporations to an industry long dominated by a not-for-profit business model.endnote[ii]

In the decade following the passage of P. L. 93-222, enrollment in HMOs grew slowly. Stiff opposition from the medical profession led to the imposition of regulatory restrictions on HMO operations. But the continued, rapid growth in health care outlays forced government officials to look for new solutions. National health expenditures grew as a proportion of the overall gross national product (GNP) from 5.3 percent in 1960 to 9.5 percent in 1980.endnote[iii] In response, Congress in 1972 authorized Medicare payments to free-standing ambulatory care clinics providing kidney dialysis to beneficiaries with end-stage renal disease. Over the following decade, the Federal Government authorized payments for more than 2,400 Medicare procedures performed on an outpatient basis.endnote[iv]

Responding to the relaxed regulatory environment, physicians began to form group practices and open outpatient centers specializing in diagnostic imaging, wellness and fitness, rehabilitation, surgery, birthing, and other services previously provided exclusively in hospital settings. As a result, the number of outpatient clinics skyrocketed from 200 in 1983 to more than 1,500 in 1991,endnote[v] and the percentage of surgeries performed in hospitals was halved between 1980 (83.7%) and 1992 (46.1%).endnote[vi]

mind-investing-behavioral-finance

The Influence of Medicare Prospective Payments

Health care costs, however, continued to spiral upward, consuming 10.8 percent of GNP by 1983. In an attempt to slow the growth rate, Congress in 1982 capped hospital reimbursement rates under the Medicare program and directed the secretary of HHS to develop a case mix methodology for reimbursing hospitals based on diagnosis-related groups (DRGs). As an incentive to the hospital industry, the legislation (the Tax Equity and Fiscal Responsibility Act (P. L. 97-248)) included a provision allowing hospitals to avoid a Medicare spending cap by reaching an agreement with HHS on implementing a prospective payment system (PPS) to replace the existing FFS system. Following months of intense negotiations involving federal officials and representatives of the hospital industry, the Reagan Administration unveiled a Medicare PPS. Under the new system, health conditions were divided into 468 DRGs, with a fixed hospital payment rate assigned to each group.

Once the DRG system was fully phased in, Medicare payments to hospitals stabilized.endnote[vii] However, since DRGs applied to inpatient hospital services only, many hospitals, like many group medical practices, began to expand their outpatient services in order to offset revenues lost as a result of shorter hospital stays. Between 1983 and 1991, the percentage of hospitals with outpatient care departments grew from 50 percent to 87 percent. Hospital revenues derived from outpatient services doubled over the period, reaching 25 percent of all revenues by 1992.endnote[viii]

Since DRGs were applied exclusively to Medicare payments, hospitals began to shift unreimbursed costs to private health insurance plans. As a result, average per employee health plan premiums doubled between 1984 and 1991, rising from $1,645 to $3,605.endnote[ix] With health insurance costs eroding profits, many employers took aggressive steps to control health care expenditures. Plan benefits were reduced. Employees were required to pay a larger share of health insurance premiums. More and more employers—especially large corporations—decided to pay employee health costs directly rather than purchase health insurance. And a steadily increasing number of large and small businesses turned to managed health care plans in an attempt to rein in spiraling health care outlays.

Managed Long-Term Services and Supports

Arizona became the first state to apply managed care principles to the delivery and financing of Medicaid-funded LTSS in 1987, when the federal Health Care Financing Administration (later renamed the Centers for Medicare and Medicaid Services) approved the state’s request to expand its existing Medicaid managed care program. Medicaid recipients with physical and developmental disabilities became eligible to participate in the Arizona Long-Term Care System as a result of this program expansion. Over the following two decades, a number of other states joined Arizona in providing managed LTSS, and by the summer of 2012, 16 states were operating Medicaid managed LTSS programs.endnote[x]

Scientists at work

Growth of Commercial Managed Care Plans

During the late 1980s and early 1990s, managed care plans were credited with curtailing the runaway growth in health care costs. They achieved these efficiencies mainly by eliminating unnecessary hospitalizations and forcing participating physicians and other health care providers to offer their services at discounted rates. By 1993, a majority (51%) of Americans receiving health insurance through their employers were enrolled in managed health care plans.endnote[xi] Eventually, however, benefit denials and disallowances of medically necessary services led to a public outcry and the enactment of laws in many states imposing managed care standards. According to one analysis, nearly 900 state laws governing managed health practices were enacted during the 1990s.endnote[xii] Among the measures approved were laws permitting women to visit gynecologists and obstetricians without obtaining permission from their primary care physician, establishing the right of patients to receive emergency care, and establishing the right of patients to appeal decisions made by managed care firms. Congress even got into the act in 1997 when it passed the Newborns’ Mother Health Protection Act, prohibiting so-called “drive-through deliveries” (overly restrictive limits on hospital stays following the birth of a child).endnote[xiii]

Research studies have yielded little evidence that managed health care excesses have undermined the quality of health care services. For example, in a survey of 2,000 physicians, Remler and colleagues found that managed care insurance plans denied only about 1 percent of recommended hospitalizations, slightly more than 1 percent of recommended surgeries, and just over 2.5 percent of referrals to specialists.endnote[xiv] In another study, Franks and colleagues found that medical outcomes were similar for participants in HMOs versus FFS health plans.endnote[xv] Franks also reported that HMO patients were hospitalized 40 percent less frequently than FFS patients, and the rate of inappropriate hospitalizations was lower among HMO patients.

Link: http://www.ncd.gov/publications/2013/20130315/20130513_AppendixB

Recent Developments

Over the past 15 to 20 years, the public outcry against draconian managed care practices has waned, primarily due to the expanded out-of-network options afforded to participants in HMOs, PPOs, and POS health plans. But the perception that managed care represents an overly cost-conscious, mass market approach to delivering medical services lingers among the American public, even though more than 135 million people with health insurance coverage now receive their primary, preventive, and acute health services through a managed care plan.endnote[xvi]People with disabilities, especially high users of medical care and LTSS, share many of the same negative perceptions of managed care as the general public.

More:

Footnotes

[i]. R. Kane, R. Kane, N. Kaye, R. Mollica, T. Riley, P. Saucier, K. I. Snow, and L. Starr, “Managed Care Basics,” in Managed Care: Handbook for the Aging Network (Minneapolis: Long-Term Care Resource Center, University of Minnesota, 1996).

[ii]. D. Mitchell, Managed Care and Developmental Disabilities: Reconciling the Realities of Managed Care with the Individual Needs of Persons with Disabilities (Homewood, IL: High Tide Press, 1999).

[iii]. M. Freeland and C. Schendler, “Health Spending in the 1980s,” Health Care Financing Review 5 (Spring 1984): 7.

[iv]. D. Drake, Reforming the Health Care Market: An Interpretive Economic History (Washington, DC: Georgetown University Press, 1994).

[v]. Ibid.

[vi]. Mitchell, Managed Care and Developmental Disabilities.

[vii]. Drake, Reforming the Health Care Market.

[viii]. L. Weiss, Private Medicine and Public Health (Boulder, CO: Westview Press, 1997).

[ix]. Employee Benefits Research Institute, EBRI Databook on Employee Benefits (Washington, DC: Employee Benefits Research Institute, 1992).

[x]. P. Saucier, “Managed Long-Term Services and Supports,” a presentation to the National Policy Forum, May 11, 2012.

[xi]. J. Iglehart, “Physicians and the Growth of Managed Care,” The New England Journal of Medicine 331, no. 17 (1994): 1167–71.

[xii]. R. Cauchi, “Where Do We Go From Here?” State Legislatures (March 1999): 15–20.

[xiii]. U.S. Department of Labor, Fact Sheet: Newborns’ and Mothers’ Protection Act, http://www.dol.gov/ebsa/newsroom/fsnmhafs.html.

[xiv]. D. Rembler, K. Donelan, R. Blendon, L. Lundberg, D. Leape, K. Binns, and J. Newhouse, “What Do Managed Care Plans Do to Affect Care: Results of a Survey of Physicians,” Inquiry 34 (1997): 196–204.

[xv]. P. Franks, C. Clancy, and P. Nutting, “Gatekeeping Revisited: Protecting Patients from Overtreatment,” The New England Journal of Medicine 337, no. 6 (1992): 424–9.

[xvi]. Statistics taken from Managed Care Online, http://www.mcol.com/factsheetindex.

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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The “BUSINESS” of Transformational Medical Practice Skills

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PODCAST: On Electronic Medical Records

EMR OVERVIEW

BY ERIC BRICKER MD

Electronic Medical Records (EMRs) are Used by 80-90% of Hospitals and Physician Practices. One Study Found that EMRs Have Lowered Patient Mortality by 0.09%.

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PODCAST: Tips for the Medical Educator’s “Elevator Pitch”

On Medical Academic – Not Business – Planning

Courtesy: www.CertifiedMedicalPlanner.org

By Dr. David E. Marcinko MBA

We’ve written and opined about medical business entrepreneurs and business start-up plans; before:

MY ESSAY: https://medicalexecutivepost.com/2020/01/20/creating-a-medical-practice-business-plan-in-2020/

MY SCRIPT: https://healthcarefinancials.files.wordpress.com/2017/08/podcast.pdf

QUERY: But, did you ever wonder what to say when you’re standing next to a senior physician colleague who could help further your academic and educational work?

MOOCS: https://medicalexecutivepost.com/2018/09/25/moocs-are-you-an-i-t-educational-futurist/

FLIPPED CLASSROOM: https://medicalexecutivepost.com/2019/05/17/the-flipped-classroom/

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Now, for some granular specificity; let’s cue the elevator pitch with David Acosta MD and Daniel Hashimoto MD MS who demonstrate what to do (and what not to do) to successfully deliver your medical educator’s elevator pitch.

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Image result for elevator speech

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PODCAST: http://academicmedicineblog.org/tips-for-the-medical-educators-elevator-pitch/

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TEXTS FOR PHYSICIAN EXECUTIVES AND HOSPITAL CXOs

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The BUSINESS of Medical Practice

BY DR. David Edward Marcinko MBA

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PODCAST: Medicare Launched the First VBC Initiative 40 Years Ago!

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See the source image

BY DR. ERIC BRICKER MD

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Value-Based Care Happened 40 Years

Why Was Medicare Able to Bring About So Much Value-Based Payment Change in 3 Years (’83-’86) Compared to the Relatively Little Change That Has Occurred in the 11 Years Since the Affordable Care Act?

Watch the Video to Find Out.

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FINANCIAL PLANNING: Strategies for Doctors and Advisors

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Management Strategies, Operational Techniques, Tools, Templates and Case Studies

FOR HOSPITALS AND HEALTHCARE ORGANIZATIONS

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BY DR. DAVID E. MARCINKO MBA

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

BY DR. DAVID EDWARD MARCINKO MBA CMP

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Financial Planning for Medical Professionals

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PODCAST: Physician Specialties with Hospital System Bargaining Power

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Certain Doctor Specialties Have Great Power within Hospital Systems Because They Generate High-Margin Patient Volume.

By Eric Bricker MD

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The “Business of Medical Practice”

TRANSFORMATIONAL HEALTH 2.0 SKILLS FOR DOCTORS

Third Edition

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Hospitals and Healthcare Organizations

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FINANCIAL PLANNING: Strategies for Doctors and their Advisors

BY DR. DAVID E. MARCINKO MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

CMP logo

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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PODCAST: Medical Supply Chain Management?

Our broken healthcare supply chain – what can be done

By Dr. Marion Mass MD

Dr. Marion Mass graduated from Medical School at Duke University. She completed internship and residency at Northwestern University’s Robert Lurie Children’s Hospital in Chicago. Dr. Mass has worked in the Philadelphia area as a pediatrician for 21 years.

Fixing Common Medical Device Supply Chain Break Points - # ...

PODCAST: https://www.youtube.com/watch?v=-BZEVnkkRAE

MARCINKO on SCM: https://medicalexecutivepost.com/2011/06/09/supply-chain-management-in-healthcare/

Your comments are appreciated.

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HOSPITALS: Management Strategies, Operational Techniques, Tools, Templates and Case Studies

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TEXTBOOK REVIEW

Drawing on the expertise of decision-making professionals, leaders, and managers in health care organizations, Hospitals & Health Care Organizations: Management Strategies, Operational Techniques, Tools, Templates, and Case Studies addresses decreasing revenues, increasing costs, and growing consumer expectations in today’s increasingly competitive health care market.

Offering practical experience and applied operating vision, the authors integrate Lean managerial applications, and regulatory perspectives with real-world case studies, models, reports, charts, tables, diagrams, and sample contracts. The result is an integration of post PP-ACA market competition insight with Lean management and operational strategies vital to all health care administrators, comptrollers, and physician executives. The text is divided into three sections:

  1. Managerial Fundamentals
  2. Policy and Procedures
  3. Strategies and Execution

Using an engaging style, the book is filled with authoritative guidance, practical health care–centered discussions, templates, checklists, and clinical examples to provide you with the tools to build a clinically efficient system. Its wide-ranging coverage includes hard-to-find topics such as hospital inventory management, capital formation, and revenue cycle enhancement. Health care leadership, governance, and compliance practices like OSHA, HIPAA, Sarbanes–Oxley, and emerging ACO model policies are included. Health 2.0 information technologies, EMRs, CPOEs, and social media collaboration are also covered, as are 5S, Six Sigma, and other logistical enhancing flow-through principles. The result is a must-have, “how-to” book for all industry participants.

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YOUR THOUGHTS are appreciated.

PODCAST: Cash Flow, Revenue Management and Leadership in Healthcare Business; etc.

THE ENTREPRENEURIAL M.D.

In this episode we are joined by Dr. Brent Jackson, Chief Medical Officer for Mercy General in Sacramento, CA to discuss the physician life-cycle, burnout, and transitioning into leadership within healthcare.

Play EpisodeDownload (40.4 MB)

Summary: Dr Brent Jackson discusses the flow of revenue throughout the medical industry.

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

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PODCAST: United Health Group “Harmony” Network?

UHG Uses Those Doctors for their NEW Harmony Network That They Sell as an HMO Insurance Product to Employers.

United Health Group Has Bought Physician Practices in Southern California Totaling 6,500 Doctors, Associated with 133 Hospitals.

YOUR THOUGHTS ARE APPRECIATED.

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PODCAST: Health Plan Innovation

HEALTH PLAN EQUALS ALIGNMENT INNOVATION

By Eric Bricker MD

Your thoughts are appreciated.

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PODCAST: Direct Primary Medical Care

NOT FEE-FOR-SERVICE MEDICINE

Direct Primary Care (DPC) Involves an Employer or a Patient Paying for a Doctor via a Monthly Membership Fee.  DPC Doctors Do NOT Bill Insurance.  There is NO Fee-for-Service.

Texas CEO Magazine Eric Bricker 1 - SO 14 - Texas CEO Magazine


There is Copay for Each Office Visit and Visits are Unlimited.

Direct Primary Care Doctors Are Most Frequently Family Practice Physicians, but Internal Medicine and Pediatricians Can Also Have Direct Primary Care Practices.

The Average Direct Primary Care Practice Has a Panel of 345 Patients, with a Goal of About 600 Patients at Full Capacity.

For Comparison, the Typical Fee-for-Service Primary Care Doctor Has a Patient Panel of 2,500.

57% of Direct Primary Care Practices Contract with Employers That Pay the Monthly Membership on the Employee’s Behalf.

Direct Primary Care is a Strategy to Increase the Quality of Care and Decrease Healthcare Costs for an Employee Health Plan.

Disclaimer Dr. Bricker is the Chief Medical Officer of Virtual Care Company First Stop Health.

THANK YOU
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Financial Management Strategies for Hospitals and Healthcare Organizations

TEXTBOOK RELEASE AND REVIEW

Reviews

Navigating a course where sound organizational management is intertwined with financial acumen requires a strategy designed by subject-matter experts. Fortunately, Financial Management Strategies for Hospital and Healthcare Organizations: Tools, Techniques, Checklists and Case Studiesprovides that blueprint.
―David B. Nash, MD, MBA,Jefferson Medical College, Thomas Jefferson University

It is fitting that Dr. David Edward Marcinko, MBA, CMP™ and his fellow experts have laid out a plan of action in Financial Management Strategies for Hospital and Healthcare Organizationsthat physicians, nurse-executives, administrators, institutional CEOs, CFOs, MBAs, lawyers, and healthcare accountants can follow to help move healthcare financial fitness forward in these uncharted waters.
―Neil H. Baum, MD, Tulane Medical School

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On PHYSICIAN RECRUITMENT: “Head-Hunters” and Executive Search Firms

ART AND SCIENCE OF PHYSICIAN RECRUITMENT

By Dr. David Edward Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Recruitment has become a refined art in recent years as practices and physicians themselves grow increasingly savvy about the finer points of marketing positions and securing employment.  It’s more competitive than ever, too.  Many organizations are going after the same physicians. Add to that a shortage of doctors in key specialties and certain geographical areas and the pressure becomes that much more intense.  Moreover, the aging of the physician workforce, their increased dissatisfaction with managed care, and changes in doctors’ work expectations (they want more free time) have affected the demand and supply.

Additionally, both practicing physicians and residents fresh out of training have become more discerning and skillful in managing the search process.  Candidates have learned to be selective based on how they’re treated on the phone, how they’re treated in person during site visits, or how smoothly the negotiations go.  One small bump in the road and they could choose to go elsewhere.  In truth, they look to rule organizations out, not in.  

Even the smallest of practices must have an effective recruitment plan because they compete directly with the big guys — larger practices and hospitals that have polished their efforts and perfected their processes. 

Facts about Physician Recruiters and Executive Search Firms

1) If you are job hunting, you should send your resume to recruiters

Different recruiters know about different positions. They do not usually know about the same ones. This is particularly true with retained firms. By sending your resume out widely, you will be placed in many different confidential databases and be alerted of many different positions. If you send your resume to only a few, it may be that none you send to will be working with positions which are suited for you. Throw your net widely.

If you change jobs, it is also wise to send follow-up letters to the recruiters and alert them of your new career move. Many search firms follow people throughout their careers and enjoy being kept up-to-date. It is a good idea to have your resume formatted in plain text so you can copy and paste it into email messages when requested to do so. Then, follow up with a nicely formatted copy on paper by postal mail.

Some estimate that only 1% to 3% of all resumes sent will result in actual job interviews. So, if you only send 50 resumes, you may only have less than 2 interviews, if that many. Send your resume to as many recruiters as you can. It is worth the postage or email time. Generally, recruiters will not share your resume with any employer or give your name to anyone else without obtaining your specific permission to do so. The recruiter will call first, talk to you about a particular position and then ask your permission to share your resume with that employer.

2) Your resume will be kept strictly confidential by the executive search firm.

It is safe to submit your resume to a search firm and not worry that the search firm will let it leak out that you are job hunting. Recruiters will call you each and every time they wish to present you to an employer in order to gain your permission. Only after they have gained your permission will they submit your name or resume to the identified employer. The wonderful aspect of working with search firms is that you can manage your career and your job search in confidence and privacy.

3) Fees are always paid by the employer, not the job candidate.

Recruiters and search firms work for the employer or hiring entity. The employer pays them a fee for locating the right physician for the job opening. This is important to remember, in that when you interact with executive recruiters, you are essentially interacting with an agent or representative of the employer. Recruiters are more loyal to employers than they are to job candidates because they work for the employer. This should not present a problem, but, should cause you to develop your relationship with the recruiter with the same integrity and professionalism that you would with the employer.

Recruiters are paid fees in one of two ways – retainer fees or contingency fees. This is an important distinction and will affect your process with both the employer and the recruiter. Some employers prefer working with contingency firms and some with retained firms. Both are respected by employers and useful in your job search, but, the two types of firms will not be handling the same positions with the same employers simultaneously.

A “retained” recruiter has entered an exclusive contract with an employer to fill a particular position. The retained recruiter, then, is likely to advertise a position, sharing the specifics of the position, location and employer openly. The retained firm feels a great obligation to fulfill the contract by finding the best person for the job.

A “contingency recruiter” on the other hand, usually does not have an exclusive relationship with the employer, and is only paid a fee if the job search is successful. Often, if the employer uses contingency firms, there will be more than one contingency firm competing to fill a certain position. As a job hunter, if you are sent to an interview by a contingency firm, you may find that you are competing with a larger number of applicants for a position. Generally, retained firms only send in from 3 to 5 candidates for a position.

Recruiters will be paid fees equal to about 25% to 35% of the resulting salary of the successful candidate plus expenses. This does not come out of the job candidate’s salary. This is paid to the recruiter through a separate relationship between the employer and the search firm. This may seem like a large fee, but, keep in mind that recruiters incur a great many expenses when searching for successful job candidates. They spend enormous amounts of money on computer systems, long distance calls, mail-outs, travel and interviews. Recruiters work very hard for these fees. Employers recognize the value of using recruiters and are more than willing to pay recruiters the fees. All you have to do is contact the recruiter to get the process moving. 

4) Not all medical recruiters work only with physicians.

Some search firms work exclusively with physicians or in healthcare, while others may work in several fields at once. Some of the larger generalist firms will have one or more search consultants that specialize in healthcare. It is important for you, as a job hunter, to assess the recruiters’ knowledge of your field. If you use industry or medical specialty buzz words in describing your skills, experience or career aspirations, you may or may not be talking a language the recruiter understands fully. It is wise to explore fully with the recruiter his understanding of your field and area of specialization.

5) Recruiters and search consultants move around.

Recruiters, like many professionals, move to new firms during their careers. Often you will find that recruiters will work at several firms during their careers. Since it is much more effective to address your letters to a person rather than “to whom it may concern”, it is smart for job hunters to have accurate and up-to-date information about who is who and where, since this can change frequently. Search firms also move their offices, sometimes to another suite, street or state. If you have a list of recruiters that is over one year old, you will certainly waste some postage in mailing your resumes and cover letters. Many of your mail-outs will be returned to you stamped “non-deliverable”, unless you obtain an up-to-date list. A resource, like the Directory of Healthcare Recruiters is updated very frequently, usually monthly [www.pohly.com/dir3.html].

6) Most search firms work with positions all over the country.

If you are from a particular state, and want to remain in that state, don’t make the mistake of only sending your resume to recruiters in your state. Often the recruiters in your state are working on positions in other states, and recruiters in other states are working on positions in your state. This is usually the case. Very few recruiters work only in their local area, most work all around the US and some internationally. Regardless of your geographic preference, you should still send your resume to all the healthcare recruiters. If you really only want to remain in your area, you can specify that preference in your cover letter.

7) Recruiters primarily work with hard to fill positions or executive positions.

Some recruiters specialize in clinical positions for physicians, managed care executive positions, healthcare financial positions or health administration positions. Others may specialize in finding doctors, nurses or physical therapists. Generally, an employer does not engage a recruiter’s assistance in filling a position unless it is hard to fill. Sometimes employers will engage search firms to save them the valuable time of advertising or combing through dozens of resumes.

Contingency recruiters tend to work with more mid-level management and professional positions, but, this is not always the case. Retained firms generally work with the higher level clinical or administrative positions.

One thing you will be assured of is that if a recruiter is working on a position that means that the employer is willing to pay a fee. That usually means that the position is a valued position and one worth closer inspection on your part. Even in healthcare, with certain exceptions, our economy is an “employer’s market”. This means that employers receive a deluge of resumes for their open positions. Increasingly, employers are using recruitment firms to handle their openings and schedule the interviews because employers simply do not have the manpower or time to handle the many resumes they receive. Therefore, if a job hunter is submitted by a recruiter, that job hunter has a great advantage over all other applicants.

ASSESSMENT: Your comments are appreciated.

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Transformational Health 2.0 Business Skills for Doctors

THE BUSINESS OF MEDICAL PRACTICE

Textbook Review

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Are Today’s Doctors Desperate?

Emotions Rise with Healthcare Reform

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

NOTE:  I penned this essay more than a decade ago.dem2

Managed care is a prospective payment method where medical care is delivered regardless of the quantity or frequency of service, for a fixed payment, in the aggregate. It is not traditional fee-for-service medicine or the individual personal care of the past, but is essentially utilitarian in nature and collective in intent. Will new-age healthcare reform be even more draconian?

Unhappy Physicians

There are many reasons why doctors are professionally and financially unhappy, some might even say desperate, because of managed care; not to mention the specter of healthcare reform from the Obama administration. For example:

  • A staggering medical student loan debt burden of $100,000-250,000 is not unusual for new practitioners. The federal Health Education Assistance Loan (HEAL) program reported that for the Year 2000, it squeezed significant repayment settlements from its Top 5 list of deadbeat doctor debtors. This included a $303,000 settlement from a New York dentist, $186,000 from a Florida osteopath, $158,000 from a New Jersey podiatrist, $128,000 from a Virginia podiatrist, and $120,000 from a Virginia dentist. The agency also excluded 303 practitioners from Medicare, Medicaid, and other federal healthcare programs and had their cases referred for nonpayment of debt.
  • Because of the flagging economy, medical school applications nationwide have risen. “Previously, there were a lot of different opportunities out there for young bright people”; according to Rachel Pentin-Maki; RN, MHA”; not so today. In fact, Physicians Practice Digest recently stated, “Medicine is fast becoming a job in which you work like a slave, eke out a middle class existence, and have patients, malpractice insurers, and payers questioning your motives.” Remarkably, the Cornell University School of Continuing Education has designed a program to give prospective medical school students a real-world peek, both good and bad.

The Ripple Effects of Managed Care and Reform

“Many people who are currently making a great effort and investment to become doctors may be heading for a role and a way of life that are fundamentally different from what they expect and desire,” according to Stephen Scheidt, MD, director of the $1,000 Cornell fee program; why?

  • Fewer fee-for-service patients and more discounted patients.
  • More paperwork and scrutiny of decisions with lost independence and morale.
  • Reputation equivalency (i.e., all doctors in the plan must be good), or commoditization (i.e., a doctor is a doctor is a doctor).
  • The provider is at risk for (a) utilization and acuity, (b) actuarial accuracy, (c) cost of delivering medical care, and (d) adverse patient selection.
  • Practice costs are increasing beyond the core rate of inflation.
  • Medicare reimbursements are continually cut.

Mad Obama

Early Opinions

Richard Corlin MD, opined back in 2002 that “these are circumstances that cannot continue because we are going to see medical groups disappearing.” Furthermore, he stated, “This is an emergency that lawmakers have to address.” Such cuts also stand to hurt physicians with private payers since commercial insurers often tie their reimbursement schedules to Medicare’s resources. “That’s the ripple effect here,” says Anders Gilberg, the Washington lobbyist for the Medical Group Management Associations (MGMA).

Assessment

And so, some desperate doctors are pursing these sources of relief, among many others:

  • A growing number of doctors are abandoning traditional medicine to start “boutique” practices that are restricted to patients who pay an annual retainer of $1,500 and up for preferred services and special attention. Franchises for the model are also available.
  • Regardless of location, the profession of medicine is no longer ego-enhancing or satisfying; some MDs retire early or leave the profession all together. Few recommend it, as a career anymore.

Assessment

To compound the situation, it is well known that doctors are notoriously poor investors and do not attend to their own personal financial well being, as they expertly minister to their patients’ physical illnesses.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Tell us what you think? Are you a desperate doctor? Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.

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

References:

  1. www.managedcaremagazine.com/archives/9809/9809/.qna_dickey.shtml
  2. www.hrsa.dhhs.gov/news-pa/heal.htm
  3. www.bhpr.hrsa.gov/dsa/sfag/health-professions/bk1prt4.htm
  4. Pamela L. Moore, “Can We All Just Get Along: Bridging the Generation Gap, Physicians Practice Digest (May/June 2001).

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™

Organizational Economics and Physician Practices

N.B.E.R.

By James B. Rebitzer & Mark E. Votruba

Economists seeking to improve the efficiency of health care delivery frequently emphasize two issues: the fragmented structure of physician practices and poorly designed physician incentives. This decade old paper analyzes these issues from the perspective of organizational economics.

We begin with a brief overview of the structure of physician practices and observe that the long anticipated triumph of integrated care delivery has largely gone unrealized. We then analyze the special problems that fragmentation poses for the design of physician incentives. Organizational economics suggests some promising incentive strategies for this setting, but implementing these strategies is complicated by norms of autonomy in the medical profession and by other factors that inhibit effective integration between hospitals and physicians. Compounding these problems are patterns of medical specialization that complicate coordination among physicians.

We conclude by considering the policy implications of our analysis – paying particular attention to proposed Accountable Care Organizations.

See the source image

READ HERE: https://www.nber.org/papers/w17535

ASSESSMENT: What has changed this past decade; if anything? Your thoughts are appreciated.

CONTACT: Ann Miller RN MHA

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Hospitals and Health Care Organizations

MANAGEMENT STRATEGIES, OPERATIONAL TECHNIQUES, TOOLS, TEMPLATES AND CASE STUDIES

TEXTBOOK REVIEWS:

Hospitals and Health Care Organizations is a must-read for any physician and other health care provider to understand the multiple, and increasingly complex, interlocking components of the U.S. health care delivery system, whether they are employed by a hospital system, or manage their own private practices.

The operational principles, methods, and examples in this book provide a framework applicable on both the large organizational and smaller private practice levels and will result in better patient care. Physicians today know they need to better understand business principles and this book by Dr. David E. Marcinko and Professor Hope Rachel Hetico provides an excellent framework and foundation to learn important principles all doctors need to know.
―Richard Berning, MD, Pediatric Cardiology

… Dr. David Edward Marcinko and Professor Hope Rachel Hetico bring their vast health care experience along with additional national experts to provide a health care model-based framework to allow health care professionals to utilize the checklists and templates to evaluate their own systems, recognize where the weak links in the system are, and, by applying the well-illustrated principles, improve the efficiency of the system without sacrificing quality patient care. … The health care delivery system is not an assembly line, but with persistence and time following the guidelines offered in this book, quality patient care can be delivered efficiently and affordably while maintaining the financial viability of institutions and practices.
―James Winston Phillips, MD, MBA, JD, LLM

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

ORDER HERE: https://www.amazon.com/Hospitals-Health-Care-Organizations-Operational-ebook/dp/B0091ICH30/ref=sr_1_8?dchild=1&keywords=david+marcinko&qid=1626110965&sr=8-8

ASSESSMENT: Your comments and thoughts are appreciated.

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CONTACT: Ann Miller RN MHA

MarcinkoAdvisors@msn.com

Ph: 770-448-0769

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***

RISK FACTORS COMMON TO PHYSICIANS

SOME COMMON RISK FACTORS FOR MEDICAL COLLEAGUES TO APPRECIATE

BY DR. DAVID E. MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

AN INCOMPLETE LIST = T.N.T.C.

  • Do you and or any family members drive a vehicle?
  • Do you have employees?
  • Do you have a professional malpractice exposure?
  • Do you have legal responsibility to protect medical, EMRs or personal and patient financial data?
  • Are you married and do you have assets not protected by a prenuptial agreement?
  • Do you have a current tax obligation?
  • Do you own a business?
  • Are you a board member, officer, or director of a corporation, foundation, religious or educational organization?
  • Do you engage in activities like hunting, flying, boating, etc?
  • Do you have business or domestic partners whose actions create joint and several liabilities for you?
  • Do you have personal guarantees on real estate or for business loans; or family members?
  • Do you have tail liability for professional services performed in the past?
  • Have you made specific legal or financial representations that others have relied upon in a business context?
  • What kind and what dollar amount of insurance and legal planning have you implemented against these exposures?

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FOREWORD BY J. WESLEY BOYD MD PhD MA

[Professor of Psychiatry Harvard and Yale University]

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ASSESSMENT: Your thoughts and comments are appreciated.

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