What is EBITDA?

A TERM ALL PHYSICIAN INVESTORS MUST KNOW

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SPONSOR: http://www.CertifiedMedicalPlanner.org

What Is Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)?

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EBITDA, or earnings before interest, taxes, depreciation, and amortization, is a measure of a company’s overall financial performance and is used as an alternative to net income in some circumstances. EBITDA, however, can be misleading because it strips out the cost of capital investments like property, plant, and equipment.

This metric also excludes expenses associated with debt by adding back interest expense and taxes to earnings. Nonetheless, it is a more precise measure of corporate performance since it is able to show earnings before the influence of accounting and financial deductions.

Why EBITDA is still a Great Financial Management Metric

Simply put, EBITDA is a measure of profitability. While there is no legal requirement for companies to disclose their EBITDA, according to the U.S. generally accepted accounting principles (GAAP), it can be worked out and reported using the information found in a company’s financial statements.

The earnings, tax, and interest figures are found on the income statement, while the depreciation and amortization figures are normally found in the notes to operating profit or on the cash flow statement. The usual shortcut to calculate EBITDA is to start with operating profit, also called earnings before interest and tax (EBIT) then add back depreciation and amortization.

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

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

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

YOUR COMMENTS ARE APPRECIATED

Thank You

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What is a “DEAD CAT” BOUNCE?

HOW IT WORKS

SPONSOR: http://www.CertifiedMedicalPlanner.org

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By Dr. David E. Marcinko MBA CMP®

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In finance, a dead cat bounce is a small, brief recovery in the price of a declining stock.

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Derived from the idea that “even a dead cat will bounce if it falls from a great height”, the phrase, which originated on Wall Street, is also popularly applied to any case where a subject experiences a brief resurgence during or following a severe decline.

  • The dead cat bounce is a sudden and temporary increase in stock price caused by investors erroneously believing that the stock price’s reached its lowest.
  • The dead cat bounce can only be fully accurately determined with concrete data in hindsight.
  • Both falsely identifying a stock price trough (i.e., falling victim to a dead cat bounce) and falsely identifying a true price trough as a dead cat bounce will result in negative financial consequences.

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

YOUR COMMENTS ARE APPRECIATED.

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

Thank You

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Why are CERTIFIED MEDICAL PLANNER® Textbooks SO DARN Popular?

[By Dr. David Edward Marcinko MBA CMP®]

http://www.CertifiedMedicalPlanner.org

OK – I was a Certified Financial Planner® before my academic team launched the Certified Medical Planner™ online and on-ground chartered education and board certification designation program a few years ago. I am now CFP reformed and in remission.

MORE: Enter CPMs

Enter the Certified Medical PlannerChartered Designation

Today, we are of course, gratified that Certified Medical Planner™ mark notoriety is growing organically in the healthcare, as well as financial services, industry.

Even uber-blogger Mike Kitces MSFS, MTAX, CFP, CLU, ChFC, RHU, REBC, CASL has taken note of us in his musings on the Nerd’s Eye View website. And, the reality is that there are a growing number of CFP educational programs at the post-CFP niche market level.

But, none for healthcare industrial complex: for doctors … by doctors!

Popularity of our Text Books

However, it is our modern, innovative and proprietary Certified Medical Planner™ textbooks and dictionaries that have exploded in the academic marketplace.

In fact, they are now redacted in thousands of medical, graduate, law and B-schools and libraries, as well as colleges and universities throughout the nation. This includes the Library of Congress, National Institute of Health and  the Library of Congress.

What Gives?

We have been told that this textbook popularity and publishing success is because of their balanced and peer-reviewed nature; something not very widespread in the financial services industry that is prone to gross and overstated advertising, salesmanship and marketing hyperbole. And, for this we are very gratified.

But, is there another reason our books are so popular?

A bit of networking and research suggests that interested folks may be eschewing the actual course work in favor of just the high quality textbooks! UGH!

Another reason may be that our books and curricula are kept fresh and updated on our corporate website: http://www.MedicalBusinessAdvisors.com

Assessment

So, what do you think? Matriculation with the professional mark versus self study without the designation mark. Please opine.

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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DOCTORS:

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

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

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

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

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

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

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Assessment of Workplace Violence in Healthcare

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ON MEDICAL WORKPLACE VIOLENCE

By Eugene Schmuckler PhD, MBA CTA

By Dr. David E. Marcinko MBA

Chapter 07: Workplace Violence

NOTE: The ME-P can only speculate how this healthcare workplace violence information from a public safety expert, applies to the recent spate of national violence – regardless of venue – or how any lessons learned are applicable in this case; or not.

1. What Is Workplace Violence?

Workplace violence is more than physical assault — it 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 Registered Nurses Association of Nova Scotia 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, 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 with intent to rob; or
  • physical attacks — hitting, shoving, pushing, or kicking.

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, or even a stranger.  The University of Iowa Injury Prevention Research Center 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).

2. Effects of Workplace Violence

The healthcare sector continues to lead all other industry sectors in incidents of non-fatal workplace assaults. In 2000, 48% of all non-fatal injuries from violent acts against workers occurred in the healthcare sector. Nurses, nurses’ aides, and orderlies suffer the highest proportion of these injuries. Non-fatal assaults on healthcare workers include assaults, bruises, lacerations, broken bones, and concussions. These reported incidents include only injuries severe enough to result in lost time from work. Of significance is that the median time away from work as a result of an assault or other violent act is 5 days. Almost 25% of these injuries result in longer than 20 days away from work. Obviously, this is quite costly to the facility as well as to the victim.

A study undertaken in Canada found that 46% of 8,780 staff nurses experienced one or more types of violence in the last five shifts worked. Physical assault was defined as being spit on, bitten, hit, or pushed.

Both Canadian and U.S. researchers have described the prevalence of verbal threats and physical assaults in intensive care, emergency departments, and general wards. A study in Florida reported that 100% of emergency department nurses experience verbal threats and 82% reported being physically assaulted. Similar results were found in a study undertaken in a Canadian hospital. Possible reasons for the high incidence of violence in emergency departments include presence of weapons, frustration with long waits for medical care, dissatisfaction with hospital policies, and the levels of violence in the community served by the emergency department.

Similar findings have been reported in studies of mental health professionals, nursing home and long-term care employees, as well as providers of service in home and community health.

Violence in hospitals usually results from patients, and occasionally family members, who feel frustrated, vulnerable, and out of control. Transporting patients, long waits for service, inadequate security, poor environmental design, and unrestricted movement of the public are associated with increased risk of assault in hospitals and may be significant factors in social services workplaces as well. Finally, lack of staff training and the absence of violence prevention programming are associated with elevated risk of assault in hospitals. Although anyone working in a hospital may become a victim of violence, nurses and aides who have the most direct contact with patients are at higher risk. Other hospital personnel at increased risk of violence include emergency response personnel, hospital safety officers, and all healthcare providers. Personnel working in large medical practices fall into this category as well. Although no area is totally immune from acts of violence it most frequently occurs in psychiatric wards, emergency rooms, waiting rooms, and geriatric settings.

Many medical facilities mistakenly focus on systems, operations, infrastructure, and public relations when planning for crisis management and emergency response: they tend to overlook the people. Obviously, no medical facility can operate without employees who are healthy enough to return to work and to be productive. Individuals who have been exposed to a violent incident need to be assured of their safety.

The costs associated with workplace violence crises are not limited to healthcare dollars, absenteeism rates, legal battles, or increased insurance rates. If mishandled, traumatic events can severely impair trust between patients, employees, their peers, and their managers. Without proper planning, an act of violence can disrupt normal group processes, interfere with the delivery of crucial information, and temporarily impair management effectiveness. It may also lead to other negative outcomes such as low employee morale, increased job stress, increased work turnover, reduced trust of management and co-workers, and a hostile working environment.

Data collected by the U.S. Department of Justice shows workplace violence to be the fastest growing category of murder in the country. Homicide, including domestic homicides, is the leading cause of on-the-job death for women, and is the second leading cause for men. The National Institute of Occupational Safety and Health (NIOSH) found that an average of 20 workers is murdered each week in the U.S. In addition, an estimated 1 million workers — 28,000 per week — are victims of non-fatal workplace assaults each year. Workplace attacks, threats, or harassment can include the following monetary costs:

  • $13.5 billion in medical costs per year;
  • 500,000 employees missing 1,750,000 days of work per year; with a 41% increase in stress levels with the concomitant related costs!

workplace-violence

More links: 

Racism in Medicine:

MORE: Work Violence

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About the Author

Dr. Eugene Schmuckler was Coordinator of Behavioral Sciences at a Public Training Center before accepting his current position as Academic Dean for iMBA, Inc. He is an international expert on personal re-engineering and coaching whose publications have been translated into Dutch and Russian. He now focuses on career development, change management, coaching and stress reduction for physicians and financial professionals. Behavioral finance, life planning and economic risk tolerance assessments are additional areas of focus. Formerly, Dr. Schmuckler was a senior adjunct faculty member at the Keller Graduate School of Management, Atlanta. He taught courses in Organizational Behavior and Leadership, Strategic Staffing, Training and Development, and the capstone course in human resources management. He is a member of a number of professional organizations including the American Psychological Association, the Academy of Management, and the Society for Human Resource Management. A native of Brooklyn New York, he received his BS degree in Psychology from Brooklyn College. He earned his MBA and PhD degrees in Industrial and Organizational Psychology from Louisiana State University. Currently, he serves on the executive BOD for:  www.MedicalBusinessAdvisors.com  and is the Dean of Admissions for www.CertifiedMedicalPlanner.org

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

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PODCAST: Hedge Fund Manager Michael Burry MD

In The Subprime of His Life – My Story

By Dr. David Edward Marcinko MBA, CMP™

[Editor-in-Chief]

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

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

About Mike

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

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

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

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

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

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

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

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

From a Book Review

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

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

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

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

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

And the rest, as they say, is history.

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

My Story … Being a Bit like Mike

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

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

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

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

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

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

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

Assessment

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

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

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

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

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

Assessment

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

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

Conclusion

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

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

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

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

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New Medical Practice Entrepreneurial Business Rules for Young Physicians [circa 2022]

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Go “Out-of-Box” – OR – Go Employee

By Dr. David Edward Marcinko MBA CMP™ www.CertifiedMedicalPlanner.org

There are more than 950,000 physicians in the United States. Yet, the brutal supply and demand, and demographic calculus of the matter is that there are just too many aging patients chasing too few doctors. Compensation and reimbursement is plummeting as Uncle Sam becomes the payer-of-choice for more than 52% of us. More so, going forward with the PP-ACA OR, perhaps not so much after the Trump election.

Furthermore, many large health care corporations, hospitals, and clinical and medical practices have not been market responsive to this change. Some physicians with top-down business models did not recognize the changing health care ecosystem or participatory medicine climate. Change is not inherent in the DNA of traditionalists. These entities and practitioners represented a rigid or “used-to-be” mentality, not a flexible or “want-to-be” mindset.

Yet today’s physicians and emerging Health 2.0 initiatives must possess a market nimbleness that cannot be recreated in a command-controlled or collectivist environment. Going forward, it is not difficult to imagine the following rules for the new virtual medical culture, and young physicians of the modern era.

A. Rule 1

Forget about large office suites, surgery centers, fancy equipment, larger hospitals, and the bricks and mortar that comprised traditional medical practices. One doctor with a great idea, good bedside manners, or competitive advantage can outfox a slew of insurance companies, Certified Public Accountants, or the Associate Management Accountant, while still serving patients and making money. It is now a unit-of-one economy where “ME Inc.,” is the standard. Physicians must maneuver for advantages that boost their standing and credibility among patients, peers, and payers.

Examples include patient satisfaction surveys, outcomes research analysis, evidence-based-medicine, direct reimbursement compensation, physician economic credentialing, and true patient-centric medicine. Physicians should realize the power of networking, vertical integration, and the establishment of virtual offices that come together to treat a patient and then disband when a successful outcome is achieved. Job security is earned with more successful outcomes; not a magnificent office suite or onsite presence.

B. Rule 2

Challenge conventional wisdom, think outside the traditional box, recapture your dreams and ambitions, disregard conventional gurus, and work harder than you have ever worked before. Remember the old saying, “if everyone is thinking alike, then nobody is thinking.” Do traditionalists or collective health care reform advocates react rationally or irrationally?

For example, some health care competition and career thought-leaders, such as Shirley Svorny, PhD, a professor of economics and chair of the Department of Economics at California State University, Northridge, wonder if a medical degree is a barrier—rather than enabler—of affordable health care. An expert on the regulation of health care professionals, including medical professional licensing, she has participated in health policy summits organized by Cato and the Texas Public Policy Foundation. She argues that licensure not only fails to protect consumers from incompetent physicians, but, by raising barriers to entry, makes health care more expensive and less accessible.

Institutional oversight and a sophisticated network of private accrediting and certification organizations, all motivated by the need to protect reputations and avoid legal liability, offer whatever consumer protections exist today.

C. Rule 3

Differentiate yourself among your health care peers. Do or learn something new and unknown by your competitors. Market your accomplishments and let the world know. Be a non-conformist. Conformity is an operational standard and a straitjacket on creativity. Doctors must create and innovate, not blindly follow entrenched medical societies into oblivion.

For example, the establishment of virtual medical schools and hospitals, where students, nurses, and doctors learn and practice their art on cyber entities that look and feel like real patients, can be generated electronically through the wonders of virtual reality units.

D. Rule 4

Realize that the present situation is not necessarily the future. Attempt to see the future and discern your place in it. Master the art of quick change with fast, but informed decision making. Do what you love, disregard what you do not, and let the fates have their way with you.

Assessment

I receive a couple of phone calls each month from young doctors on this topic. I ask them to decide if they are of the philosophical ilk to adhere to the above rules; or become another conformist and go along … to get along? In other words, get fly!

Or, become an employed, or government doctor.  Just remember … the entity that gives you a job, can also take it away.

Sample fly: http://crossoverhealth.com/

MORE: Marriage Business

Conclusion

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

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

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

LEXICONS: http://www.springerpub.com/Search/marcinko
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HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
CLINICS: http://www.crcpress.com/product/isbn/9781439879900
ADVISORS: www.CertifiedMedicalPlanner.org
BLOG: www.MedicalExecutivePost.com

 

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HOW: The ME-P Helps Your Financial Advisory Business or Medical Practice Grow?

All about the Medical Executive-Post Business Model

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One of the questions we receive most often from readers of the Medical Executive-Post is how can we “afford” to give away so much content for free. Or stated another way, “how do we get paid for all of this?”

The simple answer is that we know many (or even most) of you will simply take the ideas that we share and implement them yourself. Do-It-YourSelfers can always simply purchase our texts, books and peer reviewed handbooks redacted in more than a thousand, medical, law, business and graduate schools, as well as the Library of Congress, Institute of Health and Library of Congress.

LINK: https://medicalexecutivepost.com/2021/10/22/why-are-certified-medical-planner-textbooks-so-darn-popular/

On the other hand, some of you will realize you need some additional help.

For example:

Maybe as a financial advisor you’re “stuck” in your financial planning business and recognize that some outside assistance is necessary to help you get to the next level of niche specificity thru our Certified Medical Planner™ chartered certification program designation. Helping physicians of all specialty types in a fiduciary focused manner is the proverbial Win-Win for all concerned.

LINK: http://www.CertifiedMedicalPlanner.org

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OR, perhaps you are seeking a glossary of terms and definitions in heath economics, finance, accounting, insurance, managed care, health information technology and security; found in our Health Dictionary Series Wiki Project? Free and print versions are available.

LINK: http://www.HealthDictionarySeries.org

LINK: https://medicalexecutivepost.com/2011/09/17/order-our-three-newest-best-selling-dictionaries/

HDS

OR, as a doctor maybe your medical practice is growing so much you just hit a wall where you don’t have time to do it all for your patients. After all, with only “so much” time available every day and week, it’s vital to delegate or outsource anything that isn’t really core to your practice and management skill set.

LINK: http://www.MedicalBusinessAdvisors.com

OR, maybe you are even starting, buying or selling your medical practice and need our financial and valuation services. Part (1) – Part (2) – Part (3) Financial, estate, investing and retirement planning services are also available.

OR, you may just need a second informed opinion about a topic not listed; there are a myriad of issues to consider in the competitive ecosystem today.

LINK: https://medicalexecutivepost.com/schedule-a-consultation/

Regardless, we may have solutions to help!


So, in the meantime, I hope that the ME-P content continues to be helpful food for thought, and perhaps we’ll have an opportunity to cross paths soon at a future conferences or podcasts. Feel free to invite us to speak at your own seminar/podcast online V-log, as well.

INVITATION LINK: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

With warm regards.

Fraternally.
Ann Miller RN MHA CMP

[Managing Director]

email: MarcinkoAdvisors@msn.com

Phone: 770-448-0769

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What is a DIVIDEND ARISTOCRAT Stock?

By Dr. David Edward Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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A Dividend Aristocrat is a stock that has exhibited a remarkable level of consistency, measured by the fact that only those S&P 500 companies that have increased their annual dividend for 25 straight years — or more — can be called one. The name was coined by cable TV personality and investor Jim Cramer

These companies have raised their dividends through good times and bad, including recessions, crashes, and pandemics. Being able to continue doing so is a tribute to their stability and strength. Now, the past 18 months have been a particularly difficult economic environment to operate in, and some companies were forced to slash or hold the line on their dividends as a result.

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

But others are just fine, like investment manager T. Rowe Price (NASDAQ: TROW), which increased its dividend for the 35th straight year in 2022. It is located in Baltimore Maryland not far from where I grew up. In fact, I used to play stick ball, as a kid, in the parking lot.

UPDATE: https://www.msn.com/en-us/money/markets/down-between-15-and-53-3-top-dividend-aristocrats-that-are-too-cheap-to-ignore/ar-AA10oFN9?cvid=962479fd28494731a0cd106028a00940

YOUR COMMENTS ARE APPRECIATED.

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

FOREWORD: https://healthcarefinancials.files.wordpress.com/2007/10/dr-getzen.pdf

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

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On Purchasing Individual BONDS!

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

By Dr. David Edward Marcinko MBA CMP®

MARKET ALERT: Investors fled into the bond market Monday, pulling the yield on the closely watched 10-year Treasury to its lowest since February, with investors dashing out of equities on fears that rising COVID-19 infections will threaten recovery in the world’s largest economy.

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

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

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

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

First, bond mutual funds never mature.

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

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

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

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

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

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

UPDATE:

The yield on the 10-year Treasury note, which serves as a benchmark for interest rates across the US economy, fell for an eighth straight day last week to below 1.3%—the lowest level since February. And, the 10-year yield fell to 1.181% with an intra-day low of 1.176% yesterday, which was the lowest since February 11.

Since bond prices and yields move in opposite directions, falling yields signal higher demand for Treasuries.

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

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

ASSESSMENT: Your thoughts are appreciated.

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

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PODCAST: AMA to Teach Medical Students Health Economics?

AMA TO TEACH MEDICAL STUDENTS ABOUT HEALTH ECONOMICS?

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Courtesy: www.CertifiedMedicalPlanner.org

DICTIONARY: https://medicalexecutivepost.com/2009/06/08/dictionary-of-health-economics-and-finance/

Did you know that the American Medical Association is calling on medical schools and residency programs to include specific information about healthcare economics and financing in their curricula.

But, is health economics heterodoxic, or not? And; what about demand-derived economics in medicine?

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economic freedom

LINKS

ESSAY: https://medicalexecutivepost.com/2019/08/31/is-health-economics-heterodoxic-or-not/

ESSAY: https://www.modernhealthcare.com/education/ama-adopts-new-policy-training-physicians-healthcare-economics

MORE: https://medicalexecutivepost.com/2019/11/10/ricardian-derived-demand-economics-in-medicine/

MORE: https://medicalexecutivepost.com/2014/08/27/financial-and-health-economics-benchmarking/

MORE: https://healthcarefinancials.files.wordpress.com/2019/01/big-data.pdf

PODCAST: https://vimeo.com/ihe

Your thoughts are appreciated.

BUSINESS, FINANCE, INVESTING AND INSURANCE TEXTS FOR DOCTORS:

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

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VALUATION: Approaches for Common Stocks

A BRIEF REVIEW FOR PHYSICIAN INVESTORS

By Dr. David Edward Marcinko MBA CMP™

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SPONSOR: http://www.CertifiedMedicalPlanner.org

QUESTION: We are in near bear market correction territory – especially for tech stocks – so what are the 2 major types of valuation approaches for common stock?

UPDATE: https://www.msn.com/en-us/money/markets/stock-market-news-live-updates-sandp-500-dow-fall-amid-mixed-bank-earnings-retail-sales-miss/ar-AASL74g?li=BBnb7Kz

TECH: https://www.msn.com/en-us/money/markets/nasdaq-near-a-10percent-correction-isnt-the-sell-signal-you-probably-think-it-is/ar-AASL22m?li=BBnbfcL

ANSWER: There are basically two different approaches for common stock valuation; top-down and bottom-up.  Under either of the two fundamental approaches, a physician investor will have to work with individual company data.  In reality, each of these approaches is used by investors and security analysts when doing fundamental analysis.  

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

With the bottom-up approach, investors focus directly on a company’s prospects. Analysis of such information as the company’s products, its competitive position, and its financial status leads to an estimate of the company’s earnings potential, and, ultimately, its value in the market.  Considerable time and effort are required to produce the type of detailed financial analysis needed to understand a firm’s standing. The emphasis in this approach is on finding companies with good long-term growth prospects, and making accurate earnings estimates. 

The top-down approach is the opposite of the bottom-up approach. Investors begin with the economy and the overall market, considering such important factors as interest rates and inflation. They next consider likely industry prospects, or sectors of the economy that are likely to do particularly well (or particularly poorly). Finally, having decided that factors are favorable for investing, and having determined which parts of the overall economy are likely to perform well, individual companies are analyzed.

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COMMENTS APPRECIATED.

Thank You

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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™ book cover

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

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

Demanding High Moral Standards of Self … and Economic HEALTHCARE Organizations

Dr. David Edward Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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

Experts Speak

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

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

Evolution

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

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

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

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

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

ASSESSMENT

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

YOUR THOUGHTS ARE APPRECIATED

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

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

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***

The Three [3] Types of Banks

Join Our Mailing List Understanding Differences

[By Dr. David Edward Marcinko MBA CMP™]

SPONSOR: http://www.CertifiedMedicalPlanner.org

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dem-thinkingThere are several different kinds of banks.

A general understanding of these types is suggested for any medical professional prior to launching a self-directed [ME, Inc], or even a guided investment strategy or wealth building portfolio effort with a financial advisor [FA], stock broker or wealth manager, etc.

This banking information is usually not included in any text on financial planning, or related, until now.

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

Definition of Retail Bank

A retail bank is a typical small mass-market financial institution in which individual customers use local branches; usually of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs).

Definition of Commercial Bank

A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs.

However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees.

Definition of Investment Bank

Investment banking activities are different than those of retail and commercial banking and include underwriting securities, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and other corporate reorganizations, and also acting as a broker for institutional clients.

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Bankers

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Assessment

This brief review provides a retrospective on implications for modernity.

More:

Conclusion

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

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

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What is Techno SCAM-BAITING?

BY ANONYMOUS

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Scam-Baiting Behind the Scenes

The most basic form of scambaiting sets out to waste a scammer’s time. At a minimum, scambaiters attempt to make scammers answer countless questions or perform pointless and random tasks. By keeping a scammer busy, scambaiters claim they’re preventing the scammer from defrauding a real victim.

Scambaiting may also be conducted with a specific purpose in mind. Sometimes scambaiters attempt to obtain an offender’s bank account information, for instance, which they then report to a financial institution. But there are other, less benevolent motives in the scambaiting community.

Thousands of scambaiters are organised on the 419eater forum, which describes itself as the “largest scambaiting community on earth”, with over 1.7 million forum threads. The forum was first established in 2003 to tackle the growing issue of 419 emails – a scam that promises people huge sums of cash in return for a small upfront fee.

419eater provides a particularly interesting case study because members are incentivised and rewarded for their scambaits through a unique system of icons, regarded as trophies, that they can obtain in their profile’s signature lines.

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Romance Scam : Find Out How We Uncovered This Chinese Scam

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MORE: https://www.theguardian.com/technology/2021/oct/03/who-scams-the-scammers-meet-the-amateur-scambaiters-taking-on-the-crooks?utm_source=pocket-newtab

Healthcare: https://www.scamwatch.gov.au/types-of-scams/buying-or-selling/health-medical-products

Medical Insurance: https://www.reddit.com/r/scambait/comments/jsgffx/just_got_a_scam_call_to_sign_me_up_for_bogus/

YOUR COMMENTS ARE APPRECIATED.

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THANK YOU

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HEDGE FUNDS: History in Brief

ABOUT | DAVID EDWARD MARCINKO

BY DR. DAVID E. MARCINKO MBA CMP®

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The investment profession has come a long way since the door-to-door stock salesmen of the 1920s sold a willing public on worthless stock certificates. The stock market crash of 1929 and ensuing Great Depression of the 1930s forever changed the way investment operations are run. A bewildering array of laws and regulations sprung up, all geared to protecting the individual investor from fraud. These laws also set out specific guidelines on what types of investment can be marketed to the general public – and allowed for the creation of a set of investment products specifically not marketed to the general public. These early-mid 20th century lawmakers specifically exempted from the definition of “general public,” for all practical purposes, those investors that meet certain minimum net worth guidelines.

The lawmakers decided that wealth brings the sophistication required to evaluate, either independently or together with wise counsel, investment options that fall outside the mainstream. Not surprisingly, an investment industry catering to such wealthy individuals, such as doctors and healthcare professionals, and qualifying institutions has sprung up.

EARLY DAYS

The original hedge fund was an investment partnership started by A.W. Jones in 1949. A financial writer prior to starting his investment management career, Mr. Jones is widely credited as being the prototypical hedge fund manager. His style of investment in fact gave the hedge fund its name – although Mr. Jones himself called his fund a “hedged fund.” Mr. Jones attempted to “hedge,” or protect, his investment partnership against market swings by selling short overvalued securities while at the same time buying undervalued securities. Leverage was an integral part of the strategy. Other managers followed in Mr. Jones’ footsteps, and the hedge fund industry was born.

In those early days, the hedge fund industry was defined by the types of investment operations undertaken – selling short securities, making liberal use of leverage, engaging in arbitrage and otherwise attempting to limit one’s exposure to market swings. Today, the hedge fund industry is defined more by the structure of the investment fund and the type of manager compensation employed.

The changing definition is largely a sign of the times. In 1949, the United States was in a unique state. With the memory of Great Depression still massively influencing common wisdom on stocks, the post-war euphoria sparked an interest in the securities markets not seen in several decades. Perhaps it is not so surprising that at such a time a particularly reflective financial writer such as A.W. Jones would start an investment operation featuring most prominently the protection against market swings rather than participation in them. 

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

Apart from a few significant hiccups – 1972-73, 1987 and 2006-07 being most prominent – the U.S. stock markets have been on quite a roll for quite a long time now. So today, hedge funds come in all flavors – many not hedged at all. Instead, the concept of a private investment fund structured as a partnership, with performance incentive compensation for the manager, has come to dominate the mindscape when hedge funds are discussed. Hence, we now have a term in “hedge fund” that is not always accurate in its description of the underlying activity. In fact, several recent events have contributed to an even more distorted general understanding of hedge funds.

During 1998, the high profile Long Term Capital Management crisis and the spectacular currency losses experienced by the George Soros organization both contributed to a drastic reversal of fortune in the court of public opinion for hedge funds. Most hedge fund managers, who spend much of their time attempting to limit risk in one way or another, were appalled at the manner with which the press used the highest profile cases to vilify the industry as dangerous risk-takers. At one point during late 1998, hedge funds were even blamed in the lay press for the currency collapses of several developing nations; whether this was even possible got short thrift in the press.

Needless to say, more than a few managers have decided they did not much appreciate being painted with the same “hedge fund” brush. Alternative investment fund, private investment fund, and several other terms have been promoted but inadequately adopted. As the memory of 1998 and 2007 fades, “hedge fund” may once again become a term embraced by all private investment managers.

Photo by Alexander Mils on Pexels.com

ASSESSMENT: Physicians, and all investors, should be aware, however, that several different terms defining the same basic structure might be used. Investors should therefore become familiar with the structure of such funds, independent of the label. The Securities Exchange Commission calls such funds “privately offered investment companies” and the Internal Revenue Service calls them “securities partnerships.”

Your thoughts are appreciated.

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

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***

Musings on a Famous Portfolio Asset Allocation Study

Some Critics Claim Brinson, Hood, and Beebower Conclusions Wrong

[By Dr. David Edward Marcinko MBA CMP™]

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Frequently, we hear the axiom that asset allocation is the most important investment decision, explaining 93.6% of portfolio returns. The presumption has been that once the risk tolerance and time horizon have been established, investing is simply a matter of implementing a fixed mix of stocks, bonds, and cash using mutual funds selected for this purpose. This axiom is based on a famous study by Brinson, Hood, and Beebower (BHB) published in the Financial Analysts Journal in July/August 1986. It is the stuff of most modern business school and graduate students in economics and finance.

Enter the Critics

One critic claims that BHB’s conclusions and the interpretation of their conclusions are wrong, stating that because of several methodological problems, BHB needed to make certain assumptions for their analysis to go forward. They assumed that the average asset-class weights for the 10-year period studied are the same as the actual normal policy weights; that investments in foreign stocks, real estate, private placements, and venture capital can be proxied by a mix of stocks, bonds, and cash; and that the benchmarks for stocks, bonds, and cash against which fund performance was measured are appropriate. The author believes that each of these assumptions can lead to a faulty measurement of success or failure at market timing and stock selection.

The Jahnke Study

William Jahnke claims that BHB erred in their focus on explaining the variation of quarterly portfolio returns rather than portfolio returns over the 10-year period studied. According to the study, asset allocation policy explains only a small fraction of the range of 10-year portfolio returns earned by the pension funds reported in the study. The author concluded that this discrepancy is caused by the effect of compounding returns. He adds that BHB were wrong to use variance of quarterly returns rather than the standard deviation. Use of standard deviation would reduce the often cited 93.6% to about 79%. Moreover, BHB did not consider the cost of investing, such as operating expenses, management fees, brokerage commissions, and other trading costs, which are more significant for individual investors than for the pension plans studied. Jahnke claims that excessive costs can reduce wealth accumulation by 50%.

Note: (“The Asset Allocation Hoax,” William W. Jahnke, Journal of Financial Planning, February 1997, Institute of Certified Financial Planners [303] 759-4900).

Assessment

Finally, the author takes issue with establishing long-term fixed asset class weights. Asset allocation should be a dynamic process. Higher equity return expectations should in turn produce larger equity allocations, other things being equal.

Certified Medical Planner

Conclusion

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

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

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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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Product Details

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

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The Long and Short of Portfolio Construction

Join Our Mailing List

Long-Short Portfolio Construction vs. Long-Only

[By Dr. David Edward Marcinko MBA CMP™]

http://www.CertifiedMedicalPlanner.org

[Publisher-in-Chief]

Long-Short is an active portfolio construction discipline that balances long positions in high expected return securities and short positions in low expected return securities of approximately equal value and market sensitivity. This type of portfolio is “neutralized” or immunized against changes in value of the underlying market and, therefore, has zero systematic (beta) risk. If the selected securities perform as expected, the long-short positions will provide a positive return, whether the market rises or falls.

Misconceptions

While long-short portfolios are often perceived and portrayed as much costlier and much riskier than long-only, it is inherently neither. Much of the incremental cost and risk is either largely dependent on the amount of leverage employed or controllable via optimization. Those costs and risks that are not controllable—financial intermediation costs of borrowing shares to short, the trading costs incurred to meet long-short balancing, margin requirements, uptick rules, and the risks of unlimited losses on short positions—do not invalidate the viability of long-short strategies.

Long-Short Advantages

Compared with long-only portfolios, long-short portfolios offer enhanced flexibility not only in the control of risk and pursuit of return, but also in asset allocation. Basic market-neutral portfolios achieve a return consisting of three components: (1) interest on funds held as a liquidity buffer, (2) interest on the short sale proceeds maintained with the broker, and (3) the return spread between the aggregate long and aggregate short positions in the portfolios.

Disadvantages

Share borrow-ability and uptick rules make short-selling more difficult and costly than going long. Also, it may be legally or contractually restricted for some investors, such as mutual funds. Inefficiencies may be concentrated in overpriced stocks and, accordingly, short sales of the most overpriced stocks may offer higher positive returns than long purchases of underpriced stocks.

Assessment

Long-only portfolios are confined to altering the weighting of securities within an index in order to realize an excess return. Long-short portfolios are not constrained by index weights and, because they can short securities, they can “underweight” a security by as much as investment insights and risk considerations dictate. Long-short portfolios can be enhanced by “equitizing” them using stock index futures.

Note: “The Long and Short on Long-Short” by Bruce I. Jacobs and Kenneth N. Levy, The Journal of Investing, Spring 1997, pp. 73–86, Institutional Investor, Inc.

Conclusion

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RECAST: An Interview with Fiduciary Bennett Aikin AIF®

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On Financial Fiduciary Accountability

[By Dr. David E. Marcinko MBA & Prof. Hope Rachel Hetico; RN, MHA, CMP™]

[By Ann Miller; RN, MHA]

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

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

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

About Bennett Aikin AIF® and fi360.com

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

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

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

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

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

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

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

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

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Q. Medical Executive Post 

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

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

A. Mr. Aikin

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

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

Q. Medical Executive Post 

Please repeat that?

A. Mr. Aikin

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

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

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

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Q. Medical Executive Post 

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

A. Mr. Aikin

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

Additional resources:

Q. Medical Executive Post 

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

Assessment

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

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

Conclusion

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

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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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Can Doctors Afford to Retire Early – TODAY?

By Staff Reporters

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You’ve got a sense of your ideal retirement age. And you’ve probably made certain plans based on that timeline. But what if you’re forced to retire sooner than you expect? Aging baby-boomers, corporate medicine, the medical practice great resignation and/or the pandemic, etc?

RESIGNATION: https://medicalexecutivepost.com/2021/12/12/healthcare-industry-hit-with-the-great-resignation-retirement/

Early retirement is nothing new, but it’s clear how much the COVID-19 pandemic has affected an aging workforce. Whether due to downsizing, objections to vaccine mandates, concerns about exposure risks, other health issues, or the desire for more leisure time, the retired general population grew by 3.5 million over the past two years—compared to an annual average of 1 million between 2008 and 2019—according to the Pew Research Center.1 At the same time, a survey conducted by the National Institute on Retirement Security revealed that more than half of Americans are concerned that the COVID-19 pandemic has impacted their ability to achieve a secure retirement.2

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There’s no need to panic, but those numbers make one thing clear, says Rob Williams, managing director of financial planning, retirement income, and wealth management for the Schwab Center for Financial Research. Flexible and personalized financial planning that addresses how you’d cope if you had to retire early can help you make the best use of all your resources. 

So – Here are six steps to follow. We’ll use as an example a person who’s seeing if they could retire five years early, but the steps remain the same regardless of your individual time frame.

Step 1: Think strategically about pension and Social Security benefits

For most retirees, Social Security and (to a lesser degree) pensions are the two primary sources of regular income in retirement. You usually can collect these payments early—at age 62 for Social Security and sometimes as early as age 55 with a pension. However, taking benefits early will mean that you get smaller monthly benefits for the rest of your life. That can matter to your bottom line, even if you expect Social Security to be merely the icing on your retirement cake.

On the Social Security website, you can find a projection of what your benefits would be if you were pushed to claim them several years early. But if you’re part of a two-income couple, you may want to make an appointment at a Social Security office or with a financial professional to weigh the potential options.

For example, when you die, your spouse is eligible to receive your monthly benefit if it’s higher than his or her own. But if you claim your benefits early, thus receiving a reduced amount, you’re likewise limiting your spouse’s potential survivor benefit.

If you have a pension, your employer’s pension administrator can help estimate your monthly pension payments at various ages. Once you have these estimates, you’ll have a good idea of how much monthly income you can count on at any given point in time.

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Step 2: Pressure-test your 401(k)

In addition to weighing different strategies to maximize your Social Security and/or pension, evaluate how much income you could potentially derive from your personal retirement savings—and there’s a silver lining here if you’re forced to retire early. 

Rule of 55

Let’s say you leave your job at any time during or after the calendar year you turn 55 (or age 50 if you’re a public safety employee with a government defined-benefit plan). Under a little-known separation-of-service provision, often referred to as the “rule of 55,” you may be able take distributions (though some plans may allow only one lump-sum withdrawal) from your 401(k), 403(b), or other qualified retirement plan free of the usual 10% early-withdrawal penalties. However, be aware that you’ll still owe ordinary income taxes on the amount distributed. 

This exception applies only to the plan (including any consolidated accounts) that you were contributing to when you separated from service. It does not extend to IRAs. 

4% rule

There’s also a simple rule of thumb suggesting that if you spend 4% or less of your savings in your first year of retirement and then adjust for inflation each year following, your savings are likely to last for at least 30 years—given that you make no other changes to your withdrawals, such as a lump sum withdrawal for a one-time expense or a slight reduction in withdrawals during a down market. 

To see how much monthly income you could count on if you retired as expected in five years, multiply your current savings by 4% and divide by 12. For example, $1 million x .04 = $40,000. Divide that by 12 to get $3,333 per month in year one of retirement. (Again, you could increase that amount with inflation each year thereafter.) Then do the same calculation based on your current savings to see how much you’d have to live on if you retired today. Keep in mind that your money will have to last five years longer in this instance.

Knowing the monthly amount your current savings can generate will give you a clearer sense of whether you’ll have a shortfall—and how large or small it might be. Use our retirement savings calculator to test different saving amounts and time frames.

Step 3: Don’t forget about health insurance, doctor!

Nobody wants to spend down a big chunk of their retirement savings on unanticipated healthcare costs in the years between early retirement and Medicare eligibility at age 65. If you lose your employer-sponsored health insurance, you’ll want to find some coverage until you can apply for Medicare. 

Your options may include continuing employer-sponsored coverage through COBRA, insurance enrollment through the Health Insurance Marketplace at HealthCare.gov, or joining your spouse’s health insurance plan. You may also find discounted coverage through organizations you belong to—for example, the AARP. 

Step 4: Create a post-retirement budget

To make sure your retirement savings will cover your expenses, add up the monthly income you could get from pensions, Social Security, and your savings. Then, compare the total to your anticipated monthly expenses (including income taxes) if you were to retire five years early and are eligible, and choose to file, for Social Security and pension benefits earlier. 

Take into account various life events and expenditures you may encounter. You may not pay off your mortgage by the date you’d planned. Your spouse might still be working (which can add income but also prolong certain expenses). Or your children might not be out of college yet. 

You’re probably fine if you anticipate that your monthly expenses will be lower than your income. But if you think your expenses would be higher than your early-retirement income, some suggest that you take one or more of these measures:

  • Retire later; practice longer.
  • Save more now to fill some of the potential gap.
  • Trim your budget so there’s less of a gap down the road.
  • Consider options for medical consulting or part-time work—and begin to explore some of those opportunities now.

To the last point, finding a physician job later in life can be challenging, but certain employment agencies specialize in this area. If you can find work you like that covers a portion of your expenses, you’ll have the option of delaying Social Security and your company pension to get higher payments later—and you can avoid dipping into your retirement savings prematurely. 

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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™

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

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Step 5: Protect your portfolio

When you retire early, you have to walk a fine line with your portfolio’s asset allocation—investing aggressively enough that your money has the potential to grow over a long retirement, but also conservatively enough to minimize the chance of big losses, particularly at the outset.

“Risk management is especially important during the first few years of retirement or if you retire early,” Rob notes, because it can be difficult to bounce back from a loss when you’re drawing down income from your portfolio and reducing the overall number of shares you own.  

To strike a balance between growth and security, start by making sure you have enough money stashed in relatively liquid, relatively stable investments—such as money market accounts, CDs, or high-quality short-term bonds—to cover at least a year or two of living expenses. Divide the rest of your portfolio among stocks, bonds, and other fixed-income investments. And don’t hesitate to seek professional help to arrive at the right mix. 

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Many people are unaccustomed to thinking about their expenses because they simply spend what they make when working, Rob says. But one of the most valuable decisions you can make about your life in retirement is to reevaluate where your money is going now.

This serves two aims. First, it’s a reality check on the spending plan you’ve envisioned for retirement, which may be idealized (e.g., “I’ll do all the home maintenance and repairs!”). Second, it enables you to adjust your spending habits ahead of schedule—whichever schedule you end up following. This gives you more control and potentially more income. 

Step 6: Reevaluate your current spending

For example, if you’re not averse to downsizing, moving to a less expensive home could reduce your monthly mortgage, property tax, and insurance payments while freeing up equity that could also be invested to provide additional monthly income.

“When you are saving for retirement, time is on your side”. You lose that advantage when you’re forced to retire early, but having a backup plan that anticipates the possibility of an early retirement can make the unknowns you face a lot less daunting.

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

References:

1Richard Fry, “Amid the Pandemic, A Rising Share Of Older U.S. Adults Are Now Retired”, Pew Research Center, 11/04/2021, https://www.pewresearch.org/fact-tank/2021/11/04/amid-the-pandemic-a-rising-share-of-older-u-s-adults-are-now-retired/.

2Tyler Bond, Don Doonan and Kelly Kenneally, “Retirement Insecurity 2021: Americans’ Views of Retirement”, Nirsonline.Org, 02/2021, https://www.nirsonline.org/wp-content/uploads/2021/02/FINAL-Retirement-Insecurity-2021-.pdf.

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3 FINANCIAL SLANG “T” Terms

DEFINITIONS Physician-Investors Need to Know

By. Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

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Trading AheadUnethical and illegal trading by specialists or market makers.
A specialist may buy a stock for themselves from Dr. John Q. Public even though a better price is available from another seller. The specialist can view bid and ask prices and then manually mis-match them, or see ahead to a less favorable price. It happens in this editor’s experience, by observing how long it takes for a stop order to execute after the stop price was reached.
This practice is a form of shimming.
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Trading ImbalanceA situation where a large block of stock is put up for sale, but not enough buyers are available for purchase, and a market maker is unable to buy the imbalance. Lightly traded and tightly held stocks are considered temporarily illiquid during such imbalances.
On occasion, a trading halt is put into place until enough buyers are available to purchase the deficit. On rare occasion, a handful of buyers can buy the stock at a huge discount if the stock was not halted during the imbalance.
On the New York Stock Exchange, large stocks usually have a “delayed open” for such imbalances, as a trading specialist will fill the order by lining up buyers for the block, and then open trading for the stock for the day.
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Triple Witching HourThe final hour of trading on a Friday when stock index futures, stock index options, and stock options all expire. This happens on the third Friday in March, June, September, and December. See Quadruple Witching Hour.
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CITE: https://www.r2library.com/Resource/Title/0826102549

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Why 75+ Years of American Finance Should Matter to Physician Investors

A Graphic Presentation [1861-1935] with Commentary from the Publisher

By Dr. David Edward Marcinko FACFAS MBA CPHQ CMP™

http://www.CertifiedMedicalPlanner.org

As our private iMBA Inc clients, ME-P subscribers, textbook and dictionary purchasers, seminar attendees and most ME-P readers know, Ken Arrow is my favorite economist. Why?

About Kenneth J. Arrow, PhD

Well, in 1972, Nobel Laureate Kenneth J. Arrow, PhD shocked Academe’ by identifying health economics as a separate and distinct field. Yet, the seemingly disparate insurance, asset allocation, econometric, statistical and portfolio management principles that he studied have been transparent to most financial professionals and wealth management advisors for years; at least until now.

Nevertheless, to informed cognoscenti, they served as predecessors to the modern healthcare advisory era. In 2004, Arrow was selected as one of eight recipients of the National Medal of Science for his innovative views. And, we envisioned the ME-P at that time to present these increasingly integrated topics to our audience.

Healthcare Economics Today

Today – as 2022 passes – savvy medical professionals, management consultants and financial advisors are realizing that the healthcare industrial complex is in flux; along with the Russian war, domestic inflation and this dynamic may be reflected in the overall flagging economy.

Like many laymen seeking employment, for example, physicians are frantically searching for new ways to improve office revenues and grow personal assets, because of the economic dislocation that is Managed Care, Medi Care and Obama Care [ACA], the depressed business cycle, etc.

Moreover, the largest transfer of wealth in US history is – or was – taking place as our lay elders and mature doctors sell their practices or inherit parents’ estates. Increasingly, the artificial academic boundary between the traditional domestic economy, financial planning and contemporaneous medical practice management is blurring.

I’m Not a Cassandra

Yet, I am no gloom and doom Cassandra like I have been accused, of late. I am not cut from the same cloth as a Jason Zweig, Jeremy Grantham or Nouriel Roubini PhD, for example.

However, I do subscribe to the philosophy of Hope for the Best – Plan for the Worst.

And so dear colleagues, I ask you, “Are the latest swings in the economic, healthcare and financial headlines making you wonder when it will ever stop?”

The short answer is: “It will never stop” because what’s been happening isn’t any “new normal”; it’s just the old normal playing out before a new audience; sans the war.

What audience?

The next-generation of investors, FAs, management consultants and the medical professionals of Health 2.0.

How do I know all this?

History tells me so! Just read this work, and opine otherwise, or reach a different conclusion.

Evidence from the American Financial Scene, circa 1861-1935

The work was created by L. Merle Hostetler in 1936, while he was at Cleveland College of Western Reserve University (now known as Case Western Reserve University). I learned of him while in B-School, back in the day.

At some point after it was printed, he added the years 1936-1938. Mr. Hostetler became a Financial Economist at the Federal Reserve Bank of Cleveland in 1943. In 1953 he was made Director of Research. He resigned from the Bank in 1962 to work for Union Commerce Bank in Cleveland. He died in 1990.

The volume appears to be self published and consists of a chart, approximately 85′ long, fan-folded into 40 pages with additional years attached to the last page. It also includes a “topical index” to the chart and some questions of technical interest which can be answered by the chart.

Link: http://fraser.stlouisfed.org/75years

Assessment

And so, as with Sir John Templeton’s [whose son is an MD] four most dangerous words in investing (It’s different this time), Hostetler effectively illustrates that it wasn’t so different in his era, and maybe—just maybe—it isn’t so different today for all these conjoined fields.

Conclusion      

Your thoughts and comments on this ME-P are appreciated. While not exactly a “sacred cow,” there is a current theory that investors will experience higher volatility and lower global returns for the foreseeable future.

In fact, it has gained widespread acceptance, from the above noted Cassandra’s and others, as problems in Europe persist and threats of a double-dip recession loom. But, how true is this notion; really?

Is Hostetler correct, or not; and why?

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

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

Our Other Print Books and Related Information Sources:

DOCTORS:

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

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

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

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

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Happy NATIONAL DOCTOR’s Day 2022

By Staff Reporters

To all our valued physicians readers and subscribers

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You have always been the shield defending and healing patients in our communities. Now more than ever, you have become a guiding light through uncertainty as we navigate toward a brighter future.

This is our chance to thank you for your hard work and incredible impact!

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THANK YOU

Medical Executive-Post

CERTIFIED MEDICAL PLANNER™

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What are OTC “PINK” Sheets?

LOW PRICED “PENNY STOCKS?

By Dr. David E. Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Pink sheets are an over-the-counter (OTC) market that connects broker-dealers electronically. There is no trading floor and the quotations are also all done electronically. Since there is no central trading floor or stock exchange like the New York Stock Exchange (NYSE), the pink sheet-listed companies do not have the same criteria to fulfill as the companies listed on national stock exchanges. Many stocks listed on the pink sheets are low-priced penny stocks that trade for under $5 a share.

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

Pink sheets got their name because the original pink sheets listing the stocks were actually printed and distributed on pink pieces of paper. Trading over-the-counter (OTC) refers to the process of how securities listed on the pink sheets are traded through a broker-dealer network.

MORE: https://en.wikipedia.org/wiki/OTC_Markets_Group

Pink Sheets | Explanation | Examples with Advantages and Disadvantages

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MENTAL ACCOUNTING: What is it?

By Dr. David E. Marcinko MBA CMP®

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DEFINITION: Mental accounting attempts to describe the process whereby people code, categorize and evaluate economic outcomes. The concept was first named by Richard Thaler. Mental accounting deals with the budgeting and categorization of expenditures. People budget money into mental accounts for expenses or expense categories

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

Mental Accounting is the act of bucketizing investments and then reviewing the performance of the individual buckets separately (e.g. investing at low savings rate while paying high credit card interest rates).

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Mental Accounting • Money is

Examples of mental accounting are: (1) matching costs to benefits (wanting to pay for vacation before taking it and getting paid for work after it was done, even though from perspective of time value of money the opposite should be preferred0, (2) aversion to debt (don’t like long-term debt for short-term benefit), (3) sunk-cost effect (illogically considering non-recoverable costs when making forward-going decisions).

In investing, treating buckets separately and ignoring interaction (correlations) induces people not to sell losers (even though they get tax benefits), prevent them from investing in the stock market because it is too risky in isolation (however much less so when looked at as part of the complete portfolio including other asset classes and labor income and occupied real estate), thus they “do not maximize the return for a given level of risk taken).

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Welcome ARPA-H [health]

By Dr. David Edward Marcinko MBA CMP

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Recent advances in biomedical and health sciences—from immunotherapy to treat cancer, to the highly effective COVID-19 vaccines—demonstrate the strengths and successes of the U.S. biomedical enterprise. Such advances present an opportunity to revolutionize how to prevent, treat, and even cure a range of diseases including cancer, infectious diseases, Alzheimer’s disease, and many others that together affect a significant number of Americans.

NIH: https://www.nih.gov/arpa-h

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To improve the U.S. government’s capabilities to speed research that can improve the health of all Americans, President Biden is proposing the establishment of the Advanced Research Projects Agency for Health (ARPA-H). Included in the President’s FY2022 budget as a component of the National Institutes of Health (NIH) with a requested funding level of $6.5B available for three years, ARPA-H will be tasked with building high-risk, high-reward capabilities (or platforms) to drive biomedical breakthroughs—ranging from molecular to societal—that would provide transformative solutions for all patients.

MORE: https://thehealthcareblog.com/blog/2022/03/22/arpha-h-needs-to-think-bigger/

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The Millennial Spend on COVID-19 Tests?

By Dr. David E. Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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Millennials Spent the most on COVID-19 tests ($142)

A recent ValuePenguin survey found out-of-pocket costs for COVID-19 tests on average varied by age groups as follows:

 •  Gen Zers (ages 18-25): $125
 •  Millennials (ages 26-41): $142
 •  Gen Xers (ages 42-56): $101
 •  Baby boomers (ages 57-76): $59

Source: ValuePenguin, “COVID-19 Testing Survey: Americans Talk Out-of-Pocket Charges, Bill Negotiations, Barriers,” February 14, 2022

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

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“IDES OF MARCH” and U.S. Debt Limits 2022

BEWARE THE “IDES OF MARCH”

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Courtesy:www.CertifiedMedicalPlanner.org

Debts and Settlement is Due

The Ides of March was a day in the Roman calendar that corresponds to 15 March. It was marked by several religious observances and was notable for the Romans as a deadline for settling debts.

In 44 BC, it became notorious as the date of the assassination of Julius Caesar which made the Ides of March a turning point in Roman history.

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MORE: https://en.wikipedia.org/wiki/Ides_of_March

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Assessment: Your thoughts and comments are appreciated.

2022 UPDATE: https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit

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BALANCE BILLING: The Emerging “No Surprise” Act

Balance Medical Billing

By Dr. David E. Marcinko MBA CMP®

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The No Surprises Act is looking to make the practice of out of network balance billing a thing of the past.

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

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No Surprises Act: New Law to Protect Against Surprise ...

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Beginning in 2022, there will be few situations in which a patient can receive a bill for out-of-network care they believed would be covered by their insurance company. This new rule should especially benefit patients in emergency situations who don’t have the time or luxury to dig up the details on every provider they encounter.

CONGRESS: https://www.congress.gov/bill/116th-congress/house-bill/3630/

The No Surprises Act also requires insurance companies to provide patients with at least 90 days of coverage if an in-network provider moves out of network. That way, patients aren’t forced to switch providers immediately if such a move happens while they’re in the middle of a treatment plan.

DOCTORS: https://www.elixirehr.com/what-the-no-surprises-act-means-for-healthcare-providers/

Now, the No Surprises Act does have its limitations. Patients can still get a bill for out-of-network care if they visit an urgent care clinic for non-emergency purposes. Also, if consumers are informed that the care they’re about to receive is out of network and they give written consent to move forward, then they may get billed for that care even once the new rule takes effect.

CMS: https://www.cms.gov/nosurprises

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CURRENCY: Devaluation versus Depreciation

KNOW THE FINANCIAL DIFFERENCE

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BY DR. DAVID E. MARCINKO MBA CPM®

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

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Devaluation is the deliberate downward adjustment of the value of a country’s money related to another currency, group of currencies or currency standard. It is often confused with depreciation and is the opposite of revaluation which refers to the readjustment of a currency exchange rate.

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

Definition

The government of a country may decide to devalue its currency and like depreciation it is not the result of non-governmental activities.

One reason a country made devalue its currency is to combat a trade imbalance. Devaluation reduces the cost of a country’s export rendering them more competitive in the Global market which is which in turn increases the cost of imports.

If imports are more expensive domestic consumers are less likely to purchase them further strengthening domestic businesses because exports increase and imports decrease there is typically a better balance of payments because the trade deficit shrinks. In short a country that devalue its currency can produce is difficult because there is a greater demand for cheaper exports.

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Advantages and disadvantages of devaluation - Economics Help

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In accountancy, depreciation refers to two aspects of the same concept: first, the actual decrease of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wear, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used (depreciation with the matching principle).

Depreciation is thus the decrease in the value of assets and the method used to reallocate, or “write down” the cost of a tangible asset (such as equipment) over its useful life span. Businesses depreciate long-term assets for both accounting and tax purposes. The decrease in value of the asset affects the balance sheet of a business or entity, and the method of depreciating the asset, accounting-wise, affects the net income, and thus the income statement that they report.

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

Generally, the cost is allocated as depreciation expense among the periods in which the asset is expected to be used.

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The CERTIFIED MEDICAL PLANNER® Program Curriculum

BY DR. DAVID E. MARCINKO MBA CMP®

CMP

THE NEXT GENERATION OF FIDUCIARY FOCUSED FINANCIAL PLANNING AND MEDICAL MANAGEMENT ADVICE FOR DOCTORS

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VISIT: http://www.CERTIFIEDMEDICALPLANNER.org

CURRICULUM: Enter the CMPs

BE AWARE ALL ADVISORS … NEXT GEN FINANCIAL ADVICE IS HERE?

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Are you a financial planner, insurance agent or investment advisor seeking to assist your physician clients with medical practice enhancement solutions, along with healthcare targeted financial planning services, but don’t know where to turn for help?

OR, maybe you’ve already had a bad experience with a young physician or astute healthcare professional client that was actually more informed than you in these areas?

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

OR, a doctor/nurse client who demanded a true fiduciary advisor [not fee-based advice, with no dual licenses and no arbitration clauses] documented in writing].

Read this decade old Federal Government report to learn what can happen when your advisor is not an informed Certified Medical Planner© designated medical management practitioner.

Then, become a Certified Medical Planner© and thrive by helping others …. first!

GOV: https://oig.hhs.gov/fraud/docs/alertsandbulletins/consultants.pdf

True yesterday … more true today.

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

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CONTACT: Ann Miller RN MHA CMP®

Phone: 770-448-0769

EMAIL: MarcinkoAdvisors@msn.com

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FINANCIAL HEALTH INSURANCE CO-PAY CARDS & DRUG COUPONS?

The “Real Deal”

A co-payment is a fixed amount ($20, for example) you pay for a covered health care service after you’ve paid your deductible.

Let’s say your health insurance plan’s allowable cost for a doctor’s office visit is $100. Your copayment for a doctor visit is $20.

  • If you’ve paid your deductible: You pay $20, usually at the time of the visit.
  • If you haven’t met your deductible: You pay $100, the full allowable amount for the visit.
  • Partial deductible payments incur hybrid fees.

Copayments (sometimes called “copays”) can vary for different services within the same plan, like drugs, lab tests, and visits to specialists. Generally plans with lower monthly premiums have higher copayments. Plans with higher monthly premiums usually have lower copayments.

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

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

BY DR. DAVID E. MARCINKO MBA CMP®

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Co-Pay Cards May Be Creating More Controversy Instead of Solutions

Instead of reducing the actual price of their excessively priced medications, many companies have opted to provide co-pay cards / coupons as an affordable solution. However, co-pay cards may only lower the cost for some consumers and patients.

Novartis: https://www.copay.novartispharma.com/nvscopay/#

Pfizer: https://www.pfizerpro.com/co-pay-cards-patient-savings-offers

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See the source image

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But – The insurer is still left to pay the high price, which will eventually be passed back on to the patient / consumers in the form of higher health insurance deductibles. So – It doesn’t really seem like much of a solution when we all end up paying for these co-pay cards / coupons; does it?

Find out more here. (Source: Rebecca Mayer Knutsen, MM&M, 8/26/16)

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MEDICAL OFFICE CREDIT CARDS:

We stopped taking credit cards altogether. The only credit cards we take are for call-in payments of balances. We have placed ATM machines in our lobbies and we educate patients in advance of their visits that we only take cash or check. Our cash income has increased, our credit card fees have decreased, and we make $1.50 from each transaction through our ATM. Our patients have taken to the idea so much that they use the ATM for personal cash for other transactions because our fee is the lowest of any ATM. It has been a win-win-win.  

Dr. Farshid Nejad, Beverly Hills, CA [PM Magazine]

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For anyone contemplating taking credit cards for payments or copayments in your office, please be aware that some of the credit card companies require you to sign a contract. Don’t do that! If you do and you either have a problem with the company or find out that they are overcharging you, they will hold you responsible for the contract and may take you to court. There are enough credit card companies out that that do not require contracts and are highly competitive. 

-Dr. Elliot Udell, DPM, Hicksville, NY [PM Magazine]

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BUSINESS PLAN CONSTRUCTION: For Health Industry Modernity

FOR MEDICAL AND HEALTHCARE ENTREPRENEURS AND INNOVATORS

By Dr. David Edward Marcinko MBA MEd CMP®

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

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

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

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New Product Business Plan Sample [2021 Updated] | OGScapital

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

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Comprehensive Financial Planning and Risk Management Strategies for Doctors and their Advisors

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Best Practices from Leading Consultants and Certified Medical Planners

SPONSOR: http://www.CertifiedMedicalPlanner.org

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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™

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

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PODCAST: The FOUR PERCENT Spending Rule with Challenge?

Still Valid or Not?

PLUS the “RULES of 72, 78 and 115″ Explained”

By Staff Reporters

SPONSOR: http://www.CertifiedMedicalPlanner.org

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What Is The 4% Rule? How Much Money Do I Need To Retire? - YouTube

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The 4% Rule is a practical rule of thumb that may be used by retirees to decide how much they should withdraw from their retirement funds each year; according to Investopedia.

READ: https://www.investopedia.com/terms/f/four-percent-rule.asp#:~:text=The%20Four%20Percent%20Rule%20is%20a%20rule%20of,account%20balance%20that%20keeps%20income%20flowing%20through%20retirement.

The purpose of adopting the rule is to keep a steady income stream while maintaining an adequate overall account balance for future years. The withdrawals will consist primarily of interest and dividends on savings.

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

READ: https://www.financial-planning.com/news/kitces-smart-fix-for-the-4-rule#:~:text=The%20purpose%20of%20the%204%25%20rule%20is%20to,when%20it%20provides%20superior%20outcomes%20in%20all%20situations.

CHALLENGE: But, experts like Mike Kitces are divided on whether the 4% withdrawal rate is the best option. Many, including the creator of the rule, say that 5% is a better rule for all but the worst-case scenario.

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RULES of 72, 78 and 115: https://medicalexecutivepost.com/2020/11/22/the-rules-of-72-78-and-115/

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PODCAST: https://www.bing.com/videos/search?q=4+percent+rule&&view=detail&mid=5B0C2D1CABA12C7CF6075B0C2D1CABA12C7CF607&&FORM=VRDGAR&ru=%2Fvideos%2Fsearch%3Fq%3D4%2Bpercent%2Brule%26FORM%3DHDRSC3

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What is a REIT, Really?

REITs – The Margarine of Real Estate Investing

See the source image

By Dr. Dennis Bethel MD

By Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

Just like real estate, butter has been around for thousands of years.  Sometime in the 1800’s someone decided that there was a need for something that looked like butter, tasted similar to butter, but wasn’t butter.  Along came margarine.  Real estate investment trusts (REITs) are the margarine of the real estate investing world.

NAREIT, the National Association of Real Estate Investment Trusts, answers the question

What is a REIT?” in the following way:

“A REIT, or Real Estate Investment Trust, is a type of real estate company modeled after mutual funds.  REITs were created by Congress in 1960 to give all Americans – not just the affluent – the opportunity to invest in income producing real estate in a manner similar to how many Americans invest in stocks and bonds through mutual funds.  Income-producing real estate refers to land and the improvements on it – such as apartments, offices or hotels.  REITs may invest in the properties themselves, generating income through the collection of rent or they may invest in mortgages or mortgage securities tied to the properties, helping to finance the properties and generating interest income.”

While REITs typically own real estate, investors in REITs do not.  REITs are paper assets that represent interest in a company that owns and operates income producing properties.  In essence they are real estate flavored stock.  As such, REITs are generally highly correlated with the stock market.

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https://www.sgobserver.com/wp-content/uploads/2018/08/Screen-Shot-2018-08-26-at-8.41.54-pm.png

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TERMINOLOGY

When discussing REITs, you encounter the following terminology – public, private, traded, and non-traded.  Public REITs can be designated as non-traded or traded depending on whether or not they are traded on a stock exchange.

Since traded REITs are traded on the stock exchange, they enjoy a high degree of liquidity just like any other stock.  Unfortunately, traded REITs tend to follow the economic cycles and can closely correlate with the stock market.  This can lead to a higher degree of volatility than what is usually seen with physical real estate.  Additionally, they do not afford the investor the tax-advantages that come with investments in physical real estate.

MORE: https://medicalexecutivepost.com/2017/11/15/on-non-traded-real-estate-investment-trusts-reits/

Private REITs and non-traded public REITs are not traded on an exchange.  These are usually offered to accredited investors through broker-dealer networks.  These REITs are illiquid and generally have high fees.  They have been plagued with transparency issues as well as conflicts of interest.  Valuation of this stock is difficult and can be misleading to the investor.  Due diligence is very important as the quality of non-traded REITs can vary widely.

MORE: https://medicalexecutivepost.com/2014/06/13/why-i-hate-non-publicly-traded-reits/

ASSESSMENT: Your thoughts and comments are appreciated.

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

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

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

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KEY PRINCIPLES: Assessing Medical Practice Financial Value via USPAP

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

BY DR. DAVID EDWARD MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

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

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

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

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

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

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

A Guide To The Myths And Realities Of Medical Practice Valuation

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

Knowing The Distinctions Among Engagement Types

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

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

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

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

Are You Following Industry Standards And Rules?

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

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

What About Personal Goodwill And Practice Goodwill?

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

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

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

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

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

Understanding ‘Excess Earnings Capitalization’ And Compensation Issues

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

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

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

Emphasize Practice Specifics Over Benchmarks And Formulas

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

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

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

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

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

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

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

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

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

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

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

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

Keys To Selecting The Right Valuator Professional

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

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

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

Essential Insights On Professional Fees And What You Can Expect

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

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

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

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

Final Notes

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

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

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

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

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12 INVESTING MISTAKES of Physicians to Avoid in 2022

A MEDICAL “TREATMENT PLAN” APPROACH

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By David Edward Marcinko, MBA, CMP®

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Product Details

MEDICAL TREATMENT PLAN: A detailed plan with information about a patient’s disease, the goal of treatment, the treatment options for the disease and possible side effects, and the expected length of treatment.

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

COMMON INVESTING MISTAKES

Fees are down, expenses are up and the days of fat profit margins for physicians are over. Managed care in some form is here to stay. The tidal wave of baby boomers approaching retirement suggests the pendulum will not swing back to the “good old days” of fee-for-service medicine. Even the venture capitalists are laying off doctors because of the corona virus pandemic. And, the ACA and U.S. government, the payer for more than 50 percent of the covered population, continues to ratchet down reimbursement. Accordingly, many doctors are now working harder than ever. Unfortunately, they are also prone to irrational investing behavior and making more investment mistakes than ever before.

Here are the Institute of Medical Business Advisors’ “dirty dozen” investing blunders of physicians. Indeed, we see these common miscues among a variety of medical professionals.

Mistake 1: Having No Investment Policy Statement
Just as one would not think of treating a patient without a careful history and physical examination, you should not embark on investing your hard earned capital without an investment policy statement (IPS). This important document separates do-it-yourself investors, financial salesmen, stockbrokers and amateurs from true financial professionals.

An IPS is a document specifically detailing what you want your money to do for you with an understanding of who is to do what and how they are supposed to do it. It may be three to five pages long for an individual physician, 10 to 15 pages for a small medical group retirement plan or dozens of pages for a clinic or hospital endowment fund.

Treatment plan: A properly written IPS should contain the following:
• Statement of purpose
• Statement of responsibilities
• Investment goals and objectives
• Proxy voting policy
• Trading and execution guidelines
• Asset mix guidelines
• Social policies or other restrictions
• Portfolio limitations
• Performance review benchmarks
• Administration and fee policy
• Communication policy
• Reporting policy

Mistake 2: Not Diversifying Portfolio Objectives
Although the media frenzy of a few years ago has subsided, anecdotes of easy money still abound and doctors may forget that investment portfolios serve a specific purpose (e.g., retirement, college funding, etc.) within the content of a broader financial plan. Moreover, a single investment may become too large or too small a portion of the portfolio. This may be due to market growth in one component or slack in another.

Treatment plan: Diversify, monitor your holdings and select components with your risks and goals in mind. Time horizon and risk tolerance are likely to change as will the investment environment. One key contribution of modern portfolio theory (MPT), according to the 1990 Nobel Prize winner Professor Harry Markowitz, PhD, is the understanding that diversification can reduce portfolio risk. Indeed, the specific risk of a single stock may overwhelm any justification for failing to diversify.

Consider investing in sectors like basic materials, capital goods, communications and services, technology, consumer cyclicals and non-cyclicals, healthcare, energy, financial services and utilities. Investors can purchase most as individual securities, in mutual funds or as exchange traded funds (ETFs) or worldwide equity benchmark shares. Do not forget about cash equivalents, treasuries, zero coupon and municipal bonds and international securities.

Mistake 3: Forgetting The Investing Risk/Return Tradeoff
Some physicians fall into the trap of chasing “hot” securities like hedge funds, limited partnerships, non-registered securities or alternate investments promising high returns. High returns are associated with increased investment risk. Accordingly, it is important to understand the risks embedded in an investment before it becomes an exposed reality.

Treatment plan: Beware of projecting historic averages going forward. The stock market is inherently volatile. While it is easy to rely on past historic averages, there are long periods of time where returns regress from their long-term historic mean. On the other hand, slumps eventually correct themselves so you should continue a prudent investing plan.

Do not confuse investing with trading or speculation. According to Gene Schmuckler, PhD, the Director of Behavioral Finance for the Institute of Medical Business Advisors, Inc., there are momentum-driven market periods when investors start to believe profits are easy and there is always a “greater fool” to buy at a higher price. Such trading has more in common with gambling than investing. Avoid market timing and the urge to jump in or out at every economic hiccup.

Mistake 4: Not Factoring In The Impact Of Taxes
The desire to avoid capital gains and other taxes as a result of solid investment returns may lull some doctors into a false sense of security. An attractive investment and a slick sales pitch sometimes hide the underlying tax costs of the investment, especially when the investment is questionable. This leads doctors to give up a significant portion of the long-term growth of their assets.

Treatment plan: Income tax brackets, rates and estate taxes are almost at an all-time low in the U.S. This good fortune is due in part to the Taxpayer Relief Act of 1997, the Economic Growth and Tax Relief Reconciliation Act of 2001, and the Job and Growth Tax Relief Reconciliation Act of 2003, among other tax credits and deductions. Some mutual funds, for example, are not tax efficient while some ETFs may be tax efficient. Strive for legitimate tax reductions and avoidance but remember that tax evasion is illegal.

Mistake 5: Not Factoring In Fees And Expenses
Front-end loads, back-end loads, disappearing and hidden loads, 12-b1 fees and commissions, and advertising and sales expenses can all have a significant impact on a particular investment program.

Treatment plan: Monitor the costs of your investment program to ensure that total costs are known, reasonable for the services provided and are not consuming a disproportionate amount of the investment returns. Carefully consider full-service versus discount brokerages.

Take care using discretionary assets under management (AUM) accounts where you pay a percentage for personalized money management. More often than not, these one-size-fits-all accounts are aggregated under a larger automated umbrella to harvest economies-of-scale automatically. Indeed, the mistaken notion that the advisor “is sitting on the same side of the investment table as you” starts deteriorating on critical reflection. Do not fall for the siren sales pitch (“If I make money, you make money”). Excessive risk taking, purchases and sales activity may be at your expense.

Carefully consider whether golf balls, seminars, football game tickets, pens or quarterly meetings with your “advisor” are worth the price you may ultimately pay for these minor trinkets and services.
For example, in a 2 percent AUM program of $1 million, you may pay $20,000 annually, which is automatically deducted from the account. Are these “perks” worth $200,000 over the course of a decade? During the “golden age of medicine” in the ‘80s or the ranging bull market of the ‘90s, some doctors may have thought it was worth it. What about during a bear market or the projected market of lower than average returns that may be upon us?

Other problems with AUMs include: a higher fee to managed stocks than bonds, creating an equity bias; bias against paying of the mortgage, practice or acquiring real estate; bias against gifting initiatives or charitable intent. These are all problematic for the same reason that over-weighted equity classes increase advisor compensation while these other equally important considerations do not.

Mistake 6: Inappropriate Risk-Management Techniques
Traditionally, physicians protected their families with life, disability, malpractice and business interruption insurance yet insurance products are not investment vehicles. They merely indemnify against catastrophic economic losses that are typically extinguished over time. Behavioral economists like Daniel Kahneman, PhD, of Princeton University, and Vernon L. Smith, PhD, of George Mason University, warn us to use these insurance products carefully since we tend to experience financial losses more intensely than gains and evaluate risks in isolation.

Additionally, a comprehensive risk management plan for doctors must acknowledge risks such as sexual harassment risks; workplace violence risks; Medicare documentation, recoupment and compliance risks; and the economic risks of divorce. There is also a plethora of acronymic risks such as the Health Insurance Portability and Accountability Act (HIPAA), the Occupational Safety and Health Administration (OSHA) Act, and many others.

Treatment plan: Be willing to abandon ancient thoughts and remain open to new ideas that identify and provide solutions to the contemporaneous insurance problems of physicians. As an example, in 2001, economist Christian Gollier, PhD, of the University of Geneva, asked, “Should one even buy personal insurance since the industry itself is so skilled at exploiting human foibles?”

Mistake 7: Inappropriate Insurance Agent
It is no surprise that goaded physicians might prefer insurance vehicles like the guaranteed minimum death benefit of variable annuities or traditional cash value life insurance policies despite their high costs, huge commissions and lower returns. Agents sell these products and they work for the insurance company, not for you. Basic insurance agent credentials include the chartered financial consultant and chartered life underwriter designations, but they may remain product salesmen.

Treatment plan: Always beware the fear-mongering insurance agent salesman as the flowing coverages may be unnecessary, too expensive, provide only minimal benefits or be duplicated in other insurance policies. These include credit life or home mortgage insurance (decreasing term), life insurance for children or the elderly, accident policies for students, hospital indemnity policies, dread disease insurance, credit card insurance, pet, flight or funeral insurance, prepaid legal insurance, trip cancellation, flood, earthquake and termite insurance, and most appliance extended warranties.

Instead, consider a licensed insurance advisor or insurance counselor who sells no products, accepts no commissions and charges by the hour, all while shopping for the best companies and rates for the risk being researched. A fiduciary focused Certified Medical Planner® may be even better.

Mistake 8: Selecting The Wrong Accountant
When asking for the value of a practice, ask specifically for the fair market value (FMV). One podiatrist who consulted us asked her accountant for the “value” of her practice and received its lower “book value” rather than the higher fair market value as a profitable ongoing concern. The MD lost tens of thousands of dollars in a subsequent sales transaction. Unfortunately, although the CPA produced correct figures for exactly what she requested, the doctor did not differentiate between the two terms. Later legal mediation determined that neither was responsible for the linguistic error as both parties acted in good faith. Of course, the doctor paid dearly for her mistake.

Treatment plan: Dr. Gary L. Bode, CPA, MSA, a former medical practitioner and CFO for iMBA, Inc., suggests that you take the time to discuss wants and needs with your accountant. Those from the National CPA Healthcare Advisors Association (www.hcaa.org) or the Healthcare Financial Management Association (www.hfma.org) may also increase your comfort level through additional medical expertise. Better yet, contact an experienced medical practice valuation expert or healthcare economist.

Mistake 9: Not Having Your Practice Professionally Valuated [not appraised]
The sale or purchase of a medical practice may be the most important investment decision of your life. We have observed neurotic purchasers who spend far too much time, money and energy researching a fairly priced and modest practice to no avail (paralysis of analysis). Others have purchased exorbitantly priced practices for over $1 to $2 million on a handshake and promise. Accordingly, give this complex task the gravitas due, and run from those who would broker your sale with a “free” or “Internet-based valuation,” or provide “finance participation” schemes for purchase as a young practitioner.

According to IRS Revenue Ruling 59-60, the value of any medical practice is generally based upon the following:
• level of expected distribution and future cash flows;
• time of expected distributions and cash flows; and
• uncertainty of the expected cash flows and distributions.

Moreover, one should recall that a valuation is not a source document audit. Know specialty and industry economic conditions, trends, operating history, physician bonuses, dividends, distributions and comparable practice sales. A commission or percentage-based fee is considered unethical and may be illegal.

Accounting book value is not the same as a fair market valuation. Do not use back-of-the envelope trade magazine “multiplier methods” and obtain only Uniform Standards of Professional Appraisal Practice (USPAP)-styled valuations, which were first issued by the IRS in 1994-1995.

Combine the recognized USPAP-IRS valuation methods: income method with discounted cash flow analysis, market method and cost approach. Be sure to adjust financial statements in order to normalize each line entry. You must do the discounted cash flow analysis (DCFA) on an after-tax basis and base proper assumptions on physician compensation market rates.

Understand the intangible difference between personal and business goodwill, major premiums and minority control discounts.

Doing a walk through of the practice is mandatory for your protection. Trust but verify tangible assets and liabilities, estimates of practice risks, economic assumptions and future earning capacity.
Obtain a separate and independent real estate appraisal if necessary.

Make sure the valuation is written, substantiates value, supports conclusions and is signed by an appraiser who will defend the valuation in court as a qualified expert witness if necessary. This certification is formally known as an “opinion of value” and the only type we perform.

Remember to obtain two independent valuations, one for the buyer and one for the seller, and pay for each separately.

Treatment plan: Have the financing lined up before you buy a practice. The three major impediments to loan acquisition are school loan debt, a home mortgage and an automobile note in that order So, strive to reduce or eliminate them before applying for a loan. Hire licensed appraisal professionals with publishing, teaching and/or academic experience. Do not hire brokers or commissioned agents.
Organizations that accredit businesses but not necessarily medical practice appraisers include:

• The Institute of Business Appraisers (www.go-iba.org) awards the certifications of certified business appraiser and business valuators accredited in valuation.
• The National Association of Certified Valuation Analysts (www.nacva.com) awards the designations of certified valuation analysts and accredited valuation analysts.

Well-known medical practice and healthcare system appraisers include the big 10 consulting firms for hospitals and national healthcare systems. However, the Arthur Andersen debacle confirms that “bigger is not always better.” Medical practice niche players include Health Capital Consultants, LLC, (www.healthcapital. com), which provides large- and medium-sized practice valuations.

The Institute of Medial Business Advisors Inc, (www.MedicalBusinessAdvisors.com) specializes in small to medium practices, emerging healthcare organizations, clinics and ambulatory surgery center valuations and confers the designation Certified Medical Planner® on its independent consultants, appraisers and advisors.

Mistake 10: Selecting The Wrong Attorney
Consider the bizarre tale of the two fledgling internist partner/classmates who signed an attorney-prepared, buy-sell agreement upon creation of their nascent practice 30 years beforehand. The agreement stipulated that upon departure or dissolution, the remaining partner’s ownership would be determined not by some periodically updated valuation formula or appraisal process, Instead, it would be determined by a “matched and lost” process, also known as the “flip of a coin” for a medical conglomerate now worth over $1 million.

Treatment plan: Select a health law attorney and not your brother-in-law. More importantly, experience in the medical arena counts. Consult iMBA, Inc. or the American Health Lawyers Association (www.healthlawyers.org) as a referral resource.

Mistake 11: Blind Trust Of Wall Street And Financial Advisors
Stockbroker salesmen and the big brokerage houses that underwrite and recommend stocks may have credibility problems and some physicians get burned with the adrenaline rush of “self-directed” portfolios. Presently, both the Security Exchange Commission (SEC) and National Association of Securities Dealers are investigating far too many insurance companies and major wire houses for reverse churning (charging a fee on assets for which the stockbroker is providing virtually no services) and/or double dipping (charging an ongoing fee on mutual funds on which the client already paid a substantial commission).

No one knows for sure how to mitigate such shenanigans since human nature and self-interest are involved. Rest assured that the economic cycle will never be repealed and you must beware the four most dangerous words on Wall Street: “This time, it’s different.” Yet some believe the answer may lay with the independent fee-only advisor who charges by the hour, by the engagement, or pro re nata for advice.
Beware of taking the advice of a financial advisor carte blanche. The prime duty of a financial advisor should be to clients. Yet the very term “financial advisor” has no real academic or consistent meaning in the industry. The only hurdle to becoming one is passing a simple securities industry or state insurance sales licensing examination. Most are brokerage and agency employees with a duty to their respective firms, not you.

Treatment plan: Commissioned stockbrokers are fine to use if their fees are transparent and they offer value to you. However, be aware that Wall Street sales mavens and large broker-dealers (wire-houses) recently lobbied Congress not to be responsible to you after the sale. The Financial Planning Association is suing the SEC over this proposal to exempt the nation’s largest wire-house brokerages from certain fiduciary responsibilities associated with investment advisory regulations.

To avoid selecting the wrong financial advisor, choose an independent advisor who takes pride in fiduciary responsibility, knows the medical profession and eschews product sales commissions whenever possible. Such a professional is more than deserving of a fee. Do not hesitate to pay it.

To determine if your current advisor is the right choice, just ask to see the documents below:
• form ADV parts I and II;
• sample investment policy statement;
• registered investment advisor or series #65 investment advisory license
• CMP® license number;
• ethics requirement or attestation statements; and
• advanced degrees and designations, etc.

Some CMPs® and fee-only financial advisors possess these professional certifications as required. Stockbrokers, salesmen, intermediaries and insurance agents may not. All monikers suggest but do not guarantee impartiality and a lack of bias. Also make sure your financial advisor is experienced in the rapidly changing healthcare industrial complex.

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

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

Mistake 12: Lack Of A Complete Financial Plan
While many doctors have an investment portfolio, few have a comprehensive personal financial plan, especially one designed for medical professionals.

Treatment plan: Typically such plans consider the risk tolerance and time frame of several standard components such as insurance, taxation, investing, retirement and estate planning. Today’s practicing physicians should direct attention toward practice enhancement, economic risk management, valuations, charitable giving and succession planning. All should be interrelated in an economically sound manner and not be counterproductive to individual components of the plan.

In Conclusion
Often, successful investing and avoiding a life of economic servitude is simply a matter of delayed gratification and mistake avoidance rather than investing acumen. A good rule of thumb is to pursue fundamentals over fads and seek wise counsel when required.

About the Author

Dr. Marcinko is a Certified Financial Planner and Certified Medical Planner® and CEO for www.MedicalBusinessAdvisors.com, sponsor of the Certified Medical Planner charter designation program. He can be reached by phone at (770) 448-0769 or by e-mail at MarcinkoAdvisors@msn.com.

References:

References
1. Marcinko DE. Financial planning for Physicians and Advisors. Jones and Bartlett Publishers, Sudbury, Mass., 2005.
2. Marcinko DE. Insurance and Risk Management Strategies for Physicians and Advisors. Jones and Bartlett Publishers, Sudbury, Mass., 2005.

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Medical FINANCIAL PLANNING “Holistic” STRATEGIES

BY AND FOR PHYSICIANS AND THEIR ADVISORS

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

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PODCASTS: What is a STABLECOIN?

HEDGE AGAINST INFLATION

By Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

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What Are Stablecoins? - CB Insights Research

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DEFINITION: Stablecoins are blockchain-based digital currencies that have been created with the aim to have a stable value. Stablecoins achieve price-stability through various different methods such as a peg against a fiat currency or a commodity, through collateralization against other cryptocurrencies or through algorithmic coin supply management.

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

Every stable coin includes a specific set of mechanisms that mostly behave in the same way. In general, stable coins keep collateral of the asset and manage the supply. In this way, they incentivize the market, which allows trade of the coin for no more or less than $1.

A stable coin can be considered the best depending on several factors: It should be stable. PAX is one the most stable stablecoin. It should be liquid and available on most exchanges. It should be backed by FIAT. PAX is 100% collateralized in US bank accounts. It should be regulated. It should be redeemable.

MORE: https://www.msn.com/en-us/money/markets/treasury-fed-fear-stablecoins-could-disrupt-financial-system/ar-AAOE7lO?li=BBnb7Kz

PODCAST #1: https://www.youtube.com/watch?v=O3rVWLhBIPo

PODCAST #2: https://www.youtube.com/watch?v=GsSSLDzKCOE

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Personal Financial Planning for Physicians and Medical Colleagues

ME Inc = Going it Alone but with a Team

BY DR. DAVID EDWARD MARCINKO MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

The physician, nurse, or other medical professional should easily recognize that there are a vast array of opportunities, obstacles, and pitfalls when it comes to managing one’s finances.  Still, with some modicum of effort, the basic aspects of insurance, investments, taxes, accounting, portfolio management, retirement and estate planning, debt reduction, asset protection and practice management can be largely self-taught. Yet, it is realized that nuances and subtleties can make a well-intentioned financial plan fall short.  The devil truly is in the details.  Moreover, none of these areas can be addressed in isolation. It is common for a solution in one area to cause a new set of problems in another. 

Accordingly, most health care practitioners would be well served to hire [independent, hourly compensated and prn] financial help. Unlike some medical problems, financial issues may not cause any “pain” or other obvious symptoms.  Medical professionals tend to have far more complex financial situations than most lay people. Despite the complexities of the new world of health reform, far too many either do nothing; or give up all control totally, to an external advisor. This either/or mistake can be costly in many ways, and should be avoided. 

In reality, and at various time in their careers, the medical professional needs a team comprised of at least a financial analyst, lawyer, management consultant, risk manager [actuary, mathematician or insurance counselor] and accountant. At various points in time, each member of the team, or significant others, will properly assume a role of more or less importance, but the doctor must usually remain the “quarterback” or leader; in the absence of a truly informed other, or Certified Medical Planner™.

This is necessary because only the doctor has the personal self-mandate with skin in the game, to take a big picture view.  And, rightly or wrongly, investments dominate the information available regarding personal finance and the attention of most physicians.  One is much more likely to need or want to discuss the financial markets with their financial advisor than private letter rulings by the IRS, or with their estate planning attorney or tax accountant. While hiring for expertise is a good idea, there is sinister way advisors goad doctors into using all their retail services; all of the time. That artifice is – the value of time. 

True integrated physician focused and financial planning is at its core a service business, not a product or sales endeavor. And, increasingly money is more likely to be at the top of the list for providers as the healthcare environment is contracting.

So, eschewing the quarterback model of advice, and choosing to self-educate thru this book and elsewhere, may be one of the best efforts a smart physician can make.

ASSESSMENT: Your thoughts are appreciated.

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

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Understanding the Art of Selling Your Medical Practice

Part Two of Medical Practice Valuation

By Dr. David Edward Marcinko, MBA, CMP

By Prof. Hope Rachel Hetico, RN, MHA, CMP

www.CertifiedMedicalPlanner.org

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

Valuation Types

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

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

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

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

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

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

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

Structure Sales Transactions

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

(1) Stock Purchase v. Asset Purchase

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

(2) Corporate Transactions

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

Complete the Deal

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

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

Understand Private Deal Structure

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

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

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

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

Sidestep Common Buyer Blunders

Here are 10 blunders to avoid, as a buyer:

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

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

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

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

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

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

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

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

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

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

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

Electronic Downloads

Part I: Part I

Part II: Part II

Additional Reading:

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

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

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

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

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

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

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

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Today is FIBONACCI NUMBERS DAY

MATH NERDS

By Dr. David E. Marcinko MBA

SPONSOR: http://www.CertifiedMedicalPlanner.org

Fibonacci, also known as Leonardo Bonacci, Leonardo of Pisa, or Leonardo Bigollo Pisano, was an Italian mathematician from the Republic of Pisa, considered to be “the most talented Western mathematician of the Middle Ages”

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

Today, 11/23, is the second holiest day of the year for math nerds after Pi Day. Why? Because it’s Fibonacci Day. If you forgot about the Fibonacci series from middle school, it goes 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on, formed by taking the sum of the previous two numbers to create the next number in the sequence.

Fibonacci numbers can be found in many aspects of the natural world, including petal arrangements in flowers, the shape of hurricanes, a honeybee’s family tree, and even DNA molecules.

So yeah, to quote Jack Black in School of Rock, “Math is a really cool thing.”

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The Fibonacci Sequence Is Everywhere—Even the Troubled Stock Market |  Science | Smithsonian Magazine

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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®

CMP logo

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.

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

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What is QUANTITATIVE EASING?

Q.E.

By Dr. David E. Marcinko MBA CMP®

CMP logo

SPONSOR: http://www.CertifiedMedicalPlanner.org

QE (Quantitative Easing = compound noun)

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

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

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

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

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

Examples:

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

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

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CAUTION: Avoid 401-K Retirement Plan RMD Forgetfulness?

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DON’T FORGET to make mandatory withdrawals in retirement!

By Dr. David E. Marcinko MBA CMP®

CMP logo

SPONSOR: http://www.CertifiedMedicalPlanner.org

Once you do retire, and put your physician or medical career behind you, it’s important to realize that, at some point, the IRS expects you to draw down your 401(k) balance. Starting at age 72, you need to take required minimum distributions (RMDs).

Your annual RMD amount depends on the balance of your 401(k) and a formula that determines your life expectancy.

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RMD Age Jumps to 72 in 2020 After SECURE Act - 401K Specialist

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QUERY: But – What happens if you don’t take your RMD for the year?

ANSWER: Well, you could end up paying a penalty. In fact, it’s a pretty hefty penalty of up to 50% of the amount you were supposed to withdraw. Paying that penalty can be pretty costly for someone living in retirement. As long as you’re vigilant and stay on top of the situation, though, you can avoid the penalty as well as these other costly 401(k) mistakes.

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APPRECIATED.

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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™ book cover

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What is Corporate “ENTERPRISE” Financial Value?

THE E.V. MATH FORMULA

CMP logo

By Dr. David E. Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

The enterprise value [EV] tends to be thought of as a theoretical takeover price if a company were to be bought. It is calculated as market capitalization plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

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

Enterprise value = common equity at market value (this line item is also known as “market cap”) + debt at market value (here debt refers to interest-bearing liabilities, both long-term and short-term) + minority interest at market value, if any + preferred equity at market value + unfunded pension liabilities and other debt-deemed provisions – value of associate companies – cash and cash equivalents.

MORE: https://en.wikipedia.org/wiki/Enterprise_value

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What is an ADR / SPDR?

AMERICAN DEPOSITORY RECEIPTS AND S&P RECEIPTS

By Dr. David E. Marcinko MBA CMP®

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SPONSOR: http://www.CertifiedMedicalPlanner.org

AMERICAN DEPOSITORY RECEIPT (ADR) = A receipt evidencing shares of a foreign corporation held on deposit or under the control of a U. S. banking institution; it is used to facilitate transactions and expedite transfer of beneficial ownership for a foreign security in the U.S. Everything is done in dollars and the ADR holder doesn’t have voting rights; essentially the same as an American Depository Share (ADS).

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

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American Depositary Receipts (ADRs) - Meaning, Types, Examples

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A Standard & Poor’s Depositary Receipt, or SPDR, is a type of exchange traded fund that began trading on the American Stock Exchange (AMEX) in 1993 when State Street Global Advisors’ investment management group first issued shares of the SPDR 500 Trust (SPY).

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

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MORE: https://medicalexecutivepost.com/2008/02/15/about-american-depository-receipts/

S&P: https://medicalexecutivepost.com/2011/01/12/on-standard-poors-depository-receipts/

S&P Index: https://medicalexecutivepost.com/2011/01/15/spdrs-vs-index-mutual-funds/

S&P TAX: https://medicalexecutivepost.com/2011/01/30/do-spdrs-yield-tax-advantages/

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