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

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

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

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

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

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

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

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

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Ask an Advisor about Financial Seminars

Questions of Secrecy

By a Registered NurseLight Bulb

I attended a retirement planning seminar about a year ago; after the big stock market drop. It focused on annuities along with the “free” dinner. The strange thing was that the host asked that no recording devices be used during the presentation for copyright purposes. I know a bit about annuities and don’t think he said anything wrong, other than using a few common scare tactics. He had virtually no academic credentials and so I enjoyed the dinner and went on with my life.

Personal Invitation

A few days ago I was “personally” invited by mail to a financial planning seminar hosted by a group of attorneys, accountants and estate planners to an extremely prestigious, and no doubt expensive, restaurant. This time, the following warning appeared in writing on the invitation.

“Due to the copyright nature of this material, attorneys, accountants, insurance agents or financial planning practitioners are not admitted without express permission. And, no audio or video recording devices will be allowed.”

Assessment

As a nurse I am not in the dis-invited group, and realize that the “personal” nature of the invitation was bogus. But, I was wondering if this copyright warning was “kosher”, or am I just being paranoid?

Conclusion

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

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Dictionary of Health Insurance and Managed Care

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Why do we need the Dictionary of Health Insurance and Managed Care, and, why do payers, providers, benefits managers, consultants, and consumers need a credible and unbiased source of explanations for their health insurance needs and managed care products?

The Answer is Clear!

Health care is the most rapidly changing domestic industry. The revolution occurring in health insurance and managed care delivery is particularly fast. Some might even suggest these machinations were malignant, as many industry segments, professionals, and patients suffer because of them. And so, because knowledge is power in times of great flux, codified information protects all people from physical, as well as economic harm.

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The Power of “ME Inc” for Physicians

Embracing a New Competitive Practice Culture

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]dem21

There are more than 900,000 physicians in the United States. Yet, the brutal supply/demand/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. And, the government as payer will likely increase with the Obama Administration. So, going forward, it is not difficult to imagine the following four rules for a new-wave competitive medical care culture for all physicians.

[A] Rule No. 1

Forget about large office suites, surgery centers, fancy equipment and the bricks and mortar that comprised traditional medical practices. One doctor with a great idea, good bedside manner or competitive advantage, can outfox a slew of CPAs, while still serving the public and making money. It’s a unit-of-one healthcare economy where “ME Inc.”, is the standard and physicians must maneuver for advantages that boost their standing and credibility among patients and payers. Examples include patient satisfaction surveys, the rise of evidence-based medicine; outcomes research analysis, concierge medicine, direct reimbursement payment plans, and economic credentialing; etc.

 [B] Rule No. 2

Challenge conventional wisdom, think outside the traditional payer box, recapture your dreams and ambitions, disregard conventional gurus and work harder – and smarter – than you have ever worked before. Remember the old saying, “if everyone is thinking alike, then nobody is thinking”. Do insurance panel members think rationally or react irrationally?

However, you should realize the power of networking, vertical integration and the establishment of virtual medical practices, which come together to treat a patient, and then disband when a successful outcome achieved. Job security in this structure is achieved with successful outcomes, and perhaps not necessarily a degree in the near future. Medical futurists even presume the establishment of virtual medical schools and hospitals, where students and doctors learn and practice their art on cyber-entities that look and feel like real patients, but are generated electronically through the wonders of virtual reality units.

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[C] Rule No 3

Differentiate yourself among your medical peers. Do or learn something new and unknown by your competitors. Market your accomplishments and let the world know. Be a non-conformist. The conformity of health insurance plans are an operational standard and a straitjacket on creativity. Doctors should create and innovate, not blindly follow entrenched medical society leaders into oblivion. Seek, and practice, health 2.0 collaboration with all stakeholders.

[D] Rule No 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 the quick change and fast but informed decision making. Do what you love, disregard what you don’t, and let the fates have their way with you. Then, decide for yourself if health plans adhere to any of the above rules?

AssessmentKung Fu

Regardless of the future de facto business model of the learned profession of medicine, current practice models are no longer the structure of choice. Rather, a more laissez-faire and highly competitive business model should be pursuedPhysicians have been slow to accept this philosophy.  Remember, as a physician, if you merely want a static job with promised security, pledged retirement benefits, limited goals and structured regulations; join a health plan panel and become their laborer.

However, if you desire more, such as the possibility of a dynamic career, the unlimited security of your brainpower, non-defined retirement contributions, infinite potential with rules you can create along the way; incorporate the power of ME, Inc., in everything you do. Remain a competitive professional and be a physician ... Get fly! 

Conclusion

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

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Impact of Performance Fees on Mutual Funds and Physician Portfolios

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More Complex than Realized by Some Doctors

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

[By Professor Hope Rachel Hetico; RN, MHA, CMP™]dave-and-hope4

Physician-investors may find themselves paying advisory fees, brokerage commissions, and other sales charges and expenses. All of these layers of expense can reduce or eliminate the advantage of professional management, if not monitored carefully. Also, fees can have a major impact on investment results. As a percentage of the portfolio, they normally range from low of 15–30 basis points (or .15% to .30%, a basis point is one one-hundredth of one percent) to a high of 300–400 basis points or even higher.

Charges are Universal

All portfolio managers, mutual funds, and investment advisors charge fees in one form or another. Ultimately, they must justify their fees by creating value added, or they would not be in business. Value added includes tangibles, such as greater investment return, as well as intangibles, such as assurance that the investment plan is successfully implemented and monitored, investor convenience, and professional service.

Comparisons Required

Always compare investment performance of funds or managed accounts after fees are deducted; only then can adequate comparisons be made. Also, compare fees within asset classes. Management fees and expenses of investing in bonds or bond funds are much different than the fees of investing in, for example, small companies or emerging market stocks. Whereas 100–200 basis points of fees may be appropriate for an equity portfolio or fund, similar charges may offset the advantages of a managed bond portfolio. With managed bond portfolios, real bond returns have limited long-term potential, because returns are ultimately based on interest rates. For example, if a 3% real (i.e., after inflation) return is expected, 200 basis points in fees may produce a negative after-tax result: 3% real return minus 2% fees minus 10% taxes equals a negative 9% total return.fp-book22

Sales Charges

Mutual funds (and some private portfolio managers) charge sales charges to sell or “distribute” the product. Investors who buy funds through the advice of brokers or “commission based” financial planners will pay a sales load. The many combinations of sales charges fall into three basic categories: front-end, deferred (or back-end), and continuous.

Front-End Fees

Front-end fees are a direct assessment against the initial investment and are limited to a maximum of 8.5%. They usually are stated either as a percentage of the investment or as a percentage of the investment, net of sales charges. For example, a 6% charge on a $10,000 investment is really a $600 charge to invest $9,400 or a real charge of 6.4%. Many low-load funds charge in the range of 1% to 3%. Rather than pay brokers or other purveyors, these fund companies or sponsors use the charges to offset selling or distribution costs. Although rare, some funds charge a load against reinvested dividends.

Deferred Charges

Deferred charges (or back-end loads, or redemption fees) come in many forms. Often, the longer the investor stays with the fund the smaller the charge is upon fund redemption. A typical sliding scale used for deferred charges may be 5-4-3-2-1, where redemption in year 1 is charged 5%, and redemption in year 5 is charged 1%; after year 5, there are no sales charges. Sometimes deferred charges are combined with front-end charges.

Redemption Fees

Certain quoted redemption fees may not apply after a period, such as one year. Funds often use such fees to discourage the trading of funds. Frequently, these charges are paid to the fund itself rather than to the fund management company; or broker. Long-term physician investors actually benefit from this fee structure; short-term shareholders who redeem shares bear the additional liquidation costs to satisfy redemption requests.

Continuous Charges

Continuous sales charges, known as 12b-1 fees for the SEC rule governing such charges, represent ongoing charges to pay distribution costs, including those of brokers who sell and maintain accounts, in which case they are known as “trail commissions.” The fund company may be reimbursed for distribution costs as well. In the prospectus, funds quote 12b-1 charges in the form of a maximum charge. This does not mean that the full charge is incurred, however. For example, a fund with a .75% 12b-1 approved plan may actually incur much lower expenses than .75%. Compared to front-end charges, a .75% per year sales charge of this type could be more costly to investment performance, given enough time.

Sales Loads

Portfolio managers can charge sales loads as well, usually in the form of a traditional WRAP fee arrangement (the investor pays a broker an all-inclusive fee that covers portfolio manager fees and transactions costs). No-load funds can be purchased through brokers or discount brokerage firms. The broker charges a commission for such purchases or sales.

Management Advisory Fees

Private account managers and mutual funds charge a fee for managing the portfolio. These fees typically range between 25 and 150 basis points. Bond funds tend to charge in the range of 25 to 100 basis points, and equity funds charge 75 to 150 basis points. Fees charged by private account managers usually are higher because of the direct attention given to a single doctor client. These managers do not pass along additional administrative costs, however, because they pay them out of the management fee. These management fees come in many forms. Tiered fees can charge smaller accounts a higher fee than larger accounts. Mutual funds often charge “group fees”: a fund family may tier its fee structure to encompass all funds offered by the fund family or by a group of similar funds (such as all international equity funds). Performance fees, although subject to SEC regulations, may be charged as well. A performance fee may be charged if the manager exceeds a certain return or outperforms a particular index or benchmark portfolio.

Administrative Expenses and Expense Ratios

Most private managers are compensated with higher management fees, as mentioned above. Therefore, many private accounts usually do not incur separate administrative expenses. Some management firms charge custodial fees or similar account maintenance fees. Mutual funds incur a number of administrative expenses, including shareholder servicing, prospectuses, reporting, legal and auditing costs, and registration and custodial costs. Mutual funds report these expenses and management fees as an expense ratio—the ratio of expenses to the average net assets of the fund. Expense ratios also include distribution costs or 12b-1 charges.insurance-book10 

Brokerage Commissions

Almost all buyers and sellers of securities incur brokerage commissions. Private “wealth managers” usually provide commission schedules to prospective physician-investors or current clients. Some private managers charge higher management fees and a discounted commission schedule, while others charge lower fees and higher commissions. These combinations of management and commission fees make comparison of prospective managers’ cost structures a difficult task. Most portfolio managers obtain research from brokerage firms, which can affect the commission relationship between broker and manager. Reduced commission schedules exchanged for information are known as “soft dollar costs.” Mutual funds may negotiate similar reduced commission schedules. In this regard, more-competitive brokerage firms can charge lower fees to investors. Commissions are not part of the expense ratio, because they are a part of the security cost basis. Firms with higher portfolio turnover are more likely to have higher commission costs than those with low turnover. Asset class impacts such costs as well. For example, small-cap stocks may be more expensive than large-cap stocks, or foreign bonds may be more expensive than domestic bonds.

Total Cost Approach

To arrive at a relevant comparison of fees among funds and managers, and to see what the total effect of fees on investment performance is, analyze the various charges on a net present value basis. Begin with a given investment amount (e.g., $10,000) and factor in fees over time to arrive at the present value of those fees. Present the comparisons in an easy-to-use table.

Sources of Fee Information

Consult the mutual fund prospectus for fee information. The prospectus has a fund expenses section that summarizes sales charges, expense ratios, and management fees; it does not cover commissions, however. Expense ratios usually are reported for the past 10 years. Commission or brokerage fees are more difficult to find. The statement of additional information and often the annual report disclose the annual amounts paid for commissions. When the total commission paid is divided by average asset values a sense of commission costs can be determined. Private wealth managers disclose fee structures in the ADV I filed with the SEC. Managers must disclose these fees to potential and current clients by providing either ADV Part II or equivalent form to the investor.

Reporting Services

Reporting services, such as Morningstar and Lipper, provide similar information from their own research of mutual funds. These services can be extremely beneficial, because fee information is summarized and often accounted for in the reports’ investment return calculations. This helps the investor and planner make good comparisons of funds. Information services that cover private managers provide information, primarily about management fees.

Assessment

To the extent that online trading, deep discount brokerages, lack of SEC and FINRA oversight, and the recent financial, insurance and banking meltdown has affected the above, it is left up to your discretion and personal situation. Generally, all fess are, and should be, negotiable.

Disclaimer: Both contributors are former licensed insurance agents and financial advisors.

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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Selecting Tax-Return Preparers

What Doctors Need to Know about Preparers

Staff Writers

Most doctors and medical professionals are not thinking about tax season right now. But, according to Executive-Post supporter Rachel Pentin-Maki; RN, MHA “now may be the best time to rethink your relationship with your tax-preparer.”

All Tax Preparer’s not equal!

All tax return preparers are not the same. They possess varying levels of expertise and hold different credentials. If you are thinking about hiring a new tax preparer to do your 2008 return next year, you may want to begin your search soon so you have sufficient time to investigate and evaluate your options.

Specialty Needs

If you are aware of any significant tax issues when doing your return, find out if he or she has expertise in this area. For example, a recently divorced single father will want a tax return preparer that is knowledgeable about the tax ramifications of divorce and how it affects his return. Similarly, if you’ve recently sold a rental property at a loss, you’ll want a preparer who can advise you on reporting that loss.

Of course, medical specificity is paramount. An accountant who has many doctor-clients is a good start, but does he/she really know anything about activity based medical cost accounting?

Experience Counts

It’s usually wise to select a preparer who has been in the tax business for at least several years. However, should you opt to go with a less experienced preparer, be sure that individual has access to more experienced professionals who can address any complex tax issues that may arise during the preparation of your tax-return?

Types and Stripes

The complexity of your return, and not necessarily the amount of your income, should guide you in selecting a tax preparer, and resulting professional fees. Essentially, there are five types of preparers:

Certified Public Accountants (CPAs)—

These accountants have passed a rigorous examination which includes an entire section on tax issues. Many specialize in taxes and are experienced in handling complicated tax issues. In addition, if they are members of the American Institute of CPAs [AICPA], they must meet stringent continuing education requirements to maintain their memberships.

Commercial Agents—

These individuals work for large national organizations. They usually work only during tax season and have been trained by the organization. Most are form-driven. They are not, however, required to have a minimum level of education, nor have they passed an exam administered by a regulatory body.

Enrolled Agents—

These tax return preparers must pass a two-day examination given by the Internal Revenue Service or meet an lRS experience requirement. In addition, members of the National Association of Enrolled Agents or its state chapters must take at least 30 hours of class work in tax matters each year.

Public Accountants—

Many public accountants are tax advisers. These individuals have not taken the exams and are not obligated to meet the experience requirements of CPAs. In some states, public accountants must be licensed, but in others, anyone can claim the title.

Tax attorneys—

Like CPAs, tax attorneys must meet continuing education requirements and are subject to regulations by the states where they practice. Most tax attorneys don’t specialize in tax return preparation. Instead, they tend to be more involved in tax planning and tax litigation.

Fees

Some tax return preparers work for a fixed fee while others charge hourly rates. In either case, be sure to clarify in advance how much or on what basis the preparer will charge you to do your return. Keep in mind that it’s up to you to provide the preparer with the information necessary to do your return. Unorganized or missing files and receipts are likely to result in more work for the preparer and higher costs for you.

Assessment

Keep in mind, too, that only enrolled agents, CPAs, and tax attorneys are authorized to practice before the IRS. This means that they can represent you throughout the entire IRS audit process; commercial agents and public accountants may not.

Conclusion

What has been your experience with the above accounting types? Is medical specificity really required? Please comment, opine and send us your “tax preparer war-stories.”

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Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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