VIDEO TELECONFERENCE: How to Prepare?

By Coach: Dr. David Edward Marcinko MBA

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PHYSICIANS AND ADVISORS

TIPS TO PREPARE FOR A VIDEO INTERVIEW

Practice with someone to become comfortable with the process.

Background/Staging:


• Pay attention to the background, what will be seen around and behind you. Get rid of
clutter – it affects “your presentation.” Make sure there is nothing in the background you
don’t want anyone to see including personal pictures, etc.


• Conduct the test in the same location you plan to conduct the video interview.
• Adjust lighting to highlight your face. Do not let light wash out your facial features.


• Have back-up equipment nearby (extra laptop, phones, cables).
Clothing


• Dress in professional, conservative, non-fussy clothing as though you were going to be
with the committee in person. Wear a jacket.


• Wear a solid/bold color. Stay away from dark colors.


• Stay away from prints (e.g. herringbone) which, depending upon the design, lighting and
camera pixels, can make your outfit “vibrate” on screen.


• Dress knowing that the committee will see you “closer up” than you will see them.
Eye Contact/Body Language/Clear Communications


• Be sure to look at the camera not at the image of the committee on the screen;
otherwise you do not appear to be “looking them in the eye” or will appear nervous.


• It is hard to read committee body language without typical in-person conversation cues,
so watch the time and limit each answer to 3-4 minutes. Be attuned to a timer.


• Be attentive to your body language — leaning back in your chair is a no-no; lean forward
to convey interest in the position and the committee. Don’t rock back and forth.


• Place support things out of camera range (glass of water, a timer, notes, notepad, pen,
list of committee members) so your eyes go to the side and not up/down to these items.


• Don’t be afraid to ask to have questions repeated, either because the question was long
and complex or because of audio problems. Jot notes on complex questions.

COACH: https://medicalexecutivepost.com/2023/01/08/personal-coaching-dr-marcinko-at-your-service/


Sound Amplification and Noise Control:


• Microphones magnify noises and can be distracting to the committee. Avoid ruffling
papers and jangling jewelry. In the same vein, speak up clearly and enunciate your
words.


• Place a “do not disturb/do not enter” sign on the door of your space. Turn off running
programs (like your email) to eliminate beeps when new emails arrive.

• Silence all other technology EXCEPT if there should be technical issues, turn your
phone back on to receive a call from your Greenwood/Asher consultant for
troubleshooting.


• Ask family and colleagues to be quiet during the interview. If a family member or
colleague is your resident IT expert, have that person close-at-hand but out-of-sight
during the call.


• Be prepared to switch to a landline or cell speaker phone for the audio portion since
audio with Skype/Zoom is not always great. If you do use this option, mute your
computer microphone to eliminate conflicting noise.

SECOND OPINIONS: https://medicalexecutivepost.com/2023/01/10/physician-coaching-second-opinions

PODCAST: https://www.youtube.com/watch?v=n7bYGhEVjd8

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What is Your Academic Teaching Philosophy?

 Here is My Teaching Philosophy

[By Dr. David Edward Marcinko MBA]

Although any learner-centered teaching philosophy, or Boyer Model of scholarship, is constantly in flux, the mission of a public or private educator is: [1] to promote positive learning; [2] to motivate students, staff and graduates; [3] to provide a strong foundation for lifelong learning; and in modernity [4] to enhance career and life-work opportunities; to [5] improve bottom-line financial metrics, and [6] to collaborate on a national and global basis.

However, because we are specifically operating in the rapidly changing healthcare, business management, investing, finance, economics and education milieu, even deeper experiential insight is needed.

Developing NEW Teaching AND Education Skills FOR Business and Healthcare 2.0

Medicine and healthcare business today is different than a generation ago, and all educators and healthcare professionals need new skills to be successful.

Traditionally, the physician – like the classroom professor – was viewed as the “captain of the ship”. Today, their role may be more akin to a ship’s navigator, utilizing clinical, teaching skills and knowledge to chart the patient’s, or student’s, course through a confusing morass of requirements, choices, rules and regulations to achieve the best attainable clinical or didactic outcomes.

This new teaching paradigm includes many classic business school principles, now modified to fit the PP-ACA, the era of health reform, and modern technical connectivity. Thus, a Professor, Chair or Dean must be a subtle guide on the side; not bombastic sage on the stage.

These, newer teaching philosophies must include:

  • Negotiation – working to optimize appropriate curricula, services and materials;
  • Team play – working in concert with others to coordinate education delivery within a clinically appropriate and cost-effective framework;
  • Working within the limits of competence – avoiding the pitfalls of the generalist teacher versus the subject matter expert that may restrict access to professors, texts and facilities by clearly acknowledging when a higher degree of didactic service is needed on behalf of the student;
  • Respecting different cultures and values – inherent in the support of the academic Principle of Autonomy is the acceptance of values that may differ from one’s own. As the US becomes more culturally heterogeneous, educators and medical providers are called upon to work within, and respect, the socio-cultural and/or spiritual framework of patients, students and their families; 
  • Seeking clarity on what constitutes marginal education – within a system of finite resources; providers and professors are called upon to openly communicate with students and patients regarding access to marginal education and/or treatments.
  • Supporting evidence-based practice – educators, like healthcare providers, should utilize outcomes data to reduce variation in treatments and curriculum to achieve higher academic efficiencies and improved care delivery;
  • Fostering transparency and openness in communications – teachers and healthcare professionals should be willing, and prepared, to discuss all aspects of care and academic andragogy; especially when disclosing problems or issues that arise;
  • Exercising decision-making flexibility – treatment algorithms, templates and teaching pathways are useful tools when used within their scope; but providers and professors must have the authority to adjust the plan if circumstances warrant;
  • Becoming skilled in the art of listening and interpretingIn her ground-breaking book, Narrative Ethics: Honoring the Stories of Illness, Rita Charon, MD PhD, a professor at Columbia University, writes of the extraordinary value of using the patient’s personal story in the treatment plan. She notes that, “medicine practiced with narrative competence will more ably recognize patients and diseases; convey knowledge and regard, join humbly with colleagues, and accompany patients and their families through ordeals of illness.” In many ways, attention to narrative returns medicine full circle to the compassionate and caring foundations of the patient-physician relationship. The educational analog to this book is, The Ethics of Teaching [A Casebook], co-edited by my teacher and colleague Deborah Ware Balogh PhD of the University of Indianapolis.

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The Ohio State University
 Photo by Kevin Fitzsimons

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Assessment

Finally, these thoughts represent only a handful of examples to illustrate the myriad of new skills that tomorrow’s healthcare professionals, and modern educators, must master in order to meet their timeless professional obligations of compassionate patient care and contemporary teaching effectiveness.

Dr. Marcinko Teaching Philosophy

CHAIR: Chair 3.0 Philosophy Dr. Marcinko

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.

Book Marcinko: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

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

DOCTORS:

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

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

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

HOSPITALS:

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

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

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Product DetailsProduct Details

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My Pragmatic Philosophy of Education

It is NOT the Boyer Model

[By Dr. David E. Marcinko MBA]

The Boyer Model of Education and Scholarship

OK – I may subscribe to the Boyer Model but with several specific personal variations which I will keep propriety and not disclose here. But, I will discuss my teaching pragmatism, below.

Definition

Boyer’s Model of scholarship and education is an academic model advocating expansion of the traditional definition of scholarship and research into four types of scholarship. It was introduced in 1990 by Ernest Boyer.

According to Boyer, traditional research, or the scholarship of discovery, had been the center of academic life and crucial to an institution’s advancement but it needed to be broadened and made more flexible to include not only the new social and environmental challenges beyond the campus but also the reality of contemporary life.

His vision was to change the research mission of universities by introducing the idea that scholarship needed to be redefined.

MORE: https://en.wikipedia.org/wiki/Boyer%27s_model_of_scholarship

ME: Dr. Marcinko Teaching Philosophy

ENTER MY PRAGMATISM

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DEAN: Dean 3.0 Philosophy

Assessment

So, what do you think?

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.

Book Marcinko: https://medicalexecutivepost.com/dr-david-marcinkos-bookings/

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

DOCTORS:

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

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

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

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

PHYSICIANS BEWARE: Traditional Financial Planning “Rules of Thumb”

DOCTORS AND MEDICAL PROFESSIONALS BEWARE?

We ARE Different

By Dr. David E. Marcinko MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

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  • While financial planning rules of thumbs are useful to people as general guidelines, they may be too oversimplified in many situations, leading to underestimating or overestimating an individual’s needs. This may be especially true for physicians and many medical professionals. Rules of thumb do not account for specific circumstances or factors occurring at a particular time, or that could change over time, which should be considered for making sound financial decisions.
  • Great Health Industry Resignation: https://medicalexecutivepost.com/2021/12/12/healthcare-industry-hit-with-the-great-resignation-retirement/

For example, in a tight job market, an emergency fund amounting to six months of household expenses does not consider the possibility of extended unemployment. I’ve always suggested 2-3 years for doctors. Venture capitalist lay-offs of physicians during the pandemic confirm this often criticized benchmark opinion of mine.

As another example, buying life insurance based on a multiple of income does not account for the specific needs of the surviving family, which include a mortgage, the need for college funding and an extended survivor income for a non-working spouse. Again a huge home mortgage, or several children or dependents, may be the financial bane of physician colleagues and life insurance.

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

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EXAMPLES: Old/New Rules

  • A home purchase should cost less than an amount equal to two and a half years of your annual income. I think physicians in practice for 3-5 years might go up to 3.5X annual income; ceteras paribus.
  • Save at least 10-15% of your take-home income for retirement. Seek to save 20% or more.
  • Have at least five times your gross salary in life insurance death benefit. Consider 10X this amount in term insurance if young, and/or with several children or other special circumstances.
  • Pay off your highest-interest credit cards first. Agreed.
  • The stock market has a long-term average return of 10%. Agreed, but appreciated risk adjusted rates of return..
  • You should have an emergency fund equal to six months’ worth of household expenses. Doctors should seek 2-3 years.
  • Your age represents the percentage of bonds you should have in your portfolio. Risk tolerance and assets may be more vital.
  • Your age subtracted from 100 represents the percentage of stocks you should have in your portfolio. Risk tolerance and assets may still be more vital.
  • A balanced portfolio is 60% stocks, 40% bonds. With historic low interest rates, cash may be a more flexible alternative than bonds; also avoid most bond mutual funds as they usually never mature.

There are also rules of thumb for determining how much net worth you will need to retire comfortably at a normal retirement age. Here is the calculation that Investopedia uses to determine your net worth:

Compensation in the Physician Specialties: Mostly Stable - NEJM  CareerCenter Resources

RULES 72, 78 and 115: https://medicalexecutivepost.com/2022/01/30/the-rules-of-72-78-and-115/

INVITATION: https://medicalexecutivepost.com/2021/05/08/invite-dr-marcinko-to-your-next-big-event/

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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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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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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Dr. Dave Marcinko at YOUR Service in 2022

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Book Marcinko for your Next Financial Planning Seminar, Meeting or Medical Business Event 

By Ann Miller RN MHA

Professor and physician executive David Edward Marcinko MBBS DPM MBA MEd BSc CMP® is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; Oglethorpe University, and Atlanta Hospital & Medical Center in GA; and the Aachen City University Hospital, Koln-Germany. He is one of the most innovative global thought leaders in health care business and entrepreneurship today.

Dr. Marcinko is a multi-degreed educator, board certified physician, surgical fellow, hospital medical staff President, Chief Education Officer and philanthropist with more than 400 published papers; 5,150 op-ed pieces and over 125+ international presentations to his credit; including the top 10 biggest pharmaceutical companies and financial services firms in the nation. He is also a best-selling Amazon author with 30 published text books in four languages [National Institute of Health, Library of Congress and Library of Medicine].

Dr. 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 2001. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, management and trade publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News].

As a licensed insurance agent, RIA and SEC registered endowment fund manager, Dr. Marcinko is Founding Dean of the fiduciary focused CERTIFIED MEDICAL PLANNER® chartered designation education program; as well as Chief Editor of the HEALTH DICTIONARY SERIES® Wiki Project. His professional memberships include: ASHE, AHIMA, ACHE, ACME, ACPE, MGMA, FMMA and HIMSS.

Dr. Marcinko is a MSFT Beta tester, Google Scholar, “H” Index favorite and one of LinkedIn’s “Top Cited Voices”.

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David Edward Marcinko (2)

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On the Society of Physician Entrepreneurs

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About the SoPE

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See the source image

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By Dr. David Edward Marcinko MBA

The Society of Physician Entrepreneurs (SoPE) was established as a community of interest in 2008 by several members of the American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS), including Dr. Arlen Meyers, the President & CEO. SoPE became a separate and independent legal entity; incorporating in Washington, D.C. in January 2011.

It is a 501 (c) 6 member organization with the stated purpose of providing support; idea stage through funding, for physician entrepreneurs with ideas on how to improve healthcare. Currently there are over 1,000 members included in their LinkedIn site.

Vision

SoPE’s vision is to accelerate physician originated biomedical innovation.

Mission

The mission of SoPE is to foster scholarship in biomedical entrepreneurship and provide education, training and support; idea stage through funding, to primarily community-based physician entrepreneurs in the interest of better healthcare.

Membership

SoPE membership is open to all physicians and also accepts individuals as associate members; representatives of medical device, legal, venture capital, and other firms with an interest in serving and/or supporting physician entrepreneurs.

Assessment

www.sopenet.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.

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

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MENTAL HEALTH Action Day 2022

By Staff Reporters

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As part of its Mental Health initiative, MTV’s second-annual Mental Health Action Day – an open-source movement of brands, organizations, government agencies, and cultural leaders to drive culture of mental health from awareness to action – will bring together more than 1,600 organizations in cities across the country to encourage and empower people to take action for mental health on Thursday, May 19, 2022.

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LINK: https://www.mentalhealthactionday.art/

COACHING: From Chaos to Calm: https://medicalexecutivepost.com/coach/
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COMMENTS APPRECIATED

Thank You

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R.I.P. Paul Edward Farmer MD PhD

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By Dr. David Edward Marcinko MBA

[Editor-in-Chief]

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Paul Edward Farmer MD PhD

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Paul Edward Farmer (October 26, 1959 – February 21, 2022) was an American medical anthropologist and physician. Farmer held an MD and PhD from Harvard University, where he was the Kolokotrones University Professor and the chair of the Department of Global Health and Social Medicine at Harvard Medical School. He was the co-founder and chief strategist of Partners In Health (PIH), an international non-profit organization that since 1987 has provided direct health care services and undertaken research and advocacy activities on behalf of those who are sick and living in poverty. He was professor of medicine and chief of the Division of Global Health Equity at Brigham and Women’s Hospital.

Paul and his colleagues in the U.S. and abroad have pioneered novel community-based treatment strategies that demonstrate the delivery of high-quality health care in resource-poor settings in the U.S. and abroad. Their work is documented in the Bulletin of the World Health Organization, The Lancet, The New England Journal of Medicine, Clinical Infectious Diseases, British Medical Journal, and Social Science and Medicine.

Dr. Farmer had written extensively on health and human rights, the role of social inequalities in the distribution and outcome of infectious diseases, and global health.

He was known as “the man who would cure the world,” as described in the book Mountains Beyond Mountains by Tracy Kidder. The story of Partners In Health is also told in the 2017 documentary Bending the Arc. He was a proponent of liberation theology.

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MORE: https://www.msn.com/en-us/news/world/paul-farmer-global-health-care-pioneer-dies-at-62/ar-AAU8wJj?li=BBnb7Kz

HARVARD: https://ghsm.hms.harvard.edu/faculty-staff/paul-farmer

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Rest in Peace

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Personal BUDGETING For Physician Executives

Personal Physician Budgeting Thoughts

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BY DR. DAVID E. MARCINKO MBA CMP®

SPONSOR: http://www.CertifiedMedicalPlanner.org

Product Details

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

Although some doctors might view a budget as unnecessarily restrictive, sticking to a spending plan can be a useful tool in enhancing the wealth of a practice. And so, I will emphasize keys to smart budgeting and how to track spending and savings in these tough economic times; like today with the stock market busts, venture capitalists invading health care, corona virus the pandemic, aging baby boomer physicians and the great resignation; etc.

   There is an aphorism that suggests, “Money cannot buy happiness.” Well, this may be true enough but there is also a corollary that states, “Having a little money can sure reduces the unhappiness.”

   Unfortunately, today there is still more than a little financial unhappiness in all medical specialties. The challenges range from the commoditization of medicine, aging demographics, Medicare reimbursement cutbacks, ACA, and increased competition to floundering equity markets, the squeeze on credit and declines in the value of a practice. Few doctors seem immune to this “perfect storm” of economic woes. And then Covid-19, corona, and covid.

   Far too many physicians are hurting and it is not limited to above-average earning professionals. However, one can strive to reduce the pain by following some basic budgeting principles. By adhering to these principles, physicians can eliminate the “too many days at the end of the month” syndrome and instead develop a foundation for building real wealth and security, even in difficult economic climates like we face today.

   There are three major budget types. A flexible budget is an expenditure cap that adjusts for changes in the volume of expense items. A fixed budget does not. Advancing to the next level of rigor, a zero-based budget starts with essential expenses and adds items until the money is gone. Regardless of type, budgets can be extremely effective if one uses them at home or the office in order to spot money troubles before they develop.

   For the purpose of wealth building, doctors may think of this budget as a quantitative expression of an action plan. It is an integral part of the overall cost-control process for the individual, his or her family unit or one’s medical practice.1

How To Prepare A Personal Cash Flow Budget

   Preparing a net income statement (lifestyle cash flow budget) is often difficult because many doctors perceive it as punitive. Most doctors do not live a disciplined spending lifestyle and they view a budget as a compromise to it. However, a cash flow budget is designed to provide comfort when there is surplus income that can be diverted for other future needs. For example, if you treat retirement savings as just another periodic bill, you are more likely to save for it.

   You may construct a personal cash budget by recording each cash receipt and cash disbursement on a spreadsheet. Only the date, amount and a brief description of the transaction are necessary. The cash budget is a simple tool that even doctors who lack accounting acumen can use. Since it is possible to track the cash-in and cash-out in the same format used for a standard check register, most doctors find that the process takes very little time. Such a budget will provide a helpful look at how well you are staying within available resources for a given period.

   We then continue with an analysis of your operating checkbook and a review of various source documents such as one’s tax return, credit card statements, pay stubs and insurance policies. A typical statement will show all cash transactions that occur within one year. It is helpful to establish a monthly equivalent to all items of income and expense. For the purposes of getting started, note items of income and expense by the frequency you are accustomed to receiving or spending them.

What You Should Know About The ‘Action Plan’ Cash Budget

   For a medial office, the first operations budget item might be salary for the doctor and staff. Operating assets and other big ticket items come next. Some doctors/clients review their office P&L statements monthly, line by line, in an effort to reduce expenses. Then they add back those discretionary business expenses they have some control over.

   Now, do you still run out of money before the end of the month? If so, you had better cut back on entertainment, eating dinner out or that fancy, new but unproven piece of medical equipment. This sounds draconian until you remind yourself that your choice is either: live frugally later or live a simpler lifestyle now and invest the difference.

   As a young doctor, it may be a difficult trade-off. By mid-life, however, you are staring retirement in the face. That is why the action plan depends on your actions concerning monetary scarcity, a plan that one can implement and measure using simple benchmarks or budgeting ratios. By using these statistics, perhaps on an annual basis, the podiatrist can spot problems, correct them and continue planning actively toward stated goals like building long-term wealth.2

Useful Calculations To Assess Your Budgeting Success

   In the past, generic budgeting ratios would emphasize not spending more than 15 to 20 percent of your net salary on food or 8 percent on medical care. Now these estimates have given way to more rigorous numbers. Personal budget ratios, much like medical practice financial ratios, represent comparable benchmarks for parameters such as debt, income growth and net worth. Although these ratios are still broad, the following represent some useful personal budgeting ratios for physicians.

   • Basic liquidity ratio = liquid assets / average monthly expenses. Cash-on-hand should approach 12 to 24 months or more in the case of a doctor employed by a financially insecure HMO or fragile medical group practice. Yes, chances are you have heard of the standard notion of setting enough cash aside to cover three months in a rainy day scenario. However, we have decried this older laymen standard for many years in our textbooks, white papers and speaking engagements as being wholly insufficient for the competitively unstable environment of modern healthcare.

   • Debt to assets ratio = total debt / total assets. This percentage is high initially but should decrease with age as the doctor approaches a debt-free existence

   • Debt to gross income ratio = annual debt repayments / annual gross income. This represents the adequacy of current income for existing debt repayments. Doctors should try to keep this below 20 to 25 percent.

   • Debt service ratio = annual debt repayment / annual take-home pay. Physicians should aim to keep this ratio below 25 to 30 percent or face difficulty paying down debt.

   • Investment assets to net worth ratio = investment assets / net worth. This budget ratio should increase over time as retirement approaches.

   • Savings to income ratio = savings / annual income. This ratio should also increase over time as one retires major obligations like medical school debt, a practice loan or a home mortgage.

   • Real growth ratio = (income this year – income last year) / (income last year – inflation rate). This budget ratio should grow faster than the core rate of inflation.

   • Growth of net worth ratio = (net worth this year – net worth last year) / net worth last year – inflation rate). Again, this budgeting ratio should stay ahead of the specter of rising inflation.

   In other words, these ratios will help answer the question: “How am I doing?”

Pearls For Sticking To A Budget

   Far from the burden that most doctors consider it to be, budgeting in one form or another is probably one of the greatest tools for building wealth. However, it is also one of the greatest weaknesses among physicians who tend to live a certain lifestyle.3

   In fact, I have found that less than one in 10 medical professionals have a personal budget. Fear, or a lack of knowledge, is a major cause of procrastination. Fortunately, the following guidelines assist in reversing this microeconomic disaster.

   1. Set reasonable goals and estimate annual income. Do not keep large amounts of cash at home or office. Deposit it in an FDIC insured money-market account for safety. Do not deposit it in a money market mutual fund with net asset value (NAV) that may “break the buck” and fall below the one-dollar level. The new limit is $250,000. Track actual bills and expenses.

   2. Do not pay bills early, do not have more taxes withheld from your salary than needed and develop spending estimates to pay fixed expenses first. Fixed expenses are usually contractual and usually include housing, utilities, food, Social Security, medical, debt repayments, homeowner’s or renter’s insurance, auto, life and disability insurance, etc. Reduce fixed expenses when possible. Ultimately, all expenses get paid and become variable in the long run.

   3. Make it a priority to reduce variable expenses. Variable expenses are not contractual and may include clothing, education, recreational, travel, vacation, gas, cable TV, entertainment, gifts, furnishings, savings, investments, etc. Trim variable expenses by 5 to 20 percent.

   4. Use “carve-outs or “set-asides” for big ticket items and differentiate true wants from frivolous needs.

   5. Calculate both income and expenses as a percentage of your total budget. Determine if there is a better way to allocate resources. Review the budget on a monthly basis to notice any variance. Determine if the variance was avoidable, unavoidable or a result of inaccurate assumptions. Take corrective action as needed.

   6. Know the difference between saving and investing. Savers tend to be risk adverse while investors understand risk and take steps to mitigate it. Watch mutual fund commissions and investment advisory fees, which cut into return-rates. Keep investments simple and diversified (stocks, bonds, cash, index, no-load mutual and exchange traded funds, etc.).4

How To Budget In The Midst Of A [Corona] Crisis

   Sooner or later, despite the best of budgeting intentions, something will go awry. A doctor will be terminated or may be the victim of a reduction-in-force (RIF) because of cost containment initiatives of the corona pandemic. A medical practice partnership may dissolve or a local hospital or surgery center may close, hurting your practice and livelihood. Someone may file a malpractice lawsuit against you, a working spouse may be laid off or you may get divorced. Regardless of the cause, budgeting crisis management encompasses two different perspectives: awareness and execution.

   First, if you become aware that you may lose your job, the following proactive steps will be helpful to your budget and overall financial condition.

   • Decrease retirement contributions to the required minimum for company/practice match.
   • Place retirement contribution differences in an after-tax emergency fund.
   • Eliminate unnecessary payroll deductions and deposit the difference to cash.
   • Replace group term life insurance with personal term or universal life insurance.
   • Take your old group term life insurance policy with you if possible.
   • Establish a home equity line of credit to verify employment.
   • Borrow against your pension plan only as a last resort.

   If you have lost your job or your salary has been depressed, negotiate your departure and get an attorney if you believe you lost your position through breach of contract or discrimination. Then execute the following steps to recalculate your budget and boost your wealth rebuilding activities.

   • Prioritize fixed monthly bills in the following order: rent or mortgage; car payments; utility bills; minimum credit card payments; and restructured long-term debt.

   • Consider liquidating assets to pay off debts in this order: emergency fund, checking accounts, investment accounts or assets held in your children’s names.

   • Review insurance coverage and increase deductibles on homeowner’s and automobile insurance for needed cash.

   • Then sell appreciated stocks or mutual funds; personal valuables such as furnishings, jewelry and real estate; and finally, assets not in pension or annuities if necessary.

   • Keep or rollover any lump sum pension or savings plan distribution directly to a similar savings plan at your new employer, if possible, when you get rehired.

   • Apply for unemployment insurance.

   • Review your medical insurance and COBRA coverage after a “qualifying event” such as job loss, firing or even after quitting. It is a bit expensive due to a 2 percent administrative fee surcharge but this may be well worth it for those with preexisting conditions or who are otherwise difficult to insure. One may continue COBRA for up to 18 months.

   • Consider a high deductible Health Savings Account (HSA), which allows tax-deferred dollars like a medical IRA, for a variety of costs not normally covered under traditional heath insurance plans. Self-employed doctors deduct both the cost of the premiums and the amount contributed to the HSA. Unused funds roll over until the age of 59½, when one can use the money as a supplemental retirement benefit.

   • Eliminate unnecessary variable, charitable and/or discretionary expenses, and become very frugal.

Final Notes

   The behavioral psychologist, Gene Schmuckler, PhD, MBA, sometimes asks exasperated doctors to recall the story of the old man who spent a day watching his physician son treating HMO patients in the office. The doctor had been working at his usual feverish pace all morning. Although he was working hard, he bitterly complained to his dad that he was not making as much money as he used to make. Finally, the old man interrupted him and said, “Son, why don’t you just treat the sick patients?” The doctor-son looked at his father with an annoyed expression and responded, “Dad, can’t you see, I do not have time to treat just the sick ones.”5

   Always remember to add a bit of emotional sanity into your budgeting and economic endeavors.6

   Regardless of one’s age or lifestyle, the insightful doctor realizes that it is never too late to take control of a lost financial destiny through prudent wealth building activities. Personal and practice budgeting is always a good way to start the journey.7

The Author:

Dr. Marcinko is a former university endowed chairman and professor, former certified financial planner and has been a medical management advisor for more than two decades. He is the CEO of www.MedicalBusinessAdvisors.com, a health economics and business finance consulting firm.

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References:

1. Marcinko DE (Ed). The Business of Medical Practice (Advanced Profit Maximizing Techniques for Savvy Doctors). Springer Publishers, New York, NY, 2000 and 2004 2. Marcinko DE (Ed). Financial Planning for Physicians and Advisors, Jones and Bartlett Publishers, Sudbury, MA, 2005 3. Marcinko DE (Ed). Risk Management and Insurance Panning for Physicians and Advisors, Jones and Bartlett Publishers, Sudbury, MA, 2006. 4. Marcinko DE, Hetico HR. The Dictionary of Health Insurance and Managed Care. Springer Publishing, New York, 2007. 5. Marcinko DE, Hetico HR. The Dictionary of Health Economics and Finance. Springer Publishing, New York, 2008. 6. Marcinko DE, Hetico HR. Healthcare Organizations (Financial Management Strategies). Standard Technical Publishers, Blaine, WA, 2009. Additional Reference 7. Schmuckler E. Bridging Financial Planning and Human and Human Psychology. In, Marcinko DE (Ed): Financial Planning for Physicians and Healthcare Professionals. Aspen Publications, New York, NY, 2001, 2002 and 2003.

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Risk Management Liability Insurance and Asset Protection Strategies for Doctors and Advisors

It is not uncommon for practicing physicians to have more than a dozen separate insurance policies to protect their medical practice and personal assets. Yet, most doctors understand very little about their policies.

The book RISK MANAGEMENT, LIABILITY INSURANCE AND ASSET PROTECTION STRATEGIES for DOCTORS and ADVISORS [Best Practices from Leading Consultants and Certified Medical Planners™] explains to physicians and insurance professionals the background, theory, and practicalities of medical risk management, asset protection methods, and insurance planning.

The text presents information in a manner that is convenient and highly useful for busy medical practitioners. It discusses the medical records revolution and addresses concerns regarding cloud computing, data security, and technological threats.

The book covers modern health law and policy, including fraud and abuse, workplace-violence, Medicare compliance, HIPAA regulations, AR protection strategies with internal controls, P4P and value based care, insurance and reputation management, and how the ARA legislation is impacting physician practices.

It also includes case models and examples that provide you with a real-world understanding of how to recognize and reduce personal and medical practice risks.

With time at a premium for all, and so much information packed into one well-organized resource, this book is a must-read for every physician and financial advisor that serves the health care sector. The book will help physicians make better decisions about the risks they face and will help financial advisors improve the value they provide to their clients who are doctors.

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DR. DAVID EDWARD MARCINKO MBS CMP®

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Published: 2018

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HISTORIC PURPOSE OF MEDICAL RECORDS and S.E.S.

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An iMBA Inc., Review

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[By Dr. David Edward Marcinko CMP® MBA]

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As little as a hundred years ago, detailed medical records were likely to have been compiled by medical researchers such as Charcot and Hughlings-Jackson. The medical record was an aide memoire for detecting changes in patients’ conditions over time, solely for the benefit of the physician in treating the patient.

As health care became more institutionalized, medical records became a communications device among health care providers.  Doctors made progress notes and gave orders.  Nurses carried them out and kept a record of patient responses.  A centralized record, theoretically, allowed all to know what each was doing.  The ideal was that if the doctor were unable to care for the patient, another physician could stand in his or her shoes and assume the patient’s care.

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Enter Third Parties 

Then pressures from third party payers occurred. As insurance and then government programs became larger players in the compensation game, they wanted to know if the care they were paying for was being delivered efficiently.

  • Why were these tests ordered?
  • Why weren’t these studies done?
  • Why had the patient remained hospitalized after his temperature had returned to normal for so many hours and no pain medications had been required?
  • Why couldn’t this pre-operative work be done on an outpatient basis?

Though the real push behind these questions was the desire to save money, utilization review also directly contributed to better patient care. A patient who was being given inefficient care was getting substandard care as well. Utilization review was mainly retrospective; denial of compensation was rarely imposed, and suasion by peers was the main effector of change.  Though “economic credentialing” was shouted about, it rarely showed itself in public.

PP-ACA

Even health reform which openly admitted economic incentives as one of its motivators preferred to find some other reason for deciding not to reimburse, or admit Dr. Jones to its narrow panel of ACA, or other “skinny” network providers, or not renewing Dr. Smith’s contract an HMO. The medical record remained essentially a record of patient care which was good or not, efficient or not.  If the record wasn’t complete, the doctor could always supplement it with an affidavit, use information from somewhere else, or provide explanations.

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Socio Economic Status

Today, the concept known as Socio Economic Status [S.E.S.] is conceptualized as the social standing, or class of an individual or group. It is often measured as a combination of education, income and occupation. Examinations of socioeconomic status often reveal inequities in access to medical resources, plus issues related to privilege, power and control. SES is increasingly being considered as another payment component [CPT® codes] to medical providers, as reflected in the paper medical record, EMR and elsewhere. 

Assessment

Have you encountered any Socio Economic Status initiative in your clinic, hospital or other medical institution?

Conclusion

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Are Doctors Unique -OR- New Members of the Working Class hoi-polloi?

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United We Stand – Divided We Fall?

By Dr. David Edward Marcinko MBA

BC Dr. MarcinkoPhysician blogger Kent Bottles MD recently asked if doctors are really different; a special class of folks?

And, some colleagues are shocked when an authority like Uwe Reinhardt PhD, of Princeton University, points out that collectively many MDs act just like any other worker in the domestic economy.

LinkAre physicians really that special?

In fact, the classic 1986 letters between the Princeton professor, and former New England Journal of Medicine editor Arnold Relman MD, highlight the tension between how we think of ourselves and how we act.

Medical Labor Unions

Now, also recall that healthcare journalist William F. Shea, opined more than a decade ago, that there were numerous psychological barriers against the formation of physician unions [personal communication].

Barriers

These included (1) the public perception of doctor’s as a “cut above” ordinary workers; (2) doctor’s attempts to wrap collective bargaining in a mantle of patient’s rights that lacked credibility; and (3) the highly educated physician’s ability to re-engineer and seek alternate employment opportunities rather than accept the salary scale or lack of autonomy present in restrictive managed care entities.

Professional Wake Up Call

Tincture of Time

Time has proven Shea both correct and incorrect, as MD resignation through individual re-deployment and/or innovation has been more effective than any “union strike” if called by one practitioner at a time.

On the other hand, more than 40% of all physicians are now collective employees … So, what gives?

Link: Legal Strategies for Doctors Sheltering Employment Income

Assessment

And so, are doctors really different than the man-in-the-street; or more like union workers and the OWStreeters? Did we stand united, or have we fallen individually since the comments of Shea, Reinhardt and Relman?

Conclusion

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Questioning [Physician’s] Upward Social Mobility and the State of the Union Address

Broad Consensus Seems Impossible for Medical Professionals – and Everyman

By Dr. David Edward Marcinko; MBA, CMP™

[Publisher-in-Chief]

While an undergraduate student at Loyola University in Maryland, I learned from my Jesuit teachers and philosophers that a couple of centuries ago, the decider of all matters of importance in Jerusalem was the Great Sanhedrin, or a council of 71 judges. The council met most every day except on festivals and the Sabbath. It functioned as sort of a combination of the Supreme Court, Congress and a political debate boiler room.

Incorrect Unanimity

As one might imagine, the Sanhedrin’s members normally disagreed as they hammered out their daily opinions; much like today’s political debates over healthcare reform. But occasionally they came to a unanimous decision, and they had an amazing and very wise rule when that occurred: The decision was immediately overturned because the sages believed that a unanimous conclusion among so many individuals just had to be wrong.

THINK: The US Senate and Congress

Rules for Upward Mobility

Anyway, I was thinking about the Sanhedrin’s rule after last night’s 2010 State of the Union address by President Barrack H. Obama while I was considering the current state of the economic union for doctors – specifically. The translation is easy for non-physicians [everyman] as well; so bear with me.

Anyway, I was struck by the fact that if there was one grand unified theory which gets at least 90-100% agreement from current generations of America’s medical and lay punditocracy – it is the rules for upward [medical professional] mobility.

These rules, especially for second generation Americans like me, were:

  • A medical degree [college education] leads to a lucrative profession [job] and a satisfying lifestyle.
  • [Working hard], or practicing long hours, means your income will grow.
  • Devotion to medicine, or your job, will produce a comfortable retirement.
  • Your children will follow your career path [job] and create a lasting legacy

The Paradigm Shift

Today, with a national unemployment rate hovering around 10%, doctors and everyman may need to reconsider the above unwritten rules that have governed our upward mobility since the end of World War II. As the son of a GM auto worker – I did decades ago – and still do.

For example, from 1945 to 2000, various private and public health insurance mechanisms were developed, along with the idea that health insurance was a fringe benefit in lieu of the wage and price controls instituted after the war. Today it is even considered a “right” by some.

Nevertheless, the doctor-class was a surrogate for the affluent American upper middle class lifestyle, and a type of perpetual prosperity machine that created wealth.

There were periodic general economic dislocations of course, like the recessions of the mid-1970s and early 1980s, and the rise of managed care in the early 1990s. But, wealth seemed to compound for physicians, and progress always resumed its upward trajectory. This was especially true for all medical professional during the “golden age of medicine” [circa 1965-1990, approx].

After all, wasn’t [isn’t] healthcare considered a recession proof business? Perhaps no more!

The Physician Net-Worth Numbers

Then: I was involved in study a few years ago [September 16, 2008] which determined that the average 47 year-old physician, earning $180,000 annually, needed to amass a net-worth of about $5.5-M in order to maintain the same lifestyle throughout retirement at age 65.

Link: http://www.hcplive.com/finance/publications/pmd/2005/92/3951

Link: www.CertifiedMedicalPlanner.com

Now: Today, with the DJIA down about 30% from its’ October 2008 high, is this retirement / employment scenario still possible? Are our opinions Sanhedrin-like?

And remember, the estate tax laws sunset back to their original rates in 2011. Moreover, many financial advisors, like me, believe income tax rates and brackets will increase going forward; along with increasingly onerous regulations for small businessmen and women like physicians and private medical practitioners. New business innovations of all stripes will also be adversely affected.

Full Disclosure: I am founder of the Certified Medical Planner™ online education program for financial advisors and medical management consultants.

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Assessment

And so, I ask, do the rules of upward mobility for physicians or everyman still apply; or have they changed?  Why or why not? If so, is the change permanent or temporary, and is it for the positive or negative. Please consider financial, societal and/or generational implications.

IOW: Is President Barack H. Obama correct?

Conclusion

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The Future of Hospitals

Between a “Rock and Hard Place”

By Dr. David Edward Marcinko; MBA, CMP™

By Hope Rachel Hetico; RN, MHA, CMP™rock-and-hard-place

A recent white paper by the Joint Commission suggests that hospitals must respond in new ways to meet the increasing complexity of patient care and to address rising health care costs. Duh! What an insight. Why did it take so long for them to declare same?

 

The Hospital Accreditation Competition Heats-Up

Was it because of competition from DNV Healthcare Inc? Was it their new ability to determine if hospitals are in compliance with Medicare Conditions of Participation [COP]? DNV joins the Joint Commission on the Accreditation of Healthcare Organizations [JCAHO], and the American Osteopathic Association [AOA], as the only national hospital accrediting agency approved by the Centers for Medicare and Medicaid Services [CMS].

Link: https://healthcarefinancials.wordpress.com/2008/10/03/hospital-accreditation

Recommendations

Nevertheless, the JCAHO report recommends action in five areas:

  • Economic viability and ROI
  • Technology adoption and use
  • Patient-centered collaborative care
  • Medical and human resources staffing
  • Hospital architectural design

Patient Centered-Philosophy

Of course, it is no surprise that patient-centered care should be philosophically at the core of any partnership between a patient and his/her hospital and medical providers. Yet, just think of the last time you saw your HMO doctor and tried to engage in a collaborative health 2.0 discussion with him/her? Na-da!

Health Information Technology

The Joint Commission, despite the interoperable eHR controversy often presented on this blog, suggests that technology adoption can play a major role in improving patient care, safety and quality.

Link: https://healthcarefinancials.wordpress.com/2008/12/19/the-case-against-inter-operable-ehrs

This transformation from paper to electronic records, according to the report, will involve:

  • Making the business case for ROI and funding
  • Redesigning business processes with HIT implementation
  • Extending the digital footprint to the “medical-home”
  • Engaging IT leaders for guidance on prior mistakes 
  • Improve workflow – minimize labor intensive activities

Of Hospital “Insider” Administrators

One local hospital administrator insider, here in Atlanta, confidentially tells us that a single hospital bed is currently worth about a million bucks a year to the institution; private or public. And, the mantra of most hospital CEOs to staff doctors, is: “fill the beds”; “schedule the procedures”; and/or “book the operating rooms.”  So, the priorities outlined in the report really don’t seem appropriate; do they?

IOW: Put the hospital first; not the patient? And, this echoed our experience in hospital administration two decades ago. Has anything changed?

Assessment

Nevertheless, it may be refreshing to see an approach to healthcare technology implementation that seems to leverage the experience and knowledge of other industries. Privacy concerns however, are the biggest obstacle to HIT and true inter-operable eMRs, in our opinion. Yet, it doesn’t need to be. Who cares if grandma has a bunion, or dad had his cataracts repaired. They aren’t running for public office; are they?

The road to the Hospital of the Future will be bumpy, but we are hopeful enough to trust the benefits will be great once we arrive.

Full report: hosptals-future 

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Are hospitals today “between a rock and hard place?” Is technology and business process reorganization being offered as a substitute for critical thinking and true collaborative medicine? Especially, in light of the healthcare capitalistic thrust to: “do more – in order to earn more.”

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About the AHCJ

Advancing Public Understanding of Healthcare Issues

Staff Reportersmedfrd1210

According to its website, the Association of Health Care Journalists [AHCJ] is an independent, nonprofit organization dedicated to advancing public understanding of health care issues. 

Currently, there are more than 1,000 members in the AHCJ www.HealthJournalism.org

History

The idea for an Association of Health Care Journalists was born at a conference of health care reporters in Bloomington, Ind., in March of 1997. As it happened, several journalists, who had felt the need for such a group, crossed paths at that conference, which was sponsored by the Henry J. Kaiser Family Foundation. J. Duncan Moore, a reporter for Modern Healthcare magazine, and Melinda Voss, then a health reporter for the Des Moines Register, organized the initial meeting.

Mission

The mission of the Association of Health Care Journalists is to improve the quality, accuracy and visibility of health care reporting, writing and editing. AHCJ is classified as a 501(c) (6), a nonprofit professional trade association.

Goals

  1. To support the highest standards of reporting, writing, editing, and broadcasting in health care journalism for the general public and trade publications.
  2. To develop a strong and vibrant community of journalists concerned with all forms of health care journalism.
  3. To raise the stature of health care journalism in newsrooms, the industry, and the public, as a whole.
  4. To promote understanding between journalists and sources of news about how each can best serve the public.
  5. To advocate for the free flow of information to the public.
  6. To advocate for the improvement of professional development opportunities for journalists who cover any aspect of health and health care.

Assessment

For membership and contact information:

Association of Health Care Journalists
Missouri School of Journalism
10 Neff Hall –
Columbia, MO 65211 USA

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. Do we need more journalists reporting on the status of the healthcare industrial complex; or do we need real subject matter experts? Nevertheless, we are supporters of healthcare journalistic transparency.

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

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Healthcare and the Recession

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Physician and Hospital Pricing Pressure

[By Staff Reporters]life-preserver

As reported in Modern Physician Online, by Dan Bowman, new metadata coming from the federal government suggests that the current financial meltdown and domestic recession has impacted hospital and physician charges, as implicated by their revenues.

USBLS on Physician Charges

According to data from the US Bureau of Labor Statistics [USBLS], retail prices charged by doctors rose 2.9 percent in 2008, compared with 4.1 percent the year before. Wholesale prices for physicians were up 1.2 percent last year, compared with 4 percent in 2007.

USBLS on Hospital Charges

Hospitals meanwhile, were up 5.9 percent in 2008, compared with 8.3 percent the year before. Wholesale prices for hospital services, for their part, were up 1.5 percent last year, falling from a 3.8 percent increase in 2007.

Assessment

Link: www.ModernHealthcare.com

Conclusion

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RIA Merger Mania and the Medical PPMC Fiasco

What is Old is New Again -or- Lessons Learned

By Dr. David Edward Marcinko; MBA, CMP™

 dr-david-marcinko9According to the article Great Expectations-Disappointing Realities that recently appeared in Registered Representative, a trade magazine for the financial services industry, by John Churchill, the booming stock market of the last five years saw many Registered Investment Advisory [RIA] firms sell a portion of their future cash flows in return for cash and stock in an acquiring consolidating firm. This is known as a roll-up, or consolidator, business model. I am quite familiar with it, as both a doctor and financial advisor. I believe my dual perspective of both camps is somewhat unique, as well.

The NYSE Collapse

As the stock market collapsed in 2008-09, many RIAs who previously sold stakes to these “roll-up” consolidator firms began scrambling to pay quarterly preferred disbursements.  What gives, many implored? As a reformed Certified Financial Planner™, RIA representative, financial advisor and insurance agent, I can draw many parallels from these present day RIA consolidators to the similar Physician Practice Management Corporation roll-up fiasco of 1999-2000? Indeed, I can, and will [www.HealthcareFinancials.com]

My Experience with Medical Practice Consolidators

As a clinician and surgeon, I was the past president of a privately held regional Physician Practice Management Corporation [PPMC] in the Midwest. I assumed this route about a decade ago, by happenstance and background, when I helped consolidate 95 solo medical practices with about $50 million in revenues. But, our small company’s IPO roll-up attempt was aborted due to adverse market conditions, in 1999. Fortunately, a conservative business model based on debt, not the equity which was all the rage at the time, saved us right before the crash of 2000. So, we harvested fiscally conservative physicians who lost only a few operational start-up bucks; but no significant dollars.

On the other hand, those PPMCs roll-ups based on equity lost much more. In fact, according to the Cain Brothers index of public PPMCs, more than 95% of all equity value was lost by doctor-investors hoping to cash in on Wall Street’s riches they did not rightly deserve; not by practicing medicine but by betting on rising stock prices. So, projecting a repeat disaster from medicine, to the contemporary RIA consolidator business model, was not a great leap for me. And unfortunately, this was one of the few times I was all too correct in my prognostications.

PPMC’s Today

The type of medical consolidator or roll-up, formally called the Physician Practice Management Corporation [PPMC], was left for dead by the year 1999. Even survivors like Pediatrix Medical Group saw its stock drop precipitously. And, more than a few private medical practices had to be bought back by the same physicians that sold out to the PPMCs originally.

RIA Example

I sure hope this does not occur with FAs, as well. But, if an entity is being bought back and accounts receivables are being purchased, FAs should be careful not to pick this item up as income twice. The costs can be immense to the RIA practice, as later clients of mine learned the hard way.

Buy-Backs

For example, let’s say a family practice [or RIA?] purchased itself back from a PPMC, or RIA consolidator. Part of the mandatory purchase price, approximately $200,000 (the approximate net realizable value of the accounts receivable), was paid to the PPMC to buy back accounts receivable [ARs] generated by the physicians buying back their practice. Now, if an office administrator unknowingly begins recording the cash receipts specifically attributable to the purchased accounts receivable as patient fee income; trouble begins to brew. If left uncorrected, this error can incorrectly added $200,000 in income to this practice and cost it (a C Corporation) approximately $70,000 in additional income tax ($200,000 in fees x 35% tax rate). The error in the above example is that the PPMC [or RIA consolidator] must record the portion of the purchase price it received for the accounts receivable as patient [advisory] fee income. The buyer practice has merely traded one asset – cash – for another asset, the accounts receivable [ARs].  When the practice collects these particular receivables, the credit is applied against the purchased accounts receivable (an asset), rather than to patient [RIA] fees.  

RIA Revolution Follows PPMC Evolution

Today, surviving medical PPMCs are evolving from first generation multi-specialty national concerns, to second generation regional single specialty groups [my type], to third generation regional concerns, and finally to fourth generation Internet enabled service companies providing both business to business [B2B] solutions to affiliated medical practices, as well as business like consumer health solutions to plan members [healthcare 2.0]. I trust this sort of positive morphing will occur, over time, with the RIA consolidators. Perhaps yes, or no [www.HealthDictionarySeries.com]

RIA Consolidators

Among the most distressed RIA roll-up entities today may be the publically traded National Financial Partners and its more than 180 acquired firms, with more than 320 members in 41 states and Puerto Rico. NFP specializes in life insurance and wealth transfers, corporate and executive benefits, and financial planning and investment advisory services. Jessica M. Bibliowicz has been NFP’s President and CEO since inception in 1999. She is the daughter of Sandy Weill, and a member of the Board of Overseers for the Weill Medical College and Graduate School of Medical Sciences of Cornell University. NFP’s stock has declined from a high of $56 more than a year ago, to a current trading range of $3-4.           

And the Question Is?

And so, the question that MDs and RIAs should have asked when contemplating this business model was simply this: would I but the stock of an acquiring roll-up company if I were not part of the deal?

Valuable Consideration

Why? When MDs and RIAs sell to a consolidator, part of their “valuable consideration” is stock equity, so confidence and a conscientious work ethic is important. But, these “‘sell-out” entities are not retirement vehicles according to former financial advisor Hope Rachel Hetico; RN, MHA, CMP™ – a nurse executive and managing partner for www.MedicalBusinessAdvisors.com. Hope is also managing editor of this blog forum.

Assessment

More pointedly, according to one seller mentioned in the Churchill article,

“the whole [consolidator] pyramid is built on cash flows based on incremental growth and hugely optimistic projections of that growth”.  

Conclusion

Rest assured, the consolidator business model can be very successful; just think H. Wayne Huizenga’s Blockbuster Video and Waste Management, Inc. And so, your thoughts and comments on this Medical Executive-Post are appreciated? Why didn’t consolidation work in medicine, or with the RIAs? Or, reframed, why did consolidation work in the garbage collections industry and video store space? Can the fiercely independent RIA space learn something from the fiercely independent medical space?

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Medical Tourism and Values Based Health Insurance

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Two Emerging Medical Business Models

[By Dr. David Edward Marcinko; MBA, CMP™]dr-david-marcinko10

Last year, nurse-executive Hope Hetico; RN, MHA from www.MedicalBusinessAdvisors.com and I wrote a chapter on physician compensation for the book Practicing Medicine in the 21st Century. The book was edited by David B. Nash; MD, MBA of Jefferson Medical College, in Philadelphia. One of us [DEM] attended medical school at Temple University, so David clearly does not hold a grudge against us. Nevertheless, in the publication, we identified these two emerging trends that have grown even stronger with the passage of time:

Values Based Health Insurance Model

According to Mark Fendrick, MD and Michael E. Chernew, PhD, instead of the one size fits all approach of traditional health insurance, a “clinically-sensitive” cost-sharing system that supports co-payments related to evidence-based value for targeted patients seems plausible.

In this model, out-of-pocket costs are based on price and a cost/quality tradeoff in clinical circumstances: low co-payments for interventions of highest value, and higher co-payments for interventions with little proven health benefit. Smarter benefit packages are designed to combine disease management with cost sharing to address spending growth.

Medical Tourism and the Global Healthcare Model

American businesses are extending their cost-cutting initiatives to include offshore employee medical benefits, and facilities like the Bumrungrad Hospital in Bangkok Thailand (cosmetic surgery), and the Apollo Hospital in New Delhi India (cardiac and orthopedic surgery) which are premier examples for surgical care. Both are internationally recognized institutions that resemble five-star hotels equipped with the latest medical technology. Countries such as Finland, England and Canada are also catering to the English-speaking crowd, while dentistry is especially popular in Mexico and Costa Rica.

Although this is still considered “medical tourism,” Mercer Health and Benefits was recently retained by three Fortune 500 companies interested in contracting with offshore hospitals and JCAHO has accredited 88 foreign hospitals through a joint international commission. To be sure, when India can discount costs up to 80%, the effects on domestic hospital reimbursement and physician compensation may be assumed to increase downward compensation pressures.

Assessment

Another commentator on this topic is hospitalist Robert Wachter, MD; a blogger at Wachter’s World.

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Conclusion

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