BOARD CERTIFICATION EXAM STUDY GUIDES Lower Extremity Trauma
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The Sortino Ratio is similar to the Sharpe Ratio, it is a measure of risk-adjusted performance which looks at returns through the lens of the risk taken to achieve that performance, but instead of volatility of return, it uses downside variance as its measure of risk.
Posted on November 10, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Stocks ended a record-breaking election week by breaking records: The Dow rose above 44,000 for the first time ever, the S&P 500 rose above 6,000 for the first time ever, and the NASDAQ hit its own all-time high.
Oil rose a bit this week on fears that Hurricane Rafael would disrupt supply in the Gulf Coast, but new projections show the storm losing steam, which meant oil did as well.
One investment that didn’t go down this week: bitcoin. The crypto king soared to a new all-time high as traders bought into a friendlier regulatory environment under Donald Trump.
Derivatives are securities whose performance and/or structure is derived from the performance and/or structure of other assets, interest rates, or indexes. If used moderately and in appropriate situations, derivatives can help stabilize portfolios and/or enhance returns. However, if used in excess and/or in inappropriate circumstances, they can be harmful, potentially causing portfolio instability and/or losses. Derivatives are similar to medicine in their behavior–usually safe when used as directed, potentially toxic when abused.
There are many different types of derivative securities and many different ways to use them. Some derivative securities, such as mortgage-related and other asset-backed securities, are in many respects like any other investment, although they may be more volatile or less liquid than more traditional debt securities.
Futures and options are commonly used for traditional hedging purposes to attempt to protect portfolios from exposure to changing interest rates, securities prices or currency exchange rates, and for cash management purposes as a low-cost method of gaining exposure to a particular securities market without investing directly in those securities.
Certain other derivative securities may be described as structured investments. A structured investment is a security whose value or performance is linked to an underlying index or other security or asset class. Structured investments include collateralized mortgage obligations (CMOs). Structured investments also include securities backed by other types of collateral.
According to Wikipedia, a fundamental tenet of the paradox is that the customer, i.e. the potential purchaser of the information describing a technology (or other information having some value, such as facts), wants to know the technology and what it does in sufficient detail as to understand its capabilities or have information about the facts or products to decide whether or not to buy it. Once the customer has this detailed knowledge, however, the seller has in effect transferred the technology to the customer without any compensation. This has been argued to show the need for patent protection [HIPPA].
If the buyer trusts the seller or is protected via contract, then they only need to know the results that the technology will provide, along with any caveats for its usage in a given context. A problem is that sellers lie, they may be mistaken, one or both sides overlook side consequences for usage in a given context, or some unknown-unknown affects the actual outcome.
Posted on November 9, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
In another daily double-digit swing, Trump Media & Technology Group jumped 15.22% after President-elect Trump announced he has no plans to sell shares of his social media company.
Toast isn’t just for breakfast anymore—it’s also a restaurant software company that’s making money hand over fist. Shares popped 14.93% on strong earnings news.
Axon Enterprise climbed 28.68% to a new all-time high thanks to an impressive quarter for the law enforcement technology company.
Upstart started up and stayed there, soaring 46.02% after the AI lending marketplace beat-and-raised analyst estimates last quarter.
Unless you’re a medical professional, you’ve probably never heard of digital platform Doximity, but doctors love it. Shares surged 34.06% on a stronger-than-expected quarter.
Stocks down
Pinterest plummeted after the social media site announced slowing user growth combined with lower ad pricing, a one-two combo that sent shares tumbling 14%.
Airbnb may have beaten revenue expectations, but shareholders punished it for missing on earnings estimates last quarter. Shares fell 8.66%.
Sweetgreen sank 6.01% after the fast casual eatery fell short of analyst estimates last quarter and Goldman Sachs lowered its rating from “buy” to “neutral.”
Redfin plunged 15.62% after it announced lower earnings than analysts expected, cut its forecasts, and revealed it’s losing ground to competitors.
The SPX rose 22.44 points (0.38%) to 5,995.54 to end the week up 4.66%; the Dow Jones Industrial Average® ($DJI) added 259.65 points (0.59%) to 43,988.99 to end the week up 4.61%; and the NASDAQ Composite®($COMP) climbed 17.31 points (0.09%) to 19,286.78 to end the week up 5.74%.
The 10-year Treasury note yield (TNX) fell four basis points to 4.31%, but the 2-year yield added three basis points to 4.25%. Shorter-term yields, which are more closely connected to near-term rate policy, gained on longer-term ones this week.
The CBOE Volatility Index® (VIX) fell to 14.99, near a two-month low.
Posted on November 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
FREE SAMPLES
The Art of Giving – And Receiving – Value!
By Staff Reporters
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Imagine you’re at a party, and someone hands you a drink. Your first instinct? Find something to give back. This is [sales] reciprocity in action – our built-in psychological urge to repay kindness.
According to colleague Dan Ariely PhD, it’s like a cosmic balance sheet in our brains, ensuring we don’t owe anyone a favor. This is why companies give out free samples. They’re not just being nice; they know you’ll feel a pang of guilt if you walk away without buying something.
THINK: Free financial planning dinner seminar and prospecting event. That’s you – the Sales Prospect!
So, next time someone does you a favor, remember: it’s not just seller kindness, it’s science!
Currency Hedging is a risk-management strategy, as part of a foreign investment strategy, currency hedging is designed to reduce the impact from changes in the relative values of currencies involved in the foreign investment strategy.
In any foreign investment strategy, a significant part of the potential risk and return comes from exposure to relative currency value fluctuations. If exposure to those currency fluctuations is minimized, investors can experience more of a “pure play” exposure to the foreign investments. There is a variety of possible currency hedging strategies, ranging from swaps, options, and spot contracts to simply buying foreign currencies.
Currency Overlay is a financial trading strategy used to separate the management of currency risk from other portfolio strategies. A currency overlay manager can seek to hedge the risk from adverse movements in exchange rates, and/or attempt to profit from tactical currency views.
Posted on November 8, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
The Federal Reserve cut interest rates by 0.25 percentage points Thursday, the second consecutive cut after a two-year rate-hike run to curb post-pandemic inflation.
Lyft announced impressive earnings results thanks to more commuters using the ride-hailing service, as well as upbeat guidance for the future. Shares rose 22.92%.
Shareholders worried about a housing market slowdown hurting Zillow had nothing to fear: The real estate website crushed earnings estimates, and shares popped 23.77%.
Warner Bros. Discovery enjoyed its biggest single-quarter surge in subscribers ever thanks to streaming service Max, which sent shares soaring 11.81%.
UnderArmour rocketed 23.33% higher after its cost-savings plan paid off last quarter and management guided for a strong quarter ahead.
Planet Fitness surprised shareholders with a solid quarter for the gym giant, as well as forecasts of more growth ahead. Shares climbed 11.26%.
Prison operators GEOGroup and CoreCivic both surged on Trump’s election, and their rally continued today—in-spite of very different paths forward for each stock. GEO Group gained 13.63%, while CoreCivic rose 25.60%.
What’s down
Trump Media & Technology Group was one of the biggest winners on election night, and although the stock soared over the last few days, investors decided to take profits today. Shares sank 22.97%.
Wolfspeed plummeted 39.24% after announcing larger-than-expected losses last quarter, poor forecasts for next quarter, and layoffs to cut costs.
Match Group shareholders were heartbroken to hear that Tinder’s revenue fell last quarter, though strong revenue growth from Hinge helped ease the pain. Shares dropped 17.87%.
Virgin Galactic isn’t just a mean nickname from your high school years—it’s also a space stock that can’t make money to save its life. Shares fell 11.87%.
The S&P 500®index (SPX) rose 44.06 points (0.74%) to 5,973.10; the Dow Jones Industrial Average® ($DJI) fell 0.59 points (0.00%) to 43,729.34; and the NASDAQ Composite®($COMP) gained 285.99 points (1.51%) to 19,269.46.
The 10-year Treasury note yield (TNX) fell nine basis points to 4.34%, with most of the drop coming long before the Fed decision.
The CBOE Volatility Index® (VIX) continued its post-election plunge to 15.21.
Stocks surged and stayed higher all yesterday day on news of Donald Trump’s presidential victory. The Dow rocketed over 1,350 points as soon as markets opened, and all three indexes ended the day at record highs.
Treasuryyields have paralleled Trump’s chances of taking the White House for the last few weeks, and his election sent them soaring to over 4.46% at one point today.
Oil and gold both fell as the dollar rose after Trump’s win. The greenback popped on the promise of Trump’s protectionist tariff policies and the lower likelihood of the Fed cutting interest rates as fast as previously expected.
Bitcoin surged as traders celebrated the beginning of the new, friendlier regulatory environment that Trump promised during his campaign.
Most doctors report feeling overworked and are considering a change in career, according to a new poll.
Doximity, a virtual network for physicians, found that 81% doctors surveyed last fall said they felt overworked—a slight decline from 86% who reported burnout in 2022 but still up from 73% in 2021. Meanwhile, about three in five doctors said they were considering early retirement (30%), looking for another employer (15%), or leaving the profession altogether (14%), the poll found.
The findings, released last year, come amid reports of rising rates of physician burnout and dissatisfaction since after the Covid-19 pandemic.
Posted on November 7, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
One more group of stocks that soared on a Trump election: Big Tech companies with antitrust problems. Another Trump presidency should go a long way toward clearing up the regulatory hurdles many companies have faced recently, which is why Alphabet popped 3.99% and Amazon rose 3.8%.
CVS Health surged 11.33% after meeting revenue forecasts but missing earnings expectations. However, the miss was due to a one-time charge, so shareholders quickly forgave the healthcare retailer.
Planet Fitness gained 6.09% on a surprise bid for bankrupt fitness chain Blink Holdings in an attempt to bolster its own gym business.
Stocks Down
Super Micro Computer had a chance to show the world it wasn’t committing the fraud it has recently been accused of. Instead, the company announced it is still unable to determine when it will file the quarterly report due August 29. Shares crashed 18.05%.
Home builder stocks sank on fears that a Trump presidency will slow the rate of Fed rate cuts, keeping mortgage rates higher for longer. DR Horton fell 3.8%, Lennar dropped 4.84%, PulteGroup lost 3.09%, and TollBrothers tumbled 1.46%.
Cannabis stocks were betting big on a ballot measure in Florida to allow the sale of recreational marijuana. The initiative’s failure sent shares of Curaleaf plummeting 29.17%, TrulieveCannabis plunged 38.8%, and AyrWellness sank 55.87%.
The S&P 500®index (SPX) rose 146.28 points (2.53%) to 5,929.04; the Dow Jones Industrial Average® ($DJI) added 1,508.05 points (3.57%) to 43,729.93; and the NASDAQ Composite®($COMP) gained 544.29 points (2.95%) to 18,983.47—a new closing high.
The 10-year Treasury note yield (TNX) surged 14 basis points to 4.43%, its highest level since July.
The CBOE Volatility Index® (VIX) fell sharply to 16.3 as election-related uncertainty diminished.
Similar in ways to the availability heuristic (Tversky & Kahneman, 1974) and to some extent, the false consensus effect, once you (truly) understand a new piece of information, that piece of information is now available to you and often becomes seemingly obvious. It might be easy to forget that there was ever a time you didn’t know this information and so, you assume that others, like yourself, also know this information: the curse of knowledge.
However, according to colleague Dan Ariely PhD, it is often an unfair assumption that others share the same knowledge. The hindsight bias is similar to the curse of knowledge in that once we have information about an event, it then seems obvious that it was going to happen all along.
I should have seen it [divorce, stock market crash/soar my smoking & lung cancer, unemployment, etc] coming!
Stocks just roared out of the gate this Wednesday morning following news that former President Donald Trump has secured a second term in the White House and Republicans won a majority in the Senate.
The Dow Jones Industrial Average rose 1,341 points, or about 3.1 percent, as the market opened, reaching a record high. It was the first time it has jumped more than 1,000 points in a single day since November 2022.
The S&P 500 also gained 1.9 percent, and the NASDAQ climbed 1.8 percent.
Despite concern from big business about Trump’s plan to impose blanket tariffs on imports to the U.S., Wall Street is anticipating tax cuts and deregulation during a second Trump presidency.
Retained Earnings Risk: Profits generated by a company that are not distributed to stockholders as dividends. Instead, they are either reinvested in the business or kept as a reserve for specific objectives, such as paying off debt or purchasing equipment. Retained earnings risks are also called “undistributed profits,” “undistributed earnings,” or “earned surplus.”
Risk-Weighted (or risk-adjusted) Assets: Within the context of measuring the financial stability of banks and other financial institutions, the risk-weighted assets figure is an aggregate of a financial institution’s assets (usually loans to its customers) after the loans have been individually adjusted for their risk. This involves multiplying each loan by a factor that reflects its risk. Low-risk loans are multiplied by a low number, high-risk by high. The aggregate number can then be used to calculate the financial institution’s capital ratio. Lower risk-weighted assets typically result in higher capital ratios, and higher risk-weighted assets usually translate to lower capital ratios.
Sequence-of-Returns Risk: The risk of market conditions impacting the overall returns of an investment portfolio during the period when a retiree is first starting to withdrawal money from investments as income. For example, if a retiree has to withdrawal income from his or her portfolio when market prices are depressed, the portfolio may lose out on the potential returns that income could have made once market prices recovered.
Posted on November 6, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
First-time homebuyers in 2024 had a median income of $97,000, and their median age was 38. OpenAI and Jeff Bezos invested in Physical Intelligence, a robot startup with the aim of “bringing general-purpose AI into the physical world.”
Cybersecurity darling Palantir soared 23.38% to a record high thanks to strong earnings, high AI demand, and big spending from the Department of Defense.
Astera Labs skyrocketed 37.70% after the semiconductor parts maker (and one of Nvidia’s key suppliers) announced strong earnings.
Crypto stocks had a great day thanks to a widespread cryptocurrency rally. Coinbase rose 4.13%, MicroStrategy gained 2.16%, and RiotPlatforms jumped 8.13%.
Stocks Down
Trump Media & Technology Grouparrested its recent downturn and popped 12% at one point today, but gave all those gains up and ended the day down 1.16%.
You’d think the end of a multi-week labor dispute costing billions of dollars would be a relief for shareholders, but Boeing still sank 2.62% on news that it’s reached an agreement with striking machinists.
It’s a me, lower revenue forecasts! Nintendo fell 1.68% after announcing that sales of its Switch console are starting to sag.
Some of the smaller semiconductor stocks on the market took a beating today. NXP Semiconductor dropped 5.17% after announcing weaker-than-expected Q4 guidance, Lattice Semiconductor tumbled 1.37% after missing on sales forecasts and announcing job cuts, and while Cirrus Logic beat expectations this quarter, it still fell 7.09% on lower forecasts.
The S&P 500®index (SPX) rose 70.07 points (1.23%) to 5,782.76; the Dow Jones Industrial Average® ($DJI) added 427.28 points (1.02%) to 42,221.88; and the NASDAQ Composite®($COMP) increased 259.19 points (1.43%) to 18,439.17.
The 10-year Treasury note yield (TNX) dropped two basis points to 4.29%.
The CBOE Volatility Index® (VIX) slipped to 20.72.
In what some are calling the next iteration of the internet, the metaverse is an unfamiliar digital world where you could be an avatar navigating computer-generated places and interacting with others in real time. In this space, the constraints of our physical, bricks and mortar world and travel habits fade. And new opportunities and challenges emerge.
Google in healthcare: The search giant has repeatedly successfully transferred its in-depth knowledge of algorithms in the field of medicine, particularly since it acquired DeepMind.
Apple in healthcare: Apple will keep on working on expanding the health features of its devices, Apple Watch and iPhones included.
Microsoft in healthcare: Microsoft’s cloud solutions provide integrated capabilities that make it easier to improve the healthcare experience.
Amazon in healthcare: Amazon will make further use of its vast knowledge of online shopping trends and behavior and will keep on providing what people need, from medicine to wearables.
IBM in healthcare: IBM has a lot to offer in federated learning, blockchain, and quantum computing.
Nvidia in healthcare: NVIDIA seems incredibly focused on its approach to healthcare. We can expect NVIDIA to be a leader in the use of artificial intelligence in healthcare.
Facebook in healthcare: The Metaverse developed by Facebook/Meta has incredible potential to revolutionize healthcare.
All this technology has huge potential because it uses both virtual reality (VR) and augmented reality (AR) technology to work in virtual spaces: All signs point to the metaverse being widely used as a disruptive change in healthcare, from better surgical precision to therapeutic uses to social-distance accommodations and more.
But along with these improvements come new problems that will change what we know about modern healthcare. The metaverse is a paradigm shift in healthcare that everyone involved needs to be aware of. This is because it changes how medical infrastructure is built, how startup costs are covered, and how data security and privacy are handled.
Classic: Investment purchases and private expenditures of healthcare firms, the value of related construction, and the change in inventory during the year.
Modern: Gross Revenue Per Day is the average amount charged by a hospital for one day of inpatient care (gross inpatient revenue divided by patient-census days).
Gross Revenue Per Discharge: The average amount charged by a hospital to treat an inpatient from admission to discharge (gross inpatient revenue divided by discharges).
Gross Revenue Per Visit: The average amount charged by a hospital for an outpatient visit (gross outpatient revenue divided by outpatient visits).
Posted on November 5, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Among consideration for CVS is splitting up its assets: CVS Pharmacy, pharmacy benefit managerCVS Caremark, and insurance arm Aetna. The company has reportedly been in talks with bankers about the move, Reuters reported early this month.
Just as Nvidia will replace Intel, Sherwin Williamswill replaceDow Inc. on the Dow (how embarrassing, getting kicked off an index you share a name with). Sherwin Williams popped 4.59%, while Dow Inc. fell 2.08%.
Peloton pedaled 3.59% higher on a double upgrade from Bank of America analysts, who like the bike company’s higher profit outlook and hiring of new CEO Peter Stern from Ford.
Yum! China, the company that operates Pizza Hut and KFC restaurants in China, climbed 7.12% after announcing that new store openings translated into better-than-expected revenue and earnings last quarter.
STOCKS DOWN
Nuclear energy stocks took a big hit today after the Federal Energy Regulatory Commission ruled that Talen Energycould not increase the amount of energy its nuclear plant in Susquehanna, PA, produces in order to power an Amazon data center. Talen fell 2.23%, Vistra Corp sank 3.18%, and Constellation Energy plummeted 12.46%.
Clinical data from a Viking Therapeutics trial shows its weight-loss pill is effective. Shares soared then sank 13.36% as investors took profits.
The S&P 500®index (SPX) dipped 16.11 points (–0.28%) to 5,712.69; the $DJI dropped 257.59 points (–0.61%) to 41,794.60; and the $COMP lost 59.93 points (–0.33%) to 18,179.98.
The 10-year Treasury note yield (TNX) fell five basis points to 4.31%.
The CBOE Volatility Index® (VIX)edged up to 22.11, still below last week’s peaks.
Named for a U.S. economist, the JB Taylor Rule is a mathematical monetary-policy formula that recommends how much a central bank should change its nominal short-term interest rate target (such as the U.S. Federal Reserve’s federal funds rate target) in response to changes in economic conditions, particularly inflation and economic growth. It’s typically viewed as guideline for raising short-term interest rates as inflation and potentially inflationary pressures increase. The rule recommends a relatively high interest rate (“tight” monetary policy) when inflation is above its target or when the economy is above its full employment level, and a relatively low interest rate (“easy” monetary policy) under the opposite conditions.
To illustrate, the monetary policy of the FOMC, changed throughout the 20th century. The period between the 1960s and the 1970s is evaluated by Taylor and others as a period of poor monetary policy; the later years typically characterized as stagflation. The inflation rate was high and increasing, while interest rates were kept low. Since the mid-1970s monetary targets have been used in many countries as a means to target inflation.
However, in the 2000s the actual interest rate in advanced economics, notably in the US, was kept below the value suggested by the Taylor rule.
Posted on November 4, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Nvidia is replacing Intel on the Dow Jones Industrial Average, a shakeup to the blue-chip index that replaces a flagging semiconductor company with the primary vendor of GPUs for AI.
Bipartisan Legislation Aims to Stop Medicare Cuts & Boost Physician Pay in 2025
Physicians and other healthcare practitioners may get a pay boost in 2025 through a bipartisan bill recently introduced in Congress. The proposed bill seeks to block planned Medicare pay cuts next year and would provide the first inflationary update to physician pay in years. The Medicare Patient Access and Practice Stabilization Act would counteract the 2.8% cut to the conversion factor proposed by the Centers for Medicare and Medicaid Services (CMS) in the draft CY-2025 Physician Fee Schedule. A stop-gap pay fix is usually enacted by Congress at the end of the year.
Source: Emma Beavins, Fierce Healthcare [10/30/24].
The Physicians Foundation conducted a survey on physician practice patterns and perspectives a few years ago. Here are some key findings from the report:
• 31% of physicians identify as independent practice owners or partners. • Almost half (47%) of physicians plan to change career paths. • 78% of physicians sometimes, often or always experience feelings of burnout. • Nearly a quarter of physician time is spent on non-clinical paperwork.
HFRI: Fund of Funds invests with multiple managers through funds or managed accounts. The strategy designs a diversified portfolio of managers with the objective of significantly lowering the risk (volatility) of investing with an individual manager.
The Fund of Funds manager may allocate funds to numerous managers within a single strategy, or with numerous managers in multiple strategies. The investor has the advantage of diversification among managers and styles with significantly less capital than investing with separate managers.
In-network refers to a health care provider that has a contract with your health plan to provide health care services to its plan members at a pre-negotiated rate. Because of this relationship, you pay a lower cost-sharing when you receive services from an in-network doctor.
What does out-of-network mean?
Out-of-network refers to a health care provider who does not have a contract with your health insurance plan. If you use an out-of-network provider, health care services could cost more since the provider doesn’t have a pre-negotiated rate with your health plan. Or, depending on your health plan, the health care services may not be covered at all.
Classic: Any medical provider, supplier or facility that is in-network is one that has contracted with your health insurer to provide services;as above.
Modern: Depending on your plan, if you visit an out-of-network provider, it may not be covered or might be only partially covered. When making appointments with various doctors and service providers, you may notice some are listed as “in-network” while others are “out-of-network.”
THINK: Medicare Advantage {Part C] Plans
Example: You can expect a higher deductible and out-of-pocket limit at out-of-network providers. Your coinsurance and co-payment may also be higher for out-of-network providers.
STRIPS (Separate Trading of Registered Interest and Principal of Securities) is an acronym that describes both a government bond issuance program and the securities issued by the program. STRIPS are a form of zero-coupon security (defined below) created under the U.S. Treasury’s STRIPS program.
Originally, zero-coupon securities were created by broker-dealers who bought Treasury bonds and deposited these securities with a custodian bank. The broker-dealers then sold receipts representing ownership interests in the coupons or principal portions of the bonds.
Some examples of zero-coupon securities sold through custodial receipt programs are CATS (Certificates of Accrual on Treasury Securities), TIGRs (Treasury Investment Growth Receipts) and generic TRs (Treasury Receipts). The U.S. Treasury subsequently introduced a program called Separate Trading of Registered Interest and Principal of Securities (STRIPS), through which it exchanges eligible securities for their component parts and then allows the component parts to trade in book-entry form.
STRIPS are direct obligations of the U.S. government and have the same credit risks as other U.S. Treasury securities. STRIPS are generally considered the most liquid (easily bought and sold) zero-coupon securities.
Posted on November 2, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Ford paused production of its F-150 Lightning electric truck from mid-November to early January as demand for the once-coveted EV dwindles.
Peloton named Peter Stern, the co-founder of Apple Fitness+, as its next CEO.
Starbucksis bringing back Sharpied names on cups for the first time in four years as new CEO Brian Niccol tries to shake up the struggling coffee chain.
Boeing offered striking machinists yet another new contract offer, including a 38% pay raise over the next four years. The union will vote on the contract on Monday. Shares climbed 3.54%.
Avis Budget motored 10.92% higher despite missing forecasts on both earnings and revenue. Shareholders celebrated the rental car company’s strong growth expectations from management and took advantage of a cheap valuation.
Globalstar rocketed 32.38% after the satellite communications company announced an expanded deal with Apple.
Charter Communications soared 11.87% after losing fewer subscribers than expected, which is like a back-handed compliment in the investing world.
STOCKS DOWN
Trump Media & Technology Group remains on the roller coaster, falling another 13.53% today as early exit polls show Vice President Kamala Harris with a lead in several key states.
Wayfair may have met earnings expectations last quarter, but the online home goods retailer also lost customers and fulfilled fewer orders. Shares fell 6.26%.
Super Micro Computer continued to sell off after the resignation of its financial auditor, an almost-sure sign of fraud. Shares sank another 10.51%.
The S&P 500®index (SPX) rose 23.35 (0.41%) to 5,728.80 to end the week down 1.37%; the Dow Jones Industrial Average® ($DJI) added 288.73 points (0.69%) to 42,052.19 to end the week down 0.15%; and the NASDAQ Composite®($COMP) gained 144.76 points (0.80%) to 18,239.92 to end the week down 1.50%.
The 10-year Treasury note yield (TNX) climbed eight points to 4.36%, the highest since early July.
The CBOE Volatility Index® (VIX)remained elevated at 21.88.
Classic Definition: Employers write checks that cover most health insurance premiums for employees and their dependents. But as the late Princeton health economist Uwe Reinhardt PhD once explained, employer-sponsored insurance is like a pickpocket taking money out of your wallet at a bar and buying you a drink. You appreciate the cocktail until you realize you paid for it yourself.
Modern Circumstance: With health coverage, employers write the check to the insurer, but employees bear the cost of the premium — the entire premium, not just the portion listed as their contribution on their pay stub. The premium money that goes to the insurance company is cash that employers would otherwise deposit in employees’ accounts like the rest of their salary.
Paradox Example: The fallacy paradox is in thinking an employer’s contribution comes out of profits. In fact, higher health insurance premiums mean lower wages for workers. Since 1999, health insurance premiums have increased 147 percent and employer profits have increased 148 percent. But in that time, average wages have hardly moved, increasing just 7 percent. Clearly workers’ wages, not corporate profits, have been paying for higher health insurance premiums. Health care costs are one — though not the only — reason wages have stagnated over the last few decades. With health insurance costs rising faster than growth in the economy, more labor costs go to benefits like health insurance and less to take-home pay. Yet the paradox that employees don’t pay for their own health insurance is widespread:
The first reason is that individuals cannot be sure what causes their wages to change or remain stagnant for decades.
The second reason is that employers want Americans to believe that they pay for their workers’ health insurance.
The third reason is that there are those who profit from the employment-based system: drug companies, device manufacturers, specialty physicians and high-income individuals.
And so, they all want you to believe companies are being magnanimous in giving you insurance, but they are not!
Posted on November 1, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Comcast popped 3.39% on the news that it is exploring a separation of its cable business. The network operator got a boost this quarter from the Olympics, but still lost 365,000 cable TV customers.
Peloton Interactive pedaled 27.82% higher after the bike maker beat earnings expectations and introduced a new CEO.
Carvana accelerated 19.23% on an impressive beat-and-raise earnings report that caps off the car seller’s incredible comeback.
Booking Holdings, owner of Kayak and Priceline, hit a record high after the travel company reported shockingly strong earnings. Shares rose 4.76%
What was down
Trading in shares of Trump Media & Technology Group was halted yet again today after the meme stock sank dramatically to start the day. Shares ended the trading session down 11.72%.
Estee Lauder plummeted 20.84% on a triple whammy of bad news: The cosmetics retailer missed earnings estimates, pulled its forecast, AND cut its dividend. Ouch.
Super Micro Computer continued to tumble today, declining another 11.97% as the fallout from the resignation of its financial auditor raises the threat of the semiconductor stock getting delisted from the Nasdaq.
eBay sank 8.18% after beating earnings expectations but issuing disappointing earnings guidance heading into the holiday season.
The SPX fell 108.22 (–1.86%) to 5,705.45; the Dow Jones Industrial Average® ($DJI) dropped 378.08 points (–0.90%) to 41,763.46; and the NASDAQ Composite®($COMP) lost 512.78 points (–2.76%) to 18,095.15 and has now fallen in two of the last four months.
The 10-year Treasury note yield (TNX) added two basis points to 4.28%.
The VIX rose to 22.6, the highest since October 8.
What Is CREDIT? Credit is a contractual agreement in which a borrower receives a sum of money or something else of value and commits to repaying the lender later, typically with interest. Credit is also the creditworthiness or credit history of an individual or a company. Good credit tells lenders you have a history of reliably repaying what you owe on loans. Establishing good credit is essential to getting a loan.
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Credit Analysis is a form of financial analysis used primarily to determine the financial strength of the issuer of a security, and the ability of that issuer to provide timely payment of interest and principal to investors in the issuer’s debt securities. Credit analysis is typically an important component of security analysis and selection in credit-sensitive bond sectors such as the corporate bond market and the municipal bond market.
Credit Default Swap Index (CDX) is a credit derivative, based on a basket of CDS, which can be used to hedge credit risk or speculate on changes in credit quality.
Credit Default Swaps (CDS) are credit derivative contracts between two counter parties that can be used to hedge credit risk or speculate on changes in the credit quality of a corporation or government entity.
Credit Quality reflects the financial strength of the issuer of a security, and the ability of that issuer to provide timely payment of interest and principal to investors in the issuer’s securities. Common measurements of credit quality include the credit ratings provided by credit rating agencies such as Standard & Poor’s and Moody’s. Credit quality and credit quality perceptions are a key component of the daily market pricing of fixed-income securities, along with maturity, inflation expectations and interest rate levels.
Credit Rating Agency (CRA) is a company that assigns credit ratings for issuers of certain types of debt obligations as well as the debt instruments themselves. In the United States, the Securities and Exchange Commission (SEC) permits investment banks and broker-dealers to use credit ratings from “Nationally Recognized Statistical Rating Organizations” (NRSRO) for similar purposes. As of January 2012, nine organizations were designated as NRSROs, including the “Big Three” which are Standard and Poor’s, Moody’s Investor Services and Fitch Ratings.
A Credit Rating Downgrade by a credit rating agency (such as Standard & Poor’s, Moody’s or Fitch), of reducing its credit rating for a debt issuer and/or security. This is based on the agency’s evaluation, indicating, to the agency, a decline in the issuer’s financial stability, increasing the possibility of default (defined below). A downgrade should not to be confused with a default; a debt security can be downgraded without defaulting. (And, conversely, a debt issuer can suddenly default without being downgraded first–credit ratings and credit rating agencies are not infallible.)
Credit Ratings are measurements of credit quality provided by credit rating agencies). Those provided by Standard & Poor’s typically are the most widely quoted and distributed, and range from AAA (highest quality; perceived as least likely to default) down to D (in default). Securities and issuers rated AAA to BBB are considered/perceived to be “investment-grade”; those below BBB are considered/perceived to be non-investment-grade or more speculative.
Credit Risk is the risk that the inability or perceived inability of the issuers of debt securities to make interest and principal payments will cause the value of those securities to decrease. Changes in the credit ratings of debt securities could have a similar effect.
Credit Risk Transfer Securities (CRTS) are the unsecured obligations of the GSEs (Government Sponsored Enterprises). Although cash flows are linked to prepays and defaults of the reference mortgage loans, the securities are unsecured loans, backed by general credit rather than by specified assets.
Investors waited for the Magnificent 7 stock reports to begin rolling last evening. The NASDAQ rose to a new high on optimism while the Dow Jones fell, and the S&P 500 split the difference.
Alphabet announced earnings after the bell yesterday, Microsoft and MetaPlatforms reveal their latest quarters today, Amazon and Apple on Thursday afternoon.
The 10-year Treasury yield hit a 4-month high this afternoon before paring back a bit as traders struggle to find a signal in all the market noise.
Oil rebounded a bit from yesterday’s terrible day, though it still ended the trading session lower.
Posted on October 30, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Trump Media & Technology Group rocketed higher at the opening bell, prompting the Nasdaq to halt trading on what has quickly become the meme stock du jour. Shares ended the day 8.76% higher.
23andMe clawed 1.86% higher after introducing three new board members about a month after the entire board resigned.
VF Corp, parent company of clothing brands JanSport, Vans, and North Face, surged 27.01% thanks to an impeccable earnings report that revealed its turnaround plans are coming to fruition.
Trex, the stuff your dad built an awesome deck out of, saw sales fall last quarter but still managed to beat earnings expectations. Shares popped 6.19%.
STOCKS DOWN
JetBlue Airways sank 17.08% in spite of reporting a smaller loss than analysts expected. The problem is all the turbulence that lies ahead.
D.R. Horton is the largest homebuilder by market cap, so when it says that 2025 will be a bad year, investors should listen. Shares dropped 7.29% on the news.
Crocs stumbled 19.17% after beating earnings but announcing that its fiscal year would be bogged down by poor sales of its HeyDude shoe brand.
Stanley Black & Decker fell 8.77% after missing on both profits and sales, citing weaker consumer spending.
Xerox plummeted 17.41% after the company that can’t make a printer that works for longer than 3 months without needing a new ink cartridge announced weaker sales than expected.
The S&P 500® index (SPX) rose 9.40(0.16%) to 5,832.92; the Dow Jones Industrial Average® ($DJI) fell 154.52 points (–0.36%) to 42,233.05; and the $COMP added points 145.55 (0.78%) to 18,712.75.
The 10-year Treasury note yield (TNX) finished unchanged at 4.27% after reaching nearly 4.34% earlier today.
It is a multi-factor model measures the overall risk associated with a security relative to the market. And, it incorporates over 40 data metrics, including earnings growth, share turnover and senior debt rating.
The five most valuable US companies in the S&P 500 report earnings this week, and updates on three key economic indicators are set to be released: 1. gross domestic product, 2. inflation, and 3. jobs report. Then, next week brings the election and another expected rate cut from the Federal Reserve.
Markets:All three stock indexes rose to start a week that will be filled with high-stakes data.
Stock spotlight: Trump Media & Technology Group gained almost 22% on Monday, following the former president and current GOP candidate’s Madison Square Garden rally. The rose means that Trump Media, which includes Truth Social, is now more valuable than Elon Musk’s X.
Russell 1000® Growth Index: Measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Index: A market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell 1000® Value Index: Measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell 2000® Growth Index: Measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell 2000® Index: Market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell 2000® Value Index: Measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell 2500™ Growth Index: Measures the performance of those Russell 2500 Index companies (the 2,500 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell 2500™ Index: A market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,500 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell 2500™ Value Index: Measures the performance of those Russell 2500 Index companies (the 2,500 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell 3000® Growth Index: Measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 companies with higher price-to-book ratios and higher forecasted growth values.
Russell 3000® Index: Measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
Russell 3000® Utilities Index: A sub-index of the Russell 3000 Index, is a capitalization weighted index of companies in industries heavily affected by government regulation, including among others, basic public service providers (electricity, gas and water), telecommunication services, and oil and gas companies.
Russell 3000® Value Index: Measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.
Russell Midcap® Growth Index: Measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
Russell Midcap® Index: Measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
Russell Midcap® Value Index: Measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
Russell Top 200® Index: Measures the performance of the 200 largest securities of the 3,000 publicly traded U.S. companies in the Russell 3000® Index, based on total market capitalization. It is not an investment product available for purchase.
Posted on October 29, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Healthcare’s future as HSBC Innovation Banking collaborated with LINUS and HLTH to help prepare the healthcare ecosystem for the future. The Health 2035 report goes in depth with discussions between visionaries in the ecosystem and studies of young physicians’ forecasts for what the state of care will be in the year 2035. Download the report.
Trump Media & Technology Group soared 21.59% following a major rally at Madison Square Garden, an appearance on Joe Rogan’s podcast, and rising chances of winning the election. Fun fact: After this latest stock surge, Trump Media is now worth almost as much as social media network X.
Nio surged 10.46% thanks to an upgrade from Macquerie, whose analysts believe that the EV startup could see strong growth from new vehicle launches next year.
Spotify has earned a spot on Wells Fargo’s top pick playlist, with analysts confident the stock could rise over 20%. Shares rose 1.27%.
Lower oil prices hurt energy stock, but are a big boost for companies that spend a lot on fuel. CarnivalCorp rose 4.83%, RoyalCaribbeanCruises climbed 1.35%, and AmericanAirlines popped 3.42%.
Stocks Down
Philips floundered 15.95% after the Dutch consumer goods manufacturer missed on earnings and lowered its full-year forecast.
Boeing continued to fall yet another 2.79%, this time on the news that it is raising $19 billion through a stock offering in the hopes that it fends off a credit rating downgrade.
Oil stocks took a beating thanks to a big decline for crude prices. DiamondbackEnergy fell 3.36%, APACorp. dropped 4.51%, ExxonMobil sank 0.49%, and BP lost 1.48%.
The S&P 500® index (SPX)rose15.40points (0.27%) to 5,823.52; the Dow Jones Industrial Average® ($DJI) added 273.17 points (0.65%) to 42,387.57; and the NASDAQ Composite® ($COMP) gained 48.58 points (0.26%) to 18,567.19.
The 10-year Treasury note yield (TNX) climbed six basis points to 4.29%, the highest close since July 9.
Posted on October 28, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
401(k) vs. pension: There’s pros and cons to both. While pension plans guarantee a steady income stream, payments sometimes aren’t indexed by inflation, which can erode their value over time. On the flip side, 401(k)s are subject to market fluctuations and require financial literacy.
It’s good to have money stashed in the stock market when the market is doing well. The number of people with at least $1 million in their 401(k) and IRA accounts jumped 12% in the second quarter 2024, according to a report from Fidelity Investments, largely tracking the market’s gain during that period. It’s the third straight quarter of growth in $1+ million accounts and close to a record high.
But start saving now, because building a hard-boiled nest egg through retirement accounts takes time: The average age of a 401(k) millionaire is 59, Fidelity said.
Posted on October 26, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
The SPX fell 1.74 points (–0.03%) to 5,808.12 to end the week down 0.96%; the $DJI lost 259.96 points (–0.61%) to 42,114.40 to end the week down 2.68%; and the $COMP rose 103.12 points (0.56%) to 18,518.61 to end the week up 0.16%.
The 10-year Treasury note yield (TNX) added three basis points to 4.23%.
The CBOE Volatility Index® (VIX) climbed sharply to 19.95, nearing recent highs. The 20 level is an area to watch next week, as it traditionally signals more volatile markets.
Pick a direction already: On Wednesday, Spirit Airlines soared 30% on news of a possible merger with Frontier. On Thursday, shares plunged 21% as investors took their profits. Today, shares are back up 15.05% after Spirit announced it will cut jobs and sell planes in an effort to boost profits.
Texas Roadhouse sizzled like a porterhouse T-bone, rising 3.58% after announcing that earnings rose 32% last quarter.
Deckers Outdoor popped 10.57% thanks to soaring demand for Hoka shoes, helping the footwear company beat earnings estimates and raise forecasts.
Newell Brands may not be a household name, but they make household goods like Sharpies, Elmer’s Glue, and Crock-Pot—all things that people bought a ton of last quarter, which is why shares soared 21.59% today.
Apple is just fine, thanks: The Market Cap King got a rare analyst downgrade from KeyBanc, which is worried about lower demand from China. Shareholders were unfazed, and the stock rose 0.36%.
STOCKS DOWN
AutoNation hasn’t shaken off the aftereffects of a major cyberattack in July just yet, which is why revenue and earnings both missed estimates last quarter. Shares fell 4.46% today.
Colgate-Palmolive announced a beat-and-raise quarter, but it wasn’t enough to impress shareholders, who pushed the consumer staples giant down 4.14%.
Mohawk Industries was the worst-performing stock on the market at one point today, falling 13.70% after the flooring manufacturer reported disappointing earnings and lowered its fiscal forecast.
Online education company Coursera got an F from shareholders after the company lowered its revenue guidance for the full fiscal year. Shares dropped 9.83%.
Newmont had its worst day in over a decade yesterday after the gold miner reported shockingly bad earnings, with higher costs offsetting the rising price of gold. Shares continued to fall 1.69% today.
A young clinician representative advising to consider the cost versus value of medicine. Health care concept for economic cost-effectiveness analysis, driving down medical costs, improved access.
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Value Based CareClassic Definition: Value-based care is a type of payment model that pays doctors and hospitals for treating patients in the right place, at the right time and with just the right amount of care. You can look at it as a financial incentive to motivate healthcare providers to meet specific performance measures related to the quality and efficiency of the process. The same way, it penalizes weaker experiences, such as medical errors. The concept is often counter-intuitive.
Modern Circumstance: As healthcare costs continue to rise, value-based care has been growing in popularity compared to the traditional fee-for-service method.
Think: HMOs, PPOs, capitation payments and Medicare Advantage [Part C].
Paradox Examples:
Payment: A physician paid through fee-for-service compensation might like to see a packed medical office waiting room. More patients and services equate to higher pay. But, the same doctor paid through a VBC contract might wish to see an emptier waiting room as s/he will get the exact same daily pay for seeing fewer patients and working much less.
Prospectivity: Traditional Fee-for-Service medicine treats sick patients. VBC medicine seeks to keep patients healthy and out of the doctor’s office.
Posted on October 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
The Mount Carmel Health System
By Mark Matthews MD
A “Scrubbed” True Illustration
One of the earliest healthcare adopters of Six Sigma was the Mount Carmel Health System in Columbus, Ohio.
The organization was barely breaking even in the summer of 2021 when competition from surrounding providers made things worse. Employee layoffs added fuel to an already all-time low employee morale.
The CEO
The Chief Executive Officer was determined to stem the bleeding, break the cycle of poor financial performance and return the hospital system to profitability. He sought the potential benefits of Six Sigma and began a full deployment of its methodology. The plan was a bold move, as the organization ensured that no one would be terminated as a result of a Six Sigma project having eliminated his or her previous duties. These employees would be offered an alternative position in a different department. Moreover, top personnel were asked to leave their current positions to be trained and work full time as Six Sigma expert practitioners who would oversee project deployment while their positions were back filled.
Assessment
The Six Sigma deployment was the right decision. More than 50 projects were initiated with significant success. An example of an early Mount Carmel success story is the dramatic improvement in their Medicare Part C product reimbursements, previously written off as uncollectible accounts. These accounts were often denied by HCFA due to coding of those patients as “working aged.”
Since the treatment process status often changed in these patients, HCFA often rejected claims or lessened reimbursement amounts, effectively making coding a difficult and elusive problem. The employment of the Six Sigma process fixed the problem, resulting in a real gain of $857,000 to the organization. The spillover of this methodology to other coding parameters also has dramatically boosted revenue collection.
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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Posted on October 25, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Applications to MBA programs are up 12% in 2024 after declining for two years, according to the Graduate Management Admission Council, which surveys business school admissions offices.
Apple and Goldman Sachs were ordered to pay $89 million by the Consumer Financial Protection Bureau for failing to address thousands of consumer disputes of Apple Card transactions.
Apple is cutting production of Vision Pro due to slow sales. The tech giant is scaling down production of its $3,500 Vision Pro VR headset and might halt assembly of new ones next month,
UPS delivered a strong earnings report, with revenue beating analyst expectations for the first time in two years. Shares popped 5.28%.
ServiceNow rose 5.41% to a new all-time high thanks to a beat-and-raise third-quarter earnings report powered by higher AI demand for the enterprise software company.
Whirlpool climbed 11.20% after announcing solid earnings and reiterating guidance for the rest of the fiscal year, reassuring worried shareholders.
Molina Healthcare soared 17.67% after beating both top and bottom line estimates in the third quarter, thanks to the health insurer reaping the rewards of higher Medicaid payouts.
STOCKS DOWN
IBM dropped 6.17% on disappointing third-quarter results, missing on both top and bottom line forecasts thanks to lower consulting and infrastructure revenue.
Peloton pedaled higher yesterday after Greenlight Capital’s David Einhorn declared that the company was undervalued while he was pedaling on a Peloton. The stunt only worked for a quick sprint, though, with shares back down 2.07% today.
TKO Group Holdings got hit with a piledriver after the owner of the WWE and UFC announced it is acquiring several entertainment companies, including Professional Bull Riders. Investors bucked shares off 8.69%.
Keurig Dr. Pepper fizzled 4.80% thanks to lower sales last quarter, though the company is trying to bolster revenue by acquiring energy drink maker Ghost.
Air taxi startup Lilium crashed 61.50% on the news that its main subsidiaries have run out of cash and are filing for insolvency.
The S&P 500® index (SPX) rose 12.44 points (0.21%) to 5,809.86; the $DJI fell 140.59 points (–0.33%) to 42,374.36; and the NASDAQ Composite® ($COMP) added 138.83 points (0.76%) to 18,415.49.
The 10-year Treasury note yield fell four basis points to 4.20%.
The CBOE Volatility Index® (VIX) was about flat at 19.18.
Posted on October 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
A “New” Clinical Numeric
DR. DAVID EDWARD MARCINKO MBA MEd
This physician-led medical website http://www.thennt.com/ seeks to explain to patients and physicians how well a particular treatment or medicine is likely to work based on a statistical model called the “Number Needed to Treat.”
Calculation
This is not really a new calculation, as it has been know for many years. In fact, I review and teach it in several of my undergraduate, graduate and business school courses [healthcare administration, statistics, epidemiology, infection control, community, public and population health, etc], and have been doing so for a few years now. My students are always amazed by it.
Brief Definition
The NNT is “a measurement of the impact of a medicine or therapy by estimating the number of patients that need to be treated in order to have an impact on one person.”
Detailed Definition
According to wikipedia; the number needed to treat (NNT) is an epidemiological measure used in assessing the effectiveness of a health-care intervention, typically a treatment with medication. The NNT is the number of patients who need to be treated in order to prevent one additional bad outcome (i.e. the number of patients that need to be treated for one to benefit compared with a control in a clinical trial). It is defined as the inverse of the absolute risk reduction.
The NNT was first described in 1988. The ideal NNT is 1, where everyone improves with treatment and no-one improves with control. The higher the NNT, the less effective is the treatment. Variants are sometimes used for more specialized purposes.
One example is number needed to vaccinate. NNT values are time-specific. For example, if a study ran for 5 years and it was found that the NNT was 100 during this 5 year period, in one year the NNT would have to be multiplied by 5 to correctly assume the right NNT for only the one year period (in the example the one year NNT would be 500).
And so, your thoughts and comments on this ME-P are appreciated. Give em’ a click and tell us what you think http://www.thennt.com? Do you use the concept of NNT in your clinical medical practice; why or why not? 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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Posted on October 24, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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Quote: “It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries. In most countries, inflation is now hovering close to central bank targets…The decline in inflation without a global recession is a major achievement.”—IMF (CNN Business)
Spirit Airlines is back from the dead, soaring 46.67% on a Wall Street Journal report that it may end up merging with FrontierAirlines after all. Frontier Airlines rose 0.76% on the news.
AT&T climbed 4.65% after it beat earnings expectations in the third quarter, though it missed on revenue.
Starbucks fell hard late yesterday but recovered a bit this afternoon after new CEO Brian Niccol said the coffee chain is suspending its 2025 fiscal outlook. Shares rose 0.86% today.
Coca-Cola fizzled 2.07% after beating both top and bottom line expectations. The problem is that the only reason the soda giant performed well was because it raised prices, while demand for soft drinks slowed.
Enphase Energy plummeted 14.92% after the solar stock missed on both earnings and revenue expectations last quarter.
Boeing is a very familiar name in the “What’s down” section, and its latest earnings report did nothing to help. The manufacturing giant notched a $6 billion loss last quarter, and shares fell 1.76%.
The SPX fell 53.78 points (–0.92%) to 5,797.42; the Dow Jones Industrial Average® ($DJI) lost 409.94 points (–0.96%) to 42,514.95; and the NASDAQ Composite ($COMP) dropped 296.47 points (–1.60%) to 18,276.65.
The 10-year Treasury note yield gained four basis points to 4.24%.
Posted on October 23, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
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The IRS has announced the annual inflation adjustments for the year 2025, including tax rate schedules, tax tables and cost-of-living adjustments. These are the official numbers for the tax year 2025—that tax year begins January 1, 2025. These are not the numbers that you’ll use to prepare your 2024 tax returns in 2025 (you’ll find those official 2024 tax numbers here). These are the numbers that you’ll use to prepare your 2025 tax returns in 2026.
Trump Media & Technology Group rose 9.87% to its highest level since July as the “Trump trade” wagering on the former president to regain the White House picks up steam.
Quest Diagnostics isn’t just a sad, windowless building where you get your blood drawn—it’s also been a pretty profitable investment. Shares rose 6.88% on strong earnings and revenue growth.
STOCKS DOWN
Stop us if you’ve heard this one before: Target is cutting the price of 2,000 products ahead of the holiday season. Shares sank 1.13% as shareholders digest what appears to be a desperate move to boost sales.
Verizon Communications dropped 5.03% after missing on both revenue and earnings estimates. But the real problem was slowing customer growth and phone sales.
Defense contractors were in the earnings spotlight today, and none of them did well. GE Aerospace tumbled 9.07% despite beating analyst forecasts and Lockheed Martin fell 6.12% after sales missed estimates.
Genuine Parts, better known as NAPA Auto Parts, plummeted 20.96% after earnings missed estimates and the company announced lower fiscal year forecasts.
The SPX fell 2.78 points (–0.05%) to 5,851.20; the Dow Jones Industrial Average® ($DJI) lost 6.71 points (–0.02%) to 42,924.89; and the $COMP gained 33.12 points (0.18%) to 18,573.13.
The 10-year Treasury note yield (TNX) added two basis points to 4.2%.
The CBOE Volatility Index® (VIX) fell to 18.15, down from above 20 a week ago.
Posted on October 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
COGNITIVE BIASES
By Staff Reporters
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According to colleague Dan Ariely PhD,anchoring is the mental trick your brain plays when it latches onto the first piece of information it gets, no matter how irrelevant. You might know this as ‘ first impressions ’ – when someone relies on their own first idea of a person or situation.
Imagine you’re buying a car, and the salesperson starts with a high price. That number sticks in your mind and influences all your subsequent negotiations. Anchoring can skew our decisions and perceptions, making us think the first offer is more important than it is. Or, subsequent offers lower than they really are.
So, the next time you’re haggling or making a big decision, be aware of that initial anchor dragging you down.
Posted on October 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
Re-Thinking a Popular Practice from the Past
By Dr. David Edward Marcinko; MBA, MEd, CMP™
[Publisher-in-Chief]
More personal than a corporate home care medical business model, most people view house calls as a popular practice from the past.
Although less than 5% of the nation’s doctors regularly make house calls today, the medical house call industry is swiftly picking up momentum once again. It is a move that is greatly benefiting physicians and patients alike.
Why House Calls?
It’s because we live in a society that has become technology focused. While this emergence has benefited many in terms of medical advancements, there are a growing number of patients who are uncomfortable with next-generation medical practices. These people, particularly the rapidly aging elders of the nation, want to be cared for in a friendly, nurturing, and convenient way. As people age and fall ill, it becomes increasingly difficult to leave the home for office visits. Not to mention, there are many handicapped patients as well who have to arrange for wheelchair vans or ambulances just to visit the doctor. The COVID pandemic and tele-health are illustrative.
Meeting a Niche Market Need
Thanks to the desire of physicians seeking to open their own medical house call practices, these patient needs are slowly being met. Some of these physicians are strictly open for house call visits only and have no physical office. They commonly take appointment requests via phone calls and emails with the overall goal to combine the service of an old-time, small town doctor with the latest technology designed to meet people’s emotional, and financial, needs. Patients are also able to save a considerable amount of time by not having to leave the house to go to the doctor’s office, and not having to fill prescriptions. After all, many medical house call physicians travel along with certain medications that can be dispensed on location. Narcotics, however, will likely still need to be filled with a paper or e-prescription.
While highly convenient for patients who wish to receive medical house call services, the reviving industry is fitting for physicians. In recent years, Medicare has increased its level or reimbursements for physicians who travel to patients. Just in the past few years alone, Medicare has been billed approximately $1.75 million annually for house calls.
Enter the DNPs and NPs
Even nurse practitioners [NPs] and Doctors of Nursing Practice [DNPs] who make a small number of house calls are typically unaware that they can maximize profit potential with medical house calls. Some NPs have even offset operating expenses by offering house calls to make their office based practice more appealing to their patients.
Also, significant advances in technology have enabled popular medical equipment to be smaller and portable. Physicians are able to perform standard procedures, such as skin biopsies and blood draws while outside the office. They are also able to easily access patient medical records through usage of a laptop, as well as resources such as the Physicians’ Desk Reference [PDS] through usage of a hand-held personal digital assistant or smart cell phone.
Assessment
For example, this firm educates patients and supports physicians who are ready to make a transition from office-based positions to medical house call practices. There are no royalty or membership fees, and this is not a franchise. It helps transition to a reportedly more pleasing, profitable way to practice medicine today.
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OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:
PRUDENT BUYER: The efficient purchaser of market balance between value and cost.
PRUDENT MAN RULE: An 1830 court case stating that a person in a fiduciary capacity (a trustee, executor, custodian, etc) must conduct him/herself faithfully and exercise sound judgment when investing monies under care. “He is to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent distribution of their funds, considering the probable income as well as the probable safety of the capital to be invested.” Allows for mutual funds and variable annuities.
PRUDENT INVESTOR RULE: A fiduciary is required to conduct him/herself faithfully and exercise sound judgment when investing monies and take measured and reasonable investment risks in return for potential future rewards. Allows for mutual funds, stocks, bonds, variable annuities asset allocation & Modern Portfolio Theory.
Posted on October 22, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
MEDICAL EXECUTIVE-POST–TODAY’SNEWSLETTERBRIEFING
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Essays, Opinions and Curated News in Health Economics, Investing, Business, Management and Financial Planning for Physician Entrepreneurs and their Savvy Advisors and Consultants
“Serving Almost One Million Doctors, Financial Advisors and Medical Management Consultants Daily“
A Partner of the Institute of Medical Business Advisors , Inc.
Here’s where the major stock market benchmarks ended:
The S&P 500® index (SPX) fell10.69points (–0.18%) to 5,853.98; the Dow Jones Industrial Average® ($DJI) lost 344.31 points (–0.80%) to 42,931.60; and the NASDAQ Composite®($COMP) rose 50.45 points (0.27%) to 18,540.01.
The 10-year Treasury note yield (TNX) climbed 11 basis points to 4.18%, outpacing a 7 basis-point rise for the 2-year Treasury note yield.
The CBOE Volatility Index®(VIX) climbed to 18.6 but remains below recent peaks.
Boeing popped 3.11% on the news that it has reached a tentative deal with the machinists union that has been on strike for over a month now. With Boeing’s earnings announcement coming Wednesday, shareholders are definitely breathing a sigh of relief.
Activist investor Starboard Value has taken a sizable stake in Tylenol-maker Kenvue, which was spun off of Johnson & Johnson just last year. Kenvue shares rose 5.52% on the news.
Warby Parker climbed 9.84% thanks to an upgrade from Goldman Sachs analysts, who like the company’s strong margin growth and improved operational efficiency.
Cigna will once again attempt to acquire fellow health insurerHumana. Shareholders on both sides didn’t like the idea: Shares of Cigna sank 4.69%, and Humana fell 2.51%.
UPS dropped 3.38% on a downgrade from Barclays analysts citing pressures on the company’s margins, including higher competition and weaker demand. Management will have a chance to respond when earnings drop on Thursday.
Southwest Airlines fell 1.74% after Bloomberg reported that the beleaguered airline wants to call a truce with activist investor Elliott Investment Management.
There is no shortage of analysis for anyone interested in investing. A search for the term “stock market analysis” turned up 16 million hits on Google and well over 200,000 hits each on Bing, and Yahoo.
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The majority of stock market analysis can be lumped into three broad groups: fundamental, technical, and sentimental. Here’s a close look at SA.
Sentimental Analysis
Sentimental analysis attempts to measure the market in terms of the attitudes of investors. Sentimental analysis starts from the assumption that the majority of investors are wrong. In other words, that the stock market has the potential to disappoint when “masses of investors” believe prices are headed in a particular direction.
Sentiment analysts are often referred to as contrarians who look to invest against the majority view of the market.
For example, if the majority of professional market watchers expect a stock price to trend higher, sentiment analysts may look for prices to disappoint the majority and trend lower.
Which approach is best?
There is no clear answer to that question.
But it’s important to remember three things:
Past performance does not guarantee future results, actual results will vary, and the best approach may be to create a portfolio based on your time horizon, risk tolerance, and goals.
Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change.
And shares, when sold, may be worth more or less than their original cost.
Conclusion
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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements.
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Posted on October 21, 2024 by Dr. David Edward Marcinko MBA MEd CMP™
By Staff Reporters
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The Meaningful Endowment Effect is the tendency to value things more highly when they’re personally meaningful. It’s why a homemade gift can feel priceless while a store-bought one feels ordinary. Or, a coveted sports car, etc.
Our brains attach emotional significance to objects, inflating their value. This effect explains why we hang onto mementos and keepsakes, even if they’re not objectively valuable.
So, next time you’re de-cluttering, remember: it’s not just stuff, it’s meaningful stuff.
Although some might view a budget as unnecessarily restrictive, sticking to a spending plan can be a useful tool in enhancing the wealth of a medical practice. So, I will emphasize keys to smart budgeting and how to track spending and savings in these tough economic times.
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 sure reduces the unhappiness.”
Unfortunately, today there is more than a little financial unhappiness in all medical specialties. The challenges range from the commoditization of medicine, aging demographics, Medicare reimbursement cutbacks and increased competition to floundering equity markets, the home mortgage crisis, the squeeze on credit and declines in the value of a practice. Few doctors seem immune to this “perfect storm” of economic woes.
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.
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 medical office, the first operations budget item might be salary for the doctor and staff. Operating assets and other big ticket items come next. Some of our 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 doctor can spot problems, correct them and continue planning actively toward stated goals like building long-term wealth.
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 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.
In fact, we 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. 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.).
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.4 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.”
Always remember to add a bit of emotional sanity into your budgeting and economic endeavors.
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.
NOTE: Dr. Marcinko is a former Certified Financial Planner and current Certified Medical Planner™. He has been a medical management advisor for more than a decade. He is the CEO of http://www.MarcinkoAssociates.com
The authors acknowledge the assistance of Mackenzie H. Marcinko PhD in the preparation of this article.
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