Referrals increase. Why?
Barnett and colleagues report that the number of referrals from ambulatory visits have grown 94% from 1999 to 2009. (Arch Intern Med. 2012;172(2):163-170) Surprised? I am not.
They analyzed 845,243 ambulatory visits and estimated that a visit to a physician generated an increase in referral to another physician from 4.8% to 9.3% in the ten years. A somewhat slower referral pattern was found in physicians groups that had an ownership stake in the practice or those with the majority of income from managed care contracts. In the same time period, the “total number of ambulatory visits in the United States increased from 841 million to 1130 million per year or 3040 to 3720 visits per 1000 persons annually.” Both PCP’s and Specialists showed an increase in referral rates. Specialists referrals increased primarily in ENT, GI and Orthopedics same as for PCP’s. It is clear that further specialization has left some PCP’s uncomfortable with the rapid increase in new knowledge. But, an important factor is that they are burdened with more complicated patients and less time to deal with them.
Comment: No one knows what the proper referral rate is and so we cannot judge whether these findings have any meaning with regard to appropriateness. PCP’s in managed care contracts tend to refer less is nothing new. We found that out in the managed care era. How will the reform and ACO’s deal with referrals?   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: January 28th, 2012

'Cloud Care' What is it
Technology is moving faster than Moore’s Law about computing would suggest.
Billing software, administrative and financial aspects of a practice are the biggest headache for any practice other than human resources. So, what is new? Here comes ‘CareCloud’ offering ‘cloud ‘online services that does patient appointments, process insurance claims, billings, collections, financial analyses, medical records and links patients with physicians and other healthcare organizations. Too good to be true? You decide. " Cloud Care" . The privately held company charges $499/month per physician. This is in addition to a more comprehensive revenue cycle management program, which is billed as a percentage of collections.
All data is kept in the ‘cloud’ meaning off-site and the practice downloads some software. No special hardware is needed. Also available are benchmarks for the practice to compare itself to with regard to the usual goalposts. The company is also now introducing a medical record system.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: December 12th, 2011

2012 COLA is here
“COLA” for 2012 is coming up quickly, so it may be worth a few minutes to catch up.
Personal
Standard income tax deduction to $11,900 (up $300) for married couples filing jointly, to $8,700 for heads of household and to $5,950 for singles. Tax bracket: for a move from the 15% to the 25% bracket income will be $70,700. Estate tax exclusion increases to $5.12 million from $5M
Retirement
$17,000 (up from $16,500) limit for 401k, 403b and 457b plans; another $5,000 for those >50 Tax deductibility for traditional IRA phased out at $58,000-$68,000 for single filers and $92,000-$112,000 for married couples where spouse contributing is covered by workplace. SS payroll taxes increase for about 10M workers and maximum earnings subject to the tax will now be $110,100   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: December 12th, 2011

Are you holding on to losers??
Jason Zweig, a very savvy commentator on financial matters, recently wrote in a WSJ column about what prompts people to hold on to their losers in investments. He cites research in a new field called ‘neuroeconomics’ which offer some clues. One such study involved people deciding whether to hold or sell investments while being monitored inside a brain scanner. While monitoring the ventral striatum (part of the brain associated with associated with emotional and motivational aspects of behavior), it was noted that when an asset was a loser and the price was made to go up, activity in this part of the brain was ‘blunted’ meaning that people were always hoping for a rise and therefore theyw were not surprised. They concluded that most investors who have losers are always hoping for a rise in the value of their holdings. Another study showed that people are much worse at estimating losses from a bad investment than gains from a good investment.
Comment: My take is that a lot of us hate to admit we made a mistake and think we are really smart at spotting good investments. When we do, it is the equivalent of ‘out of sight, out of mind’ and we ignore the problem hoping it will correct itself. This is normal human behavior!   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: November 5th, 2011

Are ancillary services now a loser?
It is no surprise that total medical revenue from 2009-2010 declined for many practices according to MGMA data. While the thinking has been that those with ancillary services would continue to outperform those without, this was not necessarily the case. Turns out that for PC practices the revenue per FTE physician declined regardless of ancillary revenue. Surprisingly, surgical practices without ancillaries did better than practices with ancillaries with some increase in revenue and profit. In contrast, those with ancillary services had decreases in both metrics. For multi-specialty groups there was a slight increase in total revenue and minimal increase in profits.
Comment: I guess you have to wonder (without breaking down the numbers) whether this is due to decreased reimbursement (ultrasound for example) or continued rise in fixed expenses such as salary, benefits and bricks and mortar costs. Medicare is trying to fix leaks as they spring up and when the leak is a flood then they run to stop the leak. Soon, there is another leak. We will observe where the next one is. Unless, the entire reimbursement system is turned on its head.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: November 5th, 2011

Pocket phone ultrasounds! A pocket smartphone ultrasound device, you say? The FDA approved Mobisante’s new ultrasound device and this is hitting this market this month or next. (Businessweek October 3-9 2011)It scans vascular and other structures quickly, allows post processing and measurements as well. The cost of the hairbrush like attachment is $7495. Certainly looking at the demo the resolution is not great but if you wanted to do a fastscan or see if there was a pseudoaneurysm you don’t need a high resolution scan. The company is also looking at battlefield use. With smartphone’s everywhere, the next generation of portable ultrasound’s will improve and reliance on large centers for quick, low resolution imaging use will diminish.
Comment: Venture capital money is now flowing in to this technology. GE is already in it, AT&T is stepping in and Philips is eyeing things carefully.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: October 15th, 2011

The 'nurse doctors' are here
The NYT recently profiled a nurse practitioner with a doctorate who wanted to be called a Doctor. ( "NYT article" Reg required.)The article stated that nurses who obtained their doctorates were not doing it to gain more autonomy, money or prescriptive power. The AAFP Board President commented that patients would be confused about who the doctor really is. Let us look at some current workforce numbers: 276,000 PCP’s, 125,000 NP’s, 225,000 Pharmacists and 81,000 PA’s. Mid-level practitioners are getting larger in numbers and with the shortage advertised by physicians (myself included) the ANP’s and PA’s and Pharmacists have an opportunity to gain market share as the first healer to see patients. All they have to do is convince payers to reimburse them at the same rates as the physicians. The same physicians who were tutoring PA’s and ANP’s and promoting the teamwork concept are now crying foul. The numbers are important, too. “In 2008, there were 375,794 nurses with master’s degrees and 28,369 with doctorates.” Now, no one has proved that a nurse with a doctorate can deliver better care. But, there it is.
Comment: Where the rubber will meet the road is when Congress will look at the budget deficits and ask: Can we replace one PCP with two of either an ANP or PA? (The compensation, on average, for an ANP /PA is half that of a PCP) As I have said before on this page, the PCP’s who are locked into their own battle with specialists over being under compensated, will need support from their specialist colleagues. Will it materialize? This battle is surely before us sooner rather than later.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: October 15th, 2011

If all else fails blame the docs!
Sally Pipes comes to the defense! "USA Today article".
“The Kaiser Family Foundation released recently its latest estimate of what health insurance will cost in the future. By 2021, average family premiums are set to double, to more than $32,000. This year alone the premium is $15,073, up 9% from 2010.” She is talking about the Health Affairs article penned by two authors from Columbia, one of whom happens to be one of President Obama’s chief healthcare advisors. These authors state "We conclude that the higher fees … were the main drivers of higher U.S. spending," and "Physicians are making five times the median income. Is that what we really want?" They compared doctors' pay in six developed countries and found that U.S. earnings surpassed the rest. Basically, the authors unload and lay the entire blame on physician fees as the culprit for our health care ills. "HA article". Sally Pipes argues that education costs here are higher and almost 4-10 times the cost of medical school in the US. The average work week is longer, about ˝ the income goes to overhead and liability insurance higher. It is interesting that physician compensation in the US runs about 20% of the health care bill and take home pay about 10% of the nation’s health bill.
Comment: I expect nothing less from academics who are far removed from patient care. There is no question that US physicians in general are better paid than their counterparts in other countries. However, to blame all the ills on 1/5 of the spending is disingenuous and betrays a preexisting agenda. They ignore the old saying ‘go where the money is’ and where big dollars are spent : hospitals and nursing homes. That is not to shift blame because physicians have to get their act together and stop the waste and abuse that they see. But, any well intentioned practicing physician put in charge of the system can point to a 100 places where the waste is if they will let us do it!   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: September 22nd, 2011

Are your retirement plans disrupted?
A recent Jackson & Coker survey shows that 52% of 522 physicians surveyed had changed plans for retirement and 70% had decided to work longer due to the market. Of those who had decided to leave full-time medicine, 26% blamed it on health reform uncertainties and22% due to the rising cost of doing business. The price of EMR may have a lot to do with this regardless of the incentives. Some had gone part time or locum tenens. (See my recent article ) A full 19% stated they were leaving the healthcare industry for something else. As we point out in the article, the locum tenens industry has grown significantly Jackson & Coker point out that 10% of those working part time are older than 65 and an additional 22% of those between 55-64 are also working part-time.
Comment: I think our study ( "abstract" .) has caught the wave of physicians working part-time. The women in their child rearing years and males >60 happen to be the largest groups who can work part-time and fill in to make up the shortage. For the full abstract see the news page.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: September 22nd, 2011

Is the AMA still the voice of medicine?
Another Jackson & Coker survey touches on a sore topic for many physicians. What do they think of the AMA? Only 11% agree with the statement that the AMA represents their views! Those agreeing vary: males 10% versus females 13%, practicing 10% versus non-practicing 19%, members 40% versus non-members 4% (no surprise). Only 13% agree with the AMA position on health reform, 15% think the AMA successfully advocates for their positions, 11% that it is effective at lobbying for tort reform, 13% that the AMA is effective in supporting physician autonomy and a whopping 9% agree that the AMA is effective in insulating physicians from intrusive government regulations! Of the 976 physicians surveyed, 72% dropped their AMA membership because the AMA did not speak for them, 53% because the CPT business was a conflict of interest, 47% because of the MAA support of PPACA and 43% for too far left an ideology.
Comment: Certainly those of us who have watched the membership decline over the years and particularly after the PPACA fiasco, still recognize the power of the only united physician lobby in Congress. However, the AMA has shot itself in the foot many times and its deal with the administration regarding PPACA in exchange for changes in the SGR formula was the coup de grâce.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 20th, 2011

Did your pay go up 4.3% to 1.05M/year?
In its annual Executive Compensation Survey of about 1,200 U.S. health care providers, Modern Healthcare notes that average health care system CEO pay in 2011 climbed by 4.3% to $1.05 million, making health system CEOs the only executive group to average more than $1 million per year in overall cash compensation. If the health system revenue was <1 B$ the CEO median pay went up 14.4% mostly due to incentive pay. The average hospital executive gained 3.1% in 2010. However, the smaller system CEO ‘stagnated’ at a median of $600,000!
Comment: For those physicians becoming fully employed, are there incentives tied to your compensation? How are they structured? Are the goal posts realistic and are they being moved? My experience is that systems try to make the goal posts so high that most physicians are setting themselves up for failure. The time to set these goals is at the initial meeting. Once the goals have been set, you will be hard pressed to change them. Also, bring evidence to argue against unrealistic goals. There are legitimate places to get this information.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 20th, 2011

A behemoth goes retail!
Mayo just opened a retail facility at the Mall of America in Twin Cities mega mall called "Create Your Mayo Clinic Health Experience." The store sells Mayo Clinic cookbooks, wellness programs, and provides telemedicine services. Customers play with 3-D computer monitors, kiosks, and "navigator specialists" to map their health and develop wellness programs.
Comment: The trend to opening urgent care centers in grocery stores and CVS pharmacy and moving closer to the consumer is clear. I have previously featured this trend. I do not think every system is going to be successful at this. Previous branding helps. Mayo is one of the top most brands thanks due to the rich and famous getting their care at Mayo. Kent Seltman co-authored “Management Lessons from Mayo Clinic,” published by McGraw-Hill in June 2008. I am having him come to facilitate a session on customer satisfaction at Ohio State as part of an 18 month Talent Management and Leader Development Academy to educate junior surgical faculty. He details in his book what it takes to provide totally patient centered care. Worth listening to.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 7th , 2011

The five percent problem
What do you about the 5% of the population that accounts for close to half (47.5%) of the healthcare spending in the U.S? And 10 percent of the population for 63.6 percent of spending? In 2008, the ‘average’ person spent $233 versus the top half spending was $7,313 on themselves. Not surprisingly, it is the chronic conditions that are at the crux of the problem. Nearly 50% of people in the top 5 percent of health care spending had high blood pressure; a third had high cholesterol; and a quarter had diabetes. (Fung A. National Journal June 27, 2011)
Comment: Any solution to healthcare spending will have to focus on chronic conditions. Hence the current flavor of the month: medical homes. There has to be a multi-pronged solution to keeping chronic conditions from increasingly bankrupting the bank. Incentives for people taking care of themselves and disincentives for abusing themselves have to be part of the solution. Personal responsibility is entirely absent in the current reform legislation. All the risk is transferred to hospitals and physicians. Unless there is a financial penalty, a lot of people will not control their weight, lipids, blood pressure etc.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 7th , 2011

Value or growth?
It may not be an ideal time to be talking about value versus growth when all you are thinking about is a defensive position in the market. But, if you are a long term investor, you are not looking at the daily swings and striking a balance between value and growth. Value investing is investing in cheap stocks while growth investing is the opposite or investing in companies poised for growth. Established growth companies like Apple are expensive with a PE >2-4 times the market average. Bernstein points out that Professor Haugen studied the value effect in the mid-1990’s and noted that 20% of stocks with the highest PE’s (growth stocks with an average PE of 42) had an earnings yield of 2.36% versus the 8.3% for value stocks (PE 11.9%). Earnings yield is the inverse of the PE or earnings/price.Bernstein, a physician turned money manager, also comments that the risk of value stocks is lower than growth stocks partly because they stand up better during bear markets.
Comment: Read ‘The intelligent asset allocator' by Bernstein.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: July 24th , 2011

Physician CEO's are best. Are you surprised?
That physicians make better CEO’s of health systems is not conjecture any more. A cross-sectional study of 300 chief executive officers of the top-100 U.S. hospitals in 2009, looked at quality measures in three specialties: Cancer, Digestive Disorders, and Heart and Heart Surgery. A strong positive association between the ranked quality of a hospital and whether the CEO is a physician (p<0.001) was apparent. (Goodall. Physician-leaders and hospital performance: Is there an association?) Only 235/6500 hospitals in the US had Physician CEO’s in 2009. Goodall used the US News and World Report criteria and noted that 16/21 CEO’s of the highest performing systems (honor rolls) were physicians. These high performing hospitals like the Mayo & Cleveland Clinics choose physicians for a reason.
Comment: We have argued previously that credibility is a big issue. "abstract" . Physician CEO’s who have practiced not only know how the quality and expense factors can be dealt with but can deal with physicians one on one and directly impact the care at hospitals.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: July 24th , 2011

Wrist monitors: the latest tech watch!
Going with my technology theme, let me introduce you to wearable health monitors with a wrist sensor product. Jawbone’s "website" . came out with it’s first non-audio product, which is a wristband that acts as a portable health monitor. It is equipped with an application that combines tracking and analysis of user movements, nutrition and sleep patterns. Can you imagine a device that monitors EKG, pulse rate, temperature, motion, sleep, stress, pacer activity etc and report data back to the physician or a central monitoring site?
Comment: I think this has the potential to take off provided the cost is affordable and privacy issues are addressed. The programs may be able to be synched with smartphones also.,   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: July 9th , 2011

Concierge care growing
I have written about concierge care before. I am bringing it up again specially for PCP’s out there who are struggling with heavy handed insurer’s and declining reimbursement. BusinessWeek this week had a column about QLIANCE, a company that is widening its appeal among patients. Our research in the workforce area shows that access to physicians will be a huge issue with ‘reform’ as is currently enacted. QLIANCE founder Internist Garrison Bliss estimates that $16 of a $60 office payment is taken by the insurer. He has investors like Michael Dell and Jeff Bezos of Amazon. Bliss estimates that his concierge patients incur 22% less cost and save money with reduced hospitalizations since they can visit their Physician and obtain quick appointments, communicate by email and spend more time during the visits. He points out that because the coverage is not comprehensive, patients still need regular insurance coverage for catastrophic illnesses.
"qliance" .   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: June 23rd , 2011

Incentives: Do hospitals walk the walk?
For all the talk about having incentives for ‘quality’ hospital leaders do not walk the walk. Their recruitment patterns show they’re still incentivizing doctors for driving up procedure volumes rather than providing ‘value’ to patients. Merritt Hawkins recent study of 2700 physician searches shows that 3/4 of all physician searches include a performance bonus for the doctor and that <10 % of those bonuses are tied to something other than volume of procedures. 56% of the searches were conducted for hospitals probably because few private groups can afford their services.
Like past years Family practice and general internal medicine were the most common specialty searched for. In 2008, about 50% of physician practices were hospital-owned but a survey last fall by another industry group found that 74 percent of hospital leaders planned to hire more doctors in the next 12 to 36 months. Most want primary-care doctors. However, in my own community, 3 large Vascular Surgery groups are all hospital employed now.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: June 23rd , 2011

Insurers claim accuracy
The annual National Health Insurer Report Card released by the American Medical Association (AMA) says almost 20% of claims are processed inaccurately, which contributes to about $17 billion annually in unnecessary administrative costs. The AMA analyzed a random sample of 2.4 million electronic claims for about four million medical services submitted between February and March of this year to generate the report card. The card shows that the seven commercial insurers had an average claims processing error rate of 19.3% this year, a 2% increase from last year. The report card also ranked health insurers on their claims processing accuracy rate:
• UnitedHealth Group had the highest rating, with a 90.23% claims processing accuracy rate;
• Regence Group Blue Cross Blue Shield had an 88.41% accuracy rate; and
• Anthem Blue Cross Blue Shield had the lowest rating, with a 61.05% accuracy rate.
To rebut the data America's Health Insurance Plans claim that nearly one in five claims to health insurance companies are not submitted to health plans electronically and that "more than one in five claims are submitted by providers at least 30 days after the delivery of care." " click here to see the report card" .   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 15th , 2011

CME funding by Pharma
Pharmaceutical and medical device company funding supports up to 60% of accredited continuing medical education (CME) costs in the United States. 770 of 1547 (55% physicians) at 5 CME conferences responded to a survey and 88%) believed that commercial support introduces bias, with greater amounts of support introducing greater risk of bias. A single commercial supporter was perceived to have a greater risk of bias.
Almost 85% (653 of 770 respondents) underestimated the cost of lunch, and 88% (678 of 770) underestimated the cost of coffee at their respective site. In 2006, participants (physician and non- physician health care practitioners) attended 12.8 million hours of accredited CME activities, representing a total income of $2.38 billion. The IOM report estimated that physicians, on average, spent slightly more than $1400 per year for CME in 2007, and elimination of commercial funding with continued attendance at the same types of CME activities would increase these costs to about $3500 annually Only 15%, however, supported elimination of commercial support from CME activities, and less than half (42%) were willing to pay increased registration fees to decrease or eliminate commercial support.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 15th , 2011

How does the new ICD 10 impact you?
What does ICD 10 mean for you? The mandated transition from ICD-9 to ICD-10 occurs as of October 1, 2013. ICD-10 will be critically important to the success of Accountable Care.
Changes relate to: Code Structure , Coding Rules , Number of codes, ICD-9-CM (diagnosis) = 14,432 compared to ICD-10-CM (diagnosis) = 69,368 etc. ICD-10 offers substantial improvements over ICD-9 in defining the patient’s condition in better detail. As an example, In ICD-10-PCS there 32 codes defining which finger, which level and which approach compared to a single code in the current ICD9. About 36% of all ICD-10-CM codes are different only in that they distinguish “right” vs. “left.”
Over 50% of the ICD-10 codes are related to musculoskeletal conditions and over 17,000 ICD-10 codes (~25%) are related to fractures.
It is estimated that 16 hours of training and an additional 10 hours of practice should be anticipated for ICD-10-CM Revenue cycle management systems for both hospitals and clinics will need to be updated to support coding in ICD-10, as well as ‘typing’ of ICD codes to differentiate ICD-9 from ICD-10.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 6th , 2011

Why the compensation gender gap?
Sasso And colleagues reported an interesting study in Health Affairs on a topic of great interest: gender gap in physician compensation. It has been contended that because women enter primary care more often and work fewer hours, their compensation tended to be lower. They studied starting salaries of residents in NY state leaving residency programs between 1999-2008. They found a diverging gap with male physicians earning $16,819 on average (up from $3600 in 1999)more than female physician after accounting for specialty choice, work hours, practice setting etc. The compensation was self-reported and some of the information was based on ‘anticipated’ income in addition to estimating averages since some compensation was reported in a range rather than an absolute number. The study confirmed the greater proportion of women who planned to devote fewer than forty hours per week to patient care (38.1 percent versus 24.5 percent of men).
Comment:The authors admit that it seems unlikely that discrimination has actually increased recently and postulate that women tend to gravitate towards jobs offering more flexibility and family friendly atmosphere and are willing to trade salary for non-monetary benefits.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 6th , 2011

Patient perception regarding healthcare
The Deloitte Center for Health Solutions surveyed 1008 consumers in 2010 regarding their knowledge of health care reform and other aspects of healthcare. Here are some answers.
A full 38% said they are “not at all knowledgeable” about the new health reform law.
Grade the overall performance of the current U.S. health care system: 32% of U.S. adults grade the U.S. health care system A/B compared to 27% who give it a D/F; Those who gave it a D/F had employer-sponsored coverage((25%), Medicare (22%), Medicaid (13%), and Military coverage (8%). 48% of the uninsured gave it a D/F. However, the A/B rating improved from 20% in 2008 to 32% in 2010.
To what extend do you feel your household is financially prepared to handle future health care costs: 36% said they are financially prepared to handle future health care costs; 17% said they are not prepared; in households with income above $100K, over 50% were prepared.
Finally, when asked: Does each of the following have a major influence, minor influence or no influence on the overall health care system cost? Insurance cost 70%, hospital costs 69%, system fraud 67%,lifestyles 65% and defensive medicine 52%   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: March 10th , 2011

Ipad2 for physician offices?
Apple launches its iPad 2 this week, and the device could significantly advance mobile health at hospitals and physician offices. Physicians have widely adopted the original iPad in conjunction with electronic health record (EHR) use. Hospitals also are using iPads to support facility operations and infrastructure. There have been some issues with it including screen resolution and the battery life of 4 hours. The new Ipad 2 has a 10-hour battery life, weighs less than the original iPad (1.3 lbs versus 1.5 lbs), thinner (8.8 versus 13.4 mm) and processes graphics at a faster rate with the A5 dual-core processor , which should accelerate access to medical images and about 350,000 apps. The camera should help rural physicians with transmitting images for second opinions etc A recent survey by Aptilon of 341 U.S. health care professionals' tablet computer preferences showed that 79% preferred the iPad; 12% preferred Windows PC-based devices; and 9% preferred Android-based devices. 59% of ipad owner respondents used it for medical tasks, such as receiving and reviewing updated medical information and completing paperwork. The survey found that 38% of respondents expect to have an iPad within the year and the new Ipad 2 may accelerate that move.
The FDA just cleared (510k clearance) software, called Mobile MIM, which allows physicians to view medical images on Apple's iPhone and iPad mobile devices, and marked the first time that the FDA had given clearance to a mobile health application that will help clinicians view images and make medical diagnoses based on computed tomography CT, MRI), and PET.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: February 13th , 2011

Imaging wars
Maryland is experiencing an imaging feud between radiologists and other practitioners. A lower court in 2007 ruled that self-referral legislation passed earlier prohibiting physicians from performing CT/MRI and radiation therapy was proper. Now, the state supreme court upheld the decision. Radiologists naturally applauded the decision saying that the profit motive was the main reason for physician’s performing these services in their own offices. Practitioners, offended by the ruling, claimed that patient convenience was at stake. The American College of Radiology supported the legislation passed earlier while the orthopedic surgeons, neuro surgeons, urologists and the American College of Surgeons opposed the legislation and the ruling.
Comment: I have previously argued that these splits put one specialty against another and weaken the physician community. There is no question in my mind that there is some over utilization going on but to throw out the baby with the bath water is not the solution. Attacking an entire group for a few bad apples can also be laid at the Radiology door no doubt. In the short term the radiologist will of course gain some revenue but in the long term, it’s a loss for everyone. The next time radiologists want the support of these specialists and the ACS, there will be few specialties standing behind them. I can guarantee the Radiologists will ask for help for some issue sooner or later. We are all inter dependent.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: February 13th , 2011

Should you involve yourself in real estate?
Texas Health Resources, which owns or is affiliated with 24 hospitals, is working with Cambridge Healthcare Properties to form a real estate partnership and offer tenants and non-tenants (physicians) to own shares of the 24 buildings in the partnership. Legal concerns are of course many. A question for physicians is (as we discuss in our article” Is Medical Office Real Estate Investment for you? “In General Surgery News. "here" . (Log in required) Is: Investing in Medical Office Buildings Physicians who are interested in investing in medical buildings need to answer several questions in order to determine if ownership is right for them.
1. Should the practice own the building alone or should a joint venture with other practices be considered?
2. Should partnering with a hospital be considered?
3. Should a third-party developer partner be considered to help guide the practice through the development process?
4. What are the front-end cash requirements?
5. What is the physician’s tolerance for debt guarantees?
6. How does ownership align with long-term practice strategies and goals?
7. What is a viable exit strategy?   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: January 1st, 2011

Do you offer a HSA?
Health Savings Accounts were somewhat ‘dinged’ by the health reform legislation. Like FSA’s you cannot pay for over the counter drugs/supplies through the HAS. It did double the penalty for using the money for nonmedical expenses before age 65 from 10% to 20%. As you may know the money in a HAS may carry over, unlike the FSA. to another year. Also, unchanged is that you must purchase a high-deductible health-insurance policy ( through your employer or on your own) to qualify to make contributions to an HSA. In 2010, the deductible must be at least $1,200 for self-only coverage, or $2,400 for family coverage. You can then contribute up to $3,050 in 2010 if you have self-only coverage, or $6,150 if you have family coverage. The contributions lower your taxable income now, grow tax-deferred in the account through the years, and can be used tax-free for medical expenses. If and when the health-insurance exchanges start operating in 2014, you can still buy HAS policies. America’s Health Insurance Plans (AHIP) released a study on the use of Health Savings Accounts (HSAs), via an in-depth look at 1.2 million policy holders who use three banks for their HSA holdings. The average balance for HSAs at 2009 was $1,307—a ten percent decline from 2008. The average deposit in 2009 was $2,050 for accounts, with employer contributions accounting for $1,058. The average withdrawal was $1,850. In 2009, 67 percent of HSAs had personal deposits, 42 percent had employer contributions, 61 percent had withdrawals
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   Posted On: December 20th, 2010

Do you have basic understanding of the Medicare Physician Payment system?
Uwe Reinhardt, another economics professor at Princeton is an authority in healthcare issues and has an easy to understand contribution to NYT healthcare blog on payment issues.
He goes through the history of the fee schedule, how Medicare fees are determined, the conversion factor and most importantly the problems with the SGR and the physician fee schedule. It will only take you a few minutes but the summary is easily understood. He explains that the SGR replaced the volume performance standards prior to the BBA of 1997. It was intended to keep physician spending in Medicare ( included laboratory tests/imaging/and drugs) in line with growth of gross domestic product per capita after adjusting for growth in the Medicare population, changes in the law and importantly the cost of running a practice tracked by a Medicare Economic Index (MEI). He notes that the increases in Medicare physician fee reimbursement have been in recent years, usually ˝ that of the MEI. In effect, the fee increases have not been keeping up with inflation. However, he points out that physician services per Medicare beneficiary have increased at a compounded 5.4% indicating that volume of services have made up for the lack of fee updates.
Read his column "here" .   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: October 26th, 2010

Physician burnout analyzed
Burnout is more common than depressions or substance abuse among physicians. Common features are “emotional exhaustion, depersonalization and a decreased sense of personal accomplishment.” Symptoms include: physical exhaustion, sleep disturbances, headaches, anxiety, depressions, cynicism, guilt, ineffectiveness, poor judgment, treating patients and co-workers as objects and feeling emotionally depleted. The causes are well known to most physicians and include: lack of autonomy, problems balancing work and home, high patient volume pressures and too many administrative tasks. Almost 40% of U.S Surgeons suffer from burnout and 32% exhibit high emotional exhaustion and a quarter show depersonalization. It is interesting that ľ Surgeons would opt to become Surgeons again but only ˝ would recommend medicine to their children. 9% of Surgeons reported that they had made a major medical error in the last 3 months!
Comment: We all recognize that we have had some of these symptoms at one time or another during our careers. If you don’t you are in denial. Fortunately, we pull out of the cycle with the help of our spouses and family. Burnout has consequences for our patients. So, it’s not just a personal issue but a safety issue for the public. Note: This material is taken from Balch CM & Shanafelt T. Combating stress and burnout in surgical practice: A review in Advances in surgery. 44 (2010) 29-47.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: September 17th, 2010

Professional Liability: New information
The health policy journal ‘Health Affairs’ featured a recent series of articles on malpractice and liability. Warning: The journal is generally viewed as unfriendly to physician concerns. A study estimated total annual cost of medical liability as $55.6B or 2.4% of healthcare costs. This includes defensive medicine costs. This is lower than previous estimates but even if true 2.4% of $2.3 T annually is still a lot of dollars. Another article by Mello et al calculated the cost of defensive medicine at $45.6B in2008 or 82% of the total system cost for malpractice liability. In other words, 18% of the cost is related to actually from all the lawyering that goes on every single day related to claims against physicians. A third study evaluated physician perceptions about MP claims and concluded that concerns about MP were high in both specialists and generalists and ‘modest’ differences between states with and without tort reform. In another study by J. William Thomas, Ph.D., Cutler Institute for Health and Social Policy, University of Southern Maine of 35 medical specialties, tort reform changes to cap pain and suffering would reduce medical malpractice premiums by 10 percent and reduce the nation’s total medical costs enough to result in savings of $20 billion between 2010 and 2019.
Comment: Whichever way you slice it, the cost of frivolous suits is significant. There is NO chance of federal reform with this Congress. Maybe when all the stars are aligned with the legislative, executive and judicial branches in synch we may see the promised land.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: September 17th, 2010

Billing benchmarks
Key indicators of value to any medical practice include the net collection rate, days in accounts receivable, charge lag days, denial rates, collection per RVU, bad debt etc. A standard report generated by most software billing programs should consist of total charges, dollar amount submitted for payment, amounts paid/adjusted/written off with a breakdown by physician, facility, CPT code, and payer. An aging report with accounts receivables at 30, 60, and 120 days and beyond is essential. Overhead costs should be reviewed on at least a quarterly basis keeping in mind that overzealously trying to reduce overhead could produce negative results. Investing a little extra to obtain better information or that extra call to an third party payer may be worth a great deal more than saving a few staffing dollars. If your practice lags behind standard benchmarks, the billing manager must be able to come up with a performance improvement plan. Some warnings signs for you to look for include: claims payment first pass rate <85%, paper remittances are >30% of all posted charges, charge master has not been updated in more than 2 years, a compliance plan that has not been reviewed or updated in 2 years, insurance contracts have not been reviewed in 12 months, cash collections are lower than the previous year, 40% or more of the A/R is >90 days old and >80% of that is either self-pay or patient co pay
Comment: Most of you are familiar with the intricacies of billing but few understand the benchmarks that you should compare your office performance with. I have laid these out here "Revenue Cycle" . and here "The Smarter Physician Volume 2" .   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 20th, 2010

Rawls theory? What is it?
Who is or rather what is Rawl’s theory? John Rawl wrote his book ‘A theory of justice’ in which he explains his ‘justice of fairness’ as an alternative to the well know utilitarian philosophy. The latter states that social welfare is simply the aggregate of all individual’s welfare or in other words the possession of goods is what brings utility to individuals and does not concern its elf with whether its fair or unfair for the individual or society. Rawl on the other hand is at the opposite end of the spectrum by saying that inequality is equal to injustice. The relevance of this topic is to the healthcare debate. Although, Rawl did not mention health care as being included in his discussion some see it as a ‘social justice’ issue calling for ‘re-distribution’ and others calling this ‘socialism.’ Undoubtedly, the debate will continue between those wanting a national tax payer supported system versus those calling for the federal government to stay out of their lives.
Comment: What do you think? Tell me.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 8th, 2010

Medical Liability claims all too common
The AMA just released information from their Physician Practice Information survey of 5,825 physicians who had worked at least 20 hours/week related to medical liability.
Some interesting data: Only 5% of physicians in a given year are sued.
Over their entire career 42.2% had a claim filed against them. 61% of physicians over age 55 had been sued with an average of 1.6 claims/physician. 22% of psychiatrists and 69% of Surgeons and OBGYNs. 90% of Surgeons over age 55 had been sued! Solo and single specialties were sued more often, men were sued twice as commonly as women. AMA also reported PIAA data which showed: 65% claims were dropped/dismissed or withdrawn, 25.7% settled, 4.5% decided by arbitration and 5% by trial and 90% resolved in favor defendant physicians.
Comment: It is well know that the system ‘gets it wrong’ on both sides meaning <15% of patients who actually suffer an injury file a claim and negligence occurs in 15% of filed claims. Clearly, the system does not work. Will it ever get fixed? Not until all the stars are aligned meaning the trial lawyers are asleep, the public awakens and Congress is actually working!   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: August 8th, 2010

Quality of care by IMGs: Is it up to par?
Over a quarter of all physicians or about 180,000 working in the U.S are international medical graduates. U.S citizens born here and graduate from a foreign medical school represent 12.5% of all IMG’s. The quality of care rendered by IMG’s has always been a sensitive issue with claims and counter claims. The issue is being discussed because of the anticipated shortage of physicians.
Norcini et al just reported their findings comparing the care rendered by non-U.S.-citizen international graduates, U.S.-citizen international graduates, and U.S. medical school. graduates by reviewing inpatient death rates and lengths-of-stay for patients with congestive heart failure or acute myocardial infarction—or heart attack in 184 Pennsylvania hospitals from January 1, 2003, to December 31, 2006. Physician specialties included FP (33%), IM (48%) and Cardiology (19%). Non-U.S.-citizen international graduates had significantly lower mortality. No difference in mortality were found when comparing all international medical graduates with U.S. graduates meaning that the difference between non-U.S.-citizen and U.S.-citizen international graduates was the difference and was striking. The patients cared for by U.S.-citizen international graduates and non-U.S.-citizen international graduates had significantly longer stays than patients of U.S. graduates. The authors speculated that “variability in the quality of the medical schools that U.S.-citizen international graduates attend, but to some degree, it may also reflect their ability” implying that U.S citizen IMG’s may not be receiving the same quality education or that possibly the pool was not as strong.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: July 27th, 2010

Bernstein: Do you know who he is?
William Bernstein. If you have not heard of him, you have been hibernating (at least from a learned investor point of view). He was a physician in his past life and is a “financial theorist” and a smart money manager. His ‘efficient frontier’ website and research in portfolio theory makes him a savvy market reader. His books include: The Intelligent Asset Allocator, The Investor's Manifesto, The Birth of Plenty and The Four Pillars of Investing. Read the first chapter of ‘A hypothesis of wealth’ "Read here" .
I happen to think the guy is brilliant. His handle on economic history and theory is amazing. Read his recent column in Business Week on retirement where he gives pretty common sense advice to those of us in our sixties. He states, “ If you are a 60 year old withdrawing 2% of your retirement savings annually, you will be as safe as you can be; at 3% you are probably safe; at 4% you are taking real risks; at 5% you have a good chance of an Alpo diet.” Think about that. The figure generally thrown around is with drawing 4% of your savings annually which will last you a life time. He advises adding 1% to 1.5% to the number if you are in your 70’s. That is pretty conservative and worth considering. How do you do that? Either working later in your 60’s than you planned or having a big savings stash where 3% really adds up to an annual sum you can truly live on.
He also recommends delaying taking Social Security till you are 70 and looks at SS as an annuity. Most people will not follow that line of logic because if you die before age 82, you have left money on the table and most of us do not want the government to have a dime of our money.
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   Posted On: July 16th, 2010

Generation skipping transfer
Beginning on January 1st, 2010 the Federal Estate and generation skipping transfer (GST) was repealed with reinstatement to pre-2001 Tax Act law. What does that mean? The $1M exemption and maximum tax rate of 55% will return compared to a 3.5$M exemption and 45% maximum rate in 2009. What has not been repealed? The Federal gift tax which in 2010 is 35% compared to 45% in 2009. The cumulative life time exemption is still $1M and annual gift tax exclusion remains at $13,000 per donee. In 2011 a 55% maximum gift tax returns. If you die in 2010, a new carry over tax basis applies meaning that a capital gains income tax instead of the estate tax.
Comment: Many people have divide assets using the 3.5$M exemption using revocable trusts ( A-B trusts). Just make sure the beneficiaries of various trusts match because you could have un intended consequences and ‘disinherit’ children in GST’s in favor of grandkids. Ask your trust attorney because I am not an attorney!   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: July 16th, 2010

MedPAC carries a big stick!
You have now heard about MedPAC possibly being even more influential than previously. So, who or what is MedPAC? Medicare Payment Advisory Commission (MedPAC) is an independent federal body that Congress established in 1997 to analyze access, quality of care, and other issues affecting Medicare. Congress also requests MedPAC’s input on a variety of issues, appearance before hearings, participation in briefings for Congressional committees and staff, and solicits comments on important issues related to Medicare beneficiaries. Recent reports have dealt with: payment for long-term care hospitals, inpatient rehabilitation, hospital and physician reimbursement, inpatient and outpatient prospective payment systems, specialty hospitals, pay-for-performance programs, reviewing existing relative work units and home health services.
MedPAC also advises Congress on payments to health plans participating in the Medicare Advantage program as well as in Medicare’s traditional feefor- service programs. MedPAC consists of 17 members (three year terms serving part-time) appointed by the Comptroller General, representing diverse sectors of health care and supported by analysts with backgrounds in economics, health policy, or medicine. The Comptroller General, who heads the U.S. Government Accountability Office (GAO), has the authority to name new commission members to represent all sectors of the health care environment as well as consumers. There are currently 4 physicians, 4 PhD’s, two JD’s, two nurses and three other members on it. Meeting minutes are available on line at "Read here" . MedPAC issues two reports each year in March and June in addition to special reports requested by Congress.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: July 2nd, 2010

The new Conversion Factor
CMS released yet another RBRVS data set that will be used to pay physicians under Medicare effective June 1, 2010. This increases the Conversion Factor 2.2% and puts the current conversion factor at 36.8729. What CMS will not tell you is that for 2,226 procedure code/modifier groups, the RVU values decreased by 0.65% to 50% (or 0.01 to 2.04 RVUs). The median change was only 0.12 RVUs, which may not sound like a lot, but if you add the changes up, you get a total reduction of 492.95 RVUs for just these procedure codes. And this doesn’t consider frequency of use. For example, procedure code 75825 26 saw a reduction in RVUs of 1.16. In 2008, this procedure was reported to Medicare 60,864 times. That results in a net decrease in RVUs to those practices of 70,602 RVUs. At the current conversion factor, that is a payment reduction of $2.6 million.
Comment: Have your billers analyze your most frequent codes carefully to gauge the impact on your practice.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: June 23rd, 2010

Planning to retire at 65?
The % of people expecting to retire at age 65 has changed over the past 15 years according to a Gallup poll. In 1995, 47% expected to retire ate age 65 compared to 2007 when 57% said they would retire ate 65. Change in retirement plans apparently was due to health reasons (55%), change in the economy (32%) and to care for family (25%). Of course , life expectancy once you reach 65 has also increased. In 2008, you can on average expect to live another 18.7 years ate age 65 (men 17 versus women 20 years).
As you know the usual age of retirement for example to receive Medicare is 65 but thee retirement age varies around the world. For instance in Greece it is 58 and in France it’s 60. Does that coincide with economic issues that have arisen recently in those countries? Consequently, the expected years in retirement for French workers (24) are much greater than the U.S (17.6). The actual average retirement age varies from 58.7 in France to 64.6 in the U.S and 68.9 in Japan. The Japanese have their minimum age at 67 and 14 years on average in retirement. Apparently, in France the retirement age was dropped from 65 to 60 to please the union workers in 1983 to go along with the 5 week holiday and 35 hour work week. Now, some of these countries are trying to reverse that but labor unions are making this difficult. So when you retire where does your income come from? A large % (40%) comes from Social Security, 24% from earnings, another 19% from pensions and annuities and the rest from income assets etc. I suspect the % from pensions is larger in Physicians. At least I hope so! What is striking is how many people think their spending in retirement will be a lot or a little lower (58%) when in fcat a full 33% said they spend as much in retirement as they did before that period. The average out of pocket health care expenditures for age 65+ citizens is $4631 annually, a 62% increase since 2006. Sixty % of this goes for insurance premiums.
Comment: You will likely live longer than your parents, retire earlier and therefore need more savings than earlier generations. Social Security will be there for the baby boomers. For Generation X, the SS benefits will likely be reduced or available at a later age and for the Millenials, who knows?   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: June 5th, 2010

Stimulus $$ for physicians!!
We all watched while everyone around us scrambled to get a piece of the ‘stimulus’ money. But, did you know that Physicians also stood in line and some were successful (other than research)? About 5000 Physicians and Dentists and others received > 2.5B$ in loans! Kaiser Health News reported a radiologist in Florida who borrowed 1.5M$ for expanding MRI services, Orthopedic group in Kansas were loaned $3.4M for expansion of office and surgery space, Dermatologist group in Texas were granted $3.9M for a larger cosmetic facility. The loans were through the SBA and 13% were to health related businesses. 90% of the loans were guaranteed by the Feds under the bill and much of the associated expense of the loans were waived. The applicants did NOT have to prove a need for new or expanded services. The Dartmouth Policy researchers contend that this will raise prices while the Physicians argue the loans allow them to expand services and hire more help.
Comment: I guess this explains how the mortgage disaster worked because borrowers did not have to prove that they could afford the loans either! What happens when the loans are due and borrowers default? I suppose there is still the taxpayer!   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: June 5th, 2010

Will costs go up or down with 'reform'?
The 2010 total medical cost per American family of four is $18,074, an increase of 7.8% according to Milliman Medical Index. The employer’s share of this is about $10,744 (59%), the employee portion is 24% and 17% is out of pocket expense. Generally, the employee portion averages about 28.7%. So, what makes up this cost? In and Out patient costs are almost ˝ or 48%, Physician cost is 33%, prescription cost is 15% and 4% are miscellaneous. The fastest growth is in hospital costs which increased 9.8% in 2010 compared to 7.7% in 2009 whereas the physician component decreased from 6% in 2009 to 5.2%. The ‘reform’ will apparently shift costs from the employee to the employer at least in the short term. This is because the life term and annual limits are going to be phased out. Some more preventive services will have cost sharing removed and also prohibition of pre-existing illnesses for children will also contribute to this.
Comment: It will be interesting to see if the reform addresses the cost problem. Given that there are some early benefits that come with extra cost to employers, we are sure to see the cost curve go up   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 27th, 2010

The 'collateral rule' nixed by the Supremes in Ohio
The collateral rule is a source of aggravation to defendant physicians in liability cases and serves as a windfall for plaintiffs/attorneys. Prior to the current Ohio Supreme Court ruling, defendants were not allowed to present actual plaintiff medical bills which may have been paid by their insurance. That meant that plaintiffs could ‘double dip’ by collecting damages (if they won) for medical bills (even if the costs were lower than the original billed amount) that were already paid by their insurer. Ohio Justices ruled that nobody actually paid the difference between charges and collected amounts (write offs) and that defendants could submit evidence about reasonable value of damages that could be rightfully collected by plaintiffs.
Comment: This is one of several rulings by the Ohio Supreme’s that have gone the way Physician groups have pushed for. The Ohio Assn for Justice (re-named from Ohio Trial Lawyers Assn) of course protested that the plaintiffs deserved the full ‘fair market’ value of medical services (translate to charges). Of course this means the defendants collect lesser amounts and therefore their lawyers collect less also. Ohio Physicians have come together over the past ten years with our State medical association to make this happen.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 27th, 2010

Trends in less pay leads to less work hours
The number of hours U.S. physicians work each week has markedly and steadily decreased during the past decade. There was a striking correlation between physicians' decreasing hours and decreasing fees for their services. No surprise is there! You get paid less and less and you get discouraged and ask your self why you are putting in extra hours. "By 2006, physician fees were 25% lower than their inflation-adjusted 1995 levels," according to Douglas O. Staiger, Ph.D., of Dartmouth College, Hanover, N.H.. Interestingly, this cut across all specialties. Physicians from all demographic areas have shortened their typical workweeks from the approximately 55 hours that prevailed since 1977 to 51 hours by 2006. In contrast, mean weekly hours worked by other professionals such as lawyers, engineers, and registered nurses stayed stable.
Comment: As I have said here before, there is a shortage ahead and this makes our projections look good compared to what reality may be like. "Read here" .   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 17th, 2010

Re-balancing: Right way
How often does one‘re-balance’? Re-balancing refers to the fact that stock and bond markets go up and down and change the % of the allocations you started with. The idea is for example that if small caps do well one year, the % of small caps in your portfolio will exceed the target you set as a goal. Everyone knows by now that rather than the performance of individual stocks/bonds it is the asset allocation you set that is responsible for 90% of the results. Vanguard looked at monthly, quarterly and annual re-balancing from 1926 to 2009 and noted similar returns. So, the idea of re-balancing quarterly or semi-annually may be too often a lot of experts opine. The problem is if you never re-balance, you will probably come out with the highest returns but you take much more risk in terms of huge swings. Also, if you re-balance too often you of course pay trading fees and taxes (the latter if the account is a taxable one). Other options are: direct dividends and capital gains from over weighted accounts to under-weighted accounts; transferring or exchanging cash between asset accounts; or simply adding new money to the under weighted accounts. Some people use their birthday each year to re-balance.
For detailed information see "The Smarter Physician Volume 2" .   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 17th, 2010

Understand opportunity cost
I am going to take a stab at explaining, in terms I understand, the phrase ‘opportunity cost’ since you will hear it from administrators and business managers like it was some mysterious term known only to the elite. Take an example. You win the lottery. You have to decide what to do with $1 million. Let’s say you invest in a fast food restaurant your brother-in-law is starting. He promises you a return of 3 % annually. But, your advisor tells you have the ‘opportunity’ to make 7% annually in the market. Since you have just the $1M, if you invest in the restaurant, you lose the opportunity to make possibly 7%. In most cases, if you do not have an alternative and you want to compare the restaurant investment to something else, you would take for example the Treasury rate as the alternative. The OC is the basis for ‘discounted cash flow analysis.’ DCF analysis is when you assign appropriate values to cash flows that occur at different points in time in the future and then summarize it to a single present value. This allows you to take a promised future return and ‘discount’ it to present dollars or present value. The opposite of discounting is compounding, where you take a present sum and calculate, based on a given interest rate, the future value. The OC (or also known as the discount rate) applicable to investment cash flows is the rate that could be earned on an alternative investment with similar risk. The last phrase is important. You cannot compare investment opportunities fairly unless you factor in the risk. Got it?   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 9th, 2010

MLR: A fight for dsiclosure
Commercial insurance companies track the ‘medical loss ratio’ (MLR) as a measure of their profits and try to keep it low. This number refers to the % of the premium $ spent on direct patient care. A MLR of 80% means 80c of every $ earned in premiums is spent on direct patient care and 20c is then spent on administrative costs and profit, some of which is returned to shareholders. For regulators MLR is a measure of efficiency and financial strength. The health insurance legislation passed requires a minimum MLR of 80% for the individual and small group market and 85% for large groups. Large insurers report a lower MLR compared to smaller carriers. United Health reported a 82% MLR whereas the NAIC, the regulatory body overseeing insurers, reported it as 71% for the individual market, 79% for small groups and 84% for large groups.
Comment: You guessed it! Large insurers have already shifted some expenses such as nurse hotlines expenses, clinical health policy and wellness program costs to the ‘medical expense’ side to game the system. Wellpoint, the big gorilla, projects that they will increase the MLR (or in their words the ‘benefit expense ratio’) by 1.7%, which translates to over $500 million of $30B in premiums it collects.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: May 9th, 2010

Physician attitude pessimistic with reform
A recent survey by Athenahealth/Sermo conveys a pessimistic outlook by 2000 physicians. 79% are less optimistic since the reform bill passed, 53% indicate they may opt out of insurance plans and 66% indicate they will consider opting out of ALL government programs! If you consider that the ‘reform’ did not address tort issues, fix the SGR formula, address physician shortage in a meaningful way or give physicians assistance in dealing with health insurance companies the perception makes sense. In addition, the bill shut down physician entrepreneurs who wanted to compete with their own hospitals/ specialty units. Almost 2/3 think the quality of medical care will decline in the next five years and that solo practices or small groups will be hard put to survive. The survey shows that 92%, 81% and 83% believe getting paid by private insurers, Medicare & Medicaid, respectively has become more burdensome. The survey also tested their basic business knowledge. Only 25% correctly defined ‘cash flow’, only 33% knew their AR length of time and 43% did not know their insurance rejection rate.
Comment: That confirms my long held view that we must do a better job in teaching residents about business issues before they enter practice.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: April 25th, 2010

Unionization ahead for physicians?
Is it possible? Will the employment of physicians lead to unionization of the physician workforce? The AMA in 2004 spent over $3 million to sign up 40 physicians for Physicians for Responsible negotiation, which never took off. Although unions have tried to increase their penetration into the physicians they have hit a stonewall. The only physicians who have joined unions have been those employed by the state, county or city or groups of interns and residents. With full employment will come dissatisfaction with the heavy handedness that some physicians expect from hospitals. When physicians are forced to bargain every year or two about salaries, retirements, incentives and benefits, they may be forced to join together and seek the protection of unions. Previously anti-trust laws have restricted them from sharing information and negotiating as a group. However, with full employment a union can negotiate with hospital systems without much fear of the Feds at least with respect to anti-trust laws. The AMA says approximately 16% of physicians were employed by hospitals in 2008. But, a lot has changed since then. Merritt Hawkins 7 Associates claims that search assignments by hospitals for employed physicians have grown to 50% compared to 23% five years ago. The SIEU affiliated Doctors Council represents 4000 physicians employed in public facilities mostly in NY and NJ. Other unions are the American Physicians & dentists associated with AFLCIO and AFFSCME.
Comment: With increasing full time employment unions will be aggressively looking to recruit unhappy physicians into their fold. Just imagine. If healthcare systems are unhappy about spending time on physician issues now, what will it be like in five years when they have to deal with a physician union in addition to nurses and other employees?
Based on G Blesch “labor pains? Modern Healthcare, April 19,2010   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: April 25th, 2010

Risk adjusted mortality not accurate??
Risk adjusted mortality rates have become the ‘holy grail’ for policy wonks, media and government agencies to report on the ‘best’ hospitals and doctors. Alas! Peter Pronovost a Hopkins Professor and a researcher from the University of Birmingham in England report in the British Medical Journal that risk-adjusted mortality rates are a “poor diagnostic test” to measure hospital quality and the statistic should be only one of many factors considered when comparing hospital performance. Their study makes two main points: 1. Risk-adjusted mortality rates do a poor job of separating preventable deaths from deaths due to other causes because risk adjustment accounts only for factors that can be “identified and measured accurately.” 2. Risk adjustment fluctuates between regions and causes, exaggerating discrepancies across hospitals. They also point out that about 5% of in-hospital deaths have been deemed ‘preventable.’ The authors suggest instead non-mortality stats such as hospital acquired infection rates, outcomes of high risk procedures and clinical processes such as anti-coagulants prior to hip surgery as better markers of quality.
Comment: This makes sense that even the best risk adjusted numbers are sometimes flawed and real co-morbidities are not measured accurately.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: April 12th, 2010

SGR fix: What if it does not happen?
While the entire basis for the SGR (sustainable growth rate) methodology is too complicated to explain, it is clearly detailed on page 60 of "The Smarter Physician Volume 2" . Essentially the formula is used to determine payments to physicians under Medicare Part B and strives to control spending. Congress has been putting band aids on this flawed formula but at some point the formula will have to be trashed because if the 21% cut were to take place, the CF (conversion factor) would be worth only $28.40 which means the payment will be $10/RVU less than in 2001!! Costs have risen by about 22% during 2001-2010.
Comment: If cuts actually happen (which I doubt), 2/3 physicians according to a recent survey will reduce the # of Medicare patients, Ľ will stop accepting new patients and 1/10 will stop seeing Medicare patients altogether. Whether physicians will actually do what they say remains an open question if a significant % of their practice is Medicare. The cuts may also incentivize physicians to switch to NON-PAR status. A PAR (participating) physician is paid 80% of the Medicare fee schedule (patient’s pay 20%) in comparison to NON-PAR physicians who get paid 95% of the fee. But, NON-PAR physicians can only charge 115% of the Medicare approved amount and the patient pays the difference between the NON-PAR amount and the limiting charge.   ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
   Posted On: April 3rd, 2010

A list of new taxes
Wonder what will happen to your taxes with the new health insurance reform? If you are making over $250,000 as a couple you will pay over 1Trillion $ over the next ten years. Total tax hikes are estimated at 1.3T$ in the 2011 budget and $750B in the health reform bill.

Here is what happens to your tax rates:
1. An additional 0.9% tax on wages and earnings from self-employment plus a 3.8% ‘Medicare’ tax on interest, dividends and capital gains and ‘other unearned income’. It is estimated that this amount will be close to $2,250 for couples making 250-500,000. This is to fund Part A or Hospital Insurance part of Medicare and is the first time this tax is applied to investments.
2. Raising tax brackets (36% bracket to 39.6% and 33% to 35%)
3. Raise tax on dividends/capital gains from 15% to 20% or even 23.8%. This will force people to dump dividend paying stocks and look for muni’s. You would also shy away from any capital gains unless you had off setting losses.
4. Phasing out or capping exemptions and deductions
5. Starting 2018, there will be a 40% excise tax on “Cadillac” health insurance plans that cost over $10,200 a year for individuals and $27,500 for families.
Taxes on those making less than $250,000 for couples will come because of excise tax on medical device manufacturers; Fee on brand name pharmaceuticals; 10 percent tax on tanning services; reducing the amount families can place in Flexible Spending Accounts (FSA) and increase the penalties for non-medical deductions from Health Savings Accounts (HSA); and higher taxes on health insurance companies and producers of medicine.
Comment: Some are predicting a VAT similar to Europe because even these additional taxes will not pay for the cost of the new programs.
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   Posted On: March 28th, 2010

Read a very brief summary of the entire legislation here.