Tuesday, December 26, 2006

Make your Profit/Loss statement sing Happy tunes!

It's time to look at the books once again, as I prepare myself for the year end. As a small business owner, having no salary, and no set taxes to pay, other than the estimated deductions based on last year's, you're continuously trying to estimate what will be the year-end final Profit and Loss statement. Of course, nothing is finalized until you've sat with your CPA and divvied up your final tax burden, but drawing up your profit/loss statement can be a lesson in financial astuteness.

Unlike large businesses with multiple income streams, a small business is more sensitive to fluctuations in its ins and outs. Poorly planned expenses, without regard to tax burden and other operating expenses can leave you in the negative, so here are a few good tips for avoiding the pitfalls of a poorly balanced financial statement before it's too late.

1) Budgeting - Make a monthly budget at the beginning of the year for next year. Try as best you can to include every predictable monthly expense, as well as non-fixed expenses, such as travel to a conference, purchasing an EMR or going on a planned vacation. I like to make budget estimates side-by-side on an Excel Worksheet, with business expenses on the left, and home expenses on the right, tallied month by month, making sure to account for everything as best I can, this way you can see how much income your business needs to produce to cover business as well as home expenses. You should also update and correct your budget as the year progresses. Also, check in with your CPA intermittently if you're planning some new big expenses, like a property purchase, just to make sure it fits in with your budget predictions. An ounce of preparation goes a long way.

2) Determine your tax burden - You have one of two choices here as a small business owner. A) Pay estimated taxes based on current income; B) Pay last year's taxes this year. What? Wait a second, you're saying, "Doc, but I already paid last year's taxes!" Yes, but the IRS gives you a loophole as a small business owner. It lets you pay this year's taxes by matching 100% of last year's taxes. This is good for 2 reasons. If your income is staying the same, then it's a no-brainer. However, if you're like me, and your business and income are growing, it's the equivalent of the government giving you a 12-month loan on your money, since you won't have to pay the difference until the following year when you file your taxes. Great trick, huh? Now you see the reason and need for budgeting. You can put the extra money to work for you in a savings account to make more money before you pay taxes on it. This is more the reason you need to budget your tax burden, and make sure you have enough money to pay come April 15th.

3) Know what things will cost - Don't be surprised by hidden fees or administrative costs. Make sure everything is spelled out when leasing equipment, purchasing an EMR, signing up with a Clearinghouse or a billing contractor to take care of your claims. A small business needs to have a very clear understanding of its yearly expenses in order to survive. If you are planning to expand, make sure you know what that costs also. Estimate, estimate, estimate! And when you think you're sure, check your numbers again. There's nothing worse than hiring a new staff member only to learn towards the end of the year that you didn't make enough money to pay for theirs and your salary.

4) Grow organically - Yeah, like trees, not weeds! Don't set unrealistic expectations and maintain control of your operations. Don't get overly enthusiastic and spread yourself out too thin, betting on the birds in the tree, rather than the birds in hand. Sorry to get cliche-y here, but it gets the point across. Grow your roots deep before you spread your branches too wide, or you'll find yourself toppling over at the next storm. You get the picture? Don't forget the best way to grow is by networking, as I wrote in a previous post. It doesn't cost any money to give out your business card. As long as you're keeping your income ahead of inflation, you're doing a good job.

5) Set up wealth accounts - One for your business, and one for you. This will help keep you from spending all of your income. When it's sitting in your check book, it's very tempting to spend it on CME's, books, or whatever other authorized expenses you may want to run up. Pay your wealth account (which should be earning interest) first, then everything else. Set up an amount that is realistic for you. Before you know it, you'll have built up the down-payment for a house or an office space to own rather than lease. Be smart, start building your wealth now.

6) IRA's, ROTH's, SIMPLE plans, or a SEP - which one is right for you? If you haven't thought about it, it's time to start. Any of the financial websites or your CPA should have plenty of information about this. Choose one that's right for you, and get started.

7) Don't forget End-of-year Gifts - Budget for it, and remember that they are tax-deductible as a business expense. If your referrals are your lifeline, showing gratefulness for the year past is one of the best ways to ensure a steady stream of future referrals. Even if a particular doctor didn't send you many referrals, consider sending them a gift if they are a potential source of future referrals. Don't treat people based on the past. Everyone is a pluripotential cell when it comes to referrals, so leave the door open. Chocolates and food may feed their staff's tummies, but the best gift that personalizes your thankfulness is wine or a good bottle of champagne or port.

Good luck with your finances, and here's to a Succesful 2007!!

Saturday, December 23, 2006

The Best Day Ever!!!

The best day ever, starts nice and bright!

Yeah....... yeah, yeah!

I wake up early, well-rested and light!

Yeah....... yeah, yeah!

My son wakes up all bushy-eyed, he doesn't scream.....

My wife already has breakfast made! Yeah...... yeah, yeah!

And with a nice kiss goodbye,

Then I'm off to work; a pleasant stroll in sun-shiny day!

It's the perfect day, to be a doctor!

Yeah...... yeah, yeah!

I stop at Starbuck's, and pick up a Mocha Chocha Nocha Loca!

I'm greeted with smiles, everywhere! Everybody's so nice!

Yeah.... yeah, yeah!

My staff is on time! The patients, too! It breaks my heart!

The day runs smoothly; I've even got time to go out for lunch!

No hospitalizations, no angry patients!

Yeah, yeah, yeah, yeah!

Checks roll on in; all claims are paid in less than 30 days!

Yeah..... yeah, yeah!

Then I get home early, play karate with my son!

Yeah......yeah, yeah!

It's the b-e-s-t d-a-y e-v-e-r!
[Chorus: Best day ever.....]

It's the b-e-s-t d-a-y e-v-e-r!
[Chorus: Best day ever.....]

It's the b-e-s-t d-a-y e-v-e-r!
[Chorus: Best day ever.....]

It's the b-e-s-t d-a-y e-v-e-r!
[Chorus: Best day ever.....]

Yeah........ yeah, yeah!

It's the.... it's the.....best.......day...........Hey, where'd everybody go!?!

Friday, December 22, 2006

Do Oil prices affect Healthcare cost?

Here's a thought: Rising energy prices and this country's sheer dependence on imported oil are causing healthcare costs to rise.

I'm reading a book by Stephen and Donna Leeb, The Oil Factor: How Oil Controls the Economy and Your Financial Future, that talks about the negative effect rapidly rising oil prices can have on our nation's economy. Since 1973, which is after the U.S. stopped being able to produce a majority of its own oil supply (the book explains), the nation's economy has been negatively affected by any rapid rise in the cost of the barrel of oil above 80% compared to the price a year prior. We can see such a rise before the tech bubble burst in 2000. Unfortunately, Uncle Sam is a sick patient, and his doctor does not believe in preventive medicine. The country is entering a precarious position with rising oil demand around the world, especially with the rising economies in China and India. The pace of oil production will not be able to keep up with the coming demand. And no amount of warring in the Middle East will fix this problem, as we have seen.

So how does this affect healthcare costs? Well, everything that needs to get somewhere needs oil. Vaccines, medical supplies, medications -- part of their cost is contingent on the price of transporting these items to their destinations (i.e. doctor's offices, hospitals, etc...). Then, all of the locations use energy to keep themselves up and running. With the rise in technology, our dependence on energy has also risen, due to electronic prescribing, electronic records, electronic medication management in hospitals, etc..... The nation's healthcare system is in just as a precarious a position as the nation's economy because of our dependence on oil as our primary energy source.

So here's my proposal: Instead of continuing to try to cut reimbursements and adversely affect the quality of healthcare in this country, the White House and Congress should focus on cutting our dependence on imported oil for energy consumption and encourage the development of alternative energy sources. This will help keep inflation in check. It will keep consumer prices down, as everything is affected by the rise in oil costs. And it will subsequently result in a better control over rising healthcare costs than the nit-picky cost-cutting, claim rejection strategies of health insurance plans, and Medicare's yearly threat of reimbursement reductions.

Let's reduce our dependence on oil, and keep the quality of healthcare where it is. Let's fix Uncle Sam before he goes into renal failure and needs dialysis. The most prudent life-sustaining measure for this country right now, faced with a burgeoning population of retirees requiring ever-more expensive healthcare (and consuming more kW hrs of energy per year), is to develop and promote alternative energy sources, such as nuclear power, wind energy, and liquified natural gas. Maybe we should start driving cars that run on clean-burning corn oil.

Energy should be the singular most important issue this country focuses on to reduce the cost of Healthcare.
Everything else is just wagging the dog.

Wednesday, December 20, 2006

RediClinic? Huh? Where did this come from?

I understand where they're coming from, but when non-doctors start producing cheap-care clinics staffed by NP's to take care of the supposed "uncomplicated" issues in medicine, it makes me wonder where healthcare is going in this country? That's a problem and a lawsuit waiting to happen.

RediClinic is opening walk-in clinics staffed by NPs in WalMarts and Duane Reades around the country. Their biggest investor is the Revolution Health Group, a company founded by AOL Co-founder Steve Case. Their CEO's message on the website starts by saying that, "Healthcare is one of the largest and fastest growing industries in our country, accounting for more than $3 trillion in sales..." Ok, great, this is the first line from a clinic that is supposed to be about "high-quality, low cost routine healthcare." Oh, but they don't want a bite of this, because they're producing so-called "'convenient care'" centers through their RediClinics. They're calling it "consumer-driven healthcare," but it actually comes down to retail healthcare. Yes, ladies and gents, you are witnessing the retailization of medical care. Would you like some hair gel and shampoo with your flu shot? How about some toothpaste with your health assessment?

But seriously, let's analyze this. These clinics are staffed by NPs. They don't mention where the supervising physician is. In fact, some state laws use the word supervising loosely to mean -- easily accessible via telephone. So the physician doesn't have to be in the clinic to examine a questionable case. Ok, fine, you can say that this is only routine simple care. What about headaches? Will these NPs know who to send to the ER? What if it's a subarachnoid hemorrhage? Or a brain tumor? Will they know? Maybe routine care is fine. But they've gone beyond that. They talk about providing "stay well services," marketed as Men's and Women's Health Assessments and Diagnostic Screening. Wait a second, should I be hanging up my stethoscope and retiring from medicine? They apparently are going to do everything I do, and for a cheaper cost, because NPs cost less than MDs. I'm curious to know how quality will be maintained?
Peeved!? Yes, I am. They're infringing on my territory, and falsely marketing an ability to take care of more complex issues in medicine by promising health assessments.

What if a patient has a neurological issue? Will they be ordering MRI's? What neurologist will they be referring their patients to? And how about continuity of care? I find a company delving into healthcare, run by mostly corporate types, to be a dangerous thing, for corporations care about numbers -- the bottom line is cost, no matter how much they may say they care about quality. What quality is there in marketing drive-by, quick-fix healthcare. I truly believe this is dangerous. It's almost like a health insurance plan now also becoming a medical provider. Where is the RediClinic's greatest interest -- cost or standard of care? I understand the American public has been accustomed to quick, drive-through consumerism, but this is a dangerous mentality to pass on to medical care. Ever since HMOs tried to rear their ugly face in this country the quality of care has suffered. What looks too good on the surface cannot be that good. I don't think this is my Trojan Horse, nor that for the rest of primary care physicians in this country, but I ask, "Should we be standing by idly watching this happen?"

Apparently, we're already involved. Can you hear the the dark side of the force calling? Now this is frightening to me -- the American Academy of Family Physicians (AAFP) has signed an official agreement with the RediClinic for adhering with its "desired attributes of retail health clinics." Et tu, Brutus? That the AAFP is encouraging the formation of these clinics is disheartening. That this is going to be sold to the American public as good care is disgusting. One thing is treating a simple sore throat, another thing is having an NP do a routine health screening. What if the cholesterol is elevated? What if there are EKG abnormalities? Will they recognize them? Again, who will they refer to? And how do they know the specialist they may refer to takes good care of patients when you are literally popping into the neighborhood without any established relationships and opening the equivalent of the McDonald's of healthcare down the corner.

I hope some good will come of this for the uninsured. Or maybe we can learn from what Dr. Vic Wood is doing. Read: Crisis in Healthcare: Does Vic Wood have the answer?

The RediClinic has signed agreements with Aetna and Humana. Apparently, UnitedHealthcare is also joining the bunch. It's disturbing. Will they use this as an excuse to further lower our
reimbursements? Is the PCP being slowly squeezed out of medicine? Will we be facing a slow death of 1000 years in the belly of the insurance giants?

"Ho, ho, ho....ha, ha, ha....Goodbye PCP's....Your measly mind tricks won't work on the mighty Jabba, the RediClinic CEO"
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