Why has no one mentioned the dollar and oil?

We are in the midst of one of the biggest economic crises probably since the Great Depression, so they say. What caused the economy to weaken they say is the defaulting home ownership market, with people's finances overstretched too far to pay for their home mortgages. Home mortgages were handed out like free candy to anyone who applied. Then with the strength and crazy rise in home prices, companies like Bear Stearns and Lehman Brothers decided to package these mortgages like securities (seems absurd, right?). They took something that at the very least is backed by the real value of a property, and packaged it into something that has no value other than what is on paper, and if it loses value there is nothing to back it up. I'm not an economist, but that seems to be the gist of the problem.

However, I don't hear anyone on the news asking why did our economy really collapse? Why did our hard-working citizens stop being able to pay their home mortgage? What is the true root of the cause? Is the reason really lack of oversight? It seems that on one level you can blame the lack of oversight over the banking industry that allowed the loosening of mortgage lending rules so that people could qualify for amounts that normally they would never have been able to acquire. But for some time, they were able to pay these mortgages. Is it the rising unemployment rate? Is it unemployed people who are defaulting on their mortgages? I doubt this, given the number of foreclosures on the market right now (and foreseen to come in the next 16 months).

No one mentions the falling value of the U.S. dollar, along with the rise in oil prices? Oil has affected everything, and this rise preceded the current economic crisis spearheaded by the crashing housing industry. The rise in oil has obviously made gas more expensive, so that commuting costs are up. But then that also means that the cost of transporting goods has gone up. Companies do what is in their best interest -- increase the price of their goods. So the price of food and the price of electricity have gone up. Consequently, this affects the small business owner, so then they need to raise their rates to survive. Eventually, the market can't withstand the upward pressure, and we thus end up in the situation we are in. People can't afford their lives, so they're defaulting on their home mortgage loans. The falling U.S. dollar along with rising oil prices has been a "double-wammy" to main street America. One would have hit hard. Two his four times as hard.

Add to this a poorly regulated credit card industry, which can sneak up charges as high as a 30% APR on unpaid balances (which I think is ridiculous), and it is a setup for economic collapse. Is it really Wall Street that needs to be bailed out? Does that bail out really help middle America? And why do we really have to wait for a crisis to make the type of decisions our Dept. of the Treasury, the Federal Reserve and Congress are struggling to come up with to resolve this matter.

The best analogy I can think of is the patient who has waited until their disease is so advanced that only desperate measures can save them. We all know as doctors that this involves highly expensive care and taxes the healthcare system. Had this same patient been approached judiciously with ongoing preventive measures, this type of catastrophe would most likely have been avoided.

The U.S. government acts in the same way. Why can't they get their act together and legislate sound policies that support the ongoing health of the nation's economy? Why does Wall Street have so much say over how the government's economic policy is written? And why does the government make no mention of the fact the rising oil prices are the underlying root cause that has taxed main street America into default.

Wake up everybody. We need to free ourselves from oil dependence!

How are doctors faring in this economy?

Today, a front page article of the Wall Street Journal spoke about how people are cutting down on healthcare spending in the wake of this shaky economy. The article noted that for the first time in 10 years, the amount of money spent on prescription medications had dropped. However, it wasn't clear from the article if this drop was due to falling demand or due to the fact the insurers are more and more forcing people and/or their doctors to choose lower-priced drug substitutes for the brand-name pharmaceuticals they take or prescribe. The article assumed that the drop in prescription spending was due to patients skipping a month here and there on their costly prescriptions. I'm not saying this isn't true, but there may be another explanation. After all, I get incessant faxes, mailings, crazy insurance people calling me, airplane trailer announcements, and the list goes on, to remind me that the drug my patient is on has a cheaper (forget about effectiveness) alternative.

The other major problem, that being in Manhattan I don't have to think about so much, is that people are choosing not to drive because of the cost of gasoline. So an Internist in Tennessee in this article noted that his summer volume was down 10% from the year prior. The assumption is that people are just not driving to see their doctor for minor stuff, because the cost does not outweigh the benefit. Sorry country doc, it seems that people are more willing to stick out their illness. Well, the article also reported that remote doctors were having a more difficult time getting their patients to specialists that may be a 40 minute drive away. Again, the culprit -- rising gas prices. Really, it's about the rising cost of living that has now outpaced most employee's rise in salary. I spoke about oil's effect on the cost of healthcare in this country in a prior post; see http://solodoctalk.blogspot.com/2006_12_01_archive.html. What I didn't consider there is that people would simply self-select and not spend money on healthcare if they already have to spend too much money on gasoline and electricity. Maybe rising oil prices will cut the cost of healthcare?

No, I don't think so! Less access means that instead of presenting with elevated cholesterol and maybe some decreased exercise tolerance, people will not present until they're rushing to the emergency room with crushing substernal chest pain. The cost of treating that high cholesterol just rose as they are wheeled away to the cardiac cath lab with $1000 medications dripping into their veins to get that blocked artery unclogged after a highly expensive visit to the emergency department. The cost of delaying healthcare is immense!

Then, of course, boo hoo to the laboratory giant, Laboratory Corporation. Their self pay patient volume is down. When everybody talks about controlling the cost of medical care, no one ever mentions lowering the cost of laboratory testing. Tests for a typical comprehensive exam can run over $1000, whereas the cost of the doctor's visit and expertise averages $350 in Manhattan. The doctor's time is cheaper than the automated laboratory results. Amazing!

So, I'm curious, how are the doctors out there faring in this economy? Is healthcare as recession proof as people have said? Post your comments and share with the rest of us.

1 Year Anniversary in New Office

1 year ago I took a big chance, jumped off a financial cliff (much like the country is in right now, except I had a back-up parachute), and opened a new office designed for the future of my practice. Now a year later, I can say that as scary as that step was, it was the best thing I did for my career.

Calculated risks can push us forward beyond our limits and into greater success. Reckless risks (otherwise called "gambling") can put you in foreclosure. Being able to make the distinction is the mark of a keen businessperson. How the distinction is made, is hard to explain -- you gotta trust your gut or your instincts. You create a business plan, come up with projections on how much you will make, check to make sure your practice is pacing in that direction and hope for the best. It turned out that things worked out even better than I thought they would. So well, in fact, that I didn't realize how far beneath its potential my practice had been.

There is no substitute for having not only your own staff, but being able to create the atmosphere you want your patients to experience. Atmosphere these days is just as important as the service you provide. I have emphasized this in many of my prior posts. Sure, it's just bells and whistles, but hey, that's what has made big companies grow and grow and grow. Take Starbucks as an example. Who doesn't like to hang out in a Starbucks with the jazz music playing in the background and comfortable couches or a cozy corner to perch at. Not that I expect patients to want to come in and lounge in my waiting room, but creating a pleasant environment can ease the pain on days you run a bit of a delay.

The atmosphere goes beyond just having a waiting room. Atmosphere is a 3-dimensional experience. It's the height of the ceiling to give a roomier less-crowded feeling. It's the arrangement of the waiting area (crowded seats or loungy couches with pillows). It's the music playing in the background (much like Starbucks, I like jazz, but mix it up with other genres, like bossa nova, ambient, chill out, and zen). Patients come into my space and experience calmness. It doesn't matter how flustered they may be walking through the door, the space calms them down. The empiric evidence is that patients that used to be "difficult" to deal with have actually become nice and pleasant (something I could have not predicted). Who's to say that the environment could affect how your patients behave when they come in to see you? I was shocked to see patients I had classified in my mind (and you know we all do) as "difficult" or requiring extra time, become agreeable and much easier to deal with.

The extension of the atmosphere is how your staff treats your patients. The same way a pleasant atmosphere affects the patients, so it does your staff. Having a pleasant working environment makes for a more harmonious staff. We took that into account when designing the space, allowing for plenty of sunlight to enter from the outside rooms with transoms above the doors. The space is happy and airy, so the staff feels less heavy, lighter in their tasks. There are no neon lights to bog us down with its low-level flickering. Plenty of light, both direct, and indirect makes the space happy and bright on cloudy days or those dark winter days. With all these softer items covered, then keeping the staff sharp and on their game means having weekly meetings.

Weekly meetings cover all necessary office business. Having them as part of your operation, allows you to bring up areas where the staff needs to improve without sounding like you're just having a meeting to chastise the staff. Office meetings cover a set agenda, from the front desk to the lab, and help the office keep running smoothly. Supplies are discussed. Operating procedures are emphasized and corrected (as new situations come up). Staff has time to express any concerns or offer suggestions for improvements. It's important to have these at least monthly if you can't do it weekly.

Finally, the 1 year anniversary is a good excuse to throw a networking event to bring in all physician referrals. They can see what a wonderful atmosphere their patients go to when sent over, and it helps to reinforce our referral relationships.

Never underestimate the power of a few details to make your space homier and more pleasant to visit. If you've got all the other areas covered (good doctor, excellent bedside manner, great staff, quick follow-up, good referral network), then you are set!

Wall Street sinking, housing in crisis.....What does it mean for us?

The walls are caving in all around us. But stay calm, the foundation is still standing. Don't worry that the foundation is sort of rotten.

My practice is in Manhattan, so I take care of employees at Lehman Brothers, Merrill Lynch, and the former Bear Stearns. For the last few months, the stress and anxiety has been of astronomic proportions. However, none of them saw this incredible collapse coming. The foundations here in NYC have been rattled, and possibly soon all around the world. Will it affect a medical practice? I'm not sure. My practice continues to be as busy as ever. Is medicine recession proof? It seems that it would be, because no matter what, people need medical care regardless of economic situation. What does it mean for the employees of Lehman Brothers? What does it mean for jobs in this country? I'm just in awe of the events in the last few weeks.

For one, I am grateful to be my own boss right now. Regardless of the fact that the solo practitioner gets slammed with taxes (don't we all?), it's still best to be the captain of the ship. No one can fire me, except for myself. And as long as one continues to provide service that sets one's practice apart from the rest, there will be no famine. With stressful times ahead, providing the support our patients need will be of utmost importance.

Another beached whale!.....

Read this article and wonder if the circumstances we are in right now, with a devalued U.S. currency, rising oil prices, and terrorism used as a chest piece to support our military agenda, were not engineered by the current administration. Bear Stearns is gone. Freddie Mac and Fannie May have been absorbed by the U.S. government, which everyday seems to become more "communist" in its operation. And Lehman Brothers is next in the line-up. How many big corporations do American tax-payers have to bail out? Is it really for the good of all?

Notice the date of this article. It's fascinating to read it now.

Greenback Game

Will the Bush administration's cheaper-dollar talk backfire?

By Matthew Benjamin

Posted 10/5/03

Wouldn't it be swell if there were a silver bullet that, with a single shot, could stem manufacturing job losses, shrink the huge and growing trade deficit, and hold deflation at bay?

Some economists say there is, and the White House is locked, loaded, and firing at will.

The bullet is dollar devaluation. Make the greenback cheaper relative to other currencies, and suddenly foreign imports become more expensive, U.S. exports become more attractive, workers are hired to manufacture them, and prices of many goods stop falling.

Savior. A cheaper dollar will also help rebalance a global economy that is overly reliant on the United States, says Morgan Stanley chief economist Stephen Roach. "It will save the world."

But some believe that the silver bullet could be a boomerang in disguise. "No nation that has debased its currency has done well in even the medium term, let alone the long term," says Jim Rogers, cofounder of the famous Quantum Fund, one of the hottest hedge funds ever.

It is more than an academic debate. Terrified that job losses in manufacturing will hurt its re-election chances, the Bush administration has hitched its wagon to a weaker dollar. Although publicly affirming a commitment to a strong currency, Treasury Secretary John Snow in May began hinting at the possible benefits of devaluation. The "weak dollar" policy was cemented in the minds of many economists and currency traders last month when the Group of Seven nations called for more-flexible exchange rates. Since then, the dollar--which had already been weakening since early 2002--has dropped 4 percent against both the euro and the Japanese yen.

Last week the dollar hit a 33-month low against the yen and a three-month low against major European currencies. "We're big bears on the dollar," says Michael Rosenberg, head of global foreign exchange research at Deutsche Bank. He expects the euro, now trading near $1.17, to rise to $1.40, while the dollar, which now buys 111 Japanese yen, will purchase less than 100 yen within three years.

"The strong-dollar policy is dead and buried," says Fred Bergsten, director of the Institute for International Economics. The IIE estimates that every 1 percent drop in the value of the dollar narrows the U.S. trade gap by $10 billion. A 10 percent drop could mean a $100 billion trade swing and lead to as many as a million new jobs, according to IIE economist William Cline.

Intervention. But there's a catch. China accounted for some 22 percent of the $468 billion U.S. trade gap last year--more than any other nation. Yet because the Chinese have pegged the yuan to the dollar, devaluation is no help there. Similarly, the Japanese, who also desire a cheap currency to boost their own exports, seem unwilling to let the yen sink below the 110 level and last week intervened in currency markets, selling yen to maintain that threshold.

And devaluation carries risks of its own, to the economy and the markets. If investors lose confidence in the dollar, watch out, says James Stack, president of InvesTech Research. Interest rates can rise suddenly and bring recessions and bear markets with them. That scenario played out in the mid-1980s, when the G-7 pushed for a weaker dollar, which was then trading at an all-time high relative to major currencies. For two years, the greenback fell sharply. Then in 1987 a sudden loss of confidence in the falling dollar brought on the October stock market crash, Stack says.

Of course, the dollar's current decline is less dramatic, and confidence in America's currency remains high, as foreigners continue to buy up U.S. treasuries. And there are few other attractive places for foreign investors to put their money. "We've got to take some responsible risk to rebalance the world, and the weaker dollar is it," says Roach.

Devaluation is strong medicine, though, and getting the dosage just right is the hard part. "Trying to predict when a falling dollar affects interest rates is like trying to catch a falling pitchfork," says Stack. "It's a neat trick if you can pull it off."

http://www.usnews.com/usnews/biztech/articles/031013/13dollar.htm