Archive for the 'Business' Category

If you are a foreign investor, you should familiarize yourself with an E-Visa as it offers numerous benefits for owners of high-cost enterprise in the U.S.  The Immigration and Nationality Act (I.N.A.) provides nonimmigrant visa status for a national of a country with which the United States maintains a treaty of commerce and navigation who is coming to the United States to carry on substantial trade, including trade in services or technology, principally between the United States and the treaty country, or to develop and direct the operations of an enterprise in which the national has invested, or is in the process of investing a substantial amount of capital.

Foreign Medical entrepreneurs through this Act may purchase medical supply firms, medical offices, dental offices, or any other substantial business related operation. However, not all nationals apply to this Act. For example, citizens of India do not qualify.

Nationals of participating countries should be aware of the following stipulations as laid out by INA:

An investor must own a minimum of fifty percent (50%) of the company. In addition, employees of the same nationality may also work on an E-2 visa. Some specific requirements include:

• The investor, either a real or corporate person, must be a national of a treaty country;
• The investment must be substantial. It must be sufficient to ensure the successful operation of the enterprise. The percentage of investment for a low-cost business enterprise must be higher than the percentage of investment in a high-cost enterprise;
• The investment must be a real operating enterprise. Speculative or idle investment does not qualify. Uncommitted funds in a bank account or similar security are not considered an investment;

The investment may not be marginal. It must generate significantly more income than just to provide a living to the investor and family, or it must have a significant economic impact in the United States;

• The investor must have control of the funds, and the investment must be at risk in the commercial sense. Loans secured with the assets of the investment enterprise are not allowed; and
• The investor must be coming to the U.S. to develop and direct the enterprise. If the applicant is not the principal investor, he or she must be employed in a supervisory, executive, or highly specialized skill capacity. Ordinary skilled and unskilled workers do not qualify.

Applicants for an E-Visa are not required to state specific intent for travel, and timeframe of stay, in the US. Also, applicants should not worry about maintaining a permanent address at their home country; the Act merely asks for an unequivocal statement of return abroad. The children of the Visa holder provided they are unmarried and under the age of 21, are entitled to the same Visa classification as the principal visa holder. The nationality of the spouse or children is irrelevant to the conditions of the Visa, and the spouse may apply for a separate working Visa while in the U.S.

With this Visa, can foreign nationals really take a advantage of a burgeoning American medical market? Are the conditions of the Visa too severe?  Also, how does this promote trade with other countries?  It seems the the Visa means to attract endogenous markets from abroad to cultivate a business here at the expense of the visa holder’s country of origin.

Unexpected hurdles while selling your medical practice must be considered before the process can begin. Imagine falling ill: how can you keep the value of your business on the market as a ‘running concept’ instead of an ‘emergency sale’? As the owner of your practice, you can decide to sell your operations, but finding buyers takes time. While ill, can you sustain overhead and operational expenses without any revenue between the time your business goes for sale, and the time it takes to complete the sale? How long can you keep your operations afloat? Three months, six months? Some illnesses are very severe, can you last a whole year?

Have you considered Disability Income Protection for Medical Professionals? Insurance policies differ according to the provider and plan, but under Disability Income Protection, the insurance provider will pay you benefits while you recover. Again, the amount of benefits paid varies, but you are looking for a policy that can offer you remittance for years, not months. Such policies are typically renewable and non-cancelable. In fact, the insurance provider will continue sending the benefits checks even if you try your hand at another line of work that won’t complicate your medical recovery. Case studies show individuals employed as guest lecturers at colleges or part-time teachers at local high schools while receiving allowances of 90k annually after an original income of 200k. In most cases, this disability income is non-taxable and the policy will be continued without a premium payment.

Falling ill does not mean falling behind on your business operations. With Disability Income Protection, you and your family have options while you create a fund to sell your business, or if you have a partner, create a fund to buy-out his or her interest in the medical business.

Hospitalists is the wave of the vuture for medical business management? Maybe and maybe not. A new study by the New England Journal of Medicine questions the value of hospitalists for system savings for medical practices. There was no significant difference between inpatient days and hospital stays.

David Harlow writes more about Hospitalists and the NEJM study:

This issue comes to the fore at the same time as a related resource question — how should physicians be paid for their services? Part of the premise, all along, has been that hospitalists will save hospitals money; therefore, hospitalists’ salaries are often subsidized in part by their institutions. These salaries are seen as being in need of supplementation, or subsidization, thanks to the proceduralist-skewed Medicare physician fee schedule (see, e.g., Roy Poses’ RUC rant at Health Care Renewal) which arguably under compensates internal medicine. The fee schedule is up for a 10% rollback January 1, though yet another Congressional waiver of the sustainable growth rate (SGR) rules is virtually guaranteed.

Read more about impatient stay and hospital billing here.

Buying a medical practice is a stressful transaction that a physician undertakes. The dollars and obligations are big and the pitfalls are many for an untrained businessman. Medical Business Exchange has a legal guide for doctors and medical practitioners looking to purchase a medical facility.

Consult Your Advisors Early and Specify All Major Deal Terms Up Front.

The first item discussed is the practice purchase price, before such other items including sale structure (asset sale versus stock sale), tax allocation, payment terms, collateral and post-sale employment of doctor. Paying $500,000 for a stock sale is a lot different than paying $500,000 in an asset sale, in terms of tax write-offs. So is paying $100,000 for equipment and $400,000 for goodwill versus $400,000 for equipment and $100,000 for goodwill (again, the tax write-offs). Your offer for the medical practice should be in an outline, letter of intent or other writing specifying all major deal terms in the presale agreement specifying purchase of the medical practice.

Stock sales are good for medical practice owners since all the gain becomes taxable to them at capital gains rates. However, stock sales aren’t good for medical practice buyers because stock is not categorized as a depreciable asset. The purchasing doctor gets no tax deductions for any of the medical practice purchase price. Buyers want to buy assets rather than strictly stock. Depending on the tax allocation of the purchase price among the assets acquired (medical equipment, medical supplies, tangible receivables, goodwill, consulting payments), buyers can increase the write-offs from their transaction, reducing the after-tax cost of the medical practice purchase.
Read more about buying a medical practice.

Medical Business Exchange (www.medicalbusinessexchange.com) recently launched a new website to help medical investors, medical business entrepreneurs, medical service providers, and commercial brokers find each other.

The goal of the website is to help interested parties to buy, sell, or invest within a broad community of medical and nursing businesses.

The Exchange offers advertising opportunities (free to new members), making it easy to find buyers and service providers such as attorneys, diploma evaluators, commercial brokers, and domestic and foreign nurses.

An international approach to medical business

In tune with increasing interdependence around the globe, the site also offers information on running medical businesses across national boundaries. This includes guidance for doctors who wish to practice medicine in the United States but who received their credentials in another country. There is also useful information on nursing businesses, for both domestic and foreign nurses.

The Medical Business Exchange website explains Immigration issues, E-2 Visas, and other complications in detail. The site also clarifies criteria for evaluating medical degrees from foreign countries.

The founder of Medical Business Exchange, Boris Zinshteyn, understands international red tape from his personal experience. He earned his degree in Moscow before moving to the United States with his family in 1994.

“Medical Business Exchange,” says Zinshteyn, “envisions a community dedicated to the buying and selling of medical businesses from overseas, advancing opportunities for international medical professionals wishing to finance or invest in medical businesses in the United States.”

The Medical Business Exchange Website, www.medicalbusinessexchange.com, can also help visitors whose interests are confined to North America. For the doctor wishing to sell a practice and retire, or a professional who wishes to expand his or her practice, the Medical Business Exchange offers an entrepreneurial approach, in which medical practitioners have a stake in the success of the institution.

The best product for doctors in 2006 was ThinkLabs ds32a Electronic Stethoscope that records patients vital signs onto an iPod.

Bethesda, MD — Deteriorating relations between hospitals and physicians are imperiling a wide range of health care objectives, researchers from the Center for Studying Health System Change (HSC) report in a Health Affairs Web Exclusive published today.

One consequence of the unraveling hospital-physician relationship is a “medical arms race,” as services once performed only in hospitals migrate to physician-owned specialty hospitals, free-standing ambulatory surgery centers, and physicians´ offices. But the estrangement between hospitals and physicians is also impeding the adoption of information technology (IT), the implementation of pay-for-performance programs, and care for the uninsured.

As one hospital executive told HSC researchers: “Doctors used to feel that in return for having the hospital as a place to care for their patients and earn income, they should contribute to the hospital, taking ED call, participating on committees, improving quality. Now they say to the hospital, screw you. . . . Many don´t even come to the hospital any more.”
The HSC paper is one of the lead articles in a six-article Health Affairs package on the interaction between physicians and hospitals. Two other lead articles offer different approaches to aligning incentives for physicians and hospitals more closely. Dartmouth Medical School professor Elliott Fisher and coauthors propose making “extended hospital medical staffs” accountable for quality and cost. Gail Wilensky, the John M. Olin Senior Fellow at Project HOPE, and coauthors advocate the use of comprehensive gain-sharing arrangements, where hospitals and physicians share savings generated by more efficient care delivery, as a way to transition to a future of integrated delivery systems.

In addition to the three lead articles, package also includes shorter Perspectives by Mayo Clinic president and CEO Denis Cortese and Mayo chief administrative officer Robert Smoldt; Health Futures Inc. president Jeff Goldsmith; and VHA vice president of research Ken Smithson and VHA executive vice president and chief operating officer Stuart Baker.

Toying with us until the end. on Saturday the 109th Congress passed legislation to reverse the pending 5.1% cut in Medicare fees for 2007. Of course, this is the - what, third? - year that there will be no increase in fees, so we’ve lost at least 10 percent or more in income over the past three or so years just from Medicare cuts.

This final action was a 79-9 Senate vote on Saturday morning. We presume that President Bush will sign the legislation. The AMA press release noted that the legislation also sets aside funds to avert cuts in 2008 and stops additional Medicare cuts to rural physicians. Finally, the legislation initiates a physician quality reporting program to begin in July 2008.

With regard to quality and performance reporting, you might take a look at the AMA convened Physician Consortium for Performance Improvement The Consortium is comprised of over 100 national medical specialty and state medical societies; the Council of Medical Specialty Societies; American Board of Medical Specialties and its member-boards; experts in methodology and data collection; the Agency for Healthcare Research and Quality; and Centers for Medicare & Medicaid Services (CMS). I’m working on a monograph for you for early 2007.

OK - time to redo your 2007 budget and projections for 2008. I’d assume flat fees again for 2008 for this round. Work on your inventory levels for office and medical supplies. Take advantage of sales, and check your inventory weekly or even semi-weekly to keep levels low, but so you don’t run out either.

As the 109th Congress raced to the finish line, they left a whole lot of unfinished business. As reported here, Congress did vote to reverse the severe cut in Medicare fees that was scheduled take effect on January 1. Our friends at Kaiser have published a fuller discussion on some items of interest to physicians.

Insurance claims against doctors, nurses and other medical professionals have stabilized for the first time in years, according to the seventh annual Aon Hospital Professional Liability and Physician Liability Benchmark Analysis. While that is good news for the medical community, the bad news is that the average size of malpractice claims continues to rise.
The study, which measured 47,735 claims representing more than $4.4 billion of incurred losses in the U.S., found that the overall frequency of medical malpractice claims has not increased for the second straight year.
While claim frequency is stabilizing, according to the study, the average size (severity) of malpractice claims continues to increase at a rate of six percent. However, the average amount paid to indemnify claimants is
increasing at a rate of only three percent, while amounts paid to defend against liability claims are growing at 17 percent as hospitals invest in claims management.
“The improved frequency rate that first emerged in the 2005 study appears to be sustained through 2006,” said Greg Larcher, director and actuary of Aon Risk Consultants and author of the analysis. “Based on study findings, we believe that the impact of past state level legislative reforms has largely been realized and we do not expect significant decreases in claim frequency or severity resulting from tort reform in the future unless other states pass legislation that withstands challenges. Patient safety initiatives being implemented today, however, may be critical for sustaining a favorable frequency trend into the future.”
This year’s study found that a statistically significant relationship exists between mortality and claim frequency in certain segments of the database. For example, after adjusting for patient volume and acuity, Texas hospitals with 200 mortalities in 2004 experienced 6 indemnity claims while hospitals with 150 mortalities experienced 4 indemnity claims. This finding gives an interesting perspective on how changes in quality might affect claim counts.
Added Larcher, “While it is logical to believe that organizations that reduce preventable harm to their patients will also reduce professional liability claim counts and costs, our study takes a first step at proving this true with data. In the long term, the industry would benefit from a more comprehensive measure of quality, beyond mortality, that measures the success of patient safety improvements and their impact on liability costs.”
More than 700 healthcare facilities provided loss and exposure data for the benchmark study. These participants range from small community hospitals to large multi-state publicly traded healthcare systems. The study also includes breakouts of claim costs and frequency trends by state and facility type, including university, specialty, long-term acute care and community.
The 2006 Hospital Professional Liability and Physician Liability Benchmark Analysis is co-sponsored by the American Society for Healthcare Risk Management (ASHRM) of the American Hospital Association. To purchase a
copy, please dial +1.800.242.2626 and request item #178701. Visit http://www.aon.com/hpl_study for more information.
You can read more of my posts on Medical malpractice here.