Inflation is at its highest point in decades, and interest rates are on the rise. For many investors this type of environment is unknown after years of low rates and stable prices, creating multiple questions for physicians tending to their investment portfolios.

Doctors close to retirement may wonder what impact this economic volatility will have on their investments and how it will affect their timeline for hanging up their stethoscopes. Younger physicians are grappling with student loan payments and rising prices for almost everything and may be wondering where to put their money.

These are all valid concerns. “Not only does inflation erode purchasing power, it can have a detrimental impact on an investment portfolio,” says Michael Joyce, C.F.A., C.F.P., president of Agili, a financial planning and investment management firm. “If inflation increases, interest rates will also increase; bond prices will fall when interest rates rise. But there will also be a negative impact on stock and real estate values. As interest rates rise due to inflation, the stock market will be discounting future earnings with a higher discount rate, which means lower values.”

Investors have to be cautious to consider all factors affecting their portfolio. “Sure, an investor might see a return of 7% on their portfolio in a given year. However, what if inflation for the same year was measured by the Consumer Price Index at 9%?” says Jeff Pratt, CRC, a financial advisor with Finity Group, which specializes in financial planning for medical professionals.“On paper that’s a real return loss of 2% since the portfolio growth didn’t keep pace with inflation for the same year.”

If inflation rises to the point where consumers shift from being unhappy about paying more to not buying products, this could have even bigger economic consequences. “Inflation can only outpace wage growth for so long before consumer spending is negatively impacted, and drop-off in consumer spending could in turn lead to an economic slowdown,” says Pratt.

Clear goals help protect your investments

Physicians who are close to retirement have reason to be more worried about their investments as inflation rises because they have a shorter timeline to weather an economic storm and recover any losses. They might be tempted to make sudden changes to their portfolio, but experts say this isn’t always the best strategy.

“Regardless of whether it’s inflation or any other factor, investors should remain focused on their long-term goals and be cognizant of not taking on risk — or too much risk at the very least — they can’t handle,” says Pratt.

If, for example, a physician is nearing retirement with a $5 million portfolio and anticipates only needing $100,000 annually to meet their lifestyle needs due to other income sources, this person may not need any adjustment, says Pratt. But if the lifestyle needs require $500,000 a year, that is a faster draw down and will have a much larger impact on the portfolio, possibly requiring some assets to be repositioned. On the other hand, if they have a short life expectancy with no goal of leaving wealth to heirs or charities, this may not matter.

Investment strategies need to match overall goals and not just be knee-jerk reactions to changes in the economy.

“Diversification is the key,” says Joyce. “Physicians should include investments in their portfolios that will perform relatively well in a rising inflation environment.”

And if a lot of time was spent planning investments early on, there is one key move to keep in mind. “Assuming they were invested appropriately for retirement, the best move is likely no move at all,” says W. Ben Utley, CFP, president and a primary advisor at Physician Family Financial Advisors, a firm exclusively serving physicians.

If moves are required, Joyce says investors should look at options such as inflation-protected bonds, commodities, short-term bonds (which are less interest rate sensitive), stocks that pay high dividends and real estate that generates a lot of cash flow.

One option is Government Series I Savings Bonds. These can be purchased at Treasurydirect.com, but there’s a limit of $15,000 per calendar year. However, they are exempt from state income tax.

“Once an I bond is purchased, the money must be left in the bond for at least a year,” says Pratt. “Also, if cashed out in less than five years, then the previous three months of accrued interest is forfeited. Because of this, Series I bonds are most likely to be considered by folks with cash needs between one and five years out.”

Each inflationary environment is driven by different factors, so there is no one-stop shop to inflation-proof a portfolio, notes Pratt. Lower-duration bonds, which have less exposure to inflation and rising interest rates, might be one option. But within equities, high-quality companies with competitive advantages that give them pricing power in their industries are worth considering.

“The idea here is that these companies will be able to pass along price increases to consumers without significantly affecting demand — or their profit margins,” explains Pratt. “Fixed income typically struggles in an inflationary environment, but as an asset class it can still be an essential risk management tool despite potential headwinds.”

Will rising interest rates derail retirement plans?

The COVID-19 pandemic and the economic and mental hardships it caused forced some physicians to consider retiring sooner rather than later. But that was before inflation started eating away at investment earnings and concerns about the future of the economy came fully to bear. If a physician had been looking to retire in the next three years, is that still a good idea with so many unknowns?

“Three years from now, everything will look very different,” says Utley. “I mean, look at where we were three years ago. Nobody could have seen today’s dumpster fire glowing in the distance. I think older physicians should have a very solid plan before they make the decision to hang it up. Going back to work, especially after a failed retirement, is no fun.”

Physicians looking to retire soon should determine whether they are financially independent enough to go from earning their money from their hard work to depending entirely on their financial investments. This should include an analysis that includes a stress test of a major market downturn the day of their retirement, says Joyce.

“The knee-jerk reaction to ‘just do something’ about inflation is probably going to be the wrong move at the wrong time since the market prices of securities already reflect people’s perceptions of inflation, both now and in the future,” Utley points out. “Remember, if you’re trading, there’s a good chance you’re either buying your securities from a professional or selling your securities to a professional. The markets know more than we think they do.”

If there are losses in the portfolio due to inflation, will this have a substantial negative impact on the retirement income distribution strategy? A lot depends on the current portfolio, age of the physician and the life expectancy, says Pratt. An analysis of the goals may reveal changes are needed to the portfolio.

“Short-term bonds can be a good place to hide when riskier assets are plummeting,” notes Joyce.“But in a rising inflation environment, bonds can result in poor investment performance. It is good to focus on long-term goals and objectives and maintain a diversified portfolio that can provide for both security of principal in the short term and portfolio growth in the long term. In other words, to be able to sleep at night now but eat better in 10 years.”

Many financial paths can be followed through unknown market conditions and higher interest rates. Mutual funds or individual stocks? Real estate? Bonds? Something else? Experts say what’s most important is understanding the risks and rewards of each option and how they compare to financial goals and the investment timeline.

For example, mutual funds might be seen as a safer choice than individual stocks, but that’s not necessarily always the case.

“Mutual funds can insulate (investors) from single stock risk, but diversified portfolios can also be constructed using individual stocks, bonds, real estate and nontraditional investments whose returns, (which) are somewhat uncorrelated with each other, can also insulate a portfolio from purchasing power risk,” says Joyce.

Pratt points out that a portfolio with multiple mutual funds has its own set of risks to consider. “If one share of an S&P 500 index fund is purchased, the underlying exposure carried is spread across roughly the largest 500 companies in the U.S. economy,” he says. “If you layer in other funds across mid- and small-sized companies as well as overseas (funds), a portfolio can quickly be built with underlying exposure to potentially thousands of different individual companies. Is this better than owning individual stocks? Maybe, maybe not.”

Each investor has to establish their own timeline and risk tolerance level to help them navigate through changing market conditions.

“For any investor, whether it’s inflation or something else, the broad scope of current economic conditions should be considered in relation to how investment portfolios are allocated,” says Pratt. “As economic conditions change, as well as individual circumstances of investors themselves, portfolios should be reviewed and adjusted as needed to ensure proper alignment of goals and time horizons.”

For example, a physician approaching retirement who is heavily invested in stocks may want to consider reducing risk in their portfolio by increasing bond exposure. A physician who is young and doesn’t plan on retiring for 30-plus years may not need to do the same, says Pratt.

Younger physicians may be wise to simply ignore inflation and focus on making the right financial moves, says Utley.

“Young physicians should be buying a home, whose value tends to rise with inflation, and owning a diversified portfolio that’s tilted heavily toward equities, whose returns tend to outpace inflation. Basically, if young docs are making smart moves with their money, they’re already taking the right steps to weather inflation.”

But it still comes down to risk tolerance. Even though a younger physician has a longer investment timeline and can take a more aggressive investment strategy, that might not be something they are comfortable with,” he says.

If that’s the case, experts say they should take a less aggressive approach that matches their comfort level.

The day-to-day market changes and news cycles can affect stock and bond prices. But physicians should not be investing based on what headlines they are reading. For example, the Russia-Ukraine war generates a lot of news, but it has had little actual impact on market performance.

Pratt says Federal Reserve policy will continue to be the primary driver of market returns in the near term, particularly in the fixed-income space. “While bonds are an important risk management role within diversified portfolios, their prices — and performance — are negatively correlated with interest rates, meaning they are likely to see continued volatility as rates rise,” he says. According to the CME FedWatch Tool, market participants are currently pricing in an 86.4% probability of the federal funds rate rising by an additional 2.5% by the end of 2022. “If the Federal Reserve signals a more aggressive approach than currently expected, fixed income markets could come under further pressure; conversely, a dovish shift could lead to a rebound.”

Utley points out that inflation isn’t the biggest risk to a physician’s finances. “The things that clobber docs are entirely within their control,” he says. “The triumvirate of physician destroyers are a nasty divorce, running a small practice into the ground, and failing to save enough for retirement.”

In addition to those things, he says too many doctors are making mistakes with their student loans around public service loan forgiveness. “It’s costing them literally hundreds of thousands of dollars, often the equivalent of five or ten more years of time on the job, in the clinic, working harder than they have to,” says Utley.

Inflation might get most of the headlines, but that doesn’t necessarily mean it should be the guiding factor in all investment decisions.

“As with any investment portfolio related approach, it’s important to consider the whole puzzle and not just one piece of it,” says Pratt. “Some folks may be more impacted in their investment portfolio by inflation while others not so much. Every investor likely has goals, time horizons, risk tolerances and investment preferences unique to them, so take these considerations into account and be sure to maintain proper diversification that matches the investor’s specific time horizons and risk tolerance.”

What to do with those variable-rate loans?

Low interest rates enticed a lot of people, including physicians, to take on more debt than they probably should have. A new house, new car, new boat — all sound great with cheap financing and a low interest rate.

But some of those loans may have variable rates, which are increasing as the Federal Reserve continues to raise rates to counter inflation. Each time the rate goes up, so do all those loan payments. Should physicians be looking to refinance variable-rate loans into fixed-rate loans?

“In general, loans on assets that will decline in value, such as boats and cars, should be paid down or paid off,” says Michael Joyce, CFA, CFP, president of Agili. “Homes will generally increase in value and can be leveraged. Always be careful about refinancing costs, which can rapidly eat up any interest rate savings.”

W. Ben Utley, CFP, president and a primary advisor with Physician Family Financial Advisors, says that now is a good time to refinance variable rate loans to fixed rate loans, but one thing needs to be kept in mind. “Having debt is a good thing during inflationary times,” he says. “You borrowed with 2022 dollars and you’ll be repaying with dollars from 2023, 2024 and beyond, and all those future dollars are worth less than they would be if there were no inflation.”

If a loan has a short payback timeline of only a few months, Jeff Pratt, CRC, a financial advisor with Finity Group, says there probably isn’t a need to refinance. Although physicians may also be tempted to try to quickly pay off fixed rate loans with low interest rates, this might not always be the best option. For example, if the loan rate is 2%, taking the extra money that would be used to pay off that loan might be better allocated into the stock market where that money might yield a better overall return.

“Risk tolerance in the stock market can also play a role in determining how best to approach debt repayments as someone who believes they can average an 8% return in the market is likely going to address their debt package differently than someone who believes they can only average a 5% return in the market,” says Pratt.

For those with multiple debts with different interest rates and loan types, Pratt says the most efficient way to pay them down is to rank them by their after-tax interest rates and pay the minimum due on all of them expect for one — the debt with the highest interest rate — and pay extra on this one to accelerate its repayment. Once the highest interest debt is paid off, then apply the amount you were paying on the original highest interest rate debt toward the balance on the next highest rate, and so forth.

“Mathematically, this will minimize the total amount of interest paid over the life of all debts on a balance sheet as we’re considering the opportunity cost of each unique debt carried,” says Pratt.

Articles

Don't let rising inflation wreck your portfolio

Investing against inflation

With the return of inflation, continuing COVID-19 shocks and geopolitical instability, many investors have girded themselves for volatility. Fortunately, you can help to protect your assets from sudden, unpredictable moves in the markets and the economy. Here are a few ideas.

Many investors have seen significant drops in value for their portfolio recently. If those values rebound, one way to shelter the recovery from income tax is by converting from a traditional individual retirement account (IRA) to a Roth IRA. When a traditional IRA is converted to a Roth IRA, income tax is assessed on the value of the asset on the date of the transfer, which in today’s market can potentially result in a lower taxable transaction. If you are interested in an IRA conversion, note that dollar-cost-averaging can also help protect your assets from volatility, so you might want to make this a cornerstone of your retirement strategy.


With inflation increasing and the Federal Reserve already planning future rate hikes, interest rates may be due to follow. If you have been considering a refinance of your mortgage — whether for your home or your medical practice — this might be a good time to lock in a lower rate before they start edging upward. But be mindful of the costs that can accompany it, such as appraisal and application fees, and try to balance your monthly savings against any up-front costs. This can be especially significant if you have plans to sell your home or practice in the next few years, in which case refinancing may not be worth it.

Tax-loss harvesting allows you to sell securities that have declined in value at a loss but then use those losses to offset current and future capital gains. You can apply up to $3,000 of these losses against your ordinary income and carry forward any unused capital losses to use in future years. If you own stocks that have lost value, it is important to keep an eye on how long you have held them, because short-term capital gains are taxed at your marginal tax rate whereas long-term capital gains are taxed at a 15% (or 20% for higher income earners) tax rate. Be careful to avoid using the short-term, and more valuable, loss against any income taxed at the lower 15% or 20% rate.

One of the most beneficial tools to prepare you for future medical expenses is a health savings account (HSA), which holds pretax dollars that can be used on qualified medical expenses for yourself, your spouse and/or other family members tax and penalty free. Any funds not used by the end of the year can be rolled to the following year and continue to grow tax free. To be eligible for an HSA, you must be enrolled in a high-deductible health plan with a minimum annual deductible before health care costs are covered. Although 

® reports that physicians typically opt out of high-deductible health plans, HSAs can offer significant benefits through pretax contributions, tax-deferred growth and tax-free withdrawals. You also have a one-time opportunity to convert a portion of your traditional IRA to an HSA, limited to the annual contribution limit. Taking advantage of this strategy changes the funds from tax deferred to tax free, assuming the HSA funds are eventually used for qualified medical expenses.

If you have heirs who are feeling the economic pinch now and could benefit from getting their inheritance early, this could be an excellent time to use a gifting strategy. Individuals have an exemption against gift, estate and generation-skipping taxes of $12.04 million per person ($24.08 million for a married couple). This historically high exclusion is scheduled to decrease to about $6 million on January 1, 2026, when the Tax Cuts and Jobs Act sunsets. This exemption can be used throughout your lifetime via gifts or at death via bequests from your estate. Currently, the annual gift exemption is $16,000 per year per recipient (or $32,000 annually per recipient for a married couple), so only gifts above the $16,000 (or $32,000) annual limit per recipient would reduce your lifetime gift and estate tax exclusion.

Several of these strategies require the guidance of tax and legal professionals and can be complicated to execute, so tread carefully. A certified financial planner can partner with your certified public accountant and/or attorney to help ensure you are on the right track to weather whatever volatility we may see.

Anthony Moffa, CFP, is with The Smith Group at Baird, and has worked exclusively with clients in Private Wealth Management. Anthony works with medical professionals and business owners who want peace of mind when it comes to their portfolios and financial plan, and views both aspects as integral parts for successful wealth management. To discuss your personal or business financial planning goals, please contact Anthony at (704) 571-7395 or amoffa@rwbaird.com. For more information on Baird, visit BairdWealth.com.

With the return of inflation, continuing COVID-19 shocks and geopolitical instability, many investors have girded themselves for volatility. Fortunately, you can help to protect your assets from sudden, unpredictable moves in the markets and the economy. 

Volatile times require smart financial planning moves

Medical necessity denials are a source of frustration for many practices nationwide. “It feels like the game of whack-a-mole,” says Holly Ridge, B.S.N., RN, CPC, CPMA, manager of medical necessity and authorization denials at Duke University Health System in North Carolina. “We have an increase in denials in one service, determine the root cause, improve our processes and [then] appeal — and then something else comes up.”

Ridge, who oversees hospital and professional denials for medical necessity, says payer policies have become more detailed and restrictive. “Payers have also improved their edits to automate denials,” she adds.

Toni Elhoms, CCS, CPC, CPMA, CRC, the CEO of Florida-based Alpha Coding Experts, LLC, agrees. The worst part? “These denials can add up very quickly,” she says. For example, Medicare pays approximately $40 for a test for vitamin D (CPT code 82306). If a practice fails to support medical necessity and receives denials for this test 30 times a month, that’s $1,200 a month or $14,400 a year.

1.Sick visit on the same day as an annual wellness visit (AWV)

Reason for denial:Lack of clear clinical documentation regarding why the physician had to go above and beyond what is normally addressed during an AWV.

“I often tell doctors to write the note as if it were two separate visits — one for the problem and one for the well visit — to make it clear,” says Elhoms. “The provider needs to spell out what makes the sick visit significant and separately identifiable from the well visit.”

Providers also need to report the correct ICD-10-CM code for the visit, says Elhoms. When there are abnormal findings (ie, when the physician addresses a separate problem), report Z00.01 as well as any additional diagnosis codes to represent those findings. Only use ICD-10-CM code Z00.00 to indicate the absence of abnormal findings. Payers may question and deny Z00.00 when billed with an AWV and separate evaluation and management (E/M) service on the same day, she adds. Finally, be sure to append modifier -25 to the E/M code so it passes through clearinghouse edits, she adds. Modifer -25 is for “Significant, Separately Identifiable E&M Service by the Same Physician on the Same Day of the Procedure or Other Service.”

Reason for denial:Testing too frequently. For example, a payer might deny a prostate screening when the patient had it done six months ago through a different physician. Or a payer might deny a hemoglobin A1C every four months because its policy states it only covers the test every six months.

For annual tests (eg, prostate screenings), patient communication and care coordination are critical, says Elhoms. “Good communication with the patient can help you avoid some of these issues on the back end,” she adds.

For other frequency-related denials, clinical documentation is paramount, says Ridge. “If a patient is diabetic and doesn’t appear to be responding to the original treatment plan even though they’re [adherent], you could appeal this very easily,” she adds. “The clinical circumstances of ongoing hyperglycemia would warrant frequent A1C monitoring.”

Reason for denial:Incorrect ICD-10-CM diagnosis code. For example, a patient on long-term anticoagulant medication requires checks of their prothrombin time every few days. The payer might deny this test if the physician simply pulls the patient’s entire problem list (e.g., atrial fibrillation, heart disease and presence of coronary stent) onto the lab order.

Another common reason for denial is that physicians do not report the correct ICD-10-CM code to justify testing a patient’s vitamin D — especially when ordered for an AWV. “This is one of the biggest denials, volumewise,” says Ridge. “Medical policies cover it for a variety of diagnoses, but the annual exam is generally not one of them. If the annual exam code is linked to the vitamin D test, it won’t be covered.”

First, link the correct diagnosis code with each lab or test. In other words, the principal diagnosis on the lab order should be the condition that is being screened or monitored. For example, for frequent testing of prothrombin time, list ICD-10-CM diagnosis code Z79.0 indicating long-term (current) use of anticoagulants as the principal diagnosis, says Elhoms.

Likewise, for vitamin D testing, list the most relevant ICD-10-CM diagnosis code as the principal diagnosis on the lab order, says Ridge. For example, this might include cancer, obesity, Crohn’s disease, ulcerative colitis, irritable bowel syndrome or fatigue. A vitamin D deficiency based on a previous test might also suffice, she adds. It is important to know payer policies before ordering the vitamin D test, she adds.

Reason for denial: Patient does not meet the payer’s medical policy criteria for coverage.

Know each payer’s coverage criteria and appeal denials when possible, says Ridge. “Most Medicare Administrative Contractors will consider other indications at their own discretion,” she adds.

Another tip is to work with pharmaceutical representatives to understand indications and coverage criteria. “Not all, but many, pharmaceutical companies offer patient assistance programs if the physician determines the patient really needs the medication and they have failed multiple other treatments,” says Ridge. One caveat: For patients to qualify for some of these programs, physicians may need to bill the patient’s insurance, receive a denial, appeal that denial and fail to overturn the appeal, she adds.

If you want to address medical necessity denials but are uncertain where or how to begin, experts provide these seven tips.


7 tips to avoid medical necessity denials

Appoint someone to stay on top of each payer’s medical policies.

 For example, this could be a certified coder, biller or outside consultant. “The return on investment is absolutely worth it,” says Ridge.

What are your most frequent denials in terms of volume? What are your high-dollar denials? Knowing this information can help you take a targeted approach, says Elhoms.

It can also help you quickly spot denials that may be due to the payer’s own error, says Ridge. For example, Ridge says Medicare started denying Botox injections due to lack of medical necessity; however, it was referencing a policy that was not applicable. Bringing this to the Medicare Administrative Contractor’s attention can quickly resolve the issue and improve cashflow, she adds.

Start with your high-volume, high-dollar denials, says Elhoms. To save time, create standard letter templates for certain types of appeals. Also, remember that the quality of your appeal will make or break your case. In the absence of internal expertise, consider working with an external consultant who knows what payers are looking for in terms of appeal language, she adds. Remember to include research studies, CPT Assistant references, the payer’s own medical policy and any other information that can help support your argument, she adds.

In cases where diagnosis codes are omitted or not specific, consider adding the correct codes and resubmitting the claim, says Elhoms. Be sure to check with your payer regarding how to handle resubmitted claims. Also highlight the part of the note that supports the new or revised codes, she adds.

Build edits in your practice management system. 

The goal is to catch potentially problematic claims before they go out the door. “Coders can review these cases to make sure the right diagnosis codes are linked to the lab or test,” says Ridge.

onsider asking the patient to sign a form (i.e., the Designation of Authorized Representative form) allowing you to appeal the denial on the patient’s behalf under the Employee Retirement Income Security Act. “It gives you additional appeal opportunities and it’s another chance for a new set of eyes to review it,” says Ridge. Member appeals also have the opportunity for an independent review organization to review the denial, which may increase your chances of overturning it.

“If you’re having trouble with a payer, the time to bring up the issues is during contract negotiations,” says Elhoms. “Don’t walk away from the discussion without having some type of resolution.” For example, will the payer build a custom edit in its system or provide a direct contact who can easily address these denials without adding administrative burden on your practice?

If the payer is not willing to work with you, consider walking away, says Elhoms. “Is the payer even worth your time? If you’re spending this much time with medical necessity denials, it may not be worth it,” she adds.

How to avoid medical necessity denials and ensure timely payment.

How to avoid medical necessity denials

Prenuptial agreements, or prenups, have an undeserved reputation as the destroyer of romance. Prenups offer a level of lifelong protection unmatched by any other contract you will enter.

Is a prenuptial agreement worth it? The short answer is yes. The long answer is also yes.

This is true for most people, but especially for physicians. Although doctors are not the most likely to get a divorce (quite the opposite, according to a 2015 article published by Harvard Medical School), the possibility exists, and physicians (no matter their age) have much to protect.

A prenup need not be expensive or overly complicated to potentially save hundreds of thousands (even millions) of dollars while minimizing litigation (and all the nastiness that divorce litigation brings). It can protect generational wealth, help direct what will happen to your estate when you die and preserve assets for your children. It can even ensure clear communication and understanding of how money will be treated during the marriage, removing a typical cause of marital strife. The prenuptial agreement can help maintain marital relationships. Nothing is more romantic than a strong, healthy marriage.

Prenups are not just for millionaires. They are a wise decision for most people. There are countless situations where a prenup is an effective tool for building and maintaining wealth no matter the couple’s financial situation prior to the marriage. Prenups are insurance.

People do not want to be sued, but they carry malpractice insurance. They do not want to get sick, but they have health insurance. There is life insurance, long-term care insurance, disability insurance, and even key man insurance for partners in one’s medical practice, and no one questions that a sound financial plan includes these protections. It would be foolish not to have them. The same is true of a prenup.

Simply stated, a prenuptial agreement is a contract between two people who intend to marry. Should the wedding not take place, the contract is void. If the wedding does happen, then the prenup is a valid contract that directs certain financial paradigms, and it does so algorithmically.

In Massachusetts, for example, a prenup cannot direct matters regarding the couple’s children (custody, child support, college, etc.), but it can address the following issues. (See box above.)

For physicians, a prenup will be useful in protecting income and assets, including a medical practice. Your practice may be (or will become) your most valuable asset. Absent a prenup, closely held and privately owned businesses (even those started before the marriage) are considered marital property, no matter the duration of the marriage. If a divorce occurs, this asset may need to be valued, and then a buyout of the nonpractitioner spouse’s share will take place. This could translate into a physician paying hundreds of thousands to an ex-spouse.

The prenup can declare that certain classes of assets (such as a medical practice) are separate property and therefore no valuation or costly buyout is necessary.

Marriage is a partnership. You would not enter a medical partnership without an agreement, so you would also be wise not to enter the marital partnership without a prenup.

Among other assets protected by prenups are houses (including the marital home), assets acquired before the marriage, retirement assets, family monetary gifts and inheritances.

The list is endless. For a physician, such an agreement can be invaluable.

Carolyn “CiCi” Van Tine is a prominent divorce and family law attorney at Boston law firm Davis Malm. Send your legal questions to medec@mjhlifesciences.com.

Yes, a prenup is worth it for physicians

Picture this: You come into the office and all your electronic patient files are encrypted. When you try to access them, this is what you see: “You can’t access information unless you pay a ransom.” If you’re lucky, it might only be a few thousand dollars. Experts say “bad actors” have been known to demand hundreds of thousands of dollars or more. Without a system backup, you could face significant operational disruptions.

“The data that medical practices have is incredibly valuable to the bad guys,” says Errol Weiss, M.S., chief security officer at Health Information Sharing and Analysis Center (H-ISAC), a global, nonprofit, member-driven organization that collaborates with other entities to share vital physical and cyber threat intelligence and best practices.

What’s so valuable about patient records? The information that’s inside — names, dates of birth, addresses, financial information, and more. Hackers can sell it on the dark web (i.e., private computer networks that communicate and conduct business anonymously without divulging identifying information, such as a user’s location), open credit cards and more, says Weiss.

Evensmall practices are not exempt as targets.

“Small medical practices are low-hanging fruit for hackers because they haven’t typically tightened down their cyber environment,” says Emily Jones, practice leader and director of operations at Warren Averett Technology Group. “You’re never going to get a risk of zero, but there are measures you can put in place to protect yourself and your patients.”

Not only is this a Health Insurance Portability and Accountability Act requirement for all covered entities, it can also help practices identify specific areas of vulnerability, says Vanessa Bisceglie, MBA, president and CEO of 

Once you know your practice-specific vulnerabilities, provide targeted education. “Your employees need to be your first line of defense,” notes Jones.

The good news? Between webinars and free ezines, there are plenty of ways to educate staff on a tight budget, says Weiss. It’s the simple strategies that can be most effective, says Linda Renn, vice president at STAT Solutions, Inc.

Cybersecurity threats change quickly, and software can immediately become vulnerable, says Weiss. Patch updates are designed to fix security vulnerabilities and other bugs so hackers can’t hack patient records as easily. Make it a habit to check for systems updates regularly, he adds.

Enable multifactor authentication on all devices. 

Multifactor authentication requires users to provide two or more verification factors (e.g., password and answer to a security question). Why is this important? “All password resets go to your email,” says Weiss. “If the bad guys have access to your email, it’s game over for you.”

For example, prohibit employees from using the same password for personal and work devices, says Jones. Why? If a hacker gets access to one, they have access to both.

“Hackers move laterally,” she says. “They see where you bank or where you work, for example, and then try using the same credentials.” Requiring employees to change their password every
60 or 90 days is also important. So is using a complex password of
12 characters that includes a combination of symbols, numbers and upper- and lowercase letters.

Make sure all hardware devices and emails that hold electronic patient health information are encrypted, says Bisceglie.

A firewall is a device (either physical or virtual) that acts as a barrier to permit or deny access to your practice’s network. When configuring the firewall, you’ll need to think about internal and external access, says Jones. For example, what vendors (e.g., transcription companies, coding outsource companies, or telehealth vendors) will you permit to access your network? What websites will you permit staff to visit?

Separate your guest Wi-Fi and medical practice networks. 

“If you don’t do this, someone who knows what they’re doing can get into the practice’s network and access medical records in a matter of minutes,” says Jones.

Ensure role-based access to electronic health records. 

“Many times, vendors give broad access when the system is set up, and it’s up to a practice to really cut the access down and give staff the minimal access they need to do their role,” says Bisceglie. In the event of a breach, role-based access may help restrict the information to which hackers have access.


“If you don’t back up your systems and check those backups, a ransomware attack can be devastating,” says Weiss.

Make sure backups are off-site and, if possible, on a separate electric grid, Renn says.

However, know what type of coverage you’re getting, advises Bisceglie, adding that practices should ask about coverage specifics, deductibles and required prerequisites for coverage.

This should be the first person you call if you suspect your practice has been hit with a cyberattack because they can advise you on what to do next, says Renn. “If you don’t follow the right steps, the insurance company could null and void your coverage.”

Don’t just assume you can pay ransomware, says Renn. Engaging in a financial transaction with a sanctioned country, for example, could mean major civil and criminal penalties.“Contact your legal team because sanctions risks can be complex,” she says. “Your cyber liability attorney will be able to guide you in this area.”

Consider managed cybersecurity services. 

Small medical practices may not be able to afford an IT staff member to focus on cybersecurity. That’s why having someone else do it may be the best option, says Weiss. A managed cybersecurity services provider will properly secure the medical practice’s network and provide ongoing cybersecurity monitoring services. Weiss says to consider these questions when vettingproviders:

What does the provider do when it detects malicious activity?

Can the providerdetect when a breach has occurred? Can they detect when data has been lost?

Does the provider give recommendations on enhancing security?

Cybersecurity: How medical practices can protect patient data from hackers

Nothing in the U.S. health care system will be or should be the same after a two-year global pandemic. Our primary care system has recovered in some ways from the sudden financial shock and the loss of patients, but a closer look suggests it is still the same under-performing, under-funded, and under-cared-for prepandemic system. That needs to change over the next five years. Here is a blueprint detailing how.

Goal 1 Transform the Way Health Care Treats the Primary Care Workforce

We knew that doctors, nurses and pretty much all other primary care workers were overworked and burned out prior to the pandemic. The pandemic made it worse. Things like burnout and job dissatisfaction do not get better on their own. Health care employers will have to radically alter how they view and treat their workforce. In business, successful companies apply a concept called “

,” which involves a sustained and holistic approach to recruiting, motivating and retaining workers. It forces organizations to become desirable places to work. It also involves employers seeing their employees as individuals with unique needs, wants and situations. To achieve this goal, primary care employers must move beyond compensation as the chief human resource focus for physicians, nurse practitioners, physician assistants and nurses, and work on meeting the full range of their workplace needs. Employers must redesign health care jobs and work settings with this in mind.

Goal 2 Allow Patient Choice to Drive the Primary Care Marketplace More, Not Less

Patient choice was never really taken seriously in primary care before the pandemic. But it must be taken seriously now. For example, the inconveniences that still exist in trying to schedule, get to and follow up on primary care provider visits are unacceptable. Patients want choices for when and how they access their primary care. They want low-cost options, virtual and in-person options, easy access and convenience, and real-time communication. Primary care providers and their offices need to embrace digital health tools and a new mindset that regards patients as their 

. Virtual primary care delivery, which has 

 dramatically since the height of the pandemic, should become more mainstream than it is now, especially for certain diagnoses and for patients with already established relationships with primary care providers. Electronic patient care portals must be more interactive, operate in real time, and be designed with input from the user, the patient, on how they wish to use them. Most patient portals remain asynchronous, lack interoperability, and are limited in their functionality from the consumer side.

Patients should have 24/7 access to their primary care provider’s office, not just nine-to-five access. That’s a mindset change as much as anything else, and primary care doctors know it. Yes, payment will need to account for some of this extra access and time by providers (see below), but payment cannot be used anymore as an excuse. Physician-centric primary care as we know it will continue to decline unless patients have more choice in how they wish it to be organized and delivered to them. Primary care physicians will continue to lose relevance with their customers if they do not deliver on the choice imperative.

Stop Big Delivery Systems From Making Primary Care a “Loss Leader”

Big delivery systems that continue to spread 

 throughout the U.S. treat primary care as something beneath them––a loss leader important mainly for stopping patient “leakage” to outside specialists and other delivery systems with whom they compete. These systems, most with hospitals and powerful specialty groups at their core, must be forced to take primary care delivery more seriously in letting their primary care providers, and not their specialists, manage more of the chronic disease and preventive needs of their patients. They need to make their brand of primary care less transactional and corporate-like, and more relational and human. They need to be incentivized or forced to focus on keeping their patients healthier. In a best-case scenario, there should be more free-standing primary care offices that are not so closely aligned economically with these large hospital-based systems. This falls on individual primary care doctors to make happen and on government and venture capital to help seed fund it. Collaboration with tech companies that can provide digital health tools for these stand-alone practices at reduced cost is also a good idea.

Give Payment Control to the Primary Care Provider and Patient

We have been saying for decades how we need to invest more in primary care and keeping people healthy. But it really has not happened. Call it value-based reimbursement, bundled payment, global capitation, whatever—the words no longer matter. They are the toothless, feel-good vocabulary of an army of policy makers and industry executives who have been unable to see the follies of an approach to fixing primary care payment that depends on providers creating reams of documentation; moving through authoritarian quality checklists for every type of visit and patient; reading and reacting to a mass of analytics about how they should take care of their patients; and being chastised constantly for falling short per some half-evidence-based clinical guideline.

That’s not a good payment system. That’s a Pavlovian one that turns primary care providers into dissatisfied and burned-out lab rats. Move to payment systems that return on-the-ground decision- making and control to the individual provider, payment systems that reflect trust in how they do their jobs. Give providers the freedom to interact with patients how they see fit, and in the process get rid of much of the inane documentation requirements that add no value for either patient or provider. Not everyone needs a detailed checklist to help assure they receive appropriate care. Hold primary care providers accountable but in more global ways that do not require them to justify their decisions for every patient. Push risk onto them but also give them the appropriate amount of funds up front to manage this risk at a population level; don’t dole out the dollars in piecemeal fashion.

Goal 5 Amass an Army of Primary Care Providers at Different Skill Levels

We know there won’t be enough primary care 

 to meet the needs of our system moving forward. But we also face shortages of 

, both of whom increasingly shoulder more administrative and basic care duties in primary care. Medical schools alone cannot be relied upon to turn out more primary care physicians. They have no incentive to do so.

More initiatives of the kind that Kaiser Permanente has developed, in which they invest in developing primary care physicians, should be encouraged. There needs to be much more loan forgiveness for those wishing to pursue primary care careers. Establishing a plethora of health training programs in community colleges for medical assistants, who now do most of the primary care prep work, makes sense, and reaching into high schools to attract select individuals to such careers can be part of that initiative. Make the employers who need these types of positions invest in the training programs in return for having graduates work locally in their organizations for a period of time.

These are just the big picture strategies, and there is much more to do. But until the overarching blueprint gets articulated and adopted, the tactical details will remain devalued.

Timothy Hoff, Ph.D., is a professor of management, healthcare systems, and health policy at Northeastern University in Boston, Massachusetts, and author of the new book, “Searching for the Family Doctor: Primary Care on the Brink” (Johns Hopkins University Press).

A strategic blueprint for fixing primary care

Fixing the primary care system after the COVID-19 pandemic

www.medicaleconomics.com/view/seeking-alpha-premium

The stock market has retreated sharply this year and quite relentlessly over the past few months. Biotechs have been in retreat since late last year and the industry group is well into a deep bear market with valuations on the S&P Biotechnology Select Industry Index (

) slashed by over 60% from their highs. Investors face an uphill task this year:Things have been difficult thus far but there will be selective opportunities to recover lost ground and perhaps record some gains this year.

Biotech valuations have fallen precipitously as the stock market encounters an environment not seen in nearly 50 years — spiraling inflation and an aggressive and determined Federal Reserve (FED). The S&P 500 (

) has declined 21% and likely has more to go based on a historical perspective.

The four major corrections or bear markets this century can provide some helpful insights, though the picture remains incomplete due to the uniqueness of the present environment. The 2020 pandemic-related pullback, and the brief recession, are omitted.

Biotechs declined sharply in each of these pullbacks. The 2002-03 period is not as instructive because the Nasdaq Biotechnology Index (

) was started right during the middle of the decline and the S&P biotech index did not exist.

What can be more useful is placing these pullbacks in the context of a FED interest rate policy reflecting the economic environment at the time.

During the first two periods the FED was working to prevent or manage a recession by cutting interest rates. The biotech indexes dropped less than the market did and for good reason. Biotechs are relatively less affected by slower economic growth than the broader market, and the declining interest rate provides support for risk taking, thus allowing the biotech group to reach a bottom more quickly. Biotechs went from highs to lows in four months, compared with the S&P 500’s 17 months.

In these situations of low growth and declining interest rates, biotechs typically outperform the S&P 500 Health Care index (

). This index is a good proxy for broader health care but not as much for biotechs as it is derived from stocks within the S&P 500 index. There were only six biotechs in the S&P 500 at last count.

The 2015-16 decline, like the present one, began in an environment of rising rates or expectations thereof. Rising interest rates tend to be harmful to biotech (and growth stock) valuations as they lead to a heftier discount rate applied to future potential earnings and diminish risk taking. In 2015-16, the biotech indexes fell between 40% and 50%, compared with a 15% decline for the S&P 500 and a 27% decline for health care.

In the present pullback, biotechs at the worst point had declined 65% and 41% for the two key indexes. This exceeds the maximum decline in 2015. During the 2015 period, the rise in rates began from the 0% to 0.25% range, just like the present one. However, the FED’s language was supportive and soothing, reiterating central bank patience and a rise in small increments at a measured pace. Biotechs reached their lows in that cycle in seven months. Presently, the S&P biotech index is 15 months into the decline and the Nasdaq Biotechnology Index nine months into it.

Health care has materially outperformed the broader indexes of S&P 500 and Nasdaq in the present pullback. However, one has to be careful when forming broad-based opinions about health care performance from the S&P health care index. It is a market cap weighted index and a top 10 holdings account for 55% of its performance. A few defensive groups within health care, such as pharmaceuticals, drug distributors and insurance, have done significantly better than most other groups and dominate the index performance because of their higher market caps.

A twist that muddies the investing waters

When the federal funds rate rose in 2015 from 0%, it eventually topped out at 2.5%. That is the level most likely to be reached in September after another three increases of a half-point each. Where the 2015 framework diverges from the present situation is that there was no inflation monster to slay at that time. This time 2.5% will very likely not be a sufficient rate at which the FED can stop.

The twist in the current scenario comes from the likelihood that even slowing economic growth numbers may not bring the inflation headline numbers down fast enough. This is because structural global imbalances are resolving rapidly but may take another year to start approaching normal and even longer to return to the desired 2% inflation target. This means that the FED, for the first time since the 1970s, will be placed in a position of considering tightening in the face of declining economic growth.

That is the risk being reflected in the market valuations. Biotechs in this environment cannot rely on the usual help from the combination of lower economic growth and falling rates, as this time interest rates will continue rising — hence the 60% decline in the equal-weighted S&P biotech index. The Nasdaq Biotechnology Index has declined 41% but masks the deeper industry decline, as it is a market-cap weighted index with the Top 10 companies accounting for over 50% of the performance.

The deep decline in the S&P biotech index can also be attributed to a surge in biotech offerings over 2020 and 2021 when nearly 160 companies became public through initial public offerings and special purpose acquisition companies. As per a 

 report, 66% of these had products and platforms in the early stages of preclinical or phase 1 development, a marked uptick in early-stage, higher risk offerings compared with those of prior years. Many of these companies may not be well prepared for the present environment of tightening financial conditions. Layoffs, closings and mergers and acquisitions are inevitable.

For the market to consolidate and rebound with consistency, it requires a step-down by the FED from its present aggressive rate increase strategy.

Such an opportunity could arise if the FED, after its increase in 50 basis points in September, concludes its series of half-point hikes and steps down to increases of 25 basis points thereafter. This will allow the FED to shift from a blunt force approach to a relatively measured, surgical one.

Although a much slimmer possibility, the FED may even decide to pause on further increases to evaluate the progress on inflation over the subsequent months if the financial markets are heavily stressed, inflation numbers are declining meaningfully, and the FED would like to guide the economy to a “softish landing.”

It is often said in the commodities market that a cure for high prices is high prices. If the FED believes so, then it will need to exercise patience later in the second half of the year, after a period of significant tightening, and allow higher prices as well to depress demand and contribute toward lower prices.

Even if only a step-down to
25 basis points materializes, and there is a good possibility for that to occur, it will set up the market for a strong fourth-quarter rally. The FED may begin to telegraph its intentions in late August or early September.

The current miasma of gloom shrouding the biotech group could dissipate rapidly in the late third quarter, and we may witness a rally of over 20% in biotechs during the final months of the year if the FED provides the right signals and tone in September. Of course, if the FED does not offer soothing signals as it gets to the 2.5% level, the biotech rally will be much more muted and selective as the indexes consolidate after a brutal shake-down. Mergers and acquisitions will inevitably grow later in the year as rapidly eroding biotech valuations attract mountains of big pharma cash.

With a 65% drop or about a two-thirds valuation erosion in the S&P biotech index, it would appear we are closer to a bottom than at any other time over the past few months. However, it may not mean a quick reversal but more of a consolidation around these levels and a slow grind higher till the FED relents.

Tarun Chandra, CFA, is an analyst with Graycell Advisors and Prudent Biotech. The original version of this article was published on Seeking Alpha.

Investors face an uphill task this year:Things have been difficult thus far but there will be selective opportunities to recover lost ground and perhaps record some gains this year.

What’s next for biotech and health care

After suffering steep drawdowns this year, many investors with stock-heavy portfolios are looking for assets that don’t always move with stocks. And with inflation at a 40-year high and interest rates rising, investors are also seeking assets resistant to the negative impacts of these trends.

An investment type that satisfies these needs is real estate investment trusts (REITs), an alternative asset (that is, an alternative to stocks or bonds). Often overlooked by individual investors, these publicly traded companies are landlords that own various types of rental property, including apartment complexes, office buildings, shopping malls, data centers and self-storage facilities.

Investing in REITs is a convenient way to get income from rental properties that can be extremely messy to own directly. Though REITs usually involve more risk than bonds, they provide far higher income. They can be essential components of the retirement portfolios of physicians, especially those at small private practices that lack pensions.

Currently, fundamentals and markets of REITs in various categories signal likely growth over the next two or three years. However, today’s negative economic headlines — inflation, rising interest rates, the effects of Russia’s invasion of Ukraine and recession fears — are causing headwinds, and investors are showing reluctance to buy REITs in some sectors. Thus, the clear potential of these REITs has not yet translated into higher share prices.

Characteristically, REITs in general have suffered less damage than stocks in the last year’s tumultuous market. In the trailing 12 months as of May 31, the MSCI US REIT Index has returned about +2%, whereas the S&P 500 has returned approximately 0.4% (dividends included). A key reason for this difference is REITs’ attraction for investors as a hedge against inflation (8.5% annually), as landlords can raise rents to cover rising costs. And historically, REIT prices have moved with stocks’ only about two-thirds of the time, so REITs can somewhat diversify stock-laden portfolios.

Many investors are looking for assets that don’t move with stocks and are inflation-proof. Are REITs the answer?


Medical Economics July 2022

Investing against inflation

Volatile times require smart financial planning moves

How to avoid medical necessity denials

Yes, a prenup is worth it for physicians

Cybersecurity: How medical practices can protect patient data from hackers

Fixing the primary care system after the COVID-19 pandemic

What’s next for biotech and health care

Investing in Low-Valuation REITs for Growth and Income

Solving the physician shortage

Coding refresher: How to determine new vs. established patients

Managing patients with heart arrhythmia

After Hours: Aiding Ukraine