Eastern Orthopaedic Association • 110 West Road • Suite 227 • Towson, MD 21204

Toll-Free: 866-362-1409 • Fax: 410-494-0515 • E-mail: info@eoa-assn.com • Web: www.eoa-assn.org

Winter 2012Editor: Scott D. Boden, MD

E A S T E R N O R T H O PÆ D I C A S S O C I A T I O N

Happy New Year, 2012 to allof you! I hope the New Yearbrings in good luck, goodhealth and continued goodfortune to all of us. I want toextend the EOA’s apprecia-tion and gratitude to our Past

President and First Lady, John and ChrisRichmond, for their dedication and loyaltyto this organization. John and Chris hostedthe 41st Annual Meeting last October at theKingsmill Resort in Williamsburg, Virgin-ia. It was tremendous. We had record atten-dance at the scientific sessions. The beerfest at Busch Gardens was one of the high-lights of the meeting and the best WelcomeReception I have been to in many years.Geoffrey Westrich, MD and the ProgramCommittee organized a superb scientific

program, Amar Ranawat,MD and his TechnicalExhibits Committee onceagain secured manysponsors for the meeting,and your board dedicatedmany hours throughoutthe year to make sure theAnnual Meeting was asuccess. Dr. Richmond’sSteel Lecturer was DavidL. Kaplan, PhD, from Tufts University,who spoke about Silk-Based OrthopaedicDevices. The Presidential Guest Speaker,Brian Day, MD, came down from Canadaand gave an entertaining talk on CanadianHealth Care Reform. The Founders’ Awardfor the best abstract presentation went to X.Joshua Li, MD, PhD, University of Virgin-

President’s MessageHenry A. Backe, MD

ia, Charlottesville, VA for his work on theRole of ApoE in Intervertebral Disc Degen-eration. Congratulations to Dr. Li.

The evaluations from the 2011 meetingshowed the program content was thought tobe just right, not too advanced and not toobasic. The majority of responders wrote that

Continued on page 2

I N T H I S I S S U E

Membership Update p. 3

Meet the New Board Members p. 3

EOEF Report p. 3

EOA Bylaws Changes p. 4

Recap of the 42nd Annual Meeting p. 6

Important Dates p. 6

Thank You Annual Meeting Grantors p. 7and Exhibitors

Money Matters p. 9

Practice Management Advisor p. 10

Register Now for the 43rd Annual Meeting

The EOA AnnualMeeting is June 20-23, 2012 at The Sag-amore on LakeGeorge in BoltonLanding, NY. Go

online to www.eoa-assn.org to view theMeeting & Travel Guide and peruse thetentative schedule of events, guest speakerbios, social activities, and hotel informa-tion.

The Sagamore, located in the heart of theAdirondacks on Green Island, is an islandresort on Lake George anchored in BoltonLanding, New York. From outdoor adven-

ture to peaceful solitude, you will find it inthe Adirondacks. With more than 20 beau-tiful lakes, countless outdoor activities, anddozens of exciting attractions, the LakeGeorge area is the perfect vacationer’s par-adise.

Register for the meeting online atwww.eoa-assn.org and make your reserva-tions at The Sagamore by calling (800)358-3585. Mention you are attending theEOA Meeting to ensure you receive thediscounted rates.

Cutoff for EOA room rates is May 25, 2012.

43rd Annual MeetingJune 20-23, 2012

The Sagamore on Lake GeorgeBolton Landing, NY

EOA NEWS • Winter 2012 • Page 2

Eastern OrthopaedicAssociation

2012 Board of Directors

PresidentHenry A. Backe Jr, MD

Fairfield, CT

First Vice PresidentDavid S. Zelouf, MD

Philadelphia, PA

Second Vice PresidentDavid W. Romness, MD

Arlington, VA

Immediate Past PresidentJohn C. Richmond, MD

Boston, MA

SecretaryJames T. Guille, MD

Pottstown, PA

TreasurerGeoffrey H. Westrich, MD

New York, NY

HistorianRobert P. Boran, MD

Port Carbon, PA

Membership ChairBrian J. Galinat, MD

Wilmington, DE

Program ChairJohn D. Kelly IV, MD

Philadelphia, PA

Members-at-LargeJavad Parvizi, MD, FRCS

Philadelphia, PAMichael P. Bolognesi, MD

Durham, NCMarc J. Levine, MD

Mercerville, NJ

Managing DirectorE. Anthony Rankin, MD

Washington, DC

President’s Message continued

The Mission of the Eastern Orthopaedic Association is to promote high quality ethical care for musculoskeletal patients in the eastern region of the United States by providingeducational programs, fostering collegiality and supporting professional development among its members and physicians-in-training, and by influencing health care policy.

The EOA Mission

we delivered what they came to learn andwould recommend the meeting to a col-league. It was generally felt that we weresuccessful in keeping industry bias out ofthe presentations. The location was wellaccepted. People commented on the collegi-ality and friendliness of the meeting andappreciated the free afternoons for familytime. We do need to work a bit on makingthe poster presentations more interactiveand we will try to do this at the 2012 meet-ing. The industry-sponsored lunches werewell received and the EOEF golf outing waswell attended.

Many thanks go to Board Members whoseterms have ended. Mark Lemos, MD, fromMassachusetts served as a Member-at-Large and he will now chair the BylawsCommittee. James Vailis, MD from NewHampshire stepped down as MembershipChair and will now serve on the Audit Com-mittee. Mark Levine, MD chaired the Tele-communications Committee and will nowserve as a Member-at-Large. We welcomeRichard Wilk, MD from Massachusetts tothe Board who will serve as Telecommuni-cations Chair and Brian Galinat, MD fromDelaware who will serve as MembershipCommittee Chair. Geoff Westrich, MD willtake over as Treasurer from David Rom-ness, MD who was elected our new 2ndVice President.

Financially, the EOA is strong and thanksto your Board and our management team atData Trace, we were revenue positive for2010 and 2011. We have recently rebal-anced our investment portfolio and aresteadily recovering from our losses from thestock market collapse in 2008. Don’t worry– we still have ample reserves.

We welcomed 82 new members for 2011.Our total active membership is now 606,down slightly from 2010. Brain Galinat,

MD, as the new Membership Chair, will beworking to get our number of active mem-bers back above 2010’s total. If you have acolleague who is eligible and not a member,get him/her to join the EOA. Don’t forgetabout sponsoring someone you work withfor an allied health membership in the EOA.

The 43rd Annual Meeting will be held at thehistoric Sagamore Resort on Lake Georgein New York, June 20-23, 2012. This meet-ing will be perfect for a family summervacation. The resort has a multitude of ac-tivities and water recreation for all ages.John Kelly, MD from Pennsylvania is theProgram Chair and has put together an in-formative program which will include top-ics on joint preservation. I am sure he willhave a few “stand-up comedy acts” dis-persed throughout the program as well.Derek McMinn from the UK, well knownfor hip resurfacing, will be the PresidentialGuest Speaker. The Howard Steel Lecturewill be given by Dan Pelino, General Man-ager, Global Healthcare and Life Sciences,IBM Corporation, who will give a demon-stration of “Watson,” the IBM computerknown for winning the game show “Jeopar-dy,” and how it will help physicians prac-tice better medicine.

I hope you continue to value your EOAmembership and will encourage your eligi-ble colleagues who are not members to join.The strength of any organization is ulti-mately in its membership and that is you! Itis an honor to serve as your president thisyear. Please join me in continuing the mis-sion and traditions of the EOA. I hope tosee as many of you as possible at the Saga-more this June! Thank you.

Sincerely Yours,

Henry A. Backe, Jr, MDEOA President

EOA NEWS • Winter 2012 • Page 3

Meet the New Board Members

Brian Galinat, MDWilmington, DE

Dr. Galinat has been elect-ed to serve as the 2011-2012 EOA MembershipChair. Born in Connecti-cut, he has lived in seven

of the 18 states that make up the geographicboundaries of the EOA and has never livedmore than 20 miles from I-95. He receivedhis BS in Chemistry from Randolph-MaconCollege and his medical degree from theMedical College of Virginia. After com-pleting an orthopaedic residency at ThomasJefferson University, he did hisshoulder/sports medicine fellowship at theHospital for Special Surgery. While a resi-

dent, he received the 1987 EOA Founder’sAward.

Dr. Galinat has been in private practice inDelaware his entire career. He served as thestate representative to the AAOS Board ofCouncilors and was a member of the StateLegislative and Regulatory Affairs Com-mittee. He is currently a member of theAAOS Coding, Coverage and Reimburse-ment Committee and serves as the AAOSalternate member to the AMA RBRVS Up-date Committee (RUC). For 14 years, Dr.Galinat served as one of the many orthopae-dic surgeons helping in coverage of theteams of the U.S. Soccer Federation. Hewas the team doctor of the Wilmington BlueRocks, a local minor league baseball team,

while also covering high school teams andcoaching youth soccer. Recently electedinto the American Orthopaedic Association,he is Chairman of the Department of Ortho-paedic Surgery of the Christiana CareHealth System.

Those who know him well consider itsomewhat of a mystery how he has hadwhat many would consider a successful runof things thus far. Truth be told, his mostfortunate accomplishment was marrying hiscollege sweetheart, Lois, and maintaining ablessed relationship with her and their threechildren for over three decades. His opti-mism, however, might suggest that the bestis yet to come.

The Membership Committee along with theBoard of Directors of the Eastern Orthopae-dic Association has been hard at work de-veloping policies to improve the associationand its membership. The Program Commit-tee prepared an excellent program this pastyear and will continue to do so in 2012. Weare also working to increase resident mem-bership by fostering working relationshipswith residency programs in our region.

Membership Update

EOA has a total of 812 members. In 2011EOA welcomed 82 new members to theassociation. The total active membership is606 down slightly from 2010. Brian Gali-nat, MD, the 2011-2012 EOA MembershipChair, will work hard with his committee toincrease the active membership numbers in2012.

Please join us this year in supportingthe EOEF with your generous gift. TheEOA has made significant strides inthe last five years with the financialassistance of the EOEF and we want tocontinue growing and providing moremember benefits.

There are several vehicles throughwhich to give your tax deductible con-tribution including the EOEF LivingLegacy Program. If you would like tomake a significant gift to the EOEF,please call Dr. Chit Ranawat or ChuckFreitag at 866-362-1409 or simplysend your check to the EOEF today.

We appreciate your continued supportof the EOEF and would like to thank allof our membership for their magnifi-cent encouragement this past year.

Support EOEFMarc J. Levine, MDMercerville, NJ

Dr. Levine is a spine sur-geon at Trenton Orthopae-dic Group which consistsof 12 physicians including

eleven orthopaedic surgeons and one painmanagement specialist. The practice is al-most 50 years old and originated in Tren-ton, NJ.

Dr. Levine completed medical school atJefferson Medical College, followed by ageneral surgery internship at PennsylvaniaHospital, an orthopaedic residency atThomas Jefferson University Hospital Af-filiated Program and a fellowship in spinesurgery at Emory University Hospital Af-filiated Program.

Dr. Levine is the recipient of numerousawards including the Resident/Fellow Trav-el Award at the EOA 26th Annual Meetingheld in Rome, Italy. An Eastern Orthopae-dic Association member since 1995, he hasserved on many EOA Committees. He is anactive member of several other orthopaedicsocieties and is currently serving as a trust-ee for the Medical Society of New Jersey.

Outside the practice of medicine, Dr.Levine enjoys snow skiing, golf, and tennis.He is most proud of his wife Robin, who isa children’s yoga instructor, and their threechildren, Benjamin 15, Joseph 13 and Emi9. The family lives in Bucks County, Penn-sylvania where they spend most of theirweekend time going to children’s sportingevents.

EOA NEWS • Winter 2012 • Page 4

The following Bylaws changes will be pre-sented to the membership for approval atthe 2012 Annual Meeting at The Sagamoreon Lake George in Bolton Landing, NY,June 20-23. The copy in red are recommend-ed additions and the copy struck through areto be removed.

ARTICLE IVMEMBERSHIP

SECTION 3: Out-of-Region Member-ship Qualifications

A. Out of Region members are con-sidered Active Members in theASSOCIATION and should meetthe following criteria.

(1) Out of Region members are physi-cians who maintain a full and un-restricted license to practiceMedicine, and practices outside ofthe geographic boundaries of theASSOCIATION and inside theUnited States;

(2) Out of Region members should bea Fellow in good standing of theAmerican Academy of Orthopae-dic Surgeons or an equivalent or-ganization as determined in thesole discretion of the ASSOCIA-TION;

(3) Out of Region members agree tobe bound by and adhere to thePrinciples of Medical Ethics of theAmerican Medical Association.Members of the American Osteo-pathic Association agree to bebound by and adhere to the Codeof Ethics of the American Osteo-pathic Association;

(4) Out of Region members shouldmaintain high professional, moral

and ethical standards in his/hercommunity;

(5) Out of Region members complywith the dues, fees, and assessmentrequirements, as well as these By-laws and Policy Statements estab-lished from time to time by theBoard of Directors of the ASSO-CIATION.

B. Out of Region members are eligi-ble to vote, hold office, serve oncommittees, and sponsor appli-cants for membership.

C. Out of Region members do paydues, fees and assessments.

D. Conformity to these criteria intheir entirety continues an Out ofRegion member as an Activemember in good standing.

SECTION 3 4: Emeritus MembershipQualifications

SECTION 4 . 5: Honorary MembershipQualifications

SECTION 5 6: Candidate Membershipand Standards for Continued CandidateMembership

SECTION 6 7: Allied Health Profession-al Qualifications

ARTICLE XIIICOMMITTEES

SECTION 6: Audit CommitteeB. This Committee shall be responsible foran audit of the ASSOCIATION; and it shallsubmit to the Board of Directors and themembership an annual report. every threeyears at the time of the contract renewalwith Data Trace; and it shall submit to the

Board of Directors and the membership anaudit report at that time. Other audits willoccur at the discretion of the treasurer.

C. This Committee shall retain the servicesof a Certified Public Accountant who is inno way connected with the ASSOCIA-TION who is to assist in making the annualaudit or other special audits. At the discre-tion of this Committee, the annual audit thatwill take place every three years and at thetime of the contract renewal with DataTrace may be made without prior consulta-tion with any other officers or employees ofthe ASSOCIATION.

D. This Committee shall have the right toreview the financial affairs of the ASSOCI-ATION in addition to the annual audit onlyafter written notification to the Board ofDirectors of the purpose and scope of sucha review.

ARTICLE XXIAMENDMENTS

SECTION 2: Emergency Amendment

“Emergency Amendments including othersituations deemed by the board to be ofsuch an urgent nature that following thecustomary process for Bylaws changewould not be in the best interest of theorganization.”

This These actions must be communicatedto the ASSOCIATION membership as soonas possible, and the action confirmed by athree-fourths (3/4) vote of those present andvoting at the Annual Meeting.

EOA Bylaws Changes

EOA NEWS • Winter 2012 • Page 6

The 42nd Annual Meeting was an immensesuccess, with an excellent scientific pro-gram organized by Program Chair, Dr.Geoffrey H. Westrich, and the EOA Pro-gram Committee. Dr. John C. Richmond’sPresidential Address, “Health Care Reform:Ahead of the Curve in Massachusetts” andPresidential Guest Speaker, Dr. Brian Day’spresentation on “Health Care Reform: Les-sons from Canada” both were interestingand informative. The Howard Steel GuestLecturer, David L. Kaplan, PhD, gave avery fascinating lecture, “Silk-Based Ortho-paedic Devices.”

The meeting kicked off with a fantasticWelcome Reception at the Festhaus atBusch Garden. Everyone enjoyed the greatfood and exciting rides, along with thechance to visit with old friends and col-

Recap of the 42nd Annual Meeting

leagues. The following evening began witha Sponsor and Poster Reception before ev-eryone went out on their own to enjoy thewonderful Kingsmill Resort or the sur-rounding historical Williamsburg area. Themeeting was brought to a close with a fabu-lous Founders’ Dinner Dance. The DinnerDance began with the EOA Jazz Band Re-ception, led by Bob Richards, Jr.

It was a sensational meeting and we expressour thanks to all who attended. If youmissed it, view the 2011 Williamsburg pic-tures on the EOA website and see what agreat time it was! (www.eoa-assn.org)

We look forward to seeing you at the beau-tiful Sagamore on Lake George in BoltonLanding, New York, June 20-23, 2012!

Important Dates

44th Annual MeetingOct 30 - Nov 2, 2013

Loews Miami BeachMiami Beach, FL

43rd Annual MeetingJune 20-23, 2012

The SagamoreBolton Landing, NY

EOA Newsletter

EOA News encourages and welcomesall member input. If you have any in-formation you would like included inthe next issue, email it to HeatherSkinner at hskinner@datatrace.com

EOA NEWS • Winter 2012 • Page 7

The Eastern Orthopaedic Association would like to thank the grantors and exhibitors of theEastern Orthopaedic Association’s 42nd Annual Meeting. Without the unrestricted educationalsupport of the companies listed below, we would not have been able to provide this conference.

GOLDConvaTec, Inc.

Salient SurgicalStryker Orthopaedics - Grantor

SILVERConforMIS, Inc.

Zimmer, Inc. - Grantor

BRONZECeramTec Medical Products

Smith & Nephew, Inc. - Grantor

COPPER

AcumedAll About Care/Care Advantage

Baxter BioscienceBiomet, Inc. - Grantor

Cumberland PharmaceuticalsDePuy, a Johnson & Johnson Company

DePuy Mitek

DeRoyalFerring Pharmaceuticals, Inc.Janssen Pharmaceuticals, Inc.

MAKO Surgical Corp.Medtronic’s Spinal and Biologics Business

SynthesTiemann Surgical

Grantor & Exhibitor Acknowledgements

AngiotechBBL Medical FacilitiesCarticept Medical, Inc.

CuraMedixDT Preferred Group, LLC

EScribe Management ServicesExactech, Inc.Game Ready

Genzyme BiosurgeryHospital Corporation of America

Hologic, Inc.KCI-USA

MD Logic EMRMerck

Nimbic SystemsPositive Physicians Insurance Exchange

Practice Partners in Healthcare, Inc.ProScan Reading Services

RA Services, Inc.Riverside Health System

Roll-A-Bout CorpSRSsoft

Synvasive Technology Inc.Wright Medical Technology

EXHIBITORS

CONTRIBUTOROREF

Statements and opinions expressed in the advertisements and information regarding products or services herein are those of theauthor(s) and do not necessarily reflect those of the Publisher or the Association. The Publisher and Association do not assume anyresponsibility or liability for such material and do not endorse, guarantee or warrant any product or service advertised in this newsletter.

EOA NEWS • Winter 2012 • Page 8

“More U.S. Baby Boomers fearrunning out of money in retire-ment than they fear death.”http://gotoretirement.com/2010/07/fear-outliving-retirement-money/

Those of you born between 1946 and 1964are part of the 77-million strong BabyBoomer generation – one that is now con-templating retirement. If you were bornbefore 1946, you may already be retired orseriously considering it. If you fit into eitherof these groups, the following issue will beparamount for all of your financial deci-sions moving forward: “How do I take thewealth I have saved and efficiently turn itinto cash income to sustain me during re-tirement?” No wonder, as the quote abovemakes clear, so many soon-to-be retireesare so worried about running out of moneyin their retirement.

In this article, we will discuss problemswith the solutions retirees typically rely onto generate cash income in their retirementand suggest alternatives which may be saferand more efficient.

Conventional Wisdom onGenerating Cash in Retirement“Conventional wisdom” suggests that fi-nancial planning for retirement should in-clude various investment strategies forgenerating cash to live on. Let’s examinethe leading strategies for generating cashand the significant risks inherent in each ofthem:

1. Periodically liquidate a portionof investments.This technique is used in almost allretirees’ planning. It simply meansperiodically selling assets to generatecash to live on – whether those assetsare in IRAs, personally-held securi-ties and investments, real estate, thefamily home, business, etc. The prob-lems with periodic liquidation are:

Risk #1: Market TimingTiming the sale of an asset can be tricky, asmany retirees can attest to in the aftermathof the stock market crash of 2008. Theinvestment you are selling may be discount-ed 30 to 50 percent at the time you need tosell. Being stuck in a “liquidation only”strategy in market downturns can be dan-gerous.

Risk #2: TaxesWhen selling almost any asset, you will paycapital gains taxes at both the federal andstate level. These taxes can eat up 25% ofthe gains. For distributions out of a quali-fied retirement plan or IRA, the tax bite canbe as high as 45%! Relying solely or signif-icantly on liquidation strategy means beingsubject to these taxes and to the risk thatsuch rates will increase. Given that federalcapital gains tax rates are at the lowest intheir history, being subject to future taxincrease is not a risk to overlook.

2. Allocate heavily to a ladderbond portfolio/dividend produc-ing stocks.A laddered bond portfolio is a strate-gy commonly used by retirees where-by an investor purchases a group of

bonds with different maturities, at-tempting to match cash flows withthe demand for cash. One bond mightmature in one year, another in threeyears, and the remaining bonds mightmature in five-plus years. Each bondrepresents a different rung on theladder.

Risk #1: InflationAs inflation goes up, the bonds in the lad-dered portfolio do not keep up with buyingpower. The bonds and their interest maypay the same, but the investor can purchasefewer goods with the same amount of mon-ey.

Risk # 2: Interest RateAs rates rise, the prices of a fixed rate bondwill fall, and vice versa. Although bondladdering is a tried and true approach, con-sider the problems of allocating a substan-tial amount of money to a laddered portfolioin light of today’s interest rate environmentand a seven-year treasury paying 2.875%!

Risk #3: Market Timing / DownturnsIn terms of dividend-paying stocks, divi-dend pay outs are based on a percentage ofthe stock’s price. As the stock market fluc-tuates, so does the yield from the stock. Thestock dividend will go down dollar-wise ifthe market takes a down turn – just when thedividend is most needed.

3. Purchase an annuity.The life annuity (not to be confusedwith the variable annuity) is de-signed by actuaries to pay interestand principal back to you over yourlifetime. Essentially, you write aninsurance company a check todayand they pay you monthly, quarterly,or annually for the rest of your life(or the longer of your life and yourspouse’s). The benefits of this strate-gy include:

Benefit #1The amount the insurance company paysyou is “fixed” and will not decrease if thestock market crashes or if interest rates fall.

Will You Conquer the CashCrunch in Retirement?How to Meet the #1Financial Challenge FacingBaby Boomers…and AvoidCommon Pitfalls

David Mandell, JD, MBADinah Bird, Ph.D., CFP®, CIMA

Continued on page 9

EOA NEWS • Winter 2012 • Page 9

Benefit #2Even if you outlive your life expectancy,the insurance company continues to payyou or your spouse for as long as you arealive.

However, as interest rates have been athistoric lows for a number of years, annuitypayment rates are also extremely low. Thismakes their internal rate of return (IRR)very poor. As with any insurance product,the strength of the insurance company isalso a risk. Since you may want paymentsfor decades in the future, only the strongestcarriers should be considered.

Finally, the inflation risk to this techniquealso weakens its attractiveness. If inflationrepeats itself like the early 1980s with theprime rate at 21% or even a reasonable 8%,then a 3% annual check from the annuity(not uncommon in today’s market) is not asattractive. For these reasons, a life annuitycan be part of a balanced cash income strat-egy, but it typically should not be heavilyrelied upon.

Case Study: Abby the AllergistAbby is on the brink of retirement at 62.Abby has social security, a $1.2 millionhome near her four grandchildren, a 4% lifeannuity on a $500,000 policy, and an im-pressive 50/50 investment portfolio ofstocks and bonds valued at $3 million thatis a combination of her IRAs, 401(k)s andsavings. Abby enjoys semi-annual vaca-tions with her grandchildren but otherwiseexpects to easily live on $200,000 incomeper year during her retirement. She is ingood health and, due to her family history,expects to live until the age of 90. Abbydivorced many years ago and has no alimo-ny liabilities. She has a long term careinsurance policy that will pay her $10,000annually. All is looking good for Abby’sretirement.

Abby’s practice was bought out two yearsago, and she has decided to retire five yearsearlier than planned. She considers this asafe decision, as she has a paid-off home,an annuity, long term care insurance and a$3 million 50/50 stock/bond portfolio. De-spite retiring earlier than anticipated, shehas planned well and is better positionedthan 99% of Americans at retirement.

Abby decides to keep her house to avoidselling at a loss. She forgoes a reversiblemortgage because the “fees are outra-geous.” Current inflation is benign at 1.7%,which is a nice advantage. She has thecushion of long term care if needed. Abbyis living within her $200,000 per year bud-get.

Abby meets her $200,000 annual cashneeds by these income streams:

1. Social Security = $30,000.00

2. Annuity payments (4% of$500,000) = $20,000.00

3. Dividend payments from her 50%in stocks (2.00%) = $30.000.00

4. Interest payments from her 50%bond ladder of 1-10 years, whichhas a blended yield of (3.00%) =$45,000.00

Total in flows = $125,000.00

Abby’s two largest drains on her annualincome are:

1. Income tax ($50,000.00)

2. Property tax on her home($30,000.00)

Total out flows = ($80,000.00)

Netting out the outflows from the income,leaves a shortfall of $155,000 of cash.

Abby will need to liquidate stocks andbonds in her investment portfolio to makeup the shortfall of $155,000 for taxes andcash. Chances are very high she will haveto liquidate some of her stock when themarket is down due to normal stock marketfluctuations. Consequently, Abby will haveto sell even more stock to generate theappropriate amount of cash needed. Plus,there is a high probability that inflation willcause the price of her bonds to decrease asshe liquidates them for cash.

Abby’s investments will most likely notsustain her for the 28-year time horizon andher portfolio will be depleted before herdeath. Abby may very well experience thenumber one fear of retirees -- running out ofmoney in retirement!

Can Abby modify her investment liquida-tion strategy so she will not outlive herincome?

The Alternative Income solution can helpAbby overcome this challenge. Instead ofliquidating her portfolio of stocks andbonds for cash each year, Abby can addalternative cash income to her bond portfo-lio. By doing so, she will boost her income,provide an inflation hedge and liquidate lessof her stocks/bonds, allowing her portfolioto grow. An alternative income strategy willhelp extend the life of her investment port-folio so she will have investments for aslong as she lives.

What is an ALTERNATIVE INCOMEStrategy?“Traditional” investments are consideredstocks, bonds, currency, or hard assets, suchas real estate. An “alternative cash incomestrategy” is one that involves combinationsof such assets to create a unique portfoliodesigned to generate cash income.

REIT – Based Alternative Income StrategyOne Alternative Income Strategy provides adiversified cash flow stream from hard as-sets that are in the form of an investmentsecurity called a Real Estate InvestmentTrust or REIT. The advantages of usingREITs for forming a foundation of a cash-focused retirement strategy are:

1. According to the law, at least 90%of the cash flow streams generatedfrom properties in the REITs mustbe passed to the owner/investor ofthe REIT.

2. REITs can be an inflation hedge; asinflation increases, the propertyrents usually increase as does thevalue of the property.

3. REITs typically offer a low corre-lation to the U.S. stock market,which means that REITs help de-crease volatility.

A REIT-based Alternative Income strategybasically works like this:

An investor buys into an REIT portfolio,which will generate about 6.5% income tosupplement the money needed for expenses.Consequently, fewer securities are needed

Money Matters continued

Continued on page 10

EOA NEWS • Winter 2012 • Page 10

Is your practice moving forward, standingstill or losing ground? You'll know the an-swer if you compare different aspects ofyour practice's operations to appropriatebenchmarks. It's been said that you can onlymanage what you can measure. Bench-marking can give you the data you need tomake informed management decisionsabout the direction of your practice.

What to MeasureThere are two types of benchmarking: per-formance and process. Performance bench-marking compares a practice's operatingperformance internally over time and exter-nally against other practices of a similar sizein the same specialty. Process benchmark-ing compares a practice's work protocols.By tracking key benchmarks from quarter-to-quarter or year-to-year, you can identifythe areas in which progress is being made.

Start by choosing a few indicators that areimportant to you. For each indicator, deter-mine your objective and define what you'llmeasure and how you'll do it. Keep trackingthe data regularly so that you can makemeaningful comparisons over time. Hereare some of the indicators your practicemay want to use in its analysis.

Profitability/Cost ManagementLook at measures such as net income (orloss) per full-time equivalent physician andoperating cost per physician. Other useful

areas to analyze would include operatingcosts as a percentage of total medical reve-nue and total support staff cost per physician.

Billings and CollectionsWhat percentage of submitted claims is re-jected by third-party payers? Is that percent-age higher or lower than it has been in thepast? If you determine that the number isincreasing, you'll need to review the qualityof your coding. If coding errors are at fault,it's critical that you tackle this issue imme-diately.

Examine the percentage of accounts receiv-able over 120 days. Is it higher or lower thanwhat has been your experience? What aboutyour practice’s fee for service collectionpercentage or the dollar amount of bad debtsper physician? These are measures that youcan evaluate.

If you track your copay collection rate forseveral quarters and see that it is deteriorat-ing, have your front desk staff pull up eachpatients' records when making appoint-ments and remind them about past due pay-ments. In addition, remind your front deskemployees to ask for copays at the time ofservice and to request any outstandingamounts.

Patient No-ShowsIf your measurement of patient no-showsreveals an uptick in the numbers, consider

having your staff make reminder calls orcharging for missed appointments.

Time Patient Spends in OfficePatients resent lengthy waiting times. Youcan track the average time patients spendwaiting to see a physician or physician'sassistant. Start by giving a percentage ofpatients (10%, for example) a card that yourreceptionist time stamps on arrival and col-lects and stamps again on departure. If thedata reveal an increase in wait times, over-booking may be an issue. If that's the case,you'll want to reexamine your proceduresand time blocking. You may even have tolook into adding another physician, physi-cian's assistant or nurse practitioner.

There are other indicators your practice canuse to evaluate how well it is doing. Talk tous about how we can help: info@somer-setcpas.com

Health Care Commentaries is provided by Somerset’s HealthCare Team for our clients and other interested persons uponrequest. Since technical information is presented in general-ized fashion, no final conclusion on these topics should bemade without further review. For additional information onthe issues discussed, please contact a member of our HealthCare Team at 317-472-2200. This document is not intended orwritten to be used, and cannot be used, for the purpose ofavoiding tax penalties that may be imposed on the taxpayer.

Somerset CPAs, P.C.3925 River Crossing Parkway, Third FloorIndianapolis, Indiana 46240Telephone: 317.472.2200Toll Free: 800.469.7206Fax: 317.208.1200www.somersetcpas.cominfo@somersetcpas.com

Measure Your Practice's PerformanceBrought to you by Somerset CPAs, P.C.

Money Matters continued

to be sold out of the retiree’s portfolio,which should generate more growth in theirinvestments. Adding REITs as an alterna-tive income to a portfolio has the potentialto augment conventional strategies by en-hancing cash flows and extending the life ofthe retiree’s investment portfolio.

ConclusionGenerating income throughout retirement isa significant challenge. Common tech-niques, including asset liquidating, bonds,dividend-paying stocks and life annuities,

all have significant risks associated withthem. Therefore, the use of alternative in-come techniques is often recommended toaugment traditional techniques.

Your financial needs are complex and theauthors welcome your questions. You cancontact them at (877) 656-4362 or throughtheir website www.ojmgroup.com.

SPECIAL OFFER: For a free trial of the“Cash Income Calculator,” please call (877)656-4362

Disclosure:This article contains general information that is not suitable foreveryone. The information contained herein should not beconstrued as personalized investment advice. Past perfor-mance is no guarantee of future results. There is no guaranteethat the views and opinions expressed in this newsletter willcome to pass. Investing in the financial markets involves thepotential for gains and the risk of losses and may not besuitable for all investors. Alternative investments may carryadditional risks including a lack of liquidity which may makeit difficult to sell off an investment after it is made. Informa-tion presented herein is subject to change without notice andshould not be considered as a solicitation to buy or sell anysecurity. For additional information about the OJM Group,including fees and services, send for our disclosure statementas set forth on Form ADV using the contact information herein.Please read the disclosure statement carefully before you in-vest or send money.

Eastern Orthopaedic Association’s43rd Annual Meeting

June 20-23, 2012 at The Sagamore on Lake GeorgeBolton Landing, NY

Register online today at www.eoa-assn.orgor call 866-362-1409

New Member Incentive

New members of the EOA will have theirmeeting fee in either of their first two years

of membership waived.Join the EOA and come to the Annual

Meeting free!

Do You Know a Qualified MD or DOOrthopaedic Colleague Who Is Not an EOA Member?

Apply formembership

online atwww.eoa-assn.org

or call866-362-1409

and ask for an application.

FreeMeeting

Registration!

►24 Free CMEs through the Journal ofSurgical Orthopaedic Advances

►A complimentary subscription to theJournal of Surgical Orthopaedic Advances

►Eligibility to participate in Ortho-Preferred®, a professional liabilityinsurance program exclusively fororthopaedic surgeons

►Diverse Annual Meeting program content

►Substantial member discounts to EOAannual meetings

►Registration fee discounts to other regionalsociety meetings

►Free subscription to the official EOAnewsletter

►Awards and professional recognition

Member Benefits

Completion of an accredited residency program andprivileges to practice as an orthopaedist in a local hospital

are the requirements for both MD and DO candidates.

Eastern Orthopaedic Association110 West Road, Suite 227Towson, MD 21204