As I mentioned in a previous post, we just had our every-3-year JCAHO site survey. One of the surveyors made a comment that “variability creates vulnerability” and that phrase really stuck with me. So what does this mean? Let me give you an example. If you get on a plane, the pilot is going to go through a series of pre-flight checks and the flight attendants are going to give you a short speech about how to fasten your seatbelt and what do do in the event of a water landing. I’ve heard it dozens of time from dozens of flight attendants and it is always the same. I’ve also flown with dozens of pilots and each time, the pilot’s check list is also the same.
Not everything in the hospital can be standardized but the more you can reduce variability in practice, the less variability in outcome that you will have. Let me give you three examples.
The best outcome in CPR happens if you do chest compressions 100-120 times per minute. In order to ensure that this happens, our doctors and nurses have to go through BLS (basic life support) or ACLS (advanced cardiac life support) every 2 years. However, in the excitement of a true cardiac arrest, it can be hard to avoid going either too fast or too slow. At our medical center, we have recently started to use devices attached to the patient during CPR so we can analyze the compression rate during the code after the fact. When we first started auditing codes, I was surprised how commonly the chest compression rate either exceeded 120 or fell below 100. It turns out that this is pretty common at every hospital in the world – one’s sense of time becomes very altered when one’s adrenal glands are pumping out adrenaline at an ounce a minute during a cardiac arrest situation. We found 3 strategies to ensure correct timing of compressions – 2 that are expensive and 1 that is cheap. There are now automatic CPR compression devices that will compress the chest at a set rate and these are pretty fool-proof; we have one of these in our ER. The newer generation of the CPR monitoring devices don’t just record the compression rate but they can give a real-time read-out of compression rate during CPR. The least expensive option is to down-load a free metronome app to your smartphone and set it at 110 beats a minute and then turn it on during CPR to synchronize your chest compressions.
Our hospitalists are expected to place central venous catheters (“central lines”) and most of them learn how to do it during their residency. But there can be a lot of variability of the quality of training from one residency to another and hospitals will use different central line kits with different supplies in those kits. So 2 new hospitalists may use very different technique to put a central line into the same right internal jugular vein. To solve this, we developed a checklist for each of the steps that we expect during a central line placement and we have our hospitalists get proctored placing central lines during their first 6 months of employment to be sure that no matter where and how they were trained in central line placement, that they place it using the same procedural steps at our hospital.
Making sure you have the correct patient in your operating room and that you perform that operation on the correct anatomic part of that patient seems like a pretty straight-forward thing but every week in the U.S., there is a wrong-site surgery. Imagine waking up after anesthesia to find out that your good hip just got replaced instead of your bad hip or that you got your gallbladder taken out rather than your appendix. One way to prevent this is the “time-out” where everyone involved in the procedure stops what they are doing and confirms the patient, the sedation plan, the anatomic location, the specific procedure, etc. But time-outs only work if everyone is paying attention and you don’t miss any steps in the time-out. Therefore, the time-out should be scripted and just as predictable as the flight attendants’ pre-flight speech, no matter if you are in an OR or an endoscopy suite and no matter who is assisting during the procedure.
You can’t standardize everything in your hospital but you can standardize a lot of things. So look around you and see what you can do to reduce variability in order to reduce your vulnerability to bad outcomes.
September 13, 2016
Set a priority list for retirement investment options. Each different plan has different tax implications and some are going to be better than others in the long haul. Employer-matched 401(k) or 403(b) plans are a no-brainer because the you can basically double your money from the outset. 457 plans have an advantage of no penalties for early withdrawal compared to 401(k) and 403(b) plans. If you are at a university, you may be able to invest in BOTH a 457 and a 403(b) plan. Once you become eligible for a 415(m) plan, you will likely have to make a one-time irrevocable decision about whether to contribute to it and how much to contribute to it – I recommend you choose to contribute the maximum percentage of your salary that you can; even if you can’t afford to do that now, you can always reduce your 403(b)/457 contributions for a few years until you are financially able to do both the 415(m) and your other tax-deferred investments. If you have self-employment income (from consulting, etc.), then open an SEP and put the maximum contributions that you can into it. Every year, put money into a traditional IRA and then immediately convert it into a Roth IRA – this gives you additional diversification in the types of retirement accounts that you have. After you have done all of that, then start putting retirement savings into regular investment accounts (i.e., those made up from post-income tax money). Don’t put money in a traditional IRA unless you are going to convert it into a Roth IRA.
So, should you choose STRS or the ARP? If you think (like I do) that you are going to live a long, long time in retirement, then having a fixed income that you can count on every year is an advantage but if you think you are only going to make it 5 or 10 years after you retire, the ARP is the better option. STRS has the ability to contract with health insurance companies for good group prices on health insurance policies and this can be a plus if you are going to retire before you are eligible for Medicare; no one knows if “Obamacare” will be repealed by politicians in the future so no one really knows if health insurance exchanges will continue to be available in the future – having the confidence that you can get access to affordable health insurance no matter what happens in the future can be a plus. If you think you are going to stay in academic medicine for your whole career, then STRS is a good option but if you think you may leave to go into private practice after a few years, then the ARP is the better option. If you are a control freak and you can’t stand someone else overseeing your investment, then the ARP is better for you since STRS will make all of the investment decisions regarding your retirement account. Lastly, if you are risk adverse, go with STRS – even though STRS (like all investments) has risk, in the long-run, that risk is a lot less than putting your money in the stock market yourself.
What the analysis above shows is that there are several things happening from a tax standpoint that most investors don’t take into account. First, by reducing the take-home salary from $258,000 to $238,000, the income tax bracket of 28% does not change but the effective income tax rate does drop from 23.5% to 22.7%. This drop in the effective income tax rate results in a $1,918 reduction in income tax that year. Second, if instead the investor had paid the regular effective income tax rate of 23.5% and put the $20,000 in a regular (post income tax) investment, then the investor would have to pay tax a second time in the form of capital gains tax when the money is withdrawn in retirement. The net result is that the investor is better putting the $20,000 into a tax-deferred account from the beginning and ending up with $173,833 when they retire versus $144,514 if they had paid regular income tax on the $20,000 up front and then put it in a mutual fund investment.
What this analysis shows is that you still come out ahead by putting your retirement investment in a tax-deferred account, even if your income will be much higher in retirement.
Let’s start with income taxes. I am continually amazed at how much misconception there is about the American income tax system. The first thing to understand is that although we have tax brackets, we operate on a marginal tax system. This means that as your income goes up, your tax rate also goes up but it does so incrementally so that you pay a different tax rate for each successively larger chunk of income that you have. The table at the right shows the 2016 regular income tax brackets.
The other tax that most physicians will pay is capital gains tax. This is tax that you pay for income you get from dividends and the profit that you get from what you sell a stock for compared to what you originally bought it for. The capital gains tax rates are lower than the regular income tax rates. Unlike regular income tax, the capital gains tax is not a marginal tax, in other words, whatever your total taxable income is, that dictates your capital gains tax rate for all of your capital gains. The table above to the right shows the 2016 capital gains tax rates.
