A financial lecture I gave back in 2007 with Dr. Arjun Chanmugam for the Johns Hopkins ED Interest Group. I have no memory of this until I saw the slides

1. Hospital & Personal Finance 101
Emergency Medicine Interest Group
by K. Gordon Ngai, MPH & Dr. Chanmagum
November 23, 2007

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Presentation Outline
SECTION 1 Hospital Management 101
SECTION 2 Personal Finance 101
SECTION 3 Basic Needs—House, Car, Debt
SECTION 4 Investment 101
SECTION 5 Take Home Points

3. SECTION 1
Hospital Management 101

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Hospital Management 101—How does ED get paid?
 Maryland is a special case — all-payer system
 Cost (what we bill) ≠ Revenue (what we receive)
– Revenue can increase or decrease based on
reimbursement scheme
– 4 separate reimbursement scheme:
1. Fee-for-service
2. Prospective Payment
3. Per diem Payment
4. Capitation
Source: Ward et al., 2006 VHA series, building a financial
case for clinical improvement

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Hospital Management 101—How does ED get paid?
1. Fee-for-service— Hospital’s heaven
 provide no financial incentive for improvement
Source: Ward et al., 2006 VHA series, building a financial
case for clinical improvement

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Hospital Management 101—How does ED get paid?
2. Prospective Payment
• Medicare
• About 40% of JHH patients
Source: Ward et al., 2006 VHA series, building a financial
case for clinical improvement

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Hospital Management 101—How does ED get paid?
3. Per diem payment
• i.e. reimburse for each day of hospitalization
Source: Ward et al., 2006 VHA series, building a financial
case for clinical improvement
4. Capitation
• i.e. Kaiser Permanente
• minimal at Johns Hopkins Hospital

8. SECTION 2
Personal Finance 101

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Personal Finance—How Much do You Worth?
¨Understand Compound Interest
– $10,000 this year = $10,000 (1 + interest) next year
– If you think you understand the above, try to understand
this:
– $10,000 in year 2020 = $10,000/[(1+ interest)^(2020-
2008)]

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Personal Finance—How Much do You Worth?
¨Discount of Cash Flow (DCF) /Present Value
(PV) Analysis
– Estimate of how much you are worth NOW
– If you’re working solely for money, you should not work if
you win a lottery ≥ $3,833,294 today
– But we’re not working for money, right?
Sources:
Amortization Model—http://vertex42.com

11. SECTION 3
Basic Needs

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Basic Needs—Housing
¨Rent vs. Buy
– Renting  hassle free, ‘cheaper’ but no gain in net worth
– Buying  Usually appreciate in value (not now), interest
is tax deductible, appreciation can apply to future
purchase or tax deductions (Taxpayer Relief Act of 1997)
¨If You’ve Decided to Buy
– Try not to mortgage for more than 20 years
– avoid adjustable mortgage when interest rate is low
– Understand loan amortization (bulk of your money goes
into interest in early years)
Sources:
Amortization Model—http://vertex42.com
Tax info—http://www.bankrate.com/brm/news/real-estate/20041018a1.asp (accessed on 12-20-2007)

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Basic Needs—Car
¨Car
– All you need is a vehicle that can start when you want it
to start, and bring you to places you want to go, right?
– Maybe not…
– Bottom line—for luxury car lease for 36 months is
cheaper in cost than owning for 3 years

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Basic Needs—Debt
¨School Loans
– Deferral is the key for Federal Loans
– Pay-off the highest interest rate first—duh…

15. SECTION 4
Investment 101

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Investment 101—Understanding Risk (β)
¨Risk (aka β)
– No pain, no gain  Higher the risk, higher the return
¨Stocks, Bonds, 401(k), Traditional IRA, Roth
IRA, Hedge Funds, Mutual Funds, Foreign
Currency Exchange (FX), Precious Metals
(gold, silver, copper, etc…), orange juice, soy
bean, milk…
– No kidding, everything is ‘tradable’
– Bottom line  Understand the cycles, maximize your
401(k) and IRA when possible
Sources:
IRA—http://www.ira.com (accessed on 12-10-2007)

17. SECTION 5
Take Home Points

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Take Home Pointes
¨Live a debt-free life
– You’ve already have everything, stop chasing
¨You can’t do it all
– It’s important to understand these concepts, but there are
professionals out there to help you manage your wealth