PhysicianLife_Final by Medical Life Publishing

Physicianlife

JULY/AUGUST 2011

health...wealth...lifestyle...

Fukushima: What does it teach us about Safety? Lessons for Healthcare

Abolition of Immunity for Expert Witnesses

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whydoctors aretargets forFraud?

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Highlights

14 20 26

Why Doctors are Targets for Fraud?

Abolition of Immunity for Expert Witnesses

How to avoid being scammed

Fukushima: What does it Teach us about Safety? Lessons for healthcare

Myth and Magic in Western Medicine The earliest roots

Issues for Australian doctors

Departments 10 Features 30 Business & Finance 54 Risk Management 64 Alpha: Technology & Reviews 68 Travel

FEATURES A Difficult Marriage: Public Versus Private Work Can you manage both?

Why Doctors are Targets for Fraud? How to avoid being scammed

Fukushima: What does it Teach us about Safety? Lessons for healthcare

Myth and Magic in Western Medicine The earliest roots

10 14 20

BUSINESS & FINANCE To Rent or to Buy? Make the right choice for your practice premises

New Financial Year

Tips to get the house in order

Making the Most of a Life Insurance Payout

Can You Deliver Clinical Quality and Make A Profit?

JULY/AUGUST 2011

Issues for Australian doctors

54 60

ALPHA Letting the Sunshine in, Safely

The Chequeâ&#x20AC;&#x2122;s in the Mail Managing arrears and bad debt in private practice

Abolition of Immunity for Expert Witnesses Evolving Medical Ethics

The Growth of Non-Invasive Cosmetic Medicine

Filling the void between hospitals and beauty salons

RISK MANAGEMENT

What to look out for when installing your solar panel system

TRAVEL

The New Zealand Snow Show

editor’s note

elcome to the July/August Edition of Physician Life.

Our previous edition included some reflective pieces on our ethics and professionalism (Medicine – still a calling or just a job?) and why and when we should leave (Ageing in Doctors & Cognitive Decline – When is it time to hang up the stethoscope?). This edition has a recurring theme of doctors being vulnerable to areas of business and finance that they have little or no exposure to. Our feature article talks about why doctors are amongst scam artists’ favourite targets and what you can do to avoid being a victim of fraud. Your clinical training and experience has given you an understanding of a large variety of medical cases – there are equally as many scenarios in the world of finance. A little interest, knowledge and education into the choices you make with your finances and investments will go a long way in reducing your level of exposure. Other articles also give you useful tips on how to better manage your practice, including your finances, billing and property. All and all this edition is packed with valuable nuggets of information to keep you on top of your medical career for this new financial year. Regards,

Physicianlife health...wealth...lifestyle...

JULY/AUGUST 2011

Selina Vasdev

Editor selina@medical-life.com.au Contributing Sources

Dr. Stephen Bolsin Dr. Tony Blinde Dr. Mark Colson Dr. Ian Freckleton Pat Huddleston Dr. Peter Karamoskos Dr. Richard Middleton Jane Wilkinson The Physician Life magazine is published bi-monthly by Medical Life Publishing Pty Ltd. Physician Life & Medical Life Publishing are proud to be independent of any academic institution or professional association. Suggestions, content ideas or complete articles written by readers are welcome and will be reviewed by the Editorial Committee. Editorial Please direct all inquiries and submissions to: Medical Life Publishing PO Box 2471, Mount Waverley VIC 3149 Phone: 03 9001 6373 Fax: 03 9923 6662 Email: mail@medical-life.com.au Advertising Joe Korac

Selina Vasdev Editor

The information contained in this magazine, while believed to be correct, is not guaranteed. Medical Life magazine and its directors, employees and consultants do not accept any liability for any error, omission or misrepresentation in relation to the Information. Nor does it accept any loss, damage, cost or expense incurred by any person whatsoever arising out of or referable to the Information displayed within the magazine. The Editor has the right to omit or edit contributions for style, space or legal concerns. Any view expressed in Medical Life magazines are not necessarily the view of the Medical Life Publishing. No part of this magazine can be reproduced or copied without the express prior consent of the publisher.

Phone: 02 9872 7708 Fax: 02 9872 1002 Mobile: 0414 487 199 Email: joe@medical-life.com.au

CAB Member

PHYSICI ANLife MARCH/AP

RIL 2011

LETTERS TO THE EDITOR

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hank you to all those individuals and groups who have written in to us at Medical Life with your comments, suggestions and replies to articles. We will continue to take on board your feedback whilst helping educate and inform you on matters of business, finance and lifestyle. Your feedback and thoughts are appreciated and encouraged. Please continue sending in your comments and letters to editor@medical-life.com.au marked letters to the editor.

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Dear Selina, your journal is an intriguing mix of interesting and relevant articles. It is also a well presented and attractively produced magazine, which is a pleasure to receive. I thoroughly enjoyed the May/June Edition with articles such as ‘Ageing in Doctors & Cognitive Decline – When is it time to hang up the stethoscope?’

Although I expect you must have received some back lash from our older peers I feel you handled the subject with great sensitivity. Most will agree that there is a strong need to harness the knowledge and experience that has been gained by our seniors but, at the same time we must have in place self screening procedures as well as accessible support for doctors who are coming of age so that they are not a risk to themselves and patients. It would be a shame for doctors in their final years to ruin a reputation they have spent a lifetime building. Dr. W.K., NSW

F E AT U R E S

______________________________________________

F E AT U R E S

Ageing inDoctors Cognitive Decline

Dear Editor,

and

When is it time to hang up the stethoscope?

he Australian medical population is ageing and similarly, so is the medical workforce. Approximately one in six registered medical practitioners are over 60 years of age1 and already experiencing some decline in both physical and mental capabilities. Allowing doctors to work until advanced age can be beneficial in that it preserves highly experienced practitioners, teaching resources and skills in the community. However, the downside is that there is the potential for increased medical errors due to burnout, physical limitations (e.g. tremor, loss of dexterity, reduced tactile sensation, poor fine motor skills and coordination, visual impairment, auditory impairment) and cognitive impairment (poor judgement, impaired ability to make rapid decisions, memory impairment). What is the evidence? Firstly, there is plentiful evidence correlating cognitive decline with increased age. The ageing process significantly targets cognitive speed and

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short-term memory as well as ‘fluidity of thinking’ which can be thought of as the ability to solve new problems. However, there have not been any large scale studies correlating impaired ability to practice as a doctor with advanced age. The sparse evidence that may suggest a correlation between advanced age and cognitive decline includes: •

A study of 109 doctors evaluated in the Peer Assessment program in Ontario, Canada found 10% needed significant assistance with their day-to-day medical practice due to impairment. 18% of the doctors needing assistance were aged over 70, while this demographic made up less than 5% of the total population size. A significant overrepresentation

of this 70+ age cohort.2 •

Morrison and Wickersham studied US state licensing boards and disciplinary action in doctors across all specialties over several decades. Their findings were a weakly positive association between age and disciplinary action.3

The dilemma The issue of ageing doctors with cognitive impairment creates a dilemma in that how do we ensure the maximal safety of patient care without infringing on the civil liberties and professional autonomy of elderly doctors? Currently, monitoring by AHPRA (formerly by State medical boards) for signs of cognitive decline in

There is no regular dementia screening for ageing doctors in Australia.

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the article featured in your May/June Edition on ‘Whistleblowing in the Australian Healthcare System’ by Dr Stephen Bolsin and Dr Mark Colson was an insightful coverage of some of the examples of this brave act. The cost to human life is obvious and patients are inevitably the ones who suffer. It is despicable on the part of an individual/group or hospital to play ignorant to the goings on of poor/ improper conduct in medical practice.

Please send your comments to editor@medical-life.com.au marked letters to the editor.

Physicianlife

E2 011

LETTERS TO THE EDITOR

LETTERS TO THE EDITOR As far as human health is concerned comparisons therefore between Chernobyl and Fukushima disasters are valid. The earthquake and subsequent tsunami interrupted the AC power to the primary and secondary cooling systems of the complex. The backup diesel generators failed as they were inundated by flooding, having been placed below the level of the sea wall. Backup batteries to power the pumps were eventually depleted. Subsequently, the four active reactors’ cores overheated and sustained partial core melts resulting in explosions which severely damaged the buildings. The spent fuel rods of reactors 3 and 4 were exposed to air also resulting in overheating and a fire in the spent fuel pond of reactor 4. Containment structures of reactors 2 and 3, designed to contain highly radioactive active fuel were also damaged. Reactor 3 is fuelled by MOX (mixed oxide fuel which is a blend of uranium and plutonium). As of early April, there were significant amounts of ongoing radioactive fallout. This was made worse by the large volumes of seawater needed in an attempt to externally cool the reactors and spent fuel ponds. This resulted in extensive offshore and local contamination including the groundwater, exacerbated by the rupture of reactor 2, secondary containment which continues to leak the damaged core contents into the plant precinct.

F E AT

URE

case scenario and still remains poorly controlled. Any pronouncements as to the eventual conclusion of this disaster are therefore currently speculative. However, the currently known facts are troubling enough. The International Atomic Energy Agency (IAEA) uses a 7 point INES (International Nuclear Event Scale)1, 2 to categorise nuclear incidents (2-3) and accidents (4-7).3 The Chernobyl disaster ranked as a 7/7 accident. The Japanese nuclear regulator (Nuclear and Industrial Safety Agency) initially ranked the Fukushima disaster as a 5/7 accident (comparable to the Sellafield, UK reactor fire in 1957, and Three Mile Island USA core melt in 1979). However, the French nuclear regulator (ASN) and the US Nuclear Regulatory Commission subsequently classified it as a 6/7 accident, representing a “serious accident” resulting in “a significant release of radioactive material likely to require implementation of planned countermeasures.” On 12th April, NISA upgraded its classification of the disaster as a 7/7 (“major release of radioactive material with widespread health and environmental effects requiring implementation of planned and extended countermeasures”),3 and thus on a par with Chernobyl.

What are the consequences?

What happens when a nuclear reactor overheats?

We still don’t know what the full consequences of this disaster are or what they will be. We do know, however, that the nuclear accident has tracked closer to the worst case than the best

When nuclear cores overheat due to a lack of water coolant, they ultimately melt. Remaining water quickly turns to steam preventing replenishment of the

water and endangering the integrity of the pressure vessel. Furthermore, the reactor pressure vessel may also melt leaking the melted fuel which may escape into the environment if the primary and secondary containment structures (concrete) have been damaged. Spent fuel is kept at around 25 degrees in cooling ponds for a few decades. The water must be continually replenished to maintain this temperature. If there is a loss of water or a failure of replenishment, the spent fuel will overheat and catch fire, releasing its radiotoxic contents. Note that the longer fuel is irradiated in the reactor core, the more radioactive it becomes due to the build-up of fission by-products which also contaminate the fuel limiting its usable life. Only about 1-2% of the uranium in fuel rods is actually used up in a reactor. It is these fission by-products that pose the greatest immediate danger if released into the environment. Radioactive fallout and its health effects Radioactive fallout from a nuclear reactor can be considered in two groups: Isotopes of the noble gases (xenon, krypton-133) are radioactive elements with a very low chemical reactivity, relatively short half-lives, are not retained by the body and they remain and become dispersed in the air without ground deposition. Hence they have limited adverse health potential. The second and more dangerous radioactive fallout group is represented by mainly the radioactive isotopes of iodine, cesium, and tellurium.

So how much radioactivity was emitted and how does it compare to Chernobyl? The spread of airborne contamination is unlikely to be evenly distributed due to many variables including the prevailing winds, the altitude the contamination reaches before dispersion and the time period of release. Thus, although we speak of radial zones from the plant, the shape of the fallout most likely will represent a plume rather than a concentric disc.

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Furthermore, the prevailing jet stream is towards the United States west coast which is likely to have higher levels of contamination (but still very minimal at that distance) than, say, northern Canada which is closer to Japan. Contamination is likely to spread throughout the northern hemisphere and indeed trace amounts have already been detected from nearly all monitoring sites4 in that hemisphere. There is effectively an 'air curtain' at the equator that prevents contamination from reaching the southern hemisphere. Shortly after the nuclear plant explosions, a 20km exclusion zone was established and residents between 20 and 30km were advised to remain indoors. The IAEA and

FIGURE 1: Main transfer pathways of radionuclides in the terrestrial environment (UNSCEAR 2011)

to read a medically focused article on the nuclear situation in Japan. The devastating effects of the Japanese tsunami will be felt by generations to come.

US NRC suggested this was inadequate and advised an 80km exclusion zone.

Utilising CTBT monitoring data, the Austrian Central Institute for Meteorology and Geodynamics calculated that in the first three days, the activity of I-131 emitted was 20% and Cesium-137 20-60% of the entire Chernobyl emissions of these isotopes. Although Chernobyl emitted vastly more fallout than Fukushima has to date, it was the I-131 and Cs-137 that accounted for most of the terrestrial human and environmental hazard, and these are the main Fukushima fallout components. Also, the Fukushima plant has around 1760 tonnes of fresh and used nuclear fuel

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Physicianlife

These elements form fine suspended particles in the air (aerosols), which due to their weight will gradually end up falling on the ground when released in the air, contaminating all vegetation, clothing and any other surfaces including water sources. Those that pose the greatest health threat are Cesium-137 (half-life 30 years) and Iodine-131 (halflife 8 days). Iodine-131 is a beta emitter and is absorbed into the blood stream through inhalation and ingestion and concentrated by the thyroid gland where it is highly carcinogenic, predominantly in young people under 18 years of age. Cesium is a gamma and beta emitter. It is also absorbed by the body through the respiratory and gastrointestinal tracts and subsequently into the bloodstream and deposited throughout the body. Cesium takes between 10 days and 100 days for half of it to be excreted from the body so there is significant hazard once it is absorbed. Unlike I-131 therefore which loses most of its potential for harm in a few months, cesium remains hazardous in the environment for several hundred years.

It WAS refreshing

Best, Dr. S.T., WA 15

life ician Phys

Our system requires more people like those featured in this article to have the courage to come forward and expose the dangerous practices that occur in our medical field. More importantly, these individuals must not be the ones ostracised, but be given a platform to voice their concerns privately without fear of damaging their own careers for the sake of our patients and medical community. Best, Dr. S.M., WA ______________________________________________ Dear Selina, some of your business and finance articles, for the more cynical among us, may come across as a vehicle to promote professional services to our community. However, I will admit that they have been educational nonetheless. Some of my colleagues and I have been able to share experiences on issues such as tax, accounting, insurance and investments thanks to the coverage of these subjects in a way that is relevant to our medical practice.

Dear Editor, your article about ‘Ageing Doctors’ was quite thought provoking and I for one always assumed that my decision to retire would be based on personal choice at an age where I felt it would be right to ‘hang up the stethoscope’. However, this privilege is rather determined by my abilities that allow me to perform my duties as a doctor. I cannot imagine that the following would be popular amongst my peers but I think that it is only fair that there should be some requirements to demonstrate physical competency and cognitive skills once we pass the age of 65. To maintain dignity as individuals we should gracefully step down from our positions before we cause harm to our patients and healthcare system. Regards, Dr. B.L., NSW

Thanks, Dr. T.F., VIC

Please send your comments to editor@medical-life.com.au marked letters to the editor.

Physicianlife

contributing

WANTED riters

Dear Editor,

I'd like to pass on some positive feedback to you and your team about the magazine you are producing. Just like every other doctor, we receive a tonne of glossy marketing material dressed up as news and information claiming to be of value to me as a doctor as well as enhancing the efficiency of my practice. Initially I thought your magazine fell into the same category. But we have been very pleasantly surprised to find the articles are actually quite 'meaty' and there are many of them in each edition (rather than just a couple amongst pages of ads). The ones that most stand out are from the business section along with some of the hard hitting subjects you cover in the features. I hope that you continue to produce this magazine with the same drive and expose nature. Keep up the good work. Dr. L.C., NSW Dear Editor, I have to say when I first saw your magazine; I felt it was

a vehicle used to push advertising to a group of us who are seen as highly paid, time poor individuals. But I am more and more impressed with the quality of your articles and relevance they have for me in my professional sphere. They are informative, well written and cover many areas which are valuable for our medical community.

Thanks, Dr. M.P., NSW

Dear Editor,

LETTERS TO THE EDITOR

Dear Editor,

I write in relation to an incorrect advertisement that appeared in the January – February issue of Physician Life. This marred what was otherwise a very helpful series of articles in the magazine.

On Page 19 there was an advertisement to raise funds for a young Palestinian child, Malak, with a congenital abnormality (very small external ears, and deaf), and who needs to come to Australia for surgery to create new ears and to provide a specific type of hearing aid, because “it cannot be done anywhere in the Middle East”. There is no doubting that the Palestinian healthcare system has extremely high demands on its limited resources and that children in particular are innocent victims. Whilst the aim of the advertisement was humanitarian, it should be noted that both the surgery and provision of these types of bone anchored hearing aids (BAHA) are available in the Middle East. There at least 7 hospitals in Israel which provide these services, including Hadassah & Shaare Zedek Hospitals (Jerusalem), Bnei Zion Hospital (Haifa), Sheba & Ichilov Hospitals (Tel Aviv), Soroka Hospital (Beer Sheva) and Schneider Hospital (Petach Tikva).

You seem to raise issues in a way that clearly fills a gap. For me personally, the ones relevant to starting out in private practice have been especially valuable. They have helped reinforce my ideas and strategies for my business, but have also identified areas of complacency and development (marketing).

Palestinian children do have access to some services in Israel, with the Peres Center for Peace handling such humanitarian aid requests, and, I am advised, usually paying full costs of the procedures and providing the equipment needed. The funds come from humanitarian sources in Italy, Switzerland, the Netherlands and the USA. The “Saving Children” campaign was begun in 2003 and has had > 6500 referrals since, the majority being for neurosurgery, cardiac, and orthopaedic surgery; plastic surgery is also performed. Details can be found at www.peres-center. org/, together with an application form for a physician to complete requesting assistance for children like Malak.

For this I thank you.

Sincerely

Dr. R.F., VIC

Dr. Bernie Tuch, NSW

Thank you for sending me bi-monthly copies of your magazine.

Feel you have something you would like to share with all other Physicians?

The articles are well written and you seem to cover topics that are relevant to our profession.

We are currently looking for articles and submissions for PHYSICIANlife. Please send your comments to editor@medical-life.com.au marked letters to the editor.

Please email: editor@medical-life.com.au

Physicianlife

F E AT U R E S

You are cordially invited to the wedding of

Mrs Public Health System & Mr Private Sector Date: Yet to be confirmed Dress: Combat gear

A difficult marriage:

public VERSUS PRIVATE WORK

Can you manage both?

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F E AT U R E S

For many doctors, the battle of where to work and in what capacity reigns for the duration of their professional life. One aspect of that battle is whether to work in the public system or the private sector or whether you can work in both.

t is rarely an equitable arrangement. These work environments are dissimilar, bringing separate positives and negatives, like two different personalities. Combining the two seems to be like maintaining a difficult marriage. Let me describe the personalities. Mrs Public System Mrs Public Health System is an older woman. She wears plain clothes, has straight grey hair that she ties in a bun, she’s a no-frills kind of girl. She is an idealist and can often be seen at lamington drives. The sort of woman who would run into the street in her dressing gown to save a kitten she saw stuck in a tree outside. She works, not at a brazen pace, steadily, and at times slowly, very slowly. Yet the best of intentions drive her. Other people’s opinions affect her deeply, sometimes slowing her to a standstill but occasionally making her more efficient. Sometimes she wishes she didn’t have to

listen to all that. Whatever their opinion she knows she will always be cumbersome but it does give her time to reflect. She likes cups of tea and gossip. Yet teaching is her real joy. Sharing knowledge with students is rewarding even though it slows her down. She doesn’t work for the money. It’s not what drives her and she has stopped keeping a track of her hours, they seem irrelevant. She is there to provide a service even if it is awkward. Mr Private Sector On the other hand Mr Private Sector is man who prides himself on appearance. Crisp and clean-shaven, he would never be seen with a hair out of place. His clothes are always freshly pressed. He has a weekly manicure and reads three newspapers everyday front to back. All six of the clocks in his house keep exact time and he checks them each morning. He walks quickly as slowness irks him. He is coordinated, adaptable and quick to respond. Money features in his life. He

will happily talk figures, he knows about that type of thing. With a fresh cut-lunch bought from home each day he can work from sun up to sun down with little break. Tea and conversation are not important. He doesn’t burden himself listening to the opinions of others. He works in his own way, not hasty or hurried, just swift. The Marriage Can two such disparate personalities be joined in holy matrimony? Is that asking too much and should we just be happy that they co exist? Despite their seemingly competing interests and styles they both aim for the same endpoint. I watch my husband try and marry these two in his professional life. He works in both the private and public sectors. Both provide headaches. Mrs Public System is at times so weighty with bureaucracy it makes him want to scream. Cancellations, bed shortages, funding allocations all seem to thwart his

Despite their seemingly competing interests and styles they both aim for the same endpoint.

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F E AT U R E S

I watch my husband try and marry these two in his professional life. He works in both the private and public sectors. Both provide headaches.

plans for patients. The pain is eased by his colleagues and the sense that together the team is striving to make the old girl move a bit faster. Sometimes Mrs Public System is a demanding old biddy with onerous on call commitments, and numerous complex patients. She can also get out of your control without giving a reason. She can be cunning and guilt my husband into trying to fix her, cure her or even just make her better. Yet she is grateful for him. It is like watching him hang out with a friend who has become slightly unhinged but whom he argues is still a good person. Mrs Public Sector does repay him with the benefits of paid holidays, study leave and training allowances, which helps to ease some of her faults. Mr Private Sector doesn’t come with those benefits. Holidays are at a price and payments, though bigger, come with less regularity. The equipment offered by Mr Private Sector is often better and best of all he doesn’t argue. He is respectful and consults my husband about changes that

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directly affect him. Mr Private Sector does not ask to be changed or made better but he doesn’t give you a warm fuzzy feeling. He is more of a new friend. Someone you can’t discuss politics or religion with but will take you out on their flashy boat. Will it be divorce? Can this couple remain married in my husband’s professional life? Can he rectify their strengths and weaknesses and realise they are both working towards the same goal? Or will the couple divorce and my husband be forced to maintain a friendship with only one? Can he survive professionally in one system to the exclusion of the other? Will he be happy? Will he feel balanced? I can see why some people choose a friendship with Mr Private Sector only. He is efficient, effective and lucrative. I can also see why some people associate only with Mrs Public System. Her sense of social justice, her collegiate environment

and ability to teach young medical professionals makes her attractive. I can also understand the benefits of maintaining a presence in the two systems, to allow the frustrations in one to be balanced by the positives in the other. Whatever his allegiance currently, I am not convinced that this model of work will remain. Different career stages may require revising the relationship between Mrs Public System and Mr Private Sector. The battle between these two personalities is far from over. Jane Wilkinson is a physiotherapist married to a surgeon. She has worked for Mrs Public System and Mr Private sector but these days prefers to battle with their children.

Save the world thereâ&#x20AC;&#x2122;s money in it.

For Investors, Society and the Environment.

Contact Karen McLeod on (07) 3333 2187 or visit www.ethicalinvestment.com.au Karen McLeod is an Authorised Representative of Ethical Investment Advisers Pty Ltd (AFSL 276544). Ethical Investment Advisers (AFSL 276544) has been certified by RIAA according to the strict disclosure practices required under the Responsible Investment Certification Program. See www.responsibleinvestment.org for details.

Save the world thereâ&#x20AC;&#x2122;s money in it.

For Investors, Society and the Environment.

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F E AT U R E S

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F E AT U R E S

Whydoctors aretargets forFraud? how to avoid being scamMed In my days as an Enforcement Branch Chief at the U.S. Securities and Exchange Commission we used to say that if we found more than two doctors invested in any unregistered security, it was most likely a fraud. Doctors are targeted that often. Some of the reasons are readily apparent. Doctors tend to have a high level of investable income, and their work leaves them little time to pay attention to investments. Plus, they chat. In the operating room or in the doctor’s lounge, one doctor says what a terrific return he’s been getting through a limited partnership or a hedge fund. Another laments that his investment returns have lagged the market for more than a year. “You should talk to my guy,” says the first. The second gladly takes down the name and the telephone number. And that’s how an epidemic that will cost doctors the equivalent of several years of income spreads.

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F E AT U R E S

et’s begin by identifying the epidemic already raging. Official reports estimate that, in the United States alone, investors lose more than $40 billion annually to investment fraud. Forty billion! That’s more than one Madoff mega-scam in losses every single year. However, those statistics do not tell the whole story because they are gathered from criminal prosecutions, and most investment crime is never prosecuted. Most is never even reported. No one, especially a doctor, wants to admit that he/she has fallen victim to an investment fraud. It plays havoc with their self-image and of the image they want to project to others. So, they often swallow the most horrendous losses in silence. Why do so many doctors lose so much to investment fraud? It turns out that the answer lies in a realm with which doctors are familiar. As healthy as we may otherwise be, all humans have compromised immune systems when it comes to recognising investment fraud. We aren’t born with the antibodies to fight it. The deficiency is congenital and centered between our ears. All healthy brains come prewired with what psychologists call “cognitive biases.” Those biases are useful in most instances, but absolutely deadly in the investment context. Traditional due diligence methods have ignored them to the detriment of millions.

Official reports estimate that, in the United States alone, investors lose more than $40 billion annually to investment fraud.

The Optimism Bias In March 2005, Kristen J. Prentice, Ph.D., James M. Gold, Ph.D., and William T. Carpenter Jr., M.D. published a paper. On their way to drawing conclusions about optimism in schizophrenics, they first discussed optimism in healthy adults1: “Risk perception research in healthy adults shows that . . . they frequently exhibit a bias known as ‘unrealistic optimism’ in which individuals feel they are less likely than other people to experience unpleasant or harmful events in their lives but more likely to experience pleasant or beneficial events.” Put another way: people rarely believe that the disaster scenario—including the disaster of financial fraud—can happen to them. You can understand how this optimism bias might be necessary for every day life. The optimism bias sends all of us— even the most pessimistic—out of the house each day into a world full of germs, crime, and teenaged drivers.

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Without that optimism bias, we’d never leave home. In the investment context, though, that bias leads us to discount the possibility that the person or investment we are considering might lead to our financial ruin. And if we aren’t taking that possibility seriously, we are especially vulnerable. We can see the optimism bias at play when we assess our response to any story about a financial scam. We read about the promises that the scamster made, the number of victims, and the total amount lost. And we immediately think: The victims were gullible/stupid/ greedy. I’d never fall for that. We mentally assign ourselves to a category

of people to whom something so horrible could never happen. Notice it the next time you read about a scam. If you’ve never fallen for a scam, you likely had a similar thought when you began reading this article. That’s the optimism bias at work. Across abroad economic spectrum, investors who become victims of fraud, usually have one thing in common: they all believed that they were too smart to fall for a scam. They learned, the hard way, that that very thought made them especially susceptible. The Conformity Bias Vasily Klucharev, a neuroscientist and a research fellow at Erasmus University in

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Rotterdam, Netherlands, created a study in which he asked participants to rate faces for physical beauty on a scale from 1 to 8. The researchers then told each participant that her score was higher, lower, or the same as the average score. After distracting the participants, the researchers suddenly asked each to give her ratings again. Most changed their rating to move closer to the “average.” The researchers performed this study while the participants were connected to a functional magnetic resonance imaging device. The researchers found that deviation from the group registers in our brain as a punishment. Our brain tends to pull us into conformity. For doctors, this conformity bias plays itself out when those chats in the operating room lead them to believe that their colleagues are earning better returns through a certain adviser or investment. Their brains pull them toward conformity; sometimes toward an adviser or an investment that will cost them a fortune.

...we immediately think: The victims were gullible/stupid/greedy. I’d never fall for that.

The Congruence Bias A third bias, the congruence bias, is especially insidious because it infects those who don’t take things at face value. The congruence bias leads us to hold firmly to our first theory to explain any given situation. It’s an essential mental shortcut that makes us more efficient. Under the effects of that bias investors who insist on confirming the essential facts for themselves believe that they are doing adequate—even extraordinary— due diligence, while, in fact, the congruence bias is actually setting the scam artist’s hook deeper. Our first theory upon hearing about an attractive investment from a charismatic financial adviser—vouched for by a respected colleague—is that the adviser is who he or she appears to be and that the investment is legitimate. Those who set out to investigate, without first diagnosing and receiving treatment for the congruence bias, do their investigation in service of that first theory—legitimacy.

And any scam artist worth the title can arrange for a prospective investor to find what appears to be confirmation of legitimacy. Scamsters often work in crews, with cohorts playing the roles of satisfied investor or enthusiastic business partner. They use ghost cell phones, with dialing codes that match international cities, although the phone actually rings in the pocket of the cohort in the next room. They have a very deep bag of tricks. With every piece of evidence he or she finds confirming the supposed legitimacy of the investment, the investor’s confidence in the opportunity solidifies. The scam artist smiles at a job well done. Diagnostic Tests Doctors today have technological tools at their disposal to help accurately diagnose their patients. Still, because of the cognitive biases, doctors who would never forgo a CT scan of a patient

with head trauma fail to use diagnostic tools on investment opportunities. Of course, being able to order the correct tests requires that we first treat the above-mentioned cognitive biases. We can ameliorate the optimism bias by rejecting the blame-the-victim instinct and accepting our vulnerability. We can defuse the conformity bias by remembering that our well-meaning colleagues who recommend the hottest adviser or investment are likely laboring under untreated cognitive biases. And we can defeat the congruence bias by intentionally pursuing the theory that the investment is a fraud, rather than seeking to confirm legitimacy. Pursuing the fraud theory will lead us to evidence we would never find trying to confirm legitimacy. And, if we cannot prove the fraud theory, we can feel comfortable that the investment is at least a legitimate enterprise. Investment literature is full of the warning, “Past performance is no guarantee of

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F E AT U R E S future results.” That is true. But it is also true that, with human beings, the best predictor of future behavior is past behavior. A vigilant investor therefore looks into the past of the people behind the investment. One of the most powerful tools in the U.S. is a website called www. pacer.gov, which provides access to the docket of every federal court in the U.S., coast to coast. Civil cases. Criminal cases. Bankruptcy cases. They are all in Pacer. Neither Australia, nor most state court systems in the U.S., has a counterpart, but citizens are allowed to search court dockets at the courthouse. Avoiding a substantial loss is worth the leg work required, though, and the vigilant investor always searches court dockets for a criminal or bankrupt past and for lawsuits by unhappy investors in previous deals. Remember to search not just on the name of the individual but also on the name of any companies he or she has controlled. Lexis-Nexis is another useful diagnostic tool. It often shows that an investment promoter is operating under an assumed name, usually fleeing a past full of the kinds of trouble. Lexis-Nexis will also reveal civil judgments and tax liens, indicating a person with a powerful financial incentive to cheat current investors. The palpation of investment diagnostic tools is shoe leather investigation. Observe the lifestyle of the people behind the investment. Ferraris, mansions, expensive vacations, first-class travel, and other conspicuous consumption suggests an investment promoter who is spending his investors’ money, not his own. A visit to the supposed auditors or attorneys can reveal a sham operation no more real than the buildings on a Hollywood sound stage. A consultation with your local securities regulator is always a good idea. If the person trying to sell you an investment or give you investment advice is not properly licensed to do so, stay away. While proper registration is no indicator of legitimacy, selling investments without a license is a sure sign of an ongoing fraud.

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Ferraris, mansions, expensive vacations, first-class travel, and other conspicuous consumption suggests an investment promoter who is spending his investors’ money, not his own. in his diagnoses. He probably remembers diagnoses he made during his medical residency—when he was just as confident, but more often wrong—with a tinge of embarrassment, and laughs at his inexperienced self.

Consultation As helpful as these diagnostic tools are, the results will always find their way to a human who must interpret the findings and make a sound judgment. Diagnostic skill has everything to do with experience. The more patients a clinician sees, the better able she is to arrive at an accurate diagnosis sooner. The same is true of those of us who look for fraud rather than disease. Sir Arthur Conan Doyle could have been speaking to aspiring doctors when he explained the secret of Sherlock Holmes’s powers of detection. “There is a strong family resemblance about misdeeds,” he wrote in A Study in Scarlet. “And if you have the details of a thousand at your finger ends, it is odd if you cannot unravel the thousand and first.”2 The experienced clinician has seen hundreds, if not thousands, of patients. His long experience gives him confidence

No doctor will see as many investment opportunities as he will see patients. A doctor awakened to his cognitive biases and the wisdom that comes with experience will think of himself as a resident in the school of investments. Just as she would seek a consultation with a specialist to aid in the diagnosis of a patient, the wise doctor will seek the wisdom of those who have seen hundreds of cleverly disguised frauds and know how to recognise subtle red flags. He can read books and blogs about breaking scams to pick up knowledge about how such scams operate, to be better able to recognise the predators who aim to rob him and his patients of a lifetime of savings. And the next time a colleague brags about his investment returns in the doctors’ lounge, the wise doctor will hear those words with a new level of understanding and perhaps chuckle at his inexperienced self. Pat Huddleston is a former Enforcement Branch Chief at the U.S. Securities and Exchange Commission and the CEO of Investor’s Watchdog, LLC, a fraud prevention due diligence company. www.investorswatchdog.com

References 1 Kristen J. Prentice, Ph.D., James M. Gold, Ph.D., and William T. Carpenter Jr., M.D. Optimistic Bias in the Perception of Personal Risk: Patterns in Schizophrenia, American Journal of Psychiatry (March 2005) 2 Doyle, Arthur Conan. A Study in Scarlet. 1887. London: Penguin, 1981

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Fukushima

What does it teach us about Safety? Lessons for healthcare "Men and women around the world are asking: are we really doing well and all that we can to safeguard the world’s people in the case of nuclear accidents? Recent events suggest that there are large gaps in how societies and the international system think and act about breaches to nuclear safety." - UN Secretary-General Ban Ki-moon, 10th May 2011.

n my previous piece on the Fukushima disaster1 I reviewed the sequence of events that led to the second worst nuclear disaster in history and the potential immediate and longer term health implications. The International Atomic Energy Agency (IAEA) has given it a 7/7 rating on the nuclear accident scale, equalling that of the Chernobyl nuclear disaster. Some estimates suggest radiation releases will continue for more than a year and it will take decades to decommission the plant, if at all possible. Like the Chernobyl site, the Fukushima plant may remain a no-man’s land for thousands of years if the fuel rods are unable to be removed and hundreds of years if they are.

Like the Chernobyl site, the Fukushima plant may remain a no-man’s land for thousands of years if the fuel rods are unable to be removed and hundreds of years if they are.

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TEPCO (Tokyo Electric Power Company) and the Japanese authorities have come under considerable criticism for acting too slowly and inadequately, and failing to provide full and timely information to the public. The IAEA too has been criticised for not taking on a greater role sooner. The Japanese authorities set up a 20km exclusion zone disregarding the advice of the IAEA which advocated an 80km zone, and despite monitoring showing high levels of contamination beyond the exclusion zone potentially jeopardising public health. This article will go some way to answering the underlying causes of the nuclear disaster beyond the earthquake, drawing

on the concept of a safety culture and its parallels with safety in medicine. The recurring theme, however, with all forms of safety is that unless human factors are given precedence in the design and implementation of safety systems we cannot expect safety. Furthermore, perverse incentives and conflicts of interest undermine all attempts at implementing a successful safety culture. Earthquakes and nuclear power plants Even on a cursory consideration it seems inconceivable that a nuclear plant should be placed in a seismically active zone. Yet, approximately 90 of the world’s nuclear

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power reactors are in moderately active seismic zones, and 34 in high risk areas.2 All of Japan’s and Taiwan’s reactors are in earthquake zones. Earthquakes Japan lies on the convergent zone of four major tectonic plates. In the last 100 years there have been five major subduction zone earthquakes which have battered the region where Fukushima is located. This is a highly unstable part of the world and is part of the Pacific socalled ‘ring of fire.’ Tsunamis It would have been better if the Japanese had resorted to tsunami records. Japan has suffered 195 tsunamis since 400, according to Japan’s Central Research Institute of Electric Power Industry, which produced a report on tsunami threats to nuclear plants on the opposite coast to Dai-Ichi in July 2008. The Fukushima plant was only designed to withstand a 5.7m tsunami. The cascade of events at Fukushima had been foretold in a report published in the U.S. two decades ago. The 1990 report by the U.S. Nuclear Regulatory Commission,

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an independent agency responsible for safety at the country’s power plants, identified earthquake-induced diesel generator failure and power outage leading to failure of cooling systems as one of the “most likely causes” of nuclear accidents from an external event. Japanese nuclear industry – conflicted, unsafe and corrupt Japan was interestingly regarded as the world’s safest country by the nuclear industry in terms of seismic protection and for surviving earthquakes and nuclear disasters until the Fukushima disaster. This opinion was however unfounded. TEPCO and indeed, the whole Japanese nuclear industry has revealed a long history of poor safety, falsified maintenance and safety records, as well as fraudulently concealed accidents over many decades.3 In 2002, Tokyo Electric admitted it had falsified repair reports at nuclear plants for more than two decades. Chairman Hiroshi Araki and President Nobuyama Minami resigned to take responsibility for hundred of occasions on which the company had submitted false data to the regulator, accompanied by a cadre of senior managers. All were

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Freshly revealed reports from the International Atomic Energy Agency (IAEA), dating from the 1990s, describe safety precautions at Japanese nuclear reactors as dangerously weak. promptly re-employed as consultants and advisers to the company, and remain to this day. Then in 2007, the utility said it hadn’t come entirely clean five years earlier. It had concealed at least six emergency stoppages at its Fukushima Dai-Ichi power station and a “critical” reaction at the plant’s No. 3 unit that lasted for seven hours. There have been almost a dozen deaths at Japanese nuclear plants in the past two decades due to accidents. Freshly revealed reports from the International Atomic Energy Agency (IAEA), dating from the 1990s, describe safety precautions at Japanese nuclear reactors as dangerously weak. IAEA inspectors visited four reactors in 1992 and 1995, finding 90 deficiencies in safety

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procedures. The revelation follows the confession by four companies – TEPCO, Chubu Electric Power, Japan Atomic Power and Tohoku Electric Power – that they concealed flaws in their reactors from government regulators.

power reducing Japan’s heavy reliance on imported fossil fuels. Over a lifetime people are often rotated through the regulatory and nuclear promotion arms blurring the lines between promoting and policing the industry.

Nuclear engineers and academics who have worked in Japan’s atomic power industry have spoken of a history of accidents, faked reports and inaction by a succession of Liberal Democratic Party governments that ran Japan for nearly all of the postwar period. A review of the nation’s approach to nuclear plant safety shows how closely intertwined relationships between government regulators and industry have allowed a culture of complacency to prevail amidst massive conflicts of interest.

The regulator and regulated also share people. In the practice known as “amakudari” (descent from heaven), top government officials nearing the end of their careers land plum jobs within the industries they regulated, giving companies intimate familiarity with their overseers.

Katsuhiko Ishibashi, a seismology professor at Kobe University, has said Japan’s history of nuclear accidents stems from an overconfidence in plant engineering. In 2006, he resigned from a government panel complaining that power company advisers dominated the panel responsible for rewriting Japan’s nuclear safety rules, saying the review process was rigged and “unscientific.” The Japanese nuclear regulator, the Nuclear Industrial Safety Agency (NISA) reports to the Ministry of Economy Trade and Industry (METI). This is the same ministry which through the Natural Resources and Energy Agency is responsible for the promotion and development of nuclear power in Japan. Both regulator and regulated thus share an interest in promoting nuclear

The review of relationships on both sides of the nuclear power establishment shows industry people also ascend to regulatory posts. An examination of the business and institutional ties of 95 people currently at three main nuclear regulatory bodies, either as bureaucrats or members of policy-setting advisory panels, shows that 26 of them have been affiliated either with the industry or groups that promote nuclear power, typically with government funding. As a consequence, NISA is a reactive rather than proactive, weak and ineffectual regulator. It acts as a rubber stamp rather than an investigative body. Furthermore, penalties for safety infractions are only weakly applied if at all. All plant owners are given warning of plant inspections. Regulators approved the extension beyond the Fukushima I plant’s 40-year statutory limit just weeks before the tsunami despite warnings about its safety and subsequent

F E AT U R E S admissions by Tokyo Electric, that it had failed to carry out proper inspections of critical equipment. The types of nuclear reactors used In October 2010, Japan Nuclear Energy Safety Organization (JNES) released a simulation in which a nuclear reactor similar to those at Fukushima would have a core meltdown and other consequences only 100 minutes after losing its cooling capabilities, leaving very little margin for error in the backup systems. Safety issues with General

Electric reactors The Atomic Energy Commission (AEC), the precursor of the NRC, documents from 1972 reveal an AEC safety expert raised concerns about the vulnerability of the boiled water reactor’s less robust containment capability that would make it vulnerable to a hydrogen explosion — the same scenario in the current Fukushima fiasco. All six boiling water reactors at the Fukushima Dai-Ichi plant were designed by General Electric Co. (GE) and the company built the No. 1, 2 and 6 reactors. Passive vs. active cooling systems The nuclear industry has developed “passive” cooling systems that rely on gravity rather than powered pumps to initiate cooling in the case of an emergency and thus, at least in principle, buy some time and thus may partially mitigate against a Fukushima nuclear scenario. However, of 65 nuclear reactors currently in preparation or in actual construction, only four deploy such

Regulators approved the extension beyond the Fukushima I plant’s 40-year statutory limit just weeks before the tsunami despite warnings about its safety and subsequent admissions by Tokyo Electric, that it had failed to carry out proper inspections of critical equipment.

systems. The vast majority of plants under construction around the world, 47 in all, are considered Generation II reactor designs—the same 1970s vintage as Fukushima Daiichi. And only 15 of the 442 nuclear reactors operating in the world possess passive safety systems. It is misleading to imply that the Fukushima plant was somehow unique in the world’s nuclear fleet as a mitigating factor in its failure – nearly all nuclear plants around the world, existing and planned, are of the same vintage and design as the Fukushima plant. Why? Because advanced redundant safety systems dramatically increase the cost of a nuclear power plant and nuclear power is already uneconomic. Safety culture The crisis we currently face with the Fukushima power plant is the direct result of the corrupt and collusive relationships between industry, government and academia. This resulted in poor regulation, one-eyed nuclear boosterism, overconfidence in technology, and poor training, all permeated and catalysed by a poor safety culture. The earthquake and tsunami proved merely the trigger which merged the constellation of failings onto a devastating trajectory. The technological approach to safety would have us believe that if we had better cooling systems the disaster would have been averted. In fact, Anne Lauvergeon, the CEO of Areva, the French nuclear reactor manufacturer hoping to export its new Evolutionary Pressure Reactor (EPR) with passive cooling systems, stated boldly that, “Had there been EPR’s in Fukushima radioactive leaks would not have been possible, whatever the situation.”4 The problem with this argument is that it treats safety as a predominantly technological issue and disregards the more important human factors involved. Safety as a system The concept of safety as a systems related issue first evolved in the aviation industry in the middle of the 20th Century. It was at that time the industry realised that although over 90% of accidents were due to human error, it

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F E AT U R E S was overly simplistic and misleading to interpret this as a single point source of error that needed to be eliminated. More enlightened analysis showed that humans make decisions in the context of complex multifactorial systems that can create or inhibit optimal behaviour and decisionmaking and hence either collude with or mitigate the chances of human error. In other words, it is pointless to blame an individual for an error which, as humans, we are predisposed to making in any case, if we operate with flawed systems and processes in environments that set us up to fail. The idea of safety therefore becomes one of designing systems and processes which can prevent human error. This also entailed having a continuous learning environment that encouraged feedback and transparency in order to expose unsafe systems. Safety as a culture The concept of a ‘safety culture’ arose subsequent to the Chernobyl disaster. In simple terms, and complementary to the systems thinking in the aviation industry, this describes the way in which safety is managed in the workplace, and often reflects “the attitudes, beliefs, perceptions and values that employees share in relation to safety.”4 Culture is for the group what character and personality are for the individual. A strong safety culture drives safety in an organisation embedding it into every level of decision making and behaviour. Organisational culture derives from the top of an organisational hierarchy and then disseminates downwards. A whisper from the top is heard as a shout at the bottom. A strong safety culture thus consists of a viable coherent management system prioritising safety in action as well as words, a widely placed awareness of hazards, and widely shared behavioural norms and values. A strong safety culture would rate safety as the pre-eminent value in a workplace. A weak safety culture would place profitability ahead of safety, as occurred with the BP Deepwater Horizon disaster in the Gulf of Mexico where there was an overriding emphasis on cost-cutting. A strong safety culture in the nuclear

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industry thus requires a strong, fearless and independent regulator immune from political pressure and conflicting political agendas to avoid being compromised by industry co-option or political lobbying. In this sense, leadership required to drive a strong safety culture must also be reflected in the regulator’s political masters. The cosy conflicted and intertwined relationships between regulators, government and the nuclear power utilities in Japan placed nuclear power advocacy ahead of safety issues leading to ineffectual regulation. The dominant value which overrode any other considerations and created a weak safety culture was the overwhelming drive for energy independence dating from the 1960’s and 70’s that permeated every level of government, industry and academia. Any nuclear critics were ostracised from these sectors and silenced through ridicule and marginalisation. Nuclear power had to prevail no matter what. Strong safety cultures require ongoing vigilance and effort. Transparency and accountability, the key drivers of a strong and effective safety culture are thus essential. Even in an at least partially open although fully democratic society such as Japan, transparency and accountability can be compromised as we have seen. What is the likelihood of a robust nuclear safety culture with transparency/accountability in an opaque totalitarian regime such as in China and which is the single biggest market for new nuclear plant builds in the world with one hundred planned in the next decade? Nearly every country in the world that is proposing expanding or introducing nuclear power ranks below Japan (27th) on the Transparency International (TI) corruption index. If Indonesia (TI ranking 158) builds, as is planned, several nuclear power reactors in one of the worst seismic zones on the Pacific ‘ring of fire,’ this would have devastating public health repercussions for Australia in a Fukushima style accident. The United States Nuclear Regulatory Commission, overseeing the largest nuclear power fleet in the world, meanwhile has progressively been gutted since the Republican domination of the

104th Congress in 1994 which cut the NRC’s staff by almost half and restricted its inspection and enforcement activities. Henry Myers, the science advisor to Congressman Mo Udall who drove to strengthen the NRC following the Three Mile Island nuclear accident states that, “There hasn’t been serious oversight (of the nuclear industry) for twenty years.” Funding for nuclear safety regulation and enforcement is again being attacked by the current Republican dominated House, with the expected corrosive effect on safety culture.5 Weak safety cultures are not unusual in many industries and furthermore weak safety cultures and weak regulation are intimately related. However, nuclear core hazards and the potential for large health, economic and social effects that are intercontinental in nature associated with the dispersion of radioactive substances are the key differences for the nuclear industry. It is this fact that makes nuclear power different and that demands a set of organisational values that place nuclear safety as the top priority of an organisation. Lessons from Fukushima for Healthcare Medicine does not have a strong safety

F E AT U R E S Melbourne hospital which has a “three strikes and you’re out policy” if their staff commit errors. Not surprisingly, their adverse events statistics look remarkably good, and their senior management looks even better for it. Furthermore, errors outside of the hospital system are excluded from the aforementioned statistics. If this state of affairs was in the aviation sector, there would be outrage. It is disappointing that in a profession where the ethical motto is “do no harm” we actually do much harm. We should heed the lessons of Fukushima and address our shortcomings. Peter Karamoskos is a Nuclear Radiologist in Melbourne. He is the public representative on the Radiation Health Committee of the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA), and Treasurer of the Medical Association for the Prevention of War.

Medicine does not have a strong safety culture. In many ways it resembles the deficiencies inherent in the nuclear industry and resembles the early history of the aviation industry. culture. In many ways it resembles the deficiencies inherent in the nuclear industry and resembles the early history of the aviation industry. It is of course not unique in this regard, but disappointing nevertheless. In the US human errors are estimated to result in up to 200,000 unnecessary deaths, in hospital settings, and one million excess injuries each year.6 Comparable figures in Australia published in the National Health and Hospitals Reform Commission report in 2009 are 4,550 deaths and 96,000 injuries. The Commission furthermore stated that the present system was “unlikely to be sustainable without reform.”7 Mistakes are almost certainly even more common than measured, since studies only identify those which lead to measurable adverse events soon after the errors. Human error accounts for 80% of adverse events occurring in complex healthcare systems, analogous to the aviation industry. The problem is, not bad people but good people working

in bad systems that need to be made safer. A strong safety culture is needed to address this. Our current measures of adverse events are primitive and incomplete. Reporting is only mandatory for certain ‘sentinel events’ however these are a gross under-representation of actual errors. Voluntary reporting of adverse events is also inadequate. A study conducted in the intensive care unit of the Royal Children’s Hospital in Melbourne found most adverse events went unreported and of those reported only a small fraction came from medical practitioners. The study suggested ‘an epidemic of adverse events’ in hospitals that the medical community and broader population knew little about. There is a punitive ‘blame culture’ in healthcare which does not encourage self-reporting of errors. I am aware of a radiology department in a major

_____________________________________________________ References Karamoskos, P., (May/June2011) Fukushima Burning, Anatomy of a Nuclear Disaster. Medical Life Journals Scores of Reactors in Quake Zones. Wall Street Journal. March 19,2011 http://online.wsj.com/article/SB1000142405274870 3512404576208872161503008.html?mod=googlenews_wsj (accessed May 11, 2011) 3 http://www.newscientist.com/article/dn20263-japans-recordof-nuclear (accessed March 23, 2011) 4 Cox, S. & Cox, T. (1991) The structure of employee attitudes to safety - a European example Work and Stress, 5, 93 - 106 5 After Three Mile Island, the Rise and Fall of Nuclear Safety Culture. The Nation. http://www.thenation.com/article/159386/ after-three-mile-island-rise-and-fall-nuclear-safety-culture (accessed May 10, 2011) 6 Institute of Medicine (2000). “To Err Is Human: Building a Safer Health System (2000)”. The National Academies Press. (accessed May 1, 2011) 7 A Healthier Future For All Australians – Final Report of the National Health and Hospitals Reform Commission – June 2009. http://www.health.gov.au/internet/nhhrc/publishing.nsf/ Content/nhhrc-report (accessed May 1, 2011). Images P21, “A Blast of the Past - Barsebäck Nuclear Power Plant. "Fukushima is todays Blast" by S@ilor, http://www.flickr.com/ photos/-skipper-/5300173476/ p21, “fukushima-6” by favanegasb, http://www.flickr.com/photos/favanegasb/5753394216/ p21, “fukushima-4” by favanegasb, http://www.flickr.com/photos/favanegasb/5753394148/ p22, “Kashiwazaki Nuclear Plant Panorama, Kashiwazaki, Niigata-ken, Japan” by WillJL, http://www.flickr.com/photos/ willjl/3767837525/ p23, “nuclear reactor at Reed College” by The Impression That I Get, http://www.flickr.com/photos/the_impression_that_i_ get/1375696505/ p23, “Nuclear Reactor” by tysh, http://www.flickr.com/photos/ tysh/2605367434/ p24 & 25“The 2011 Tōhoku earthquake and tsunami (Tōhoku Chihō Taiheiyō-oki Jishin)” by the tsunami, http://www.flickr. com/photos/60671268@N02/5533083256/ 1

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F E AT U R E S

Myth and Magic in

Western Medicine The Earliest Roots

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F E AT U R E S

The Madness, money and math behind it all How have we managed to come this far in Medicine? Early philosophers1 understood the ‘3 Ps’ of life: pain, paying and perishing. Going by these criteria, in terms of knowledge, technology, materials and consequent benefits, the answer is “quite far”.

oday we experience these ‘3 Ps’, to a lesser degree, blessed with the medical skills that ease the former and latter (whilst adding to the second).

This article is a brief review to highlight part of this route to medical enlightenment. This is a vast topic and an article this length is nothing but a toe nail sketch. Much of the information presented here is obtained from “A History of Medicine”, by Henry E. Sigerist2 and assorted sources on the web. The early healers From the First Stone Age (about 50,000 BCE) through the Neolithic (about 10,000 BCE) to the dawn of civilisation in Mesopotamia (about 5,000 BCE), healing advanced slowly. Very slowly. It is reasonable to consider the contribution the earliest practitioners made. Even so long ago, they were just like us, with an interest, (whatever the reason), in helping their fellows. The main difference of course, is that they did not enjoy the benefits of great collective experience and fascinating scientific advances, many of which amazingly have their origins all those hundreds of years ago. If we look at primitive societies and extrapolate back to the first healers, it is clear that whilst they understood injury and death; internal disease was mysterious, blamed on many magic and mystical causes, attributed to evils spirits which cast spells, inhabited or inserted

objects into the victim and/or involved the breaking of a taboo. Attempts at healing may have begun when somebody who had survived a life threatening experience, a bad injury, epilepsy or too much peyote etc. was considered imbued with powers that had protected them and would now protect others. The healing powers of the survivor and his family line were revealed and revered. Although the number of treatments available was initially limited, over many years, through a process of experimentation, the safe curative effects of more and more plant and animal extracts were discovered. Even if they often proved to be fatal, these were the earliest ‘therapeutic trials’ and some of them still benefit us today! It is possible to imagine the early healer using smoke, incantations, amulets, cleverly concealed animal parts, dances and herbs to cure the various ailments that presented. The most amazing finding of all from the Neolithic are trephined skulls. Nobody knows quite why. (See later *). Given their limited resources, how effective all their methods were is anyone’s guess, but it is likely that the

shaman had a degree of success, the placebo effect being dependent to a large degree upon belief. Of course, patient expectations were such even then that treatment failure sometimes resulted in the death of the unlucky witchdoctor. Nowadays of course we only have the Medical Boards to deal with.

It is possible to imagine the early healer using smoke, incantations, amulets, cleverly concealed animal parts, dances and herbs to cure the various ailments that presented.

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F E AT U R E S The Levant: Sumerians to the Greeks, Mesopotamia The great civilisations that arose in Mesopotamia were the first city states. Within them lived and worked many different people, including physicians. These civilisations spanned a total of approx 4000 years, so the physicians had a great deal of time to observe and record all manner of conditions and treatments. They became very skilled at their craft. The book, “Diagnoses in Assyrian and Babylonian Medicine” by Scurlock and Andersen has rewritten our understanding of these times. Not yet having read any of its 900 pages, I relied on a review by William Mullen in the Chicago Tribune3 for the fascinating glimpse it provides of a sophisticated discipline, far more advanced than previously believed, even more advanced than Early Greece. They were beginning to apply scientific principles to their practices. The diseases and treatments outlined are not too far from modern practice and reveal true professionals who rather than relying upon magic and mysticism, were logical, vigorous and rigorous. Aetiology did however lean towards mysticism. Disease was seen as punishment from one of a number of gods (of which there were about 6,000) and the physicians had to acknowledge these causative deities and how to appease them. Diagnosis involved bird watching, astronomy and examining the livers of various unfortunate animals. These multidisciplinary physicians were also religious figures and kept their consulting rooms (and secretarial scribes) in the temples. A physician (or Ashipu) could specialise in paediatrics, obstetrics, gynaecology, neurology, infectious diseases, dentistry, ophthalmology and veterinary medicine. Urlugaledin (4000 BCE) was the first recorded surgeon and examples of some of the earliest surgically specialised tools that he might have used in these times have been found. They resemble modern scalpels, knives and the ever present trephine.

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The godly connection could well account for their strongly disciplined approach to ethics and fees (Laws of Hammurabi, discovered in 1900 at Lagash, Iraq). They were prohibited from overprescribing medicines and magic for the dying. Instead, doctors were bound to do what they could to ease the patient’s suffering, saving families from false hope and unnecessary expense. Even so long ago they had to be careful. Hammurabi’s penalties for slip ups could be harsh: If a physician make a large incision with the operating knife, and kill him, or open a tumor with the operating knife, and cut out the eye, his hands shall be cut off. All of a sudden, the Medical Board doesn’t seem so bad.

Purify and grind to powder a watersnake skin, add the plant, the root of myrtle, crushed alkali, powdered barley, the skin of the Kushippu Bird, then pour water, boil it, and let the water be run off. Bathe [the sick organ] in it, and rub oil over it.

In addition to nerve wracking surgery and keeping the appropriate gods happy with propitious offerings, the physician scratched prescriptions for the preparation of potent potions onto pieces of clay tablet which were then dispensed by the local pharmacist. The remedies were compounded from an extensive and impressive pharmacopoeia of naturally occurring agents, including animal bits, various salts and assorted seeds. The active ingredients of many of these concoctions are still mimicked by modern pharmacology. But cost more. Treatment was administered by almost all the routes we know today (except IV) including inhalation of marijuana smoke for pain, depression and nausea.

The Levant: Sumerians to the Greeks, Egypt

Here is one prescription for a poultice, translated from a clay tablet:

Fortunately, for the world’s few surviving Kushippu Birds nobody really knows quite what this treated. One thing we can be grateful for is that Scurlock and Anderson appear to have identified diseases or disease states that no longer exist or trouble us so much, possibly because we developed immunity and cleaner living conditions.

Further to the West, Egyptian medicine was advancing in its own right. It is for scholars to determine how much of an exchange of ideas occurred between these great centres of civilisation but clearly there were similar constraints on how much could be done and a degree of parallel development of philosophies and therapies would be likely, cross fertilised through contact. A significant number of achievements and ‘firsts’ occurred during this epoch, one was the writing of probably the earliest remaining medical texts, on papyruses. These papyri indicate that treatments were based upon a mixture of the usual primitive spiritualism and some solid practical experience. The Edwin Smith papyrus (circa. 1600 BCE)

F E AT U R E S indicates an understanding of research methods whilst the Ebers papyrus, from about 50 years later, describes spells and nasty ointments to scare away malignant spirits. The most fascinating practise of all from this age is of course the Egyptians predilection to remove some of the organs, including the brain (through the nose) and then bandage their Mummies up and store them in Sarcophagi. An unexpected consequence of this would appear to be the earliest professional jealousies. Whilst embalmers in the Wabat were familiar with human anatomy, it would appear from physician’s treatises that they were not. Obviously no clinical meeting. The earlier prosthesis and prophylactics date from around these times. ‘Mummiesto-be’ missing bits were given wooden replacements for their trip to the afterlife whilst ‘Mummies-who-did-not-want-tobe’ were given proto (vaginal) pessaries made from crocodile droppings. The Levant: Sumerians to the Greeks, Greece The Greeks drew on knowledge and experience from their colleagues from the South and the East, but they also made great contributions to the science and philosophy of medicine. They also used extensive herbal remedies and simple surgery. The earliest medical school was established in Cnidus, 700 BCE. Whilst we know bad humour can be caused by ill health, Greeks believed the converse. Full of bad humour, they would go to the temple, or Asklepion, for diagnosis, treatment. They would enter a trance state (enkoimesis) during which they would be ‘cured’, receiving the words of gods from the oracle, or, reinforced with opium, submitting to surgery as indicated. It is difficult to determine whether the most famous oracle of all, Pythia at Delphi on Mt. Parnassus, gave medical as well as strategic and political advice. This service lasted almost 1,200 years. One curiosity is that childbirth was considered a polluting event, possibly

because of the horrendous maternal and foetal mortalities and morbidities. Abortion and infanticide, neither illegal, were common. Some notable figures from this time include Hippocrates and Aristotle. Hippocrates, (460 – 370 BCE) who is of course ‘father’ to us all, was a remarkable observer, diagnostician, physician, surgeon and philosopher. He described and categorised disease and treatments. He is history’s first Thoracic Surgeon. He established a medical school in Kos, where he and his student observed and documented many conditions in the Hippocratic Corpus and developed the philosophy behind his Oath. Aristotle (384 – 322 BCE) was not a physician. He can be considered as one of the founding figures of Western Philosophical, Logical, Academic and much Theological thinking, his influence extended through the Renaissance to today. His physical scientific thinking, however, also tended to the metaphysical and has been replaced by Newtonian thinking. He was an acute, astute observer of nature but preferred thinking to tinkering. Research was not for him.

effort to ‘improve their mental functions’. Clearly they have an urgent need for such therapy. Stunningly, they appear to have found oxymoronically titled ‘competent surgeons’ to help with this bizarre business. This just goes to show that some members of the human race are actually actively devolving. Please note: This account does not mention Early Indian, Chinese or AmeroIndian cultural influences. It is highly likely that the former two did have some influences, with trade between people in the ancient world being quite extensive, although rather slow. This is not to ignore or denigrate these cultural influences, which probably became of greater significance after the times written about here.

Dr. Tony Blinde believes science can easily explain all the many wonders we enjoy on this our only planetary home.

Finally This brief review of early medical achievement draws to a close. These painfully slow advances (and remember these 2,000 words cover a period of approximately 50 millennia) pointed the way to further advances. Humans moved from misty mystical thinking, prancing about fires and rattling bones to scare demons, towards a more rigorous and logical way of treating their unfortunate fellow man. However, some of us still appreciate the various deities we serve. Some amongst our peers appear to believe they are latter day Ashipu.

_____________________________________________________ References 1 References Plato et al. Greece. 2 ‘A History of Medicine. Vol 1. Henry Sigerist. Out of Print. 3 William Mullen, Chicago Tribune, October 24, 2005. Images p27, "Imhotep" by inhashi, http://www.flickr.com/photos/49929019@N00/2072815616/ p28, "Edwin Smith Surgical Papyrus" by edyoung75, http:// www.flickr.com/photos/30031069@N02/2975460095/ Images licensed under a Creative Commons Attribution 2.0 Generic Licence http://creativecommons.org/licences/by/2.0

Despite all the advances that have come from these early beginnings, there are still those who have not caught up *Incredible as it may seem, there are some people today who seriously discuss having holes bored into their skulls in an

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Make the right choice for your practice premises

Research shows that many doctors spend about 25 years building their practice in one location or region, so itâ&#x20AC;&#x2122;s worth considering whether renting or owning your practice premises is the best wealth creation strategy in the long term.

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hen starting out and setting up a practice, it is understandable that many professionals would choose to lease their premises because of the lower entry costs. But, on the other hand, purchasing your own rooms can potentially be a profitable longterm business and personal investment strategy. To make an informed choice about which is better for you, a more thorough examination of the risks and rewards of renting versus buying is advisable. Even though it seems like less of a commitment, a five year lease with a five year renewal option can cost as much as an outright purchase of your practice premises. Renting vs buying Whether renting or buying there is more to consider than just the monthly cash flow obligation.

If you rent, your landlord receives a steady income with the ability to increase the rent at regular intervals. Many landlords also recognise the goodwill value a tenant has tied up in a particular location, so they know the tenant cannot risk relocating. Often, this strengthens the landlordâ&#x20AC;&#x2122;s position and their ability to achieve above market rentals on your practice premises. You also do not have security of tenure with the landlord capable of requiring you to vacate the premises at the expiry of the rental agreement. This may seriously impact on your practice goodwill should you be unable to find alternative premises in close proximity. Buying your premises gives you the flexibility of choosing a repayment structure to suit your cash flow, but depending on whether you take out a fixed or variable rate loan, you may risk exposure to interest rate movements affecting your repayments. Your property ownership does however provide you with an excellent asset in

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If you purchase your premises, you will never again need to be at the mercy of a landlord and participate in rental negotiations or market-rental reviews. your porfolio even at the risk of exposure to fluctuations in the capital value of your practice premises. Owning your practice premises need not be an inflexible commitment from the perspective of your practice as you always have the option to sell or lease out the premises should you choose to move your practice location. Add up your repayments A significant advantage when buying your commercial premises is that your interest rate can be fixed, while your landlord will usually not fix your rent. Effectively, purchasing your property fixes your “rental” for as long as you can fix your interest rate. Fixed rate loans of five years or more are not uncommon. Plus, if you have enough equity, you could choose to use your existing residential property as

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security, which could potentially result in a lower interest rate. If you purchase your premises, you will never again need to be at the mercy of a landlord and participate in rental negotiations or market-rental reviews - which can reset your rent independently of agreed rental escalations. What’s your cash outlay? While renting your premises usually means that you don’t need to have a substantial deposit to set up a practice, don’t underestimate the cash outlays of renting. Your landlord could ask for a deposit of up to six months of rental payments and at least a month’s rent in advance. By comparison, it is possible to own your commercial property with minimal cash outlay. Some specialist financiers can provide financing of up to 100% of the purchase price and

potentially avoid the need for a deposit and costly mortgage insurance. Fit-out for the long term Fitting out your premises will be required whether you rent or buy. Rental premises have a termination date with no certainty of continuity, and you may be required to fit out a new place with added expense. Negotiating a lease term that corresponds to the useful life of your fit-out can be difficult, placing you at risk of being forced to leave the premises before you have had full use of your fitout. You can have more confidence in fitting out premises that you own with the knowledge that you can stay for the long term. Security for your retirement Consider your position at retirement. By purchasing your commercial premises, you can create substantial financial security and wealth for your retirement, or even secure an additional income stream. Generally a tenant leaves with nothing.

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Your profit can even be magnified by choosing the right structure for the investment, for example through your self-managed super fund.

Often, commercial property offers a higher yield than residential property. If buying, you can sell for a capital gain or retain the property as a commercial investment property, bringing you additional income for your retirement. Your profit can even be magnified by choosing the right structure for the investment, for example through your self-managed super fund.

commercial properties exchange hands without being advertised. When doing the maths, remember to consider the time and costs remaining on your current lease commitment to minimise overlap and avoid financial strain. Finally, consider what might be salvageable from your current practice to take with you and seek advice on the suitability of the property before you purchase.

Take practical steps

ď&#x192;¨Barry Lanesman from Investec Professional Finance has over 20 years involvement in financing for specialist practices.

If you decide that you would like to buy your own premises, start by taking practical steps and write down what you hope to achieve. Speak to your accountant or financial adviser, real estate agents in your area, colleagues who own their own premises, a specialist financier and property buying consultants to get a broad range of opinions. Let your requirements be known to real estate agents as many

Disclaimer Investec Professional Finance Pty Ltd ABN 94 110 704 464 (Investec Professional Finance) is a subsidiary of Investec Bank (Australia) Limited ABN 55 071 292 594. All finance is subject to our credit assessment criteria. Terms and conditions, fees and charges apply. The information contained in this document (Information) is general in nature and has been provided in good faith. It has not been prepared with your individual personal financial circumstances in mind. Whilst all reasonable care has been taken to ensure that the Information is accurate and opinions fair and reasonable, no warranties in this regard are provided.Â Some transactions may have tax implications. We recommend that you obtain independent financial and tax advice before making any decisions.

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Tips to get the house in order

T For doctors working in their own business or earning a salaried income, the early stages of a new financial year should be a time to stop for a moment and review your general finances. Every year the revolving door of opportunities shape the direction we are moving and now is the perfect time to set your financial course for the year ahead.

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his exercise is not just about ensuring that you are making the best choices available to you in regards to your money, it is also about having confidence that your financial affairs are in order so that you move forward focusing your efforts on the things that are important to you. Family and friends, health and wellbeing, work and career. This article aims to provide a simple checklist to make sure the house is in order before the next financial year flashes before your eyes. Review your business structure The manner in which we derive income is a critical building block in the management of our taxation liability and the timing of the tax payments that will become due. Those who earn private income have many options as to

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the structure of their businesses. Some choose to work as sole traders, some use practice trusts or practice companies, each of these have their strengths and weaknesses and any changes to a business structure should be considered carefully and with professional advice before any implementation occurs. When a change of structure provides additional benefits such as asset protection or flexibility in managing income, early in the new tax year is a great time to implement such a change. A 1st July trading date allows you to take maximum benefit of the tax advantage and also ensures that any billing or administrative issues are kept to a minimum.

account at the concessional tax rate of 15%. A total concessional contribution of $50,000 for the over 50’s and the cap of $25,000 still applies to the younger under 50’s. Where personal cashflow allows it we strongly recommend maximising this benefit whilst the increased limit is available. The positive characteristics of superannuation are widely publicised and with many doctors turning to self managed superannuation to purchase their business premises the arguments continue to fall in favour of maximising superannuation where you can.

Review your super contributions

For those over 50 it is also worth considering making after tax contributions to super that will lock in your long term tax rate at 15% for investment earnings.

Under current legislation a worker aged over 50 and with a balance over $500,000 in their superannuation can still put the extra amount of $25,000 into their

So as part of your plan for the year, establish your regular super contributions to achieve your desired result by 30th June 2012.

Review your personal spending / budget The old saying ‘look after the pennies and pounds will look after themselves’ rings true throughout our lives. Having a good budget and understanding of your spending habits is vital to the accumulation of wealth. To do this with a level of success takes discipline and for most of us this does not come easily. We encourage all our clients to create a cash hub account that might be an offset account or simply a high interest saving account to receive all your income. From this account you pay your mortgage and other interest and you transfer your regular cost of living amount to a separate account. This separate account pays for the groceries, utility bills, fuel for the car, activities for the children and family holidays. To remain true to your budget you should also pay your credit cards out each month from this account.

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B U S I N E S S & F inan c e Implementing a budget in this way identifies what surplus income you should be achieving to reduce debt or grow your investments. The net result is you have set yourself a budget and have a system to monitor your spending. Clearly if you over spend on lifestyle your repayment of the mortgage will slow, or your investment assets will not be getting the boost they should. A further benefit to this approach is that your credit cards will be paid out in a timely manner, helping you avoid the penalty interest and maximising the interest-free period. Thus increasing the interest received on your balances. Review your loan facilities The finance market in Australia is continuing to evolve. The GFC saw many of the non-bank lenders struggle to source funds for lending and as such the major banks regained a reasonably strong market position which in turn allowed them dictate the terms. We have seen over the last few months an increase in the competition between t h e major players as well as the wider lending market. The campaign by the NAB to pay for your exit fees to switch across from the other majors,

increasing loan to value ratios on offer and easing of credit requirements and insurance requirements for doctors has all lead to a more fluid and flexible market. With competition comes benefits for the consumer, as such it is worthwhile on an annual basis to check whether your existing lending is at a competitive rate and even more importantly that your debt is in the optimal structure. There are many financial situations where the best approach is to not repay a debt but to retain it using an interest only facility. Maybe you are living in a house that will become an investment in the future when you upgrade to a larger or more expensive home. It is critically important to understand that redraws and offsets create a different effect for taxation, and it is a very important difference in regard to long term tax planning. So this exercise of reviewing your lending should focus not just on the rates of interest but the structure of your debt and your plans for the future. Review your investments My final point on the checklist is to consider your investment portfolio, be sure you have an understanding of what asset classes you are exposed to, including your superannuation assets. Are you comfortable with that allocation, do you need to make any changes before the year is under way? Are you maintaining a reasonable level of diversification?

you remove the emotional decisions by simply taking profit from asset classes that have out performed and allocate these funds towards asset classes that have lagged behind. We all know the flow of capital around the world shifts in cycles, and this regular rebalancing is a great mechanism to ensure you smooth out the volatility in the portfolio and capture gains along the way. Attempting to time markets is one of the great risks facing even the most experienced fund managers, the majority of whom do not manage to out-perform the market over the long term. Conclusion Doctors have a plethora of opportunities that they need to be aware of and conducting this sort of review can be a little daunting. But the new financial year is a great opportunity to run this checklist over your financial position and be able move in to the 2011/12 financial year with confidence that youâ&#x20AC;&#x2122;re maximising your financial effectiveness. ď&#x192;¨James Clyne is the Accounting Partner and Adam Faulkner is the Medical Wealth Strategist at MEDIQ Medical Financial Services.

Diversification is important for any investment portfolio, so whilst the Australian market might be comfortable to us, it only represents 2% of the investment market around the world. Investing for the long term requires at least an annual rebalance to ensure

Disclaimer: This advice may not be suitable to you because it has not been tailored to your personal circumstances. Please seek personal a financial product a person should obtain a Product Disclosure Statement a decision about whether to acquire the product. The material contained within the market, and on our understanding of legislation and Government accurate. Opinions constitute our judgement at the time of issue and are

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contains general advice that financial and tax advice prior to acting on this information. Before acquiring (PDS) relating to that product and consider the contents of the PDS before making in this document is based on information received in good faith from sources press releases at the date of publication, which are believed to be reliable and subject to change.

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F E AT U R E S

Making the most of a

Life Insurance

Payout

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You have worked hard and sensibly provided for your loved ones. You are the primary “breadwinner” in your family. You want to protect your family and ensure that if you pass away, especially when you have a young family heavily dependant on you, that your estate has enough money to pay the bills, to feed and clothe your family, and to continue maintaining their standard of life. To this end, you have arranged life insurance – a sum of money paid to your estate as a result of your death.

rganising life insurance is a very sensible first step – but a Will which creates protective and tax saving opportunities for your estate can add significant value to any payout. What happens to the life insurance proceeds? Are you concerned that: • •

the proceeds are kept within your family (ie protected from creditors and predators); and income and other taxes do not erode the income generated by the proceeds.

If yes, a well drafted “testamentary trust” in your Will together with the appropriate insurance nomination can achieve these goals. Payments of the life insurance proceeds directly to the policy beneficiary can make it easy for it to be attacked and can attract extra tax.

The purpose of this article is to outline the advantages of incorporating a testamentary trust in your Will. What is a testamentary trust? A testamentary trust is a trust established by a Will. It can be optional (the beneficiary can choose not to use it), discretionary (the beneficiary decides who to benefit) or a fixed trust or a combination of these. These trusts are widely recommended for use in modern Wills because of the tax and asset protection advantages that they offer when compared to a standard Will. A standard Will offers little assistance to a beneficiary of an inheritance in relation to issues of tax efficiency and asset protection. What do these trusts look like? The diagram below depicts how a testamentary trust may be structured.

Discretionary Simply put, instead of nominating your spouse as the policy beneficiary, you nominate your estate (or your legal personal representative) as the policy beneficiary. Your Will then provides for how the life insurance proceeds are distributed. The life insurance proceeds can be paid to a testamentary trust of which your spouse is the primary beneficiary (but not the only beneficiary). The advantages of directing proceeds to a testamentary trust as follows: Asset protection A beneficiary of a discretionary testamentary trust is, at law, a mere discretionary object and accordingly has no interest in the assets of a trust. Because of this, assets (including life insurance proceeds) held within a discretionary testamentary trust, are not assets of the individual and accordingly, these assets do not form part of that individual’s estate.

discretionary Executor

Trustee •E.g. Primary beneficiary

WILL

Optional Discretionary Testamentary Trust Beneficiaries include: •Primary beneficiary •Immediate family •Related entities •Charities

 Flexibility of distributions Tax savings, especially for minor beneficiaries Asset protection for trust assets

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B U S I N E S S & F inan c e Therefore, a creditor or other person claiming against the beneficiary cannot obtain the assets held in the trust. This would assist where members of your family, who you wish to receive the life insurance proceeds: • • •

may be experiencing bankruptcy, may be on the verge of a relationship breakdown and subject to family law claims, or may be sued by clients/patients and their insurance does not cover these claims.

In each of these situations, the life insurance proceeds, whilst paid into a testamentary trust, are protected from these claims and that family member will continue to benefit from these proceeds. Compare this to a situation where a policy beneficiary is your spouse, and the proceeds would go directly to your spouse. If your spouse was to enter into a new relationship, and your spouse received these proceeds, potentially those proceeds can be attacked by the new partner in the event of any family law claims.

beneficiaries on low marginal tax rates, the trustee can minimise the overall tax liability on the trust income. The trustee can choose to distribute income to minor beneficiaries of the trust with each beneficiary being able to receive up to $16,000 of income per year tax free (for the 2010-11 financial year with the benefit of the Low Income Tax Offset).

Case study

Normally “penalty rates” of tax apply to income derived from trusts which are paid to children under age 18. However, the Tax Act allows children under the age of 18, who receive income from a testamentary trust, to be treated as adults for tax purposes. This could mean significant tax savings for beneficiaries who can “split” income with minor children, as the case study below demonstrates.

The policy beneficiary is his wife (labelled below as “No Testamentary Trust”). The policy beneficiary is his estate and the proceeds going into testamentary trust for his wife (labelled below as “Testamentary Trust”).

Tax savings Well-drafted testamentary trusts can give a beneficiary the option to reduce personal income tax by splitting income from the life insurance proceeds between a range of family members on lower rates. The trustee of the testamentary trust (normally the primary beneficiary, and generally the surviving spouse), has complete discretion to determine who receives the income of the trust. Tax is paid on the income of the trust at the marginal rate of the beneficiaries who receive it. Therefore, by selecting

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$2m of the proceeds is set aside into a bank account earning $100,000 interest in the first year.

The tax consequences are set out below: As you can see, when the proceeds of life insurance is paid directly to the surviving

$100K interest – Spouse on $180K income and 4 minors no income No Testamentary Trust Interest paid to wife

$100,000

Tax

$99,550

Beneficiary’s inheritance can be kept in the family A modern, well drafted discretionary testamentary trust may also help your family keep the proceeds from passing to non-family members; for example, by providing that on their death the control of the testamentary trust passes to their children (rather than to a spouse).

A doctor who has life insurance of $3m passes away, leaving a wife and four children (aged 9, 12, 15 and 17).

Testamentary Trust Wife chooses to distribute all of the interest to 4 kids ($25,000 ea)

$100,000

$5,400 Tax Save

$94,150 Rates based on the tax year 2010/2011

$100K interest – Spouse on $50K and 4 minors no income No Testamentary Trust Interest paid to wife

$100,000

Tax

$28,650

Testamentary Trust Wife chooses to distribute all of the interest to 4 kids ($25,000 ea)

$100,000

$5,400 Tax Save

$23,250 Rates based on the tax year 2010/2011

spouse, here the wife, she can only utilise the one tax free threshold. Instead, if the husband’s Will provided for a testamentary trust and he nominated his estate to be the policy beneficiary, the proceeds of life insurance can be directed to the testamentary trust and all members of his family can utilise their own tax free threshold, thereby significantly reducing the amount of tax payable by the family. Mike Fitzpatrick is a Partner at PwC Australia, Bernadette Duell is a Lawyer at PwC Australia and Aaron Zelman is a Partner of Priority Life.

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Filling the void between hospitals and beauty salons

The Growth of Non-Invasive Cosmetic Medicine 42

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In the latest figures released by the Cosmetic Physicians Society of Australasia (CPSA) Australians now spend more per capita on cosmetic medicine than any other country in the world. And the same figures from April this year show that Australians spent an estimated $560.6 million on non- and minimally-invasive treatments in the past 12 months, an increase of 25% on the previous year.

r Gabrielle Carswell, President of the CPSA, says: “We’re seeing an increasing demand for ‘walk-in, walk-out’ treatments such as dermal fillers and line smoothing injections. These procedures can offer fantastic results and are far less invasive than surgery, which means shorter recovery periods and less social downtime. They are generally more affordable than surgery too, making cosmetic medicine attainable to a greater portion of the population.” The other major drivers of growth are better consumer awareness coupled with social acceptance, says Dr Carswell. “Cosmetic medicine is becoming far less taboo. An increasing number of celebrities are now confessing their beauty secrets when they were once tight-lipped about undergoing procedures.” The Premier of Queensland, Anna Bligh, has admitted to having Botox and Australian celebrities including Sonia Kruger, Rebecca Gibney and Charlotte Dawson say a “tweak here and there” is fine if it “makes you feel better.”1 Another driver of growth is Australia’s harsh climate, with sun damage causing some Australians to appear older than their years, in some cases looking 1015 years older than their European counterparts. Many Australians need medical treatment for their sun-damaged skin but when they see good results they often become interested in further improvements of a cosmetic nature. Lasers and intense pulse light (IPL) therapy are also becoming common as anti-aging treatments. Treatments range from removal of age spots and hyperpigmentation on face, chest, hands etc to IPL which is a non-invasive treatment

Many Australians need medical treatment for their sun-damaged skin but when they see good results they often become interested in further improvements of a cosmetic nature. that stimulates the collagen under the skin to improve its appearance. In the United States a survey published earlier this year by the American Academy of Facial Plastic and Reconstructive Surgery (AAFPRS) found that threequarters of the procedures performed by the Academy’s surgeons in 2010 were non-surgical procedures. AAFRPS also found that the number of procedures performed annually has risen 45% over the past two years. The Academy found that more patients were opting for nonsurgical procedures to delay cosmetic surgery. President of the AAFPRS Jonathan M. Sykes, M.D, said: “Non-surgical procedures are an excellent option for some people, with the added benefits of lower costs and shorter recovery time; two things that are consistently important to those considering facial plastic surgery. We have been seeing a trend over the past few years that people who want to look and feel younger and rejuvenated are turning to non-surgical, less invasive procedures to obtain the refreshed look they want.” All these statistics present an opportunity for Australian doctors, as the “injectables” such as Botox, Dysport and dermal fillers like Juvaderm and Restylane require a doctor’s prescription as they are S4 drugs. Also these treatments can only be performed by a

specially trained physician or certified nurse. Currently these treatments are offered at some traditional beauty salons, but as they don’t have a doctor on site the appointments are all arranged for one or two days a month and are performed by a visiting doctor. Current non-surgical cosmetic treatments include (but are not limited to) cosmetic injections of muscle relaxants such as Botox and Dysport used on vertical frown lines between the eyebrows and also on crows feet below the eyes; dermal fillers used in the lips, nasolabial folds, and other areas where volume is required; laser-treatment for pigmentation and age-spot removal, skin resurfacing, skin rejuvenation and tightening. There are also treatments for the body in these categories for example dermal filler injections can be used to produce a more youthful looking décolletage or cleavage; there are laser body treatments for cellulite and for circumferential reduction, and Mesotherapy which is the use of injections to dissolve fat in troublesome areas such as a double chin and ‘love handles’. The huge void between a hospital and a beauty salon There is a very large gap between actual cosmetic surgery in a hospital which can show dramatic results but carries all the risks of surgery and treatments in beauty salons, which show minimal,

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Interview Ha Nguyen is the CEO of My Botique, a business that specialises in “injectables”. The company trains GPs and nurses in all of these non-invasive and minimally-invasive procedures.

The growth in the Botox market is expected to be the fastest among all the segments in the facial aesthetics market.

Nguyen says they’ve seen massive growth in their business in the short time since its inception, less than two years ago. “We’re seeing our customer profile constantly expanding to include women from all walks of life, and men as well. We are seeing affluent women coming in for the cost savings – from where they used to go to plastic surgeons.” “Mothers and younger females – upwards of 25 years old – are engaging our services for aspirational factors. And men across the board from corporate to entertainment are seeking Botox to help them remain competitive.” One of the newer treatments the company are currently looking at is plasma therapy. This consists of removing blood from a patient, enrich platelets on a centrifuge, injecting the same blood cells back in to the face. A client would need this treatment once per month to maintain maximum benefit.

if any, results. More serious than beauty salons but less serious than surgery in a hospital, are specialist clinics in convenient locations that carry out these procedures and treatments which are proving popular for both for patients and physician owners. Staffed by an overseeing doctor, specially trained nurse injectors and highly qualified laser technicians, this business model fills an ever-expanding niche. The future forecast for Botox & dermal fillers The global forecast for facial aesthetics is predicted to reach about $4 billion in 2017 at a compound annual growth (CAGR) of 9%. This growth is expected to be driven by minimally invasive and non-invasive procedures that offer long term results at competitive pricing. The growth in the Botox market is

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expected to be the fastest among all the segments in the facial aesthetics market. The US will continue to be the largest market for Botox in the future. The Botox market is driven by factors such as low procedure time and cost effectiveness of the procedure. Chronic facial wrinkles can be treated using botulinum toxin unlike other anti wrinkle procedures. It is the most effective non surgical anti wrinkle solution available in the facial aesthetics market. It is possible to get rid of age old facial lines and wrinkles in just five to 10 minutes while it is not the case with other procedures. Also the uniqueness of botulinum toxin is the wide spectrum of treatment that it provides. It can be used for forehead wrinkles, eyelids, lips and the neck. Medical uses for Botox which could also be treated in a cosmetic clinic include prevention of excessive sweating and teeth grinding. The results of botulinum toxin procedure are not permanent, due to which the side effects are also not permanent. This is due to the fact that the ingredients used in botulinum toxin degrade over a period of time that not only results in temporary results but also the side effects that do not last long. The future market is expected to be robust with more prominent players such as Medicis and Merz Pharmaceuticals coming up with their versions of botulinum toxin at a cheaper price. The results of hyaluronic acid based fillers are short term, usually from three to six months. As a result recurring income for physicians and aesthetic centres encourages growth of this segment. Susi Banks is a freelance journalist whose articles regularly appear in The Australian and the Daily Telegraph newspapers ____________________________________________________ References 1. Sunday Telegraph, 15 August, 2010

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Feel you have something you would like to share with all other Physicians? For Investors, Society and the Environment. Contact Karen McLeod on articles (07) 3333 2187 or visit www.ethicalinvestment.com.au We are currently looking for and submissions for PHySiciAnlife . Karen McLeod is an Authorised Representative of Ethical Investment Advisers Pty Ltd (AFSL 276544). Ethical Investment Advisers (AFSL 276544) has been certified by RIAA email: editor@medical-life.com.au according to the strict disclosurePlease practices required under the Responsible Investment Certification Program. See www.responsibleinvestment.org for details.

Can you deliver clinical quality and make a profit? Medical specialists the world over struggle with the same issue â&#x20AC;&#x201D; growing a practice and delivering quality clinical outcomes, while at the same time managing a complex small business. We explain that corporatisation is not always the right answer.

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B U S I N E S S & F inan c e

growing number of specialist medical practitioners in Australia have considered or have entered into contractual arrangements to provide medical services as independent practitioners within corporate practices. And to some extent, corporatisation has been a necessary step for some medical specialties to deliver higher quality care. For example, radiologists, due to the capital costs of establishment and specialised equipment, have largely converted to corporate structures and many pathologists have corporatised to obtain sufficient business scale to hit margins. Surgeons, on the other hand, have low capital costs (as most equipment is provided by hospitals) and high margins with referrals based on personal reputation rather than a business name. Anaesthetists, too have limited need for a corporate structure with very low capital costs and high margins. Business is generated through relationships with surgeons, so there may be no real goodwill for sale if they choose to retire.

If you compare the three major professional practices in Australia – accounting, legal and medical – medical specialists generate by far the lion’s share of return per professional...

If you compare the three major professional practices in Australia – accounting, legal and medical – medical specialists generate by far the lion’s share of return per professional, followed by solicitors, general medical practitioners and accountants. Perhaps because of their relative profitability, medical specialists generally favour a single professional practice structure and they account for more than 90% of medical specialist practice structures in Australia.

Challenges of running a private practice? When a specialist sets up a private practice, it is often a defining moment – a realisation of lifelong dreams and ambitions. Most practices begin with a flush of youth and enthusiasm, as specialists seek not only to improve the lives of others, but also to establish the foundations of wealth for themselves and their family. As practices mature, the time

Regardless of your medical specialty, selecting the right business structure is critical to maximising the profit of your practice and to do this properly will involve the use of trust structures, rather than corporate entities. Why establish a private practice? Revenue and profit. In 2010, there were 16,090 specialist medical practices operating in Australia. Income generated by these practices was $9.8 billion, with fees for medical services being the highest source of income, comprising some 88.1% of total income earned. [Specialist Medical Services in Australia, IBISWorld]

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B U S I N E S S & F inan c e pressures of giving quality care means specialists often spend a disproportionate amount of time on clinical and practice matters – with a specialist’s personal financial ‘housekeeping’ suffering as a result. This is a key challenge for specialists, as some of the greatest wealth creation and management opportunities lie in viewing a specialist’s practice and personal financial management as being interconnected. Some specialist practitioners are paying more tax and carrying more debt than they need to – something they could easily resolve by setting up the right structure and carefully managing the distribution of practice income to legitimately reduce non-deductible debt and build up cash reserves for investment and wealth creation. Case Study Dr Smith is an orthopaedic surgeon, who works as a junior salaried specialist in private practice, as well as consulting in public and private hospitals on a part time basis. He completed his vocational training, has broad clinical experience and is now ready to establish his own private practice. He is looking at the best way to structure his equity holding, particularly from an asset protection and tax planning prospective. As a specialist medical practitioner, Dr Smith’s income is considered to be personal services income – which means it is income earned as a result of his personal effort and skills so it is all attributable to Dr.Smith. Establishing a practice trust structure will see income generated by specialist medical advice, attributable only to Dr. Smith. But the service trust will also generate income. This income is NOT deemed as personal service income so will not be attributable to Dr.Smith. So how does a practice trust structure work? Operationally, the ABC medical trust receives all the patient fees, as it is the trust that provides medical services to

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ABC Medical Trust

Service Fees

Beneficiary A

DEF Service Trust

Rent

Beneficiary B

patients. ABC medical trust pays DEF service trust a service fee for the provision of support. The service fee paid is set at 40% of the gross fees from patient consultations, with the balance of the patient fees to be distributed to Dr Smith as wages. Dr Smith can use his self managed super fund to purchase the premises where the medical practice is run under a limited recourse borrowing facility. The rental payments to the fund must be set at arm’s-length – meaning payments must be set at a commercial rate. DEF service trust employs a practice manager, reception staff, administration support staff and a nurse. It also holds (either by purchasing or leasing) all the medical equipment, supplies and office systems. DEF service trust also pays all of the expenses involved in running the practice (i.e. wages, superannuation contributions and other employment benefits. It also pays the rent for the medical practice premises to the Smith self managed super fund. For asset protection purposes, all of Dr Smith’s personal assets, such as his investment properties and investment portfolio should be held in a separate family trust. Service fees should be set at between 40% and 60% of gross practice fees depending on factors such as the location of the practice and cost structures. For

Smith SelfManaged Super Fund

Beneficiary C

example, the more capital intensive the practice the higher service fee that can be charged. Generally, service fees percentages are lower in rural areas in comparison to metropolitan areas. To avoid a challenge from the Tax Office, all service fee arrangements should be structured in accordance with Australian Taxation Office approved rulings, IT 276 and TR2006/2. How does personal wealth management complement a good private practice? Medical specialists can remain in private practice and ‘buy in’ the expertise necessary to deliver all the benefits of corporatisation without losing their independence or personal approach to clinical care. A good financial advisor will view your professional practice and your personal wealth management as a collective and employ tax strategies to improve cash flow for investment strategies and eliminate non-productive debt. Other benefits, such as creating back-office efficiencies can save a specialist 3 to 4 days a month – time that could be spent with patients, family or improving work life balance. Roger Wilson is a Wealth Management Partner and Eric Maillard is the Lead Business Advisory Partner at Lachlan Partners, Melbourne.

At Lachlan Partners everything connects

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At Lachlan Partners, you’ll be dealing with professionals who have a proven track record. They are committed to building meaningful, long-term relationships with you and are passionate about making your financial master plan connect perfectly. We help you get the most out of life. You can see it in our brand mark. You can see it in the relationships we’ve established with generations of clients. You can see it in the way our services have been designed to work in harmony with each other. As one of Australia’s most trusted and reputable private advisory firms, our range of business and financial advisory services has been created with pure financial synergy in mind. It enables us to look at the bigger picture of your overall needs and provide one powerful integrated solution. We offer the kind of solution that comes with the outstanding level of personal service that you expect from a more intimate financial establishment like Lachlan Partners. But that’s not all that sets us apart. It’s worth noting we operate on a fee for service basis, which means the advice we offer is totally independent and objective. Our sole purpose is to help you achieve your financial and lifestyle goals. Lachlan Partners publishes Investing Times, Australia’s foremost independent newsletter providing financial and investment wealth creation strategies.

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Melbourne Level 35, 360 Collins Street Melbourne VIC 3000 T 03 9605 9200 F 03 9605 9249 Sydney Level 18, 201 Kent Street Sydney NSW 2000 T 02 9291 2800 F 02 9291 2888 Brisbane Level 5, 49 Sherwood Road Toowong Qld 4066 T 07 3871 0599 F 07 3871 0522 Freecall 1800 643 631 E info@lachlanpartners.com.au W www.lachlanpartners.com.au

T h e cheque â&#x20AC;&#x2122; s in the mail B U S I N E S S & F inan c e

g n i g a n a M ars and arre debt bad ivate r p n i e c i t c pra

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B U S I N E S S & F inan c e

Money and Medicine are uncomfortable partners. Doctors don’t like to talk about money even amongst themselves much less with their patients. But whether you like it or not, if you are a doctor in private practice then you are operating a business and, while it may not be your cup of tea, you will have to deal with money matters including bad debt.

hile most doctors will tell you their practice has bad debt, the good news is that the vast majority of your patients want to pay you and are happy to do so, and the reasons they sometimes don’t are more to do with misunderstandings and failed communication than anything else. What’s a bad debt and what is good debt or arrears? Let’s look at the definitions; a bad debt is an amount of money owing that is unlikely to be collected. As simple as that sounds, not all amounts of money that are owing are bad debts, particularly in the health context. There must first be a legal obligation to pay the amount alleged as owing. Those who manage medical billing will know that rejected claims from health funds or Medicare are just a fact of life and something we deal with daily. However, the majority of rejected claims are not and will never become ‘bad debts’. For example, if a patient was not eligible for Medicare at the date of service or their health fund membership did not cover them for the services provided then you cannot pursue these claims through these channels. Or in the situation where a third party insurer

their billing staff handle the arrears is a tangible measure of the quality of their work. It’s how you can assess the value of the people doing this for you. Most doctors are realists and over the years have come to understand that they will always have arrears, it’s just the way the system works. What’s important is that the arrears are being attended to and are moving on a monthly basis. The business of avoiding bad debt – prevention is better than cure

denies liability for your patients’ claim, the insurer is not obliged to pay your accounts until such time as either a legal determination is made or the insurer accepts liability. Technically speaking, these claims should not be written off as ‘bad debts’ because they were never payable in the first place. There was no legal obligation on the payer to pay. In these situations, you will usually need to redirect your claims to the patient and only when the patient has refused to pay despite numerous attempts, will you have a bad debt on your hands. In contrast to bad debts, ‘arrears’ are claims that will be paid, but have been delayed. There are currently over 300 listed Medicare ‘exception’ codes that reflect why claims have been rejected or delayed. Almost all rejected claims are payable and will eventually be paid, though sometimes it can take a very long time if a claim gets stuck. Following up these claims involves time and people spending long hours on the phone. It’s just a part of the daily grind and is perhaps some of the most important work your billing staff should be doing on a very regular basis. Because after all, getting the claims out is only half the task, it’s getting them in that’s often the harder but most crucial part of the job. For many doctors, assessing how

There are many practices that can proudly boast negligible levels of bad debt and it is always due to excellent front end procedures. Whilst it cannot be denied that talking about money may have an impact on the doctor/patient relationship, patients deserve to know what they will have to pay and doctors deserve to be able to determine their fees. It is best practice to provide an estimate of medical fees, otherwise known as informed financial consent (IFC) and in some circumstances, such as when using the known-gap scheme, it is a legal requirement. It’s the common sense stuff that patient’s really appreciate. Be clear and upfront at the first opportunity and be consistent in the approach to stating your fees with your patients, whether you as the doctor have the discussion or a member of your staff. Ensure you have systems in place so that your accounts go out promptly, because if it is weeks or months after the service has been delivered you are increasing your risk of errant claims. And as we all know a prompt follow up avoids trouble down the track! As a rough estimate, once your debt becomes 60 days overdue your chances of recovery decrease by about 50% and the older the debt the lower the chances of success. Unlike most businesses, doctors are

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B U S I N E S S & F inan c e

Top Tips

Remember - doctors are free to set their fees for their professional services on a case by case and patient by patient basis. You are never locked into a particular type of claiming.

It is the front end of your practice where you will have the most success in avoiding bad debt. Do not be ambivalent about the payment of services.

Place a sign at reception stating, ‘All patients (including workers compensation patients) are required to make full payment at the time of consultation. Thank you.’ Then if you want to bulk bill someone or you have a workers compensation patient whose account you want to send to the insurer you still can.

Be consistent in how you and your staff discuss what the fees will be - patients don’t like surprises.

Have lots of payment options available.

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fortunate to have third parties who will cover some or all of the costs of their services including; Medicare, private health funds, workers compensation and third party insurers. Using online claiming can transform practices that have had problems being paid. In the rooms context it means you can lodge claims on behalf of your patients at the point of service and, while they will have to pay your fee on the day, their Medicare rebate will be deposited into their registered bank account within 2 days. It is a much better option than allowing your patients to take their account to Medicare and maybe forward the cheque to you a few months later. The health fund no-gap and known-gap schemes are also much better options for the majority who like to be paid promptly. For many it is preferable to sending patients their invoices after discharge from hospital which they will have to take to Medicare and their funds, to obtain cheques. Even if you do receive both cheques you will only receive the schedule fee, whereas the nogap scheme offers substantially higher rebates, does not involve the patient having to do anything to pay you and, because it’s mostly electronic, the money will be in your account within days rather than weeks or even months. And remember that, unlike years ago, most people now come to the doctor knowing, accepting and prepared to

cover some costs. So having plenty of payment options available for your patients is critical. A merchant facility which you can obtain from your bank is a must as most patients will pay with credit card or EFTPOS. Okay so sometimes it might get down to this but let’s dispel the myths of the legal process The legal process of debt recovery is your last resort and something that should never be embarked upon lightly. There is only one legal avenue available for most debt recovery matters in Australia, which is civil proceedings, usually in the Local Court. The starting point in the legal process is a letter of demand, which is a letter setting out the details of the amount owing and advising that unless payment is received by a certain date, legal proceedings will be commenced without further notice. Whilst some billing organisations will follow up with a second letter of demand, experience shows that upon the issue of a second your credibility drops by 50% and continues to drop proportionately with every subsequent demand. It’s no surprise that the debtor will soon work out you’re not serious.

B U S I N E S S & F inan c e

Costs in the small claims division of the local court: Legal fees

(approx.) $550

Filing fee

$83 ($166 if you are a company)

Court service fee

$35

Default judgement

$157.80

Writ of levy of property

$70

TOTAL

$895.80 ($978.80 if you are a company)

The first and only letter of demand really should be seen as either, the end of the road (if it doesn’t work you’re going to let it go) or the first step in a legal debt recovery process which will continue through the court system until you are paid. But before you head to court decide if the costs of the proceedings are worthwhile and if the debtor has the capacity to pay. It’s never a good idea to throw good money after bad. Mercantile Agents, which provide collection services, can sometimes be a good middle option if you find yourself with large quantities of small debts, as they are more affordable than the legal process. Collectors will demand the payment of a debt by contacting the debtor, often initially in writing and then subsequently by phone or even by personal attendance. Good collectors will also determine whether the debtor has the capacity to pay, has a legal obligation to pay, and will negotiate to achieve a resolution of either full or part payment. If the Collector fails and the matter proceeds to court, the same court fees and costs as listed below are incurred. What to do if you do have bad debt Start by speaking with the patient sooner rather than later. It doesn’t really matter if it is you, your billing service or your staff who try and determine what the problem is; whether it is a capacity to

pay, or a dissatisfaction with the service, or they did not expect to receive the bill and therefore do not want to pay. A sensitively handled phone call can often address these issues and resolve the matter. Negotiate with the patient and consider forgoing some of your fee if the circumstances warrant it. One such circumstance might be if there was an adverse outcome for the patient. Demonstrating some flexibility in these circumstances may also avoid a complaint against you. For patients with private health insurance consider reverting to nogap claiming for your inpatients, but remember you have to be registered with the funds for their no-gap schemes first. It costs nothing to register and means you always have this as a claiming option. Remember also that you will need to advise the patient that you have decided to process the claim in this way, that there will be nothing further for them to pay and that the original account has been destroyed.

Tips for Physicians • Communicate clearly in the rooms about fees and obtain IFC if you will be admitting your patients and plan to charge gaps. • If you do not have rooms and are only seeing inpatients, either develop a system of providing your patients with IFC if you plan to charge gaps (the hospital may assist at the point of admission or your billing service may have some suggestions) or consider using the no-gap option.

Think of it like having a great treatment plan. Put time and effort into it at the outset, stick to it if you can, but if it all goes pear shaped at the critical moment, ditch the plan and adapt!

Margaret Faux is the Managing Director of Synapse Medical Services providing billing services for doctors Australiawide.

And if you are of the view that some money is better than no money then you might consider reverting to bulk billing an errant claim from time to time. Just as in the situation above, you will need to communicate to the patient that they are released from the debt, destroy the original account and organise for the patient to sign an assignment of benefit form - most will happily oblige in these circumstances.

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Abolition of

Immunity for Expert

Witnesses Issues for Australian doctors

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RISK MANAGEMENT

Witness Immunity The history of the law taking a stand to protect witnesses from exposure to civil actions for negligence and defamation is lengthy 1. The protection at first related to words uttered in court and then was extended to documents created by experts for legal proceedings and then, more recently, to work preparatory to the creation of such documents. The exceptions to the protection were rare prosecutions for perjury, perverting the course of justice, and contempt of court. Such actions in respect of experts (persons possessed of specialised knowledge and thereby in some circumstances allowed to express opinions) are all but unheard of. The stance of the law to cloak in-court matters in immunity against civil action was not especially for the benefit of expert witnesses – it covered lay persons and experts alike, as well as judicial officers and counsel. The rationale in relation to witnesses was the public interest in encouraging those giving evidence to express themselves freely and fearlessly and therefore to enable courts to be assisted to reach just resolution of criminal and civil litigation without witnesses being inhibited by concerns about further collateral litigation. In March 2011 the decision of Jones v Kaney2 fundamentally changing the position of expert witnesses was made by the highest court in the United Kingdom, the Supreme Court (formerly the House of Lords). It will have significant ripple effects, including here in Australia. However, to understand the decision it is important to appreciate what preceded it and the limitations in the application of the Law Lords’ reasoning. Important earlier legal developments Important developments preceded Jones v Kaney in three respects, making the decision United Kingdomspecific for the present. The first was an erosion in the protection accorded to barristers over a series of cases, culminating in 20023 with the House of Lords abolishing the advocate’s immunity from liability in negligence in and out of court, albeit not their privilege from claims for defamation. This greater accountability for barristers was later controversially rejected in Australia4.

...expert witnesses could be dealt with by their disciplinary tribunals for misconduct without infringement of the witness immunity rule.

The second decision was that of the Court of Appeal of England and Wales5 in which it was determined in the context of statistically problematic evidence given by an eminent paediatrician in a murder trial that expert witnesses could be dealt with by their disciplinary tribunals for misconduct without infringement of the witness immunity rule. This same approach has since been adopted in Australia6. The third development was a determination in the English High Court that expert witnesses were not immune from being ordered to pay costs thrown away by reason of their conduct7. Thus, by the time of Jones v Kaney, the landscape in terms of experts’ immunity from the consequences of poor quality evidence in court or preparation of reports had fundamentally shifted in the United Kingdom. Their cousins in the legal process, barristers, were only protected against defamation, and regulatory agencies had taken action for unsatisfactory discharge of both clinical and forensic roles against medical practitioners in a number of high profile cases. The facts The facts of Jones v Kaney are important but in some respects a distraction from the issues of principle. A traffic

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Lord Phillips concluded that in terms of principle it was appropriate to regard the onus as lying on those propounding the retention of expert witness immunity to justify that position.

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RISK MANAGEMENT accident occurred in Liverpool, UK, and the appellant who had been riding his motorcycle when struck by a drunk, uninsured and disqualified driver suffered both physical and psychiatric injuries. A clinical psychologist - the respondent, was asked by the appellants’ solicitors to prepare a forensic report. She did so, expressing the view that the appellant was suffering from PTSD. Eighteen months later she prepared a second report and concluded that he no longer had the symptoms to warrant a diagnosis of PTSD but that he was still suffering from depression and some PTSD symptomatology. A subsequent report by a psychiatrist expressed the view that the appellant was exaggerating his physical symptoms. The district judge ordered the psychologist and psychiatrist to hold discussions and to prepare a joint statement. They did so by telephone and formally recorded agreement that the appellant’s psychological reaction to the accident was no more than an adjustment disorder that did not reach the level of a depressive disorder or PTSD. The psychologist stated she had found the appellant to be deceptive and deceitful in his reporting. The psychiatrist and the psychologist agreed that the appellant’s behaviour was suggestive of the adoption of “conscious mechanisms” that raised doubts about whether his subjective reporting of symptoms was genuine. Difficulties arose when the psychologist was asked questions about how she came to sign the joint report. She admitted that she had not read the views of the psychiatrist by the time of the conference. She said that the joint report was not drafted by her and did not reflect what she had agreed to on the telephone, maintaining that she had felt under some pressure to agree. She said that her true view was that the appellant had been evasive rather than deceptive and that he had suffered PTSD which had now resolved. The appellant sued the respondent psychologist asserting that he had been constrained to settle his claim for significantly less than would have occurred if the psychologist had not signed the joint statement in the terms in which she did. In response the psychologist asserted by way of defence that she was immune from an action for negligence by reason of the doctrine of witness immunity. The matter made its way through the English legal system to the Supreme Court where the Law Lords overturned the previous law on witness immunity by a majority of five to two and permitted the action against the psychologist to proceed to trial. The Supreme Court Decision The leading judgment of the majority was by Lord Phillips, the President of the Court. He noted that both counsel and experts (under court rules) owe a duty to the court: “Each undertakes a duty to provide services to the client. In each case those services include a paramount duty to the court and the public which require the advocate or the

witness to act in a way which does not advance the client’s case. The advocate must disclose to the court authorities that are unfavourable to his client. The expert witness must give his evidence honestly, even if that involves concessions that are contrary to his client’s interests” (at [50]). Lord Phillips concluded that in terms of principle it was appropriate to regard the onus as lying on those propounding the retention of expert witness immunity to justify that position. He noted a survey undertaken in 2010 of 106 experts who were asked whether they would continue to function in the forensic domain if immunity were substantially reduced; 92 said that they would. He concluded that immunity was not necessary to prevent a chilling effect on the supply of expert witnesses. Lord Phillips accepted that the principal argument in favour of continuing the protection of immunity for experts was that the risk of being sued would deter them from giving full and frank evidence in accordance with their duties to the court. However, he found that the risk of disciplinary proceedings or a wasted costs order constituted deterrents to acting other than properly and observed that no empirical evidence had been adduced before the court to support the proposition that without immunity expert witnesses would be less inclined to perform their duty to the court. He contended that there was a lesson to be learned from the evolution of liability of barristers –it had been thought by some that immunity from suit was necessary to ensure that they were not inhibited from performing their duty to the court – “Yet removal of their immunity has not in my experience resulted in the diminution of the advocate’s readiness to perform that duty.” (at [57]) Lord Phillips accepted that some experts were apprehensive about being sued by vexatious clients but he questioned whether such a fear was realistic. He observed that there was nothing vexatious about the claim before the court as the psychologist in question had put her

He concluded that immunity was not necessary to prevent a chilling effect on the supply of expert witnesses.

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RISK MANAGEMENT name to a report that she conceded did not express her views. He noted that since the law had changed there was no indication that barristers had experienced a flood of spurious claims at the hand of disappointed litigants. He could not discern why the situation should be different for expert witnesses if immunity was removed from them.

to adopt or alter opinions other than those genuinely held.” (at [68])

So far as Lord Phillips was concerned, witness immunity for experts should be abolished for claims brought by clients against their own expert witnesses in both civil and criminal matters. However, he conceded that the risk of vexatious claims may be greater in criminal matters and

At present it can be said that the Jones v Kaney decision is born out of the evolution of English law, particularly the abolition of immunity for barristers against negligence actions. It only applies to allow actions brought by clients against their own experts – not those of the other side. Its operation in criminal litigation will be limited. It does not permit defamation actions against expert witnesses. It highlights the need for medical practitioners (and others) to be circumspect and assertive when participating in joint conferences of experts and to ensure that any agreements to which they sign up as a result of the increasingly common joint conferences of experts are genuinely a meeting of minds.

Lord Brown regarded the category of claims able to be brought against experts to be confined to where they were said to have behaved in an egregious manner

observed that such claims would be struck out as an abuse of process “unless the convicted client first succeeds in getting his conviction overturned on appeal.” (at [60]). He emphasised that this did not lay experts open to defamation actions, absolute privilege continuing in this regard. Lord Brown agreed but expressed his views confined to expert assessors, namely not treaters or (somewhat curiously) forensic pathologists “either of whom may be called upon to give factual evidence in the case as well as being asked for their professional opinions upon it without their having been initially retained by either party to the dispute.” Thus, from his perspective witnesses of fact retain complete immunity. Lord Collins took a similar approach emphasising that the decision did not apply to the position of the “adverse expert”, on the basis that such a witness “owes no duty to the client on the other side” (at [73]). Lord Brown regarded the category of claims able to be brought against experts to be confined to where they were said to have behaved in an egregious manner, as was asserted in the case before the court. He urged courts “to be alert to protect expert witnesses against specious claims by disappointed litigants – not to mention to stamp vigorously upon any sort of attempt to pressurise experts

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Repercussions of the Decision

The United Kingdom Supreme Court decision develops the law after the permission provided to regulators to bring disciplinary actions against medical and other expert witnesses in a way that is logical. What can be said in respect of those jurisdictions where advocates’ immunity has been reduced is that the courts have not been overwhelmed by actions against counsel. Nor have health regulators allowed a flood of complaints to be taken to hearing against expert witnesses in the United Kingdom or Australia. It remains to be seen whether the chilling effect feared by many in relation to the preparedness of experts to give evidence candidly and fearlessly, or at all, comes to pass. For now the Jones v Kaney decision is inconsistent with longstanding Australian law. In the longer term in Australia, it may well be that it will provide a model for greater accountability in some circumstances for medical and other experts in relation to negligent discharge of forensic responsibilities.

RISK MANAGEMENT

References Freckelton I and Selby H (2009) Expert Evidence: Law, Practice, Procedure and Advocacy (4th edn, Sydney: Thomson) 2 Jones v Kaney [2011] UKSC 13 3 Arthur JS Hall & Co v Simons [2002] 1 AC 615 4 D’Orta-Ekenaike v Victoria Legal Aid (2005) HCA 12; (2005) 223 CLR 5 Meadow v General Medical Council [2006] EWCA Civ 1390; [2007] QB 462 6 James v Keogh [2008] SASC 156 7 Phillips v Symes (No 2) [2004] EWHC 2330 (Ch); [2005] 1 WLR 2043 1

Dr. Ian Freckelton is a Senior Counsel at the Victorian Bar. He is a Professor of Law, Forensic Medicine and Forensic Psychology at Monash University. He is the co-author of Expert Evidence: Law, Practice, Procedure and Advocacy (4th edn, Thomson, Sydney, 2009)

Images p56, "Victoria Tower" by UK Parliament, http://www.flickr.com/photos/uk_parliament/2753260476/ p59, " House of Lords Chamber" by UK Parliament, http://www.flickr.com/photos/uk_parliament/2701203046/sizes/l/in/photostream/ Images licensed under a Creative Commons Attribution 2.0 Generic Licence http://creativecommons.org/licences/by/2.0

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RISK MANAGEMENT

evolving

Medical

ethics A

sk most members of the public what the basis for current ethical standards in medicine are and they will respond “The Hippocratic Oath”. In fact some medical schools still ask medical graduates to swear a version of the Hippocratic Oath on graduation, but the practice is by no means universal. Some of the important omissions of the early forms of the Hippocratic Oath include no mention of female doctors (important in an era when more than half of medical graduates are female), absolute patient confidentiality (challenged in a time of international

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terrorism) and absolute loyalty to the profession (in defensible when medical error contributes to thousands of deaths and billions of dollars of waste annually in Australia alone)1,2. Although some of these deficiencies in the Hippocratic principles can be easily remedied others may be more difficult to reconcile with the Bronze Age Greek teachings in which they were codified. This was the problem that confronted the Georgetown conference that was convened in 1973, the year after the disclosure by, social scientist Peter

Buxtun, of the ‘Tuskegee Experiment’ conducted by the US Public Health Service (Forerunner of the Center for Disease Control). The now infamous Tuskegee experiment or “Tuskegee Study of Untreated Syphilis in the Negro Male” to give it its full title had been running for 40 years when Peter Buxtun informed the press of its existence and the fact that there were no plans to end the grossly unethical study. The experiment was conceived in the 1930s when there was no cure for syphilis and deliberately chose the poorest county in Alabama to identify and observe the natural course

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of the disease in only black sufferers. The study had no consent process but required that recruits undergo blood tests and annual lumbar punctures and mandatory post mortem examination; a fact that relatives were often only told after the subjects’ death3. Even when penicillin became the recognised successful treatment for syphilis the subjects were not told if they had the condition or offered the cure but given a placebo that turned out to be aspirin. Furthermore updates of the study had been published in well-respected medical journals, presumably with the approval of

reviewers, which confirmed the medical profession’s ongoing complicity in the totally unethical experiment4. A highly unethical research project, under any ethical regime, but not explicitly covered by Hippocratic principles. The project was very embarrassing for the US after they had completed the prosecution of Nazi war criminals at Nuremburg on charges of ‘crimes against humanity’ for cruelty to another race of human beings. Interestingly, doctors had also been guilty of war crimes in Nazi Germany and Japan, despite the ethical principles contained in the Hippocratic Oath and it seemed

likely that a new ethical framework to cover research and medical practice was required. Bill Clinton provided a Presidential apology to the surviving victims of the Tuskegee Experiment in 1997, 25 years after the initial disclosure, which indicates the time it took for the profession to come to terms with the atrocity5. The Georgetown Conference came up with what is now regarded as the The Four Pillars of medical ethics for the modern doctor. These are Beneficence (a duty to do good); Non-maleficence

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RISK MANAGEMENT (a duty to do no harm); Autonomy (a duty to respect a patient’s wishes); and Justice (a duty to deal equably with patients and resources). Although these were originally proposed as the principles for medical research they quickly became adopted for principles of medical practice6. Many would argue that this stepwise evolution of ethical values for the profession as a result of the Georgetown Conference has served the medical profession well and could continue to serve the profession into the future. However the four principles have failed to deal with some important aspects of healthcare including incident reporting, performance monitoring and whistleblowing to name a few of current interest to the profession. If we deal with these issues in turn we can examine the influence, if any, of the

and Wisdom, two primary virtues of Virtue Ethics would provide an ethical impetus to improve healthcare outcomes in this way12. The third primary virtue of courage would also align with those clinicians brave enough to adopt such an approach to quality improvement13. Furthermore performance monitoring is not an extreme process to implement and would conform to the fourth primary virtue of temperance or a moderate view13. Incident reporting Adverse events contribute significantly to the cost, mortality and morbidity of complex healthcare systems but reliable incident reporting and implementation of strategies to prevent recurrence have been demonstrated to reduce the frequency of adverse events in Australia14.

The ethical framework of the medical practitioner is one of the most important distinctions between them and the medical manger. Four Pillars on the reasoning associated with the issue and any omissions or improvements that could be achieved by employing different reasoning. In this case applying the four primary virtues of Virtue Ethics7. Performance monitoring There is now a considerable body of evidence confirming that the collection and analysis of performance data and feedback of the results to individual clinicians and units can improve performance. A reduction in riskadjusted mortality by as much as 40% for CABG surgery has been identified in two separate studies8,9. Other specialties have also described similar results but the profession remains largely reluctant to embrace this method of quality improvement10,11. Conscience

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Once again the process of incident reporting is supported by the four primary virtues being wise, conscientious, brave professional behaviour and not an extreme act. The bravery is illustrated by the fact that many UK doctors will not report adverse events because of fear of the consequences15. Thus Virtue Ethics again aligns itself with an activity that improves outcomes but is not supported or endorsed by current ethical behaviour although it has been successfully achieved in an Australian hospital using a supportive environment13,16. Whistleblowing In many ways this represents the ultimate action for virtue ethics conforming to all of the primary virtues but with courage as the first requirement17,18. The fact that whistleblowing is regarded

with such hostility by the medical profession with current ethical values is best demonstrated by the reduction in reporting of poor care that occurs during medical training in the context of a revised ethics curriculum19,20. Although the recent article in this journal covered other examples in Australia21. Unfortunately this unofficial learning is well recognised in medicine and attributed to the ‘hidden curriculum’ of medicine22. It has been suggested that changing these behaviours in medical graduates will take a generation. However this may be the wishful thinking of those in the profession who do not want to change because the evidence suggests otherwise. When in Geelong we introduced a personal digital assistant (PDA) based programme for performance monitoring and incident reporting accredited registrars were prepared to record their performance for analysis and feedback as well as report incidents at the highest rate recorded in the medical literature, 97-100% 16. This response was identified as practical virtue ethics, aided by portable digital technology and with the trainees ‘blowing the whistle’ on their own performance13. The project was an Australian first conforming to the highest standards of medical and ethical practice23. One question that must always be

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References Kohn, C. T., Corrigan, J. M., et al. (1999). To Err is Human. Building a Safer Health System. Washington, Institute of Medicine: 1-16. 2 Ehsani, J. P., Jackson, T., et al. (2006). “The incidence and cost of adverse events in Victorian hospitals 2003-4.” Medical Journal of Australia 184: 551-555. 3 Jones, H. J. (1993). Bad Blood: The Tuskegee Syphilis Experiment. New York, Free Press. 4 Rockwell, D. H., Yobs, A. R., et al. (1964). “The Tuskegee Study of Untreated Syphilis: The 30th Year of Observation.” Arch Intern Med 114: 792-798. 5 Chelala, C. (1997). “Clinton apologises to the survivors of Tuskegee.” The Lancet 349: 1529. 6 Beauchamp, T. L. and Childress, J. F. (1973). Principles of Biomedical Ethics. New York, Oxford University Press. 7 Oakley, J. (1998). A virtue ethics approach. A Companion to Ethics. Khuse and Singer. Oxford, Blackwell: 86-97. 8 Hannan, E. L., Kilburn, H., et al. (1994). “Improving the outcomes of coronary artery bypass surgery in New York State.” JAMA 271: 761-766. 9 O’Connor, G. T., Plume, S. K., et al. (1996). “A regional intervention to improve the hospital mortality associated with coronary artery bypass graft surgery. The Northern New England Cardiovascular Disease Study Group.” JAMA 275: 841-846. 10 Shortell, S. M., Bennet, C. L., et al. (1998). “Assessing the Impact of Continuous Quality Improvement on Clinical Practice: What It Will Take to Accelerate Progress.” The Millbank Quarterly 76: 593-624. 11 Bolsin, S. N. and Freestone, L. (2007). Report Cards and Performance Monitoring. Informed Consent and Clinician Accountability. S. Clarke and J. Oakley. Cambridge, Cambridge University Press. 1: 91-105. 12 Clarke, S. and Oakley, J. (2004). “Informed Consent and Surgeon’s Performance.” Journal of Medicine and Philosophy 29: 11-35. 13 Bolsin, S., Faunce, T., et al. (2005). “Practical virtue ethics: healthcare whistleblowing and portable digital technology.” J Med Ethics 31: 612-618. 14 Wolff, A. M., Bourke, J., et al. (2001). “Detecting and reducing hospital adverse events: outcomes of the Wimmera clinical risk management program.” Med J Aust 174: 621-5.ent, P., Creati, B., et al. (2002). “Professional monitoring and critical incident reporting using personal digital assistants.” Med J Aust 177: 496-499. 15 White, C. (2004). “Doctors mistrust systems for reporting medical mistakes.” BMJ 329: 12. 16 Freestone, L., Bolsin, S., et al. (2006). “Voluntary incident reporting by anaesthetic trainees in an Australian hospital.” International Journal of Quality in Health Care 18: 452-7. 17 Faunce, T. (2004). “Developing and Teaching the Virtue-Ethics foundation of Healthcare Whistleblowing.” Monash Bioeth Rev 23: 41-55. 18 Faunce, T., Bolsin, S. N., et al. (2004). “Supporting Whistleblowers in Academic Medicine: Training and Respecting the Courage of Professional Conscience.” Journal of Medical Ethics 30: 40-43. 19 Bolsin, S. N. (2003). “Whistle blowing.” Med Educ 37: 294-296. 20 Goldie, J., Schwartz, L., et al. (2003). “Students’ attitudes and potential behaviour with regard to whistle blowing as they pass through a modern medical curriculum.” Medical Education 37: 368-375. 21 Bolsin, S. and Colson, M. (May/June2011) “Whistleblowing in the Australian Healthcare system - Ethics, professionalism and healthcare management.’’ Medical Life Journals 22 Hundert, E. M., Douglas-Steele, D., et al. (1996). “Context in medical education: the informal ethics curriculum.” Medical Education 30: 353-364. 23 Bolsin, S. and Colson, M. (2009). IT benefits in Healthcare performance and safety. Handbook of Research on Information Technology Management and Clinical Data Administration in Healthcare. A. Dwivedi, IGI Global: 798-813. 1

asked of proposed changes in ethical principles is “What relevance does it have to current medical practice”? We hope that the improvement in outcomes for patients, professionals and organisations is evident. However there may be an even more important consideration. If medical professionals are to deal with the current emphasis on healthcare management as the solution to reduced funding in the presence of rising healthcare costs then we must have a reasoned, systematic response to the argument of budgetary primacy in healthcare planning and delivery. Ethical considerations, particularly Virtue Ethics, are capable of providing that reasoned systematic response that will restore the patient, the doctor and the allied health professional to the centre of healthcare planning and delivery7. The ethical framework of the medical practitioner is one of the most important distinctions between them and the medical manger. This ethical framework should provide considerable extra weight to the opinions of the medical profession in considerations of healthcare delivery and planning. Budgetary considerations should be subjugated to values derived from medical ethics when they differ, although they will often be aligned. A wise, brave and conscientious consultant I once knew said during a senior management meeting held to

discuss cuts to patient services and medical staffing, and at which he was the only doctor, “You must all remember that very few patients attend this hospital specifically to see a manager.” The comment certainly helped to redefine the direction the meeting took and focused the considerations on patients and their services, not budgets. I suspect that doctors have too easily ignored or abandoned their ethical code at the cost of decreasing influence in healthcare management. The difference between doctors and managers (especially medical managers) is sometimes only their ethical code. Having the right one is important. Managers may not even have Hippocrates let alone Virtue Ethics and therefore can not be relied on to make the correct decisions in delivering and developing healthcare for patients. Wise, conscientious, brave and moderate medical input should always be valued, in planning and managing better healthcare for patients.  Dr Stephen Bolsin is an Adjunct Clinical Professor of Perioperative Medicine at Monash University and Specialist Anaesthetist at Geelong Hospital  Dr Mark Colson is a Specialist Anaesthetist at the Geelong Hospital.

Images p62 & 63, "Lady Justice" by DIDEO, http://www.flickr.com/photos/dideo/1244001441/ Images licensed under a Creative Commons Attribution 2.0 Generic Licence http://creativecommons.org/licences/by/2.0

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Letting the Sunshine In,

What to look out for when installing your solar panel system Have you seen advertisements such as this? “Solar Power is now almost as free as Sunshine” "Let us install your roof top solar power plant. Just $X000 for a 1.5Kw system after government rebates. Get in quick before the offer expires. Pay off on our payment plans as YOU make money from the Sun. Hurry, rebates and feed in tariffs will not last much longer."

ounds urgent, sounds wonderful, doesn’t it? Sounds too good to be true? Well, that is because it is. There are a number of pit falls on the road to sunny sustainability and this article is intended to give anybody thinking of installing a photovoltaic (PV) system an idea of what to look out for. For those new to solar energy, a photovoltaic system (or PV system) is a system which uses one or more solar panels to convert sunlight into electricity. It consists of multiple components, including the photovoltaic modules, mechanical and electrical connections and mountings and means of regulating and/or modifying the electrical output.1

The facts of the matter are that most of the cheaper systems that are currently being sold are a waste of money and resources and depending on the skills of the installers, may represent significant dangers to the house owner and anybody who handles the panels. The Solar Industry here in Australia is presently going through something of a crisis due to a combination of ill-conceived

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government policies, a poorly designed rebating system and a number of experienced, opportunistic "fly by night and get rich quick" specialists. This scheme could very well become "Pink Batts" Mk2. Introduction to Solar Power The Solar Constant, the power of the Sun at the Earth’s surface, per square meter normal to the Sun, is approx. 1.37 kW. This has varied by about 0.1% over the last 30 years. Enough solar energy hits the surface of our planet in 1 hour to supply the energy needs of the entire population for 1 year. i.e. The Sun delivers about 84 terawatts over the entire planet. Mankind uses about 12 terawatts. So solar is a freely available resource. All we have to do is harness it. More and more people have begun to make effort to do just that and the uptake of solar systems has increased as recognition of the need for secure, clean energy has become more widespread.

ALPHA

There were approximately 16 gigawatts of installed solar PV systems at the end of 2010. The rate of installation will increase exponentially as volume production and conversion efficiencies lead to price reductions. There are of course a few problems that are unavoidable. If we just look at the maths for a moment: •

The surface area of the planet is approx. 5 x 108 km2.

•

The present maximum efficiency of readily available panels is approx. 14% - 19%. This means that in order to get all our energy from solar power, we would have to cover almost 80% of the entire planet with PV cells.

Clearly this is not desirable or even possible with present or as yet foreseeable technology. Solar radiation can be harnessed either by solar collectors, for heat, or PV panels, for power. Photovoltaic panels are an integral and important part of the integrated approach of ‘distributed’ power’. This includes ‘roof top power plants’ that can feed back into the grid when underutilised by the home owner to give credits for later draw down. Perhaps the main objection to this idea is how to maintain baseload (the minimum continuous power demand to be provided reliably) when the Sun goes behind a cloud or at night. This problem has actually been solved by a number of ingenious readily available technologies. One answer is to use the Sun’s energy during the day to heat a eutectic mixture of salts to above 500oC, which is then stored and drawn through steam generators when needed for power generation.2

...the uptake of solar systems has increased as recognition of the need for secure, clean energy has become more widespread

A brief review of how PV cells work Solar cells are made of highly purified silica doped with various "dopants" that modify the number of electrons (excess or deficit) in the crystalline matrix. There are two forms of silica substrate. One is doped to have an excess of electrons and therefore is negatively charged (the n-type). The other substrate has a deficit of electrons and is therefore positively charged (the p-type). This deficit of electrons produces electron voids or ‘holes’. When these two substrates are layered together to form the PV cell (n-type above the p-type), an area is formed called the pn-junction, and it is here that the central phenomenon of semiconductor physics occurs. Some of the free electrons from the n-type move, across the pn-junction to combine with ‘holes’ to form negative ions. In doing so they leave behind positive ions. This produces what is called a ‘space charge’ or ‘depletion region’. This ‘depletion region’ inhibits further electron transfer unless subjected to ‘forward bias’.

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ALPHA When the n-type side of the cell is struck by photons, the energy of the photon is transferred to the extra electrons effectively producing this necessary ‘forward bias’. Hence electrons flow and create the necessary potential difference (voltage). PV Cell Characteristics PV cells operate at a constant current (amps) which is determined by maximum size of the cell and the inherent efficiency. This is dependent upon the quality of the silica and the dopants used. The maximum cell current is currently about 5.5 to 6 Amps. PV cell voltage is dependent upon intensity, frequency and angle of incident sunlight, and temperature. Voltage drops as temperature increases. PV Panels PV cells are arranged into panels which are in turn, strung together. A typical solar array will be one or more series strings of solar modules; multiple strings are connected in parallel to one or more inverter inputs. The calculations are quite simple: Series connection of panels, sum the voltage, Amps remain constant. For a parallel connection of panels, it is the converse. Clearly the possibility exists for generation of significant voltages pushing out significant current. PV panels put out direct current (DC) which is fed through an ‘inverter’ which, well, inverts every other cycle to produce alternating current (AC). Grid Connection The inverter is connected to a main or sub circuit board, and via that board, interacts with the main grid (the solar array can also be grid-connected via a battery bank). This grid-connected configuration allows the owner to generate some revenue by feeding power into the grid and getting credits for it on their next bill. Imagine being able to charge a little electric commuter car or a bike using really green power. During a hot sunny day, the empty houses in a neighbourhood could be effectively producing all the power to run the air-conditioning for people staying at home. This is therefore pollution free energy. On a sufficient scale it also minimises the need for more and larger (and in Australia, filthy polluting) coal fired power stations. Inverters Inverters are quite complex electronic devices. They can operate at very high efficiencies, up to 97%, but only if they are matched to the output of the panels feeding into them. What can go wrong and how to counter it

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1. Quality of Equipment. There are many different grades of panels and inverters (and installers) and you get what you pay for. The best and more expensive panels have module efficiencies in excess of 19%. All quality solar panels have a long life, with a performance guarantee of minimum 80% of rated output after 25 years. The cheaper panels utilise cheaper components/materials, less advanced technologies, and can have lower efficiencies and shorter lifespans. They also are made down to a price and therefore will skimp on quantity and quality of materials; e.g. whilst there are connectors/cables etc. made to international standards, there are also cheaper copies of inferior quality. 2. Installation. As mentioned at the beginning of this piece, there are many ‘fly by night’ installers who depend on making money as quickly as possible, selling large numbers of cheap systems. The main selling point is to sell the unwary a system of sufficient panel size to get the optimum government rebate or credits (assigned to the supplier). Without a care given to matching the panel’s output to the needs of the owner, the inverter to the output of the panels and paying little attention to how it is installed. These systems can be very dangerous. Currents and voltages are high and can cause fires, damage, injury and death. Not all certified electricians understand all the ups and downs of direct current installation.

During a hot sunny day, the empty houses in a neighbourhood could be effectively producing all the power to run the air-conditioning for people staying at home. 3. Tariffs. The other hook: The owner will look forward to getting the ‘feed in tariff’ to offset the cost of their power. A system that fits the needs of the supplier is unlikely to suite most people. At 1.5 - 2Kw it will be far too small for most people’s needs and the hapless owner will end up paying more than expected. Once on the ‘feed in tariff’ they will find that their power costs (per kwh) will also increase. Central to this tactic are government rebates, carbon credits and the federally mandated feed in tariffs. It is not possible to cover all the different state and federal permutations that exist but in a nutshell, it is unwise to plan to buy a system, dreaming of the money to be made making and selling electricity. Price differentials will change and you may end up worse than you planned, so do not rely upon today’s figures. The feed in tariff is more impressive and persuasive at 66c/ Kwh, but once it ceases, (in 2025) there will be a 1 for 1 system introduced. This will still be worthwhile.

ALPHA

It is best to think of this as a ‘smart living choice’ that will help in some way to reduce our personal impact on the planet and minimise the pain of future electricity price rises.

It is best to think of this as a ‘smart living choice’ that will help in some way to reduce our personal impact on the planet and minimise the pain of future electricity price rises. Some providers of energy who retail both ‘green energy’ and gas will allow electricity credits against gas usage. In NSW tariffs are in disarray. This reflects poorly on government ‘intelligence’ and policy making and indicates a pressing need for a national policy, unobstructed by petty political factions. How to avoid problems with a supplier

Conclusion I hope this has been an interesting read for you and will help you as and when you start to look for such a system for your house, office etc. If this article saves just one person from wasting money on a sub-standard or sub-optimal system, or turning into something looking like a giant barbecued possum whilst up on their roof, it will be worthwhile.

Dr Richard Middleton, VIC

1. Go to a reputable provider. DO NOT buy over the phone, from anybody. Ask for references. 2. They MUST ask about your present usage. A good way to estimate the best system size for your use, is to divide your DAILY usage in Kwh by 4. This gives you the size of the system in Kw. Check your last bill, it is there. 3. They must match the inverter to the output of the proposed system. 4. Do not be swayed by rebates

__________________________________________________________________________________ References

5. They must come and inspect your house for orientation, roof space, access and shading, before settling on a system for you.

1http://en.wikipedia.org/wiki/Photovoltaic_system

6. They should discuss all other options to complement your system to minimise your total energy usage.

Mr. Euan Angus, Manager of The Solar Division at Camberwell Electrics

7. Check installer’s credentials, insurance, warranties and approach. Ask yourself, if this was a surgeon, would I let him operate on me?

2 See www.beyondzeroemissions.org More information about choosing an installer is available at www.cleanenergycouncil.org.au

Images p67 "Wall-E Solar Charge Level Info Panel" by Gymkata, http://www.flickr.com/photos/ chrislackey/2658088234/in/photostream/

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TRAVEL

The New Zealand Snow Show Living the high life is easy in Queenstown New Zealand where the town's newest luxury hotel, Hilton Queenstown is on the edge of the lake and a short drive from the ski slopes. Hilary Doling checked in for a slice of kiwi luxury.

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TRAVEL

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TRAVEL TRAVEL

Treble Cone Ski Area

I stroll down to the private jetty and wait for the water taxi into town. The air is cold and clear. In front of me stretches the jade-green depths of Lake Wakatipu in Queenstown, New Zealand. This has to be the only way to travel I think as I climb aboard the boat and it skims over the shiny surface of the lake towards Queenstown. I look back at the mountains and their peaks are blobbed with snow like giant scoops of ice-cream, ahead the lights of the town twinkle like fireflies.

This is the first evening I've ventured into Queenstown, despite its reputation as party central because there are so many options right here in 'The village'. On the first night I treated myself to a meal at Hilton Queenstownâ&#x20AC;&#x2122;s signature restaurant Wakatipu Grill, run by renowned New Zealand chef Peter Thornley. Day two saw me at the Me & Mee Noodle Bar in the Kawarau Hotel. Then the village itself offers more dining options, including The Lake Counter cafe, grocery & deli and the Stacks Pub which is aptly named since the place is packed to the rafters with stacks of sporty types in warm -no doubt New Zealandwool jumpers recounting the outdoorsy delights of their day. The complex is only fifteen minutes from the nearest ski slopes, The Remarkables, but from the floor to ceiling the glass windows either side of the fireplace in my room make the mountains seem much closer. The views are magnificent, so much so that while its light I hardly ever switch on the state of the art LCD TV preferring instead to toast my toes by the fire and look at the soft grey sky

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TRAVEL

Treble Cone Ski Area

and the snowy mountains. At night I sink into the king-sized beds with pillows as soft as a snow drift and dream of more days up on the mountains when for once I sail down the black runs with elegant ease and don't end up on my bottom in a tangle of skis and embarrassment. Well, a girl can dream.

The views are magnificent, so much so that while its light I hardly ever switch on the state of the art LCD TV preferring instead to toast my toes by the fire and look at the soft grey sky and the snowy mountains."

Coronet Peak These may not be the most expansive peaks around, but at only a short 25-minute (18km) drive along a fully sealed road from Queenstown, they make up for this with ease of access. So on day one, we’re straight off the plane at Queenstown airport and straight up on the slopes before you can say ‘slalom’. Gold Stars to: This much-loved mountain had a serious facelift three years ago and now has a very slick multimilliondollar building at the base area with slick gourmet cafes, and a huge sundeck for those who are more interested in their ski

tans than their turns. The Meadows double chairlift was replaced for the 2010 season by a high-speed quad, improving the learning experience for beginners and novices. New this Season: A new novice trail from the top of the Meadows Chairlift creating more terrain for novice skiers and boarders. A dedicated Kids Fun Zone comes complete with flags, games and space. A new 102-metre magic carpet lift makes it easy to reach the learner area from the mountain base. New snow guns for lower trails including the new novice trail. There has also been an upgrade of rental equipment.

Coolest Moment: Night Skiing and First Tracks mean both ends of the day offer magic moments on snow. Favourite Fuel Stop: The European style Heidi’s Hut at Rocky Gully for gourmet pizzas, pasta, seriously good coffee, and mulled wine at the bar. The Remarkables ‘Where attitude meets altitude’ is what they say about The Remarkables and it’s true. There are shades of the European Alps here with 220 skiable hectares with narrow chutes, rock drops and off-piste powder for

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TRAVEL

the brave, and wide sunny bowls accessed by three quad chairs for the rest of us.

plastic off ski racks. Live music helps the cafe atmosphere.

Gold Stars to: The Remarkables’ 4x4 coaches and transport system which mean you can leave the car at home and travel the 45 minutes from Queenstown (and up the unsealed road mountain road ) stress free.

Cardrona

New this Season: Extensive trail work means more terrain and better gradients for novice and intermediate skiers and riders. 12 new snow guns will create consistent snow coverage on novice and intermediate trails. There has also been an upgrade of rental equipment and best of all padded seating fitted to all chair lifts for a more comfortable ride to the top. Coolest Moment: Adrenalin junkies like the Lake Alta area with its off-piste steeps and shoots. Favourite Fuel Stop: If weather permits sit outside on the café deck and watch the antics of the NZ ski slopes most curious bird, the grey-feathered kea birds that are prone to sit on the top of the 4WDs and chew the

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It’s 58 kilometres from Queenstown (serious Cardrona fans tend to stay in Wanaka) but worth the drive because Cardrona has great natural snow due to its higher elevation and the fact it mainly faces south. Its runs are wide and forgiving. Gold Stars to: Getting to the top quickly courtesy of a new high-speed detachable quad chairlift at Captain’s Basin. The new Captain’s Express chairlift is two and a half times quicker than the old quad with the journey now only taking three and a half minutes versus nine minutes in the past. It also gets a huge gold star for having the best kids club in the Southern Hemisphere. New this Season: The learner' slopes have been redeveloped making them larger and even more accessible thanks to a new magic carpet lift. A fourth quad chairlift will be officially opened this season which will expand resort boundaries and number of intermediate and advanced runs

on offer. Increase ski area to 345 hectares and vertical rise to 700m. This will mean Cardrona has more chairlifts than any other resort in the South Island. Coolest Moment: Has to be stopping for a photo–op on the Skyline run with a panoramic backdrop of the snowy peaks and the emerald green lake below: stunning. Favourite Fuel Stop: Love that noodle bar! Gourmet noodles with views down to the beginners’ area for anyone who wants to spy on the kids. Great hot chocolate too, served with New Zealand’s favourite marshmallow chocolate fish. Treble Cone Nearer Wanaka than Queenstown, Treble Cone used to be only a serious-skiers hangout; light on facilities, and heavy on serious slopes. TC, as it is affectionately called by aficionados, still attracts rugged outdoor-types but these days a substantial upgrading of facilities means it’s a great mountain for skiers who love cappuccinosipping as much a chute-skiing. If you’re

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Treble Cone Ski Area

The winding roads up to the NZ slopes are notorious, so in a spectacular first for NZ, the resort is planning a gondola that will transport skiers from the valley floor to the ski field base"

happy to go off-piste TC offers the largest skiable terrain in the south Island. Gold stars to: The winding roads up to the NZ slopes are notorious, so in a spectacular first for NZ, the resort is planning a gondola that will transport skiers from the valley floor to the ski field base. New this Season: New technology and online booking systems that will allow you to load up your pass via the treblecone. com website and go straight to the lifts. Glenorchy Air is launching 15 minute scenic flights from Queenstown to the base of Treble Cone. Flights depart Queenstown

at 8:15 in the morning and return around 4pm in the afternoon – passengers will be dropped off at the base of Treble Cone.

muffins come fresh from the oven daily. There is decent coffee too.

Coolest Moment: TC has invested heavily to create new runs and widen existing ones over the last four years, transforming the mountain into a much slicker place to ski. The widening of the south Ridge in the saddle basin means more skiers will get to enjoy the beautiful basin.

Hilary Doling is Editor in Chief of the popular The Luxury Travel Bible website, the world’s ultimate destination guide. www.luxurytravelbible.com Details: www.hilton com www.newzealandski.co.nz

The Treble Cone Bar & Café offers the best mountain food around. None of your ‘chips with everything’ approach here. There’s great sushi, salads and very gourmet burgers. Sour dough bread and homemade

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