Watching Out for Harassment in Your Practice

These days most business owners are aware of sexual harassment and the need for having policies and employee training on this type of conduct. But sexual harassment is only one form of workplace conduct that any practice must do everything possible to prevent. There are other forms of harassment that any business owner should know about and have appropriate policies on. You should always be watching out for harassment in your practice. Here are a few others you should be aware of:

• Visual harassment: This might include things like pictures, posters, screensavers of an offending or demeaning nature. Someone having a poster of the latest Playboy Bunny or some hot semi-dressed male model would not be smart as would an offensive screensaver that others in the office could see.

• Physical harassment: This could include threatening some sort of unwanted or harmful contact, blocking someone’s movement, unwanted touching of a person, etc.

• Verbal harassment (or written): This could include making unwanted statements about a person’s appearance, clothing, body, behavior, religion, sexual orientation and/or creating rumors about a person.

• Nonverbal harassment: Examples of this could be staring at a person and making them feel uncomfortable, looking up and down their body, nasty or derogatory gestures towards a person, following a person without their permission (i.e. stalking).

You should have office policy that covers these matters. The policy should explain what harassment is and the exact steps an employee should take if they experience any form of harassment. If you don’t have an office policy manual that covers these things, consult your attorney and get one done. A law office that is very good with these matters, one that we’ve referred many practice owners to and where this data comes from is:
The Law Offices of Timothy Bowles, P.C.
One South Fair Oaks Ave. Suite 301
Pasadena, CA 91105
626-583-6605 Fax

Ken DeRouchie

The Cost of Employee Turnover

All of the information we’ve written about on proper hiring and training procedures in this and past issues of The Practice Solution are based upon several key issues: a) to have the most productive office possible you have to have a team of good staff, working well together to accomplish the mission of the practice, and b) the cost of employee turnover can be very high, therefore hiring the right people who remain with you long-term can save a tremendous amount of money.

The facts are that employee turnover can be very costly. Studies indicate that such a cost can equal 6 to 9 months of the salary of the position. This is based on the costs involved in finding, interviewing, testing, selecting, training and getting a new employee fully functioning on the job. There is also the cost of lost income that can occur during the period of employee development, especially if the position is empty for a period of time.

If the position pays $3000 per month, your costs could be between $18,000 and $27,000 every time the position turns over. That may seem high, but because much of that is a “hidden” cost, you may not see it. But you will experience it in the long run. It’s therefore extremely important to test and screen applicants properly and carefully in order to hire the best possible individuals for your practice.

Your goal is to find employees who will work well within the procedural framework of your office and stay, contribute to and grow with your practice. In order to find those people you need successful hiring practices including tests, applications, reference checks, interview questions and more that can help with the hiring process. Only looking at a resume and conducting an interview is no way to determine the quality of an applicant. Hiring someone off of a resume/interview alone is a crap shoot and can be disastrous in the long run. If you are interested in learning more about successful hiring procedures, including what tests to use, what to look for in an application, what screening procedures are best to filter out the best applicants, who should you interview and how do you conduct a productive interview, contact me at: or call me at 800-695-0257.

Ken DeRouchie

Independent Contractors

Our readership, for the most part, is made up of privately owned health care practices in the dental, veterinary and optometric fields. It is not uncommon for them to occasionally hire outside vendors to do sporadic work here and there. Therefore we want to help you be aware of the various rules and regulations surrounding independent contractors.

For starters, what is an independent contractor?

There is no pat answer to that question as each state has its own rules regarding this. But there are some national (IRS) guidelines that any employer should be aware of when determining whether someone qualifies as an independent contractor or not.

The most basic concept to understand in this area is that individuals who are independent contractors have their own business, profession or trade. They are in business for themselves. They earn their money and receive their income from their own independent business. They do not depend upon one employer for their livelihood.

Some simple and more obvious examples would be: hiring a painter to paint your office; your attorney or accountant; hiring a bookkeeper to do your books who also does this for other businesses. None of these people depend upon you for their sole source of income, and you do not control their work hours, work location, etc.

Here are some specific points to look at when attempting to determine if a person you hired is an independent contractor (IC) or not. Review the following points in order to become familiar with what an IC is.

• Can the person earn a profit or loss from the work they are doing? If so, they could be an IC.

• Is the person told where to work, when to work, what he/she can or cannot do as part of the work? If so, they likely wouldn’t be an IC.

• Does the person offer their services to others in general? If so, they could be an IC.

• Does the person furnish their own materials, tools, etc. needed for them to do the work? If so, they could be an IC.

• Does the person work for more than one company or firm at one time? If so, they could qualify as an IC.

• Does the person invest in equipment and facilities? If so, they could be an IC.

• Does the person pay his/her own business and traveling expenses? If so, they could be an IC.

• Is the person told how to work, when to work, where to work by the hiring firm? If so, they would likely not be an IC.

• Does the person hire and pay his own assistants? If so, they could be ICs.

• Does the person set his or her own working hours? If so, they could be ICs.

• Does the person provide services that are an integral part of the hiring firm’s day-to-day operations? If so, they might not qualify as an IC.

• Does the person receive training from the hiring firm? If so, they might not qualify as an IC.

As mentioned above, the most basic thing to understand about whether a person is an independent contractor or not is: do they have their own business, profession or trade, and earn their income from their own independent business rather than one employer? If so, and most of the points we’ve gone over are present, they would likely qualify as an IC.

If you have any uncertainty on this subject, please consult your accountant or attorney before making any final decision regarding anyone’s qualifications as an independent contractor.

Ken DeRouchie

Hiring Techniques

The Application

One of the areas we are regularly asked about is how to best read and evaluate an employment application. Here are some things you can look for on an application that will give you an initial “feel” for the applicant.

• Neatness
• Completeness
• Does everything look accurate and honest? For example, are the dates of past employment consistent?
• Past work experience – what have they done that would qualify them to work for you – look for past responsibilities held and descriptions of what they did and the salary they earned.
• Past work stability – how long did they work at previous jobs or did they hop from one job to the next?
• Reasons why they left their past jobs – are their statements positive or negative about this?
• Gaps in time between jobs. What did they do?
• Comments they may write about themselves.
• Level of education achieved.
• Date available to start work.
• Yes or no questions – are they all filled out? Are there any questions raised from their answers?

The Applicant Interview

Once you have decided to schedule an interview with a potential employee, make sure you are fully prepared with the questions you want to ask. Since the purpose of the interview is to gather information to make an informed decision, it’s important that the questions you ask elicit as much information as possible.

There are basically two types of questions: open ended which allow a person to think and speak, and closed ended, which give basically “yes” or “no” answers. You want to ask open ended questions as they are more revealing. Here are some examples of open ended and close ended questions, each concerning the same subject. Look them over and you should easily be able to see how they will elicit different responses and how the open ended question will give you much more data for your hiring evaluation.

Close Ended: Are you highly motivated?
Open Ended: What career objectives have you set for yourself?

Close Ended: Are you qualified for this position?
Open ended: In what ways have your previous jobs prepared you for this position?

Close Ended: Can you accept criticism?
Open Ended: Give me some examples of times you’ve been criticized. How did you respond?

These are just a few examples of how to properly ask questions in a hiring interview. You can see that the open ended question will provide you with much more useful data to evaluate the applicant.

Applying the proper screening techniques when hiring, which would include proper use of the application, interviewing with information eliciting questions as well as testing can help you identify both the good and potentially dangerous applicant which will allow you to make a more informed decision.

Happy hunting!

Ken DeRouchie

Vacation Policy

One of the key areas that we’ve helped practice owners with is office policy. In this article we’ll present some ideas on what you can include in an office policy having to do with vacations.

The importance of having and using office policies that cover the rules, regulations and agreements for how a health care practice is to be run cannot be overstated. Without policy known and agreed upon, you end up with confusion, inefficiency and overwork in any practice. With proper policy in place that covers all aspects of a practice including such things as discrimination, paid holidays, vacations, retirement plans, etc., staff will know what to do and the result will be a smooth running office. Below is a sample vacation policy that can be adapted to any office.



Regular full-time staff and specified regular part-time staff get an annual paid vacation. The length of your vacation is based on the length of your continuous service with the office.


Length of Continuous Service

Less than 90 Days: 0 vacation days
After 1 year: 5 vacation days
After 2 years: 10 vacation days

Vacation pay for full and specified part-time staff members is at the regular pay rate.

Vacation benefits accrue on a monthly basis. However, since vacation time is earned in 12 month increments, staff members are not eligible to take vacation time off for time worked in less than a 12 month period.

New employees begin to earn vacation pay at the end of the orientation and training period. Upon completion of this phase, eligible new employees will receive vacation benefits retroactive to the date of employment. If employment is terminated for any reason after completing the orientation and training period, the employee is entitled to payment of prorated vacation benefits earned and accrued, retroactive to the date of employment.

Staff members may be required to take their vacation while the doctor is on vacation. If the entire staff goes on vacation when the doctors does, staff members not eligible for vacation benefits may be required to cover the office during the vacation period. All vacations will be approved at the convenience of the office so that continuous patient care is assured. Conflicting requests will be decided in favor of the person with the most seniority.

Any earned and unused vacation time must be taken prior to the beginning of a leave of absence. No vacation time is earned while on a leave of absence.

If a paid holiday falls during your scheduled vacation period, you will be given an additional day off with pay or paid for the day at regular wages. No allowance will be made for sickness or other types of absence occurring during the vacation unless the staff member is hospitalized.

Staff members are required to take their earned vacation time in the year after which it has been earned. If there are extenuating circumstances (for example when the absence may severely affect office operations during a critical period), you may be requested to carry all or part of your vacation forward to the next year.

Failure to return from vacation on the scheduled date is considered job abandonment and treated as a voluntary termination.

Regular full time staff members will receive holiday pay equivalent to the straight time pay received if the holiday falls on a regular working day. New employees do not receive holiday benefits until they complete the orientation and training period.

To be eligible for holiday pay the staff member must be at work, or on an excused absence, the day immediately before the holiday and the day immediately after unless approved, in writing, by management.

Holidays that occur during a leave of absence are unpaid.

If a holiday falls on a weekend, the office may close the day before or the day after the holiday and take this as a paid holiday day.

When a designated holiday occurs during an eligible staff member’s scheduled paid vacation period, the individual will receive an extra day off (the date to be approved and paid at the regular rate for the day).

Staff members who terminate employment will receive compensation for any past earned, but unused holidays such as one that occurs during a scheduled vacation period that hasn’t yet been used.

New Years Day
Memorial Day
Independence Day (July 4)

What Goes in a Job Description

I can’t stress enough the importance of implementing proper, well written job descriptions and office policies into your practices. As few doctors are trained in practice management or management and executive skills while in professional school, most doctors have to fly by the seat of their pants when it comes to running the business side of a practice. That’s why we often write about how and why to implement office policies and job descriptions in order to make the office run more smoothly.

This begs the question: what should be included in a job description?

Here are the key points that we include in a job description:

• The purpose of that position. For example, what is the purpose of the receptionist of a practice? It might be: “to keep the appointment book full, rescheduled appointments to a minimum and the patient flow smooth and efficient”.

• The product or outcome of that position – i.e. what are they suppose to produce? For a receptionist it could be, “A full appointment book with maximum productivity for the doctor and a correctly routed flow of patients and communication within the office”.

• Statistics for the position. You need some sort of metrics to accurately measure the productivity of any job. For a receptionist it might be “percent of patients kept to schedule” or “percent of schedule book filled”, etc.

• The various job duties the position is to perform. You can simply list them out, making sure you have the most important duties covered.

• Write-ups of how to do the various job duties you’ve listed. These write-ups should be written by people who have successfully performed the duties of the job and should be continually updated.

These are the key points that we find make a good job description that will help anyone put a new employee on the job and make any transition from one employee to another much easier.

Help Stop This Deadly Disease

BATAVIA, Ill.-(Business Wire)-April 2, 2009 – According to a recent study conducted by The American Heartworm Society (AHS), heartworm disease continues to be a major health concern throughout the United States. The study indicates the need to continue to raise awareness among the more than 82 million pet owners about this potentially deadly disease and correct some of the misconceptions about its transmission, prevention and treatment.

The results of the study show that heartworm incidence in dogs is on the rise in the US and there is a continued increase in the geographical spread of the disease. The extended occurrences were found particularly in the northwest region and around the Rocky Mountain States. The Delta, South-central and Southeast regions also saw an increase in reported cases, with prevalence being the highest in the Delta region.

Heartworm disease is found in all 50 states. All dogs, regardless of breed, size, general health – and whether they are considered indoor or outdoor pets – are vulnerable to it. Once a dog tests positive for heartworms, treatment for the disease is complicated. It’s lengthy, traumatic to the pet and its owner, expensive, and can be risky. Cats can get infected too, and while heartworms are easy to prevent, there is no approved treatment if they get infected.

Heartworms are transmitted by an infected mosquito biting your dog and depositing tiny larvae on the skin which migrate through the tissues and mature until they reach the heart and lungs. There, they cause debilitating damage that can rob the animal of its energy, its quality of life and, eventually, of life itself.

“Fortunately, there is an easy, reliable way to prevent pets from contracting heartworm disease in the first place,” said Dr. Sheldon Rubin, president of AHS. “Heartworm Preventives are highly effective, convenient to administer, and available at a small fraction of the cost of treatment,” he added. They must be dispensed by a licensed veterinarian.

Pet owners are urged to consult their veterinarians about heartworm disease, and to follow his or her recommendations carefully in order to protect their pets. “The American Heartworm Society (AHS) hopes to raise pet-owner awareness of heartworm disease and has designated “April is Heartworm Awareness Month,” said Dr. Sheldon Rubin, president of AHS.

About the American Heartworm Society

The American Heartworm Society, headquartered in Batavia, Illinois, is the global resource for the prevention, diagnosis and treatment of heartworm disease and was formed during the Heartworm Symposium of 1974. The American Heartworm Society stimulates and financially supports research, which furthers knowledge and understanding of the disease.

“Should I Lease or Should I Buy, That is The Question”?

by Brad Beck

Vice President, Banc of American Practice Solutions

Are you still writing rent checks? Have you ever asked yourself; “would I be better off purchasing a location instead of leasing?” In order to answer these questions you need to carefully review the advantages and disadvantages of leasing or purchasing property for your practice.

Buying real estate certainly has its rewards. Developing equity in real estate can be a sensible way to grow your business and personal wealth portfolio. What are the advantages and disadvantages of leasing property though?

One of the advantages of leasing is that your credit rating is not as crucial and normally requires little or no down payment. Another benefit is that you don’t have to worry about selling the building when you want to move to a new location. And, of course, your monthly rent may be considered a tax deduction that you can deduct as a business expense.

The disadvantage of leasing is fairly obvious – you never build any equity in the property and your rental rates could increase based on market conditions.

What are the advantages and disadvantages of purchasing? Crunching the numbers is important when doing any comparison. One advantage is when you own the property you eliminate dealing with a landlord. Additionally your interest on the mortgage loan should be tax deductible. Also, by making improvements to your property you could increase its value and, by holding the property long term, you should gain equity that can be used for retirement. With a fixed mortgage, you never have to worry about your payments going up annually like a rent payment, unless your interest rate is variable. Also, there is normally a depreciation tax write off available to the owners of a property and this could save you significant tax dollars. In fact many accountants recommend that a property be bought in the doctor’s name and then leased back to the doctor’s corporation (if he has one) to get the maximum tax benefit for the doctor.

One should also be aware that there could be some downside to owning real estate. Owning real estate could require you to invest time and energy in tasks that are not related to the day to day running of your office. Costs such as unexpected repairs, routine maintenance, trash pick-up, landscaping, and possibly snow removal should be considered in your cash flow analysis. Being a property owner could require you to be subject to legal and regulatory laws not associated with leasing property as well. Also, selling the property to get your money back out of it can take time and be subject to the economic whims of the real estate market.

Have you taken a look at your business plan? Have you asked yourself; “how much space will I need ten years from now? Will I be able to grow my practice and expand with the possible restrictions of the size of property I buy and/or will I be able to expand my rental space, as needed, in a leased property?”

All of these matters should be looked at when making the decision to purchase or lease. Answering all of these questions will help you make the decision as to whether leasing or purchasing is really best for your business future.

For a new practice, Banc of America Practice Solutions offers a Conventional Commercial Real Estate loan product that can provide you with an option of up to twelve months of interest-only payments that will give you lower payments at the beginning of the loan while you are building your client base. Banc of America Practice Solutions also offers fixed rate Conventional Commercial Real Estate loans of up to 25 years. Most banks usually don’t offer a long term commercial real estate loan, which is important to keep your payments low and affordable. Along with the longer term, Banc of America can lock in your rate in for 12 months, so you know today what your rate will be tomorrow.

Whether you are an established doctor buying the building where you are currently located, relocating your clinic to an existing building or condo unit, refinancing the existing debt on the building, or even starting an additional practice, contact Brad Beck Vice President Banc of America Practice Solutions @ 800-214-6087 and he will be glad to help you with your Conventional Real Estate needs.*

* Banc of America Practice Solutions is a wholly owned subsidiary of Bank of America, NA. Banc of America Practice Solutions and Bank of America, NA are registered trademarks of Bank of America Corporation. The suggestions set forth above are not intended to express, imply or infer any guaranty of success or promised result, and are intended as guidelines only.

The Financial Crisis: A Look Behind The Wizard’s Curtain

By Bruce Wiseman

I’m tired of hearing about sub-prime mortgages.

It’s as if these things were living entities that had spawned an epidemic of economic pornography.

Sub-prime mortgages are as much a cause of the current financial chaos as bullets were for the death of JFK.

Someone planned the assassination and someone pulled the trigger.

The media, J. Edgar Hoover and the Warren Commission tried to push Lee Harvey Oswald off on the American public. They didn’t buy it.

They shouldn’t buy sub-prime mortgages either.

Someone planned the assassination and someone pulled the trigger.

Only this time the target is the international financial structure and the bullets are still being fired.

Oh yes, people took out adjustable rate mortgages they could ill afford, that were then sold to Wall Street bankers. The bankers bundled them up like gift wrappers at Nordstrom’s during the Holidays and sold them to other banks after raking off billions in fees. The fees? They were for…well…they were for wrapping the mortgages in the haute couture of Wall Street.

But it didn’t start there. No, no, not by a long shot.

And as the late, great Paul Harvey would say, “And now you’re going to hear the Rest of the Story.”

Are sub-prime mortgages part of some larger agenda?

And if so, what is it?

Stay with me here, because Alice is about to slide down the rabbit hole into the looking glass world of international finance.


There are various places we could start this story, but we will begin with the 1987 ascendency of Rockefeller / Rothschild home-boy, Alan Greenspan, from the Board of Directors of J.P. Morgan to the throne of Chairman of the Federal Reserve Bank (a position he was to hold for twenty years).

From the beginning of his term, Greenspan was a strong advocate for deregulating the financial services industry: letting the cowboys of Wall Street sow their wild financial oats, so to speak.

He also kept interest rates artificially low as if he had sprayed the boardroom of the Federal Reserve Bank with some kind of fiscal aspartame.

While aspartame (an artificial sweetener branded as “Equal” and “NutraSweet”) keeps the calories down, it has this itty bitty side effect of converting to formaldehyde in the human body and creating brain lesions.

As we are dealing here with a gruesomely tortured metaphor, let me explain: I am not suggesting that Chairman Greenspan put Equal in his morning coffee, but rather that by his direct influence, interest rates were forced artificially low resulting in an orgy of borrowing and toxic side effects for the entire economy.


Greenspan had been the Fed Chairman for seven years when, in 1994, a bill called the Community Reinvestment Act (CRA) was rewritten by Congress. The new version had the purpose of providing loans to help deserving minorities afford homes. Nice thought, but the new legislation opened the door to loans that set aside certain lending criteria: little things like, a down payment, enough income to service the mortgage and a good credit record.

With CRA’s facelift, we have in place two of the five elements of the perfect financial storm: Alan (Easy Money) Greenspan at the helm of the Fed and a piece of legislation that turned mortgage lenders into a division of the Salvation Army.

Perhaps you can see the pot beginning to boil here. But the real fuel to the fire was yet to come.


To understand the third element of the storm, we travel back in time to the Great Depression and the 1933 passage of a federal law called the Glass Stegall Act. As excess speculation by banks was one of the key factors of the banking collapse of 1929, this law forbade commercial banks from underwriting (promoting and selling) stocks and bonds.

That activity was left to the purview of “Investment Banks” (names of major investment banks you might recognize include Goldman Saks, Morgan Stanley and the recently diseased Lehman Brothers).

Commercial banks could take deposits and make loans to people.

Investment banks underwrote (facilitated the issuing of) stocks and bonds.

To repeat, this law was put in place to prevent the banking speculation that caused the Great Depression. Among other regulations, Glass Stegall kept commercial banks out of the securities.

Greenspan’s role in our not-so-little drama, is made clear in one of his first speeches before Congress in 1987 in which he calls for the repeal of the Glass Stegall Act. In other words, he’s trying to get rid of the legislation that kept a lid on banks speculating in financial markets with securities.

He continued to push for the repeal until 1999 when New York banks successfully lobbied Congress to repeal the Glass Stegall Act. Easy-Money Alan hailed the repeal as a revolution in finance.

Yeah Baby!

A revolution was coming.

With Glass Stegall gone, and the permissible mergers of commercial banks with investment banks, there was nothing to prevent these combined financial institutions from packaging up the sub-prime CRA mortgages with normal prime loans and selling them off as mortgage-backed securities through a different arm of the same financial institution. No external due diligence required.

You now have three of the five Horsemen of the Fiscal Apocalypse: Greenspan, CRA mortgages and repeal of Glass Stegall.


Enter Hammering Hank Paulson.

In April of 2004, a group of five investment banks met with the regulators at the Securities and Exchange Commission (SEC) and convinced them to waive a rule that required the banks to maintain a certain level of reserves.

This freed up an enormous reservoir of capital, which the investment banks were able to use to purchase oceans of Mortgage Backed Securities (cleverly spiked with the sub-prime CRA loans like a martini in a Bond movie). The banks kept some of these packages for their own portfolios but also sold them by the bucketload to willing buyers from every corner of the globe.

The investment bank that took the lead in getting the SEC to waive the regulation was Goldman Sachs. The person responsible for securing the waiver was Goldman’s Chairman, a man named Henry Paulson.

With the reserve rule now removed, Paulson became Wall Street’s most aggressive player, leveraging the relaxed regulatory environment into a sales and marketing jihad of mortgage backed securities and similar instruments.

Goldman made billions. And Hammering Hank? According to Forbes Magazine, his partnership interest in Goldman in 2006 was worth $632 million. This on top of his $15 million per year in annual compensation. Despite his glistening dome, let’s say Hank was having a good hair day.

In case this isn’t clear, it was Paulson who, more than anyone else on Wall Street, was responsible for the boom in selling the toxic mortgage backed securities to anyone who could write a check.

Many of you may recognize the name Hank Paulson. It was Paulson who left the Goldman Sachs’ chairmanship and came to Washington in mid 2006 as George Bush’s Secretary of the Treasury.

And it was Paulson who bludgeoned Congress out of $700 billion of so called stimulus money with threats of public riots and financial Armageddon if they did not cough up the dough. He then used $300 billion to “bailout” his Wall Street home boys to whom he had sold the toxic paper in the first place. All at taxpayer expense.

Makes you feel warm all over, doesn’t it?

Congress has their own responsibility for this fiscal madness, but that’s another story.

This one still has one more piece – the Pièce de résistance.


Greenspan, the Community Reinvestment Act, the repeal of Glass Stegall and Paulson getting the SEC to waive the capital rule for investment banks have all set the stage: the economy is screaming along, real estate is in a decade long boom and the stock market is reaching new highs. Paychecks are fat.

But by the first quarter of 2007, the first nigglings that all was not well in the land of the mortgage back securities began to filter into the press. And like a chilled whisper rustling through the forest, mentions of rising delinquencies and foreclosures began to be heard.

Still, the stock market continued to rise with the Dow Jones reaching a high of 14,164 on October 9th 2007. It stayed in the 13,000 range through the month, but in November, a major stock market crash commenced from which we have yet to recover.

It’s not just the U.S. stock market that has crashed, however. Stock exchanges around the world have fallen like a rock off a tall building. Most have lost have half their value, wiping out countless trillions.

If it was just stock markets, that would be bad enough, but, let’s be frank, the entire financial structure of the planet has gone into a tail spin and it has yet to hit ground zero.

While there surely would have been losses, truth be told, the U.S. banking system would likely have gotten through this, as would have the rest of the world, had it not been for an accounting rule called Basel II promulgated by the Bank of International Settlements.

Who? What?

That’s right, I said an accounting rule.

The final nail in the coffin, and this was really the wooden spike through the heart of the financial markets, was delivered in Basel, Switzerland at the Bank of International Settlements (BIS).

Never heard of it? Neither of have most people so, let me pull back the wizard’s curtain.

Central banks are privately owned financial institutions that govern a country’s monetary policy and create the country’s money.

The Bank of International Settlements (BIS), located in Basel, Switzerland is the central banker’s bank. There are 55 central banks around the planet which are members, but the bank is controlled by a Board of Directors, which is comprised of the elite central bankers of 11 different countries (U.S., UK, Belgium, Canada, France, Germany, Italy, Japan, Switzerland, the Netherlands, and Sweden).

Created in 1930, the BIS is owned by its member central banks, which, again, are private entities. The buildings and surroundings which are used for the purpose of the bank are inviolable. No agent of the Swiss public authorities may enter the premises without the express consent of the Bank. The Bank exercises supervision and police power over its premises. The Bank enjoys immunity from criminal and administrative jurisdiction.

In short, they are above the law.

This is the ultra secret world of the planet’s central bankers and the top of the food chain in international finance. The Board members fly into Switzerland for once-a-month meetings, which they hold in secret.

In 1988 the BIS issued a set of recommendations on how much capital commercial banks should have. This standard, referred to as Basel I, was adopted worldwide.

In January of 2004 our boys got together again and issued new rules about the capitalization of banks (for those that are not fluent in bank-speak, this is essentially what the bank has in reserves to protect itself and its depositors).

This was called Basel II.

Within Basel II was an accounting rule that required banks to adjust the value of their marketable securities (such as mortgage backed securities) to the “market price” of the security. This is called Mark to the Market. There can be some rationality to this in certain circumstances, but here’s what happened.


As news and rumors began to circulate about some of the sub-prime, CRA loans in the packages of mortgage backed securities, the press, always at the ready to forward the most salacious and destructive information available, started promoting these problems.

As a result, the value of these securities fell. And when one particular bank did seek to sell some of these securities, they got bargain basement prices.

Instantly, per Basel II, that meant that the hundreds of billions of dollars of these securities being held by banks around the world had to be marked down – Marked to the Market.

It didn’t matter that the vast majority of the loans (90% +) in these portfolios were paying on time. If, say Lehman Brothers had gotten fire sale prices for their mortgage backed securities, the other banks, which held these assets on their books, now had to mark to the market, driving their financial statements into the toilet.

Again, it didn’t matter that the banks were receiving payments (cash flow) from their loan portfolios, the value of the package of loans had to be written down.

A rough example would be if the houses on your street were all worth about $400,000. You owe $300,000 on your place and so have $100,000 in equity. Your neighbor, Bill, in selling his house, uncovered a massive invasion of termites. He had to sell the house in a hurry and wound up with $200,000, half the real value.

Shortly thereafter, you get a demand letter from your bank for $100,000 because your house is only worth $200,000 according to “the market.” Your house doesn’t have termites, or perhaps just a few. Doesn’t matter.

Of course, if the value of your home goes below the loan value, banks can’t make you cough up the difference.

But if you are a bank, Basel II says, you must adjust the value of your mortgage backed securities if another bank sold for less — termites or no.

When the value of their assets were marked down, it dramatically reduced their capital (reserves) and this – their capital – determined the amount of loans they could make.

The result? Banks couldn’t lend. The credit markets froze.

Someone recently said that credit was the life blood of the economy.

This happens to be a lie. Hard work, production, and the creation of products that are needed and wanted by others; this is the true life blood of an economy.

But, let’s be honest, credit does drive much of the current U.S. economy: home mortgages, auto loans and Visas in more flavors than a Baskin Robbins store.

That is, until the banks had to mark to the market and turn the IV off.


Mortgage lending slammed to a halt as if it had run head long into a cement wall, credit lines were cancelled and credit card limits were reduced and in some cases eliminated all together. In short, with their balance sheets butchered by Basel II, banks were themselves going under and those that weren’t simply stopped lending. The results were like something from a financial horror film – if there were such a thing.

Prof. Peter Spencer, one of Britain’s leading economists, makes it very clear that the Basel II regulations “…are at the root cause of the crunch…” and that “…if the authorities retain the strict Basel regulations, the full scale of the eventual credit crunch and economic slump could be disastrous.”

“The consequences for the macro-economy,” he says “of not relaxing (the Basel regulations) are unthinkable.”

Spencer isn’t the only one who sees this. There have been calls in both the U.S. and abroad to, at least, relax Basel II until the crisis is over. But the Boys from Basel haven’t budged an inch. The U.S did modify these rules somewhat a year after the devastation had taken place here, but the rules are still fully in place in the rest of the world and the results are appalling.

The credit crisis that started in the U.S. has spread around the globe with the speed that only the digital universe could make possible. You’d think Mr. Freeze from the 2004 Batman movie was at work.

We have already noted that stock markets around the world have lost half of their value erasing trillions. Some selected planet-wide stats make it clear that it is not just stock values that have crashed.

China’s industrial production fell 12% last year, while Japan’s exports to China fell 45% and Taiwan’s were off 55%. South Korea’s overseas shipments decreased 17%, while their economy shrank 5.6%.

Singapore’s exports were off the most in 33 years and Hong Kong’s exports plunged the most in 50 years.

Germany had a 7.3% decline in exports in the 4th quarter of last year while Great Britain’s real estate market declined 18% in the last quarter compared to a year earlier.

Australia’s manufacturing contracted at a record pace last month bringing the index to the lowest level on record.

There’s much more, but I think it is obvious that credit pipe can no longer be smoked.

Welcome to planetary cold turkey.


It is fascinating to look at the date coincidence of the crash in the U.S. Earlier I noted that the stock market continued to rise throughout 2007, peaking in October of 2007. The dip in October turned to a route in November.

The Basel II standards were implemented here by the U.S Financial Accounting Standards on November 15th 2007.

There are more oddities.

Despite the fact that Hammering Hank dished out hundreds of billions to his banker buddies to “stimulate” the economy and defrost the credit markets, the recipients of these taxpayer bailout billions have made it clear that they will be reducing the amount of money they will be lending over the next 18 months by as much as $2 trillion to conform to Basel II.

What do you think…Hank, with his Harvard MBA, didn’t know? The former Chairman of the most successful investment bank in the world didn’t know that the Basel II regulations would inhibit his homies from turning the lending back on?

Maybe it slipped his mind.

Like the provision he put into his magnum opus, the $700 billion bailout called TARP. It carried a provision for the Federal Reserve to start paying interest on money banks deposited with it.

Think this through for a minute. The apparent problem is that the credit markets are frozen. Banks aren’t lending. They can’t use the money from TARP to lend because Basel II says they can’t. On top of this, Paulson’s bailout lets the Fed pay interest on funds it deposits there.

If I am the president of a bank, and let’s say that I’m not Basel II impaired, why in the world am I going to lend to customers in the midst of the worst financial crisis in human history when I can click a mouse and deposit my funds with the Fed and sit back and earn interest from them until the chaos subsides?

But, hey, maybe Hank’s been putting Aspartame in his coffee.

No, this stuff is as obvious as the neon signs on Broadway to the folks who play this game. This is banking 101.

So, given, the provisions of Basel II and the refusal of the BIS to lift or suspend the regulations when they are clearly the driving force behind the planet wide credit crisis, and considering the lack of provisions in Paulson’s bailout bill to mandate that taxpayer funds given to banks must actually be lent, and given the added incentive in the bill for banks to deposit their bread with the Fed, one gets the idea that maybe, just maybe, these programs weren’t designed to cure this crisis; maybe they were designed to create it.

Indeed, my friends, this is crisis by design.

Someone planned the assassination and someone pulled the trigger.


All of which begs the question…How Come?

Why drive the planet into the throws of fiscal withdraw – of job losses, vaporized home equity, and pillaged 401ks and IRAs?

Because when the pain is bad enough, when the stock markets are in shambles, when the cities are teaming with the unemployed, when the streets are awash with riots, when governments are drenched in the sweat of eviction and overthrow, then the doctor will come with the needle of International Financial Control.

This string of ineffective solutions put forth by people who know better are convincing bankers, investors, corporations and governments of one thing: the system failed and even the U.S. government – the anchor of international finance (which is blamed for causing the disaster) – has lost its credibility.

The purpose of this financial crisis is to take down the United States and the U.S. dollar as the stable datum of planetary finance and in the midst of the resulting confusion, put in its place a Global Monetary Authority – A planetary financial control organization to “ensure this never happens again.”

Sound Orwellian? Sound conspiratorial? Sound too evil or too vast to be real?

This entity is being moved forward by world leaders “as we speak.” It is coming and the pace is quickening.

A year ago, I saw an article in which the President of the New York Federal Reserve bank was calling for a “Global Monetary Authority” or GMA to deal with the world’s financial crisis. While I have been following international banking institutions for some time, this was the clue that they were making their move. I wrote an article on it at the time.

By the way, as some may recall, the President of the New York Fed last year was a man named Timothy Geithner. Geithner was very involved in structuring the booby-trapped TARP bailout with Paulson and Bernanke.

Of course now, he is the Secretary of the Treasury of the United States.

Change we can believe in.

Once Geithner started to push a global financial authority as the solution to the world’s financial troubles, other world leaders and opinion leading voices in international finance began to forward this message. It has been a PR campaign of growing intensity. Meanwhile, behind the scenes, the international bankers are keeping their hands on the throat of the credit markets choking off lending while the planet’s financial markets asphyxiate and become more and more desperate for a solution.

British Prime Minister, Gordon Brown, who has taken the point on this, has said that the world needs a “new Bretton Woods.” This is the positioning. (Bretton Woods, New Hampshire was the location where world leaders met after the second World War and established the international financial organizations called the International Monetary Fund (IMF) and the World Bank to help provide lending to countries in need after the war).

Sir Evelyn de Rothschild called for improved (international) regulations while the Managing Director of the IMF suggested a “high level of ministers capable of reaching agreements and implementing them.”

The former director of the IMF, Michael Camdessus, called on “the global village” to “urgently and radically” implement international regulations.

As the crisis has intensified, so too have calls for a global financial policeman, and of late, the PR has been directed in favor of…surprise, the Bank of International Settlements.

The person at the BIS who was primarily responsible for the creation of Basle II is Jaime Caruana. The BIS Board has now appointed him as the General Manager, the bank’s chief executive position, where he will be in charge of dealing with the current financial crisis which he had no small part in creating.

A few well chosen sound bites tell the story.

Following a recent IMF function, discussion centered on the fact that the BIS could provide effective market regulation while the Global Investor Magazine opined that “…perhaps the Bank of International Settlements in Basel…” could undertake the task of best dealing with the crisis in the financial markets.

The UK Telegraph is right out front with it.

“A new global solution is needed because the machinery of global economic governance barely exists…it’s time for a Bretton Woods for this century.

“ The big question is whether it is time to establish a global economic ‘policeman’ to ensure the crash of 2008 can never be repeated.’


“The answer might be staring us in the face in the form of the Bank of International Settlements (BIS). The BIS has been spot on throughout this.”

And so you see, this was a drill. This was a strategy: bring in Easy Money Alan to loosen the credit screws; open the flood gates to mortgage loans to the seriously unqualified with the CRA, bundle these as securities, repeal Glass Stegall and waive capital requirements for investment banks so the mortgage backed securities could be sold far and wide, wait until the loans matured a bit and some became delinquent and ensure the media spread this news as if Heidi Fleiss had a sex change operation, then slam in an international accounting rule that was guaranteed choke off all credit and crash the leading economies of the world.

Ensure the right people were in the key places at the right time – Greenspan, Paulson, Geithner, and Caruana.

When the economic pain was bad enough promote the theory that the existing financial structures did not work and that a Global Monetary Authority – a Bretton Woods for the 21st Century – was needed to solve the crisis and ensure this does not happen again.

Which is exactly where we are right now.


Let me preface this section by saying that this is advice designed to help you orient your assets, i.e. your reserves, your retirement plans, etc. to the Brave New World of international finance. It is not meant as advice about what you do with your business or your job, your personal life.

Those things are all senior to this subject, which has a very narrow focus. There is an embarrassment of riches of materials that you can use to stay ahead of and on top of this crisis. Use them to flourish and prosper. This article is not an call to cut back or contract. It is to provide you information so you know what is going on and can plan.

Enough said.

First of all, while not likely, but just in case Timothy Geithner is shocked into some New Age epiphany and Ben Bernanke grows some real wisdom in his polished dome, what the government should do is:

1- Cancel any aspects of Basel II that are causing banks to mis-evaluate their assets.

2- Remove the provision of TARP that permits the Fed to pay interest on deposits.

3-Mandate that any funds given under the TARP bailout or that are to be given to banks in the future must be used to lend to deserving borrowers.

4- Repeal The Community Reinvestment Act.

5- Reinstate Glass Stegall.

6- Restore mandated capital requirements to investment banks.

7- And in case Congress decides to cease being a flock of frightened sheep and take responsibility for the country’s monetary policy, they should get rid of the privately owned Federal Reserve Bank and establish a monetary system based on production and property.

8- But if a global monetary authority is put in place, it should not be controlled by central bankers. It should be fully controlled directly by governments with real oversight over it and with a system of checks and balances. This you can communicate when this matter hits Congress or the White House or both (which it almost certainly will).

And what do you with your reserves in this Brave New World of international finance?

Modesty aside, please do what I have been recommending for a few years now: get liquid (out of the stock and bond markets) and put some of your assets into precious metals, gold and silver, but more heavily to silver.

Keep the rest in cash (CDs and T-bills) and perhaps a small bit in some stronger foreign currencies like the Swiss Francs or Chinese Yuan (also referred to as the RMB, which is short for Reminbi)

If you want more personal or specific advice on your investments – for example, what form of gold and silver and where to buy and what to pay, etc. – you can call or email me for an appointment, which we can probably do by phone. I charge $200 for the first half hour, which is the minimum and $325 for a full hour, which is usually sufficient for most folks.

And remember that my recommendations are based on my 30 years of experience in banking, finance and investments but I have no crystal ball and make no guarantees regarding my recommendations.

We are living in the most challenging economic times this planet has ever seen. I hope this article has helped shed some light on what currently happening on the international financial scene. I didn’t cover everything as I don’t have time to write another book right now. Nor did I cover everyone involved but these are the broad strokes.

If you want to follow these shenanigans, log on to The Road to London Summit ( It will all look and sound very reasonable – all about saving jobs and homes – but you have seen behind the wizard’s curtain and the above is what is really going on.

Bruce Wiseman

Wiseman Management Services

4312 Talofa Ave

Toluca Lake, Ca 91602

Are Online Pet Drug Companies Stealing Your Business?

How to effectively compete with the internet drug companies

There are many companies online that are severely undercutting the profits of veterinarians who would normally be filling the prescriptions. This may or may not be currently affecting your practice but, in the long run, this will probably affect every veterinary practice.

Recently a doctor posted a question on the The Practice Solution Magazine message forums regarding “combating the internet drug companies”. He asked for suggestions on how to deal with this serious issue. I have interviewed hundreds of doctors around the country about this subject over the past 3 years and I’ve put together some suggestions to effectively address this. My suggestions are based upon the feedback of doctors who have dealt with this successfully.

Things you can do when you get a request for a prescription to be filled:

  • Check the client’s chart and make sure that the patient has been in for an exam in the past year and is up to date. If not, call the client and let them know that in order for you to fill a prescription, you need to do an exam on the animal before you are able to prescribe anything by law.
  • Call your client and talk to them one-on-one to find out what they are trying to achieve from ordering online or by mail order. See if it is because of price or convenience. Be prepared to handle either eventuality.
  • Have your client tell you the price they were quoted and check it against your own retail price. MANY times doctors find that their prices are VERY competitive with the online drug company prices. Many clients simply take the media ads’ claim of lower prices at face value and don’t check it out. Many times you’ll find that your prices are comparable or possibly even better. Take the time to investigate this and know where you stand. You can’t deal with any competition effectively unless you know exactly where you stand in comparison.
  • Many doctors are offering to match price and even ship the product to the client. As long as this is fairly cost effective it will make a very positive impression on the client. This type of service can easily result in clients referring more clients to you based on your great service to them.

Other proactive things you can do:

  • Proactively educate your clients. Let them know that there are mail-order/online drug companies out there that DO NOT guarantee their products. Let them know that if the animal has a reaction to a drug (even heartworm or flea/tick medications) that the online company can do nothing for them and that YOU can. You stand behind the medication you prescribe and if their animal has a problem, you can help them.
  • Call your drug distributors and ask them if they have any programs that will match online drug company prices. Some drug company representatives have worked out rebates to compete with online drug companies.
  • Make sure that whoever is doing the drug ordering for your clinic really stays on top of stock and current prices, and shops prices from different distributors to ensure you are getting the best price.
  • Start a drug co-op. If you have a good relationship with other veterinarians in your area, look at the possibility of doing a group order to take advantage of volume pricing.

I hope these suggestions help you. Please feel free to post in our forums any other questions and I’ll do my best to answer them for you. Also, if you have found your own solutions to this problem, please pass them on to help other doctors.

Ken DeRouchie

Staff Writer

The Practice Solution Magazine