Financial thoughts

European leaders maintained pressure on Greece to accept terms demanded by international lenders during a weekend of talks to avert a financial collapse.

Interim Greek Prime Minister Lucas Papademos struck a tentative deal with party leaders to boost economic competitiveness and extend spending cuts after euro-area finance chiefs told them an increase in the 130 billion-euro ($170 billion) aid package wasn

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Divers have resumed the search for 21 people still missing after a cruise ship capsized off the Tuscan coast.

Divers were scouring the submerged area of the ship Thursday once officials determined it had stablized after shifting on the rocks a day earlier.

Rough seas were forecast for later in the day, adding an element of uncertainty to the search and plans to begin pumping a half-million gallons of fuel from the vessel.

The missing include a 5-year-old Italian girl and her father. The girl’s mother issued a fresh appeal to speed the search and for passengers who saw the pair to come forward to help determine where they were last seen.

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Doctors in America are harboring an embarrassing secret: Many of them are going broke.

This quiet reality, which is spreading nationwide, is claiming a wide range of casualties, including family physicians, cardiologists and oncologists.

Industry watchers say the trend is worrisome. Half of all doctors in the nation operate a private practice. So if a cash crunch forces the death of an independent practice, it robs a community of a vital health care resource.

"A lot of independent practices are starting to see serious financial issues," said Marc Lion, CEO of Lion & Company CPAs, LLC, which advises independent doctor practices about their finances.

Doctors list shrinking insurance reimbursements, changing regulations, rising business and drug costs among the factors preventing them from keeping their practices afloat. But some experts counter that doctors’ lack of business acumen is also to blame.

Loans to make payroll: Dr. William Pentz, 47, a cardiologist with a Philadelphia private practice, and his partners had to tap into their personal assets to make payroll for employees last year. "And we still barely made payroll last paycheck," he said. "Many of us are also skimping on our own pay."

Pentz said recent steep 35% to 40% cuts in Medicare reimbursements for key cardiovascular services, such as stress tests and echocardiograms, have taken a substantial toll on revenue. "Our total revenue was down about 9% last year compared to 2010," he said.

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"These cuts have destabilized private cardiology practices," he said. "A third of our patients are on Medicare. So these Medicare cuts are by far the biggest factor. Private insurers follow Medicare rates. So those reimbursements are going down as well."

Pentz is thinking about an out. "If this continues, I might seriously consider leaving medicine," he said. "I can’t keep working this way."

Also on his mind, the impending 27.4% Medicare pay cut for doctors. "If that goes through, it will put us under," he said.

Federal law requires that Medicare reimbursement rates be adjusted annually based on a formula tied to the health of the economy. That law says rates should be cut every year to keep Medicare financially sound.

Although Congress has blocked those cuts from happening 13 times over the past decade, most recently on Dec. 23 with a two-month temporary "patch," this dilemma continues to haunt doctors every year.

Beau Donegan, senior executive with a hospital cancer center in Newport Beach, Calif., is well aware of physicians’ financial woes.

"Many are too proud to admit that they are on the verge of bankruptcy," she said. "These physicians see no way out of the downward spiral of reimbursement, escalating costs of treating patients and insurance companies deciding when and how much they will pay them."

Donegan knows an oncologist "with a stellar reputation in the community" who hasn’t taken a salary from his private practice in over a year. He owes drug companies $1.6 million, which he wasn’t reimbursed for.

Dr. Neil Barth is that oncologist. He has been in the top 10% of oncologists in his region, according to U.S. News Top Doctors’ ranking. Still, he is contemplating personal bankruptcy.

That move could shutter his 31-year-old clinical practice and force 6,000 cancer patients to look for a new doctor.

Changes in drug reimbursements have hurt him badly. Until the mid-2000’s, drugs sales were big profit generators for oncologists low interest rate personal loans.

In oncology, doctors were allowed to profit from drug sales. So doctors would buy expensive cancer drugs at bulk prices from drugmakers and then sell them at much higher prices to their patients.

"I grew up in that system. I was spending $1.5 million a month on buying treatment drugs," he said. In 2005, Medicare revised the reimbursement guidelines for cancer drugs, which effectively made reimbursements for many expensive cancer drugs fall to less than the actual cost of the drugs.

"Our reimbursements plummeted," Barth said.

Still, Barth continued to push ahead with innovative research, treating patients with cutting-edge expensive therapies, accepting patients who were underinsured only to realize later that insurers would not pay him back for much of his care.

"I was $3.2 million in debt by mid 2010," said Barth. "It was a sickening feeling. I could no longer care for patients with catastrophic illnesses without scrutinizing every penny first."

He’s since halved his debt and taken on a second job as a consultant to hospitals. But he’s still struggling and considering closing his practice in the next six months.

"The economics of providing health care in this country need to change. It’s too expensive for doctors," he said. "I love medicine. I will find a way to refinance my debt and not lose my home or my practice."

If he does declare bankruptcy, he loses all of it and has to find a way to start over at 60. Until then, he’s turning away new patients whose care he can no longer subsidize.

"I recently got a call from a divorced woman with two kids who is unemployed, house in foreclosure with advanced breast cancer," he said. "The moment has come to this that you now say, ’sorry, we don’t have the capacity to care for you.’ "

Small business 101: A private practice is like a small business. "The only thing different is that a third party, and not the customer, is paying for the service," said Lion.

"Many times I shake my head," he said. "Doctors are trained in medicine but not how to run a business." His biggest challenge is getting doctors to realize where and how their profits are leaking.

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"On average, there’s a 10% to 15% profit leak in a private practice," he said. Much of that is tied to money owed to the practice by patients or insurers. "This is also why they are seeing a cash crunch."

Dr. Mike Gorman, a family physician in Loganvale, Nev., recently took out an SBA loan to keep his practice running and pay his five employees.

"It is embarrassing," he said. "Doctors don’t want to talk about being in debt." But he’s planning a new strategy to deal with his rising business expenses and falling reimbursements.

"I will see more patients, but I won’t check all of their complaints at one time," he explained. "If I do, insurance will bundle my reimbursement into one payment." Patients will have to make repeat visits — an arrangement that he acknowledges is "inconvenient."

"This system pits doctor against patient," he said. "But it’s the only way to beat the system and get paid."

— Are you a doctor who has made financial decisions you came to regret? E-mail Parija Kavilanzand you could be part of an upcoming article. Click here for CNNMoney.com comment policy. 

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Today’s record-low mortgage rates are out of reach for millions of U.S. homeowners who would benefit from them most.

One in four homeowners with a mortgage _ 11 million people _ owe more than their home is worth. These “underwater” borrowers have virtually no shot at refinancing.

Their plight is a drag on the housing market and the broader economy.

The Obama administration is hoping at least 1 million of these borrowers will take advantage of its refinancing program under more lenient rules unveiled Monday. Homeowners who are current on their payments will be eligible to refinance no matter how much their home’s value has dropped.

Still, it’s unclear how many borrowers will benefit. Lenders will remain under no obligation to refinance a mortgage they hold.

A growing number of these people are missing mortgage payments and falling into foreclosure. And the higher rates they’re locked into limit how much they can contribute to a weak economy. If they were able to refinance at today’s rates, it could boost consumer spending by tens of billions of dollars, economists say.

Underwater homeowners are paying an average 30-year fixed mortgage rate of 5.7 percent, according to an analysis of mortgage data by CoreLogic and The Associated Press. That compares with today’s average rate of 4.11 percent on a 30-year fixed mortgage. For a homeowner with a $250,000 mortgage, the lower rate would save more than $200 a month.

For many Americans, a few hundred dollars each month would mean the difference between paying their mortgage on time and in full and losing, or walking away from, their home guaranteed online payday loans.

Underwater borrowers are the “most desperate population in the country today,” says Barry Bosworth, an economist at the Brookings Institution.

Dan and Maggie Micoff bought a two-bedroom home in the Detroit suburb of Marine City in 2003. They paid $119,000. Eight years later, they’re underwater with a 6 percent loan.

If they could refinance, the Micoffs, both 58, could shave at least $120 from their monthly bill.

“The banks won’t work with us,” Maggie Micoff said. “We helped bail them out, and now we can’t even get a personal loan to get by. We could rent something for a few hundred dollars cheaper.”

Even among homeowners who do have equity in their homes, few are refinancing. Many have already refinanced within the past year. Others can’t meet tighter lending standards. That’s why underwater borrowers represent the best chance for refinancing to unleash spending that’s otherwise going toward mortgage bills.

With millions locked into artificially high rates, foreclosures are rising. Mortgage default notices surged nationally last month.

Whether the administration’s revamped mortgage refinancing program will reach more Americans this time is unclear, said Mark Vitner, senior U.S. economist at Wells Fargo.

“No one knows if it will spur a lot more people to refinance, but it’s a start,” Vitner said.

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An Australian court has temporarily banned Samsung from selling its new Galaxy tablet computer in the country, another setback for the South Korean electronics giant in a global patent battle with Apple Inc. that accuses it of slavishly copying the iPad and iPhone.

Federal Court Justice Annabelle Bennett on Thursday granted a temporary injunction against sales of Samsung’s Galaxy Tab 10.1 in Australia. The decision prevents Samsung Electronics Co. from selling the device in Australia in its current form until a further court order, or until a pending patent lawsuit between the warring technology giants is resolved.

The ruling is a blow for Samsung, which had hoped to launch the new product in time for Christmas sales. It comes after courts in other countries including Germany and the Netherlands made judgments that upheld Apple’s claims that its intellectual property had been appropriated by Samsung.

The patent battle spanning 10 countries has underlined the perception of Samsung as an efficient imitator among technology companies rather than a pace setter. Over the years, the company has grown to become the global No. 1 in TVs and No. 2 in smartphones by sales. But unlike archrival Apple Inc., it has not mesmerized consumers with its originality and innovation.

In April, Cupertino, California-based Apple Inc. sued Samsung in the United States, alleging the product design, user interface and packaging of Samsung’s Galaxy devices “slavishly copy” the iPhone and iPad.

Suwon, South Korea-based Samsung Electronics Co No teletrack payday loans. fought back with lawsuits of its own, accusing Apple of patent infringement of its wireless telecommunications technology.

Apple filed the Australian lawsuit in July, accusing Samsung of copying its touch screen technology. In her ruling Thursday, Bennett said she was granting the temporary injunction in part because she felt Apple had a sufficient likelihood of winning the trial against Samsung.

The judge’s full orders will not be published until Friday. It was not immediately clear whether Samsung could _ or would _ attempt to sell a variation of the device that removed the features Apple objected to in the Australian lawsuit.

“We are disappointed with this ruling and Samsung will be seeking legal advice on its options,” Samsung said in a statement. “Samsung will continue its legal proceeding against Apple’s claim in order to ensure our innovative products remain available to consumers.”

Samsung, which filed its Australian countersuit in September, said it remained confident it could prove Apple violated its wireless technology patents.

“We will continue to legally assert our intellectual property rights against those who violate Samsung’s patents and free ride on our technology,” the company said in a statement.

An attorney for Apple declined to comment after the hearing.

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Russia’s influential finance minister resigned Monday following a televised confrontation with President Dmitry Medvedev, who had angrily demanded that Alexei Kudrin immediately explain his criticism of Medvedev’s policies or step down.

The open tension within Russia’s leadership follows the announcement over the weekend that Prime Minister Vladimir Putin plans to return to the presidency next year and Medvedev would then take his old job as prime minister. Russia will have a presidential vote despite the backroom maneuvering, but Putin is sure to win it.

The departure of Kudrin is likely to unsettle investors. He has been finance minister since 2000 and his tight hold over the budget has been seen as the key to Russia’s economic stability.

“It is difficult to see how Mr. Kudrin’s resignation can be anything but market-negative,” said Neil Shearing, chief Emerging Markets economist at Capital Economics Ltd in London. “With oil prices starting to slide and financial markets still jittery, now is not a good time for the government to lose its arch-fiscal hawk.”

Speaking over the weekend, Kudrin said he would refuse to serve if Medvedev was made prime minister because of disagreements over policy, including plans to substantially boost military spending.

Addressing Kudrin on Monday, Medvedev called the minister’s remarks “irresponsible chatter” and “improper,” especially since they were made in the United States while the minister was in Washington for meetings of the International Monetary Fund and the World Bank.

“If you disagree with the course set by the president and being implemented by the government, you have only one choice: Resign,” Medvedev said.

Kudrin said he would decide only after talking to Putin.

“You can seek the advice of whomever you want, but as long as I’m president, such decisions are made by me,” Medvedev retorted.

The Kremlin said Medvedev signed a decree on Kudrin’s resignation. Kudrin confirmed that he had quit in brief remarks reported by state news agencies.

Kudrin has been widely credited with helping Russia weather the 2008-2009 global financial crisis. During Putin’s presidency from 2000 to 2008, Kudrin stashed some of the revenue from Russia’s oil exports in a stabilization fund, despite strong opposition from other ministers who wanted to spend the money. But when the financial crisis hit and oil prices sank sharply those savings proved crucial in reducing the blow to Russia’s economy.

Some market analysts speculated that Kudrin’s departure could have a greater effect on Russia’s economy than the 2012 presidential election itself.

“It is unlikely that Mr. Kudrin’s replacement will share his predecessor’s credentials and clout,” Shearing wrote in a note to investors.

Before last weekend, Kudrin had been mentioned as a possible prime minister under Putin if Putin returns to the presidency.

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Consumers are spending more to fill their tanks, feed their families and pay the rent. At the same time, the number of people applying for unemployment benefits has reached the highest level in three months.

The latest government data show that inflationary pressures and a depressed job market are hurting an economy that barely grew in the first half of the year.

Higher prices could also keep the Federal Reserve from taking major steps to stimulate the growth next week when policymakers meet.

When prices rise, consumers cut back on big purchases, such as appliances, furniture and vacations. Mixed reports on manufacturing Thursday and flat retail sales in August suggest that may already be happening.

A decline in demand forces businesses to put off hiring and even lay off workers. In August, the economy added zero net jobs. Unemployment benefit applications have increased in three of the past four weeks.

“Unless spirits improve soon, businesses will ramp up layoffs, consumers will pull back, and the economy will fall back into recession,” said Mark Zandi, chief economist at Moody’s Analytics.

Consumer prices rose 0.4 percent in August, according to the Labor Department’s Consumer Price Index. Prices for food, energy, rent, and clothing all increased. Excluding volatile food and energy costs, core prices increased 0.2 percent.

Some inflation can be healthy for the economy because it encourages people to spend and invest rather than sitting on their cash. More spending drives corporate growth, which makes businesses more likely to hire people.

For the 12 months that ended in August, core prices surged 2 percent. That’s the biggest year-over-year increase in nearly three years, and it’s at the high end of the Federal Reserve’s informal inflation target.

Rising inflation is a key reason Macroeconomic Advisors lowered its growth estimate for the July-September quarter from 1.9 percent to 1.6 percent. The economic consulting firm said higher prices will reduce consumer spending.

Economists don’t expect prices to rise much further, mostly because employers aren’t hiring much or handing out big raises. Still, the spike in prices over the past year has cut into consumers’ pay and limited their purchasing power.

“In an environment where you’re now looking at zero job growth, it will be difficult to have much success passing on any additional costs,” said Tom Porcelli, chief U.S. economist at RBC Capital Markets.

Unemployment benefit applications rose to 428,000 last week, the Labor Department said in a separate report. And the four-week average, a less volatile measure, rose for the fourth straight week to 419,500, the highest level in eight weeks.

Applications need to fall below 375,000 to indicate that hiring is increasing enough to lower the unemployment rate. They haven’t been that low since February.

The unemployment rate stayed at 9.1 percent for the second straight month in August. It has been above 9 percent for all but two months since May 2009 _ one month before the recession officially ended.

U.S. factories have helped drive growth over the past two years. But manufacturing began to falter this spring, slowed by supply chain disruptions caused by the Japan crisis and diminished consumer demand.

Overall factory output rose in August for the second straight month, according to a report from the Federal Reserve. The gain was driven by strong auto production. Carmakers have rebounded over the past two months, mostly because supply chains are flowing more freely.

Many economists took that as a positive sign in the otherwise gloomy data.

Still, two regional surveys from Federal Reserve banks showed manufacturing contracted in the Northeast and Mid-Atlantic this month.

“The common thread among all of today’s data is one of weakness,” Porcelli said.

The Fed will discuss additional stimulus measures at its two-day meeting next week. Most economists expect it will announce a plan to shift money out of short-term securities and into longer-term Treasury bonds. The move could lower rates on mortgages, auto loans and other consumer and business loans.

But some Fed officials are worried the Fed’s policies could push inflation higher. Last month, three board members opposed the Fed’s decision to keep interest rates near zero for the next two years, unless economic conditions changed dramatically. It was the first time as many members dissented from a decision in almost 20 years.

Fed Chairman Ben Bernanke acknowledged last week that rising commodity prices had pushed up inflation this year. But he said it was likely to moderate in coming months.

There are some signs that core inflation, which the Fed pays close attention to, could level off soon. Cotton prices have come down from the spring, and clothing costs are expected to follow. New-car prices were unchanged for the second straight month in August, after rising earlier this year.

“The combination of disappointing growth but rising core inflation puts the Fed in a difficult situation,” said Michelle Meyer, an economist at Bank of America Merrill Lynch.

__

AP Business Writer Daniel Wagner contributed to this report.

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Australia avoided recession with its economy growing 1.2 percent in the three months through June after shrinking in the previous quarter due to natural disasters at home and abroad, according to government figures Wednesday.

Storms and record flooding early this year destroyed crops worth billions of dollars on Australia’s east coast and disrupted coal and iron ore exports. Earthquakes also devastated two key Australian trading partners, Japan and New Zealand.

The economy expanded 1.4 percent in the year through June, the Australian Bureau of Statistics said. It contracted 0.9 percent in the January-March quarter. A recession is generally defined as two consecutive quarters of contraction.

Burgeoning demand from China and India for Australian minerals and energy carried Australia through the global financial crisis with only two quarters of contraction, the first in December 2008.

Treasurer Wayne Swan said the rebound from natural disasters added half a percentage point to growth in the three months through June, the strongest quarterly growth in four years.

“Despite being hit by the most costly natural disasters in our history, the Australian economy has continued to forge ahead of most others in the developed world,” Swan told reporters.

“Today’s figures send a really powerful message: that even the biggest natural disasters in our history and the worst global downturn in 50 years can’t knock us off course,” he said.

But the recovery in mining had not been as fast as the government had expected in May when Swan drafted the national budget for the current fiscal year that ends on June 30, 2012.

Some coal mines in Queensland state had yet to return to full production since they were inundated by flood water and rail connections to ports destroyed.

“The impact of the natural disasters has been bigger on our economy than we expected,” Swan said.

The government forecast in its May budget that flooding and cyclones in Australia combined with earthquakes in Japan and New Zealand had cut economic growth in the fiscal year to June 30, 2011 by 0.75 percentage point to a yearly figure of 2.25 percent. Swan said that year figure was down to 1.8 percent.

Flooding in eastern Australia since November killed 35 people, damaged or destroyed more than 35,000 houses and inundated crops as well as coal mines.

An earthquake devastated New Zealand’s second largest city, Christchurch, and killed at least 169 people on Feb. 22. Japan’s northeast coast was laid waste by an earthquake and tsunami on March 11, killing more than 25,000 people.

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A tropical depression far out in the Atlantic is forecast to become a hurricane this week, but it’s too early to know if it’ll strike the U.S. or anywhere else.

The new depression is forecast to become Tropical Storm Katia _ the name that replaced Katrina in the rotating storm roster because of the catastrophic damage from the 2005 storm. That could come early Tuesday.

The U.S. National Hurricane Center in Miami said Monday the depression south of the Cape Verde Islands could reach hurricane strength Thursday, still far out in the Atlantic.

Hurricane Center spokesman Dennis Feltgen said it’s too early to know if it would hit the U.S.

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