Our solution’s primary purposes are to generate inpatient revenue by intercepting patient out migration through the emergency department, to protect that revenue by providing a convenience to office-based attending physicians, and perform in a leadership role for the hospital client by accepting responsibility and accountability for the success of the emergency medicine and hospitalist services.
These purposes are achieved through the design and execution of a physician practice model in which hospitalist services are provided as a separate but interdependent, integrated medical service along with traditional emergency medicine services. The interdependence and unique integration of these practices provide the benefits of exceptional medical quality and pays for itself by generating additional revenue that exceeds the incremental costs of these combined services. In effect, our service generates net revenue, not net costs. The integrated model typically yields a 300% to 800% annual return on investment and usually pays for itself within the first year.
Our model is successful for many reasons, but primarily because it:
Generates increases in revenue.
Minimizes risk by achieving results; not unfulfilled hopes and promises.
Is accountable for achieving the hospital’s performance expectations.
Utilizes physicians who are challenged by and enjoy a combination of higher acuity outpatients and inpatients, diagnosing medical conditions treatable within the hospital, and managing ongoing inpatient care.
Enables the small community hospital to recruit primary care physicians, specialists, and surgeons more easily with minimal risk, and eliminates the barriers of rounding and unattached call.
Aligns the clinical and financial goals of the hospital and HospitalMD physicians.
Is a clinical partner with the hospital and an extension of the office-based attending physician’s practice.
Physician Alignment and Seamless Integration
Admissions decisions made for emergency medicine patients are often fragmented and dysfunctional because they are based on financial and/or convenience motives of the emergency medicine physician that are different than those of either the hospitalist or office-based attending physician. Integrating both the hospitalist and emergency medicine roles into a single practice (not just a single vendor) eliminates these barriers. The decision to discharge, transfer, or admit is made in the best interest of the hospital, patient, and office-based attending physician. This behavior is achieved by the hospitalist and emergency medicine physicians “thinking as two, and acting as one”. Seamless decisions are the ultimate in continuity. The meaning of these terms may sound subtle, but the effects are profound.
Working for the same vendor doesn’t necessarily mean working together. The successful hospitalist service for a small community hospital is not ensured by simply having the hospitalist employed by the same vendor that provides the emergency medicine physicians. Nor are the powerful financial benefits in the emergency department achieved by simply having the emergency medicine physician employed by the same vendor as the hospitalist.
The hospitalist works physically within the small community hospital and this proximity to the emergency department permits more timely response to the emergency medicine physician, expedites the admission, and improves the immediacy of care. To optimize the admission opportunities for the small community hospital, the hospitalist must become a conspicuous convenience to the emergency medicine physician to identify more admission prospects, and expedite admission to the inpatient unit.
A rounder is available within the small community hospital and accessible to the hospital staff only as long as it takes them to round. The real hospitalist is usually available for up to eight hours a day. The small community hospital’s nursing staff, medical staff, and the patient and its family, have access to HospitalMD’s hospitalist 24 hours a day, 365 days a year.
A separate document available from HospitalMD, HMD Practice Model Overview, discusses integration of these two services, and alignment of physicians’ purposes, goals, and expectations with those of the hospital, in more depth.
Extension of the office-based attending physician’s practice
The hospitalist and emergency medicine physician provide services on behalf of the office-based attending physician that the physician can’t provide in their office. Therefore, the hospitalist and emergency medicine physician must see themselves as extensions of the office-based attending physician’s practice. And, neither the hospitalist nor the emergency medicine physician has a local office practice, so the office-based attending physician does not lose patients. The patients tended by the hospitalist on behalf of the office-based attending physicians are always referred back to that physician.
Summary
Hospitals need physicians, physicians do not need hospitals. Therefore, expect physicians to do what is in their best interests. Then, to optimize small community hospital revenue, fully understand the underlying causes of physician behavior and treat the causes, not the symptoms or the behaviors. This article has attempted to explain some of the underlying causes of physician behavior that have resulted in problematic out migration; and provide a problem-solving framework to help in understanding how to overcome revenue decline.
Any revenue losses due to direct admission reimbursement inefficiency are relatively minor compared to the revenue decline of out migration through the emergency department. Out migration through the emergency department occurs when patients come through the emergency department that qualify for admission but are not admitted. There are several reasons for low admission rates through the emergency department.
As a courtesy to office-based attending physicians, it is commonplace for the emergency medicine physician to perform a significant amount of admission-related work on behalf of the office-based attending physician for admissions through the emergency department even though the emergency medicine physician is not paid for this service. The time required for this admission-related convenience to the office-based attending physician can take from forty-five minutes to an hour per admission of the emergency medicine physician’s time in contrast to an average of five minutes with emergency medicine patients. When this courtesy is extended, the emergency medicine physician must also agree to oversee the patient in the emergency department until the patient is handed off to the attending and is physically transferred to the inpatient unit.
Emergency medicine physicians frequently tell us that they have been told since residency to keep patients out of the hospital to reduce health care costs. This physician view is pervasive. And, the threat of malpractice litigation causes physicians to practice defensive medicine. Together, pervasive myths about how to reduce health care costs, and acceptance of defensive medicine, lead emergency medicine physicians to transfer patients to another hospital or discharge patients to their primary care physicians often too frequently. The result of these messages is “treat ’em and street ’em”. And, since they are not paid for the work time, why should they take the risk?
Physicians’ patterns of admissions depend on each physician’s interpretation of subjective admission guidelines and initiative to absorb work for which they are not paid. This individual physician pattern is usually made early in a physician’s career without regard to the best interests of both the patient and hospital. Once this pattern is set, the resistance to change is strong. The emergency medicine physician in a rural market is typically paid hourly. This rate varies with the volume of emergency department patient visits. The emergency medicine physician cannot be paid for admissions. Therefore, in the absence of the emergency medicine physician being paid for higher medical quality, admissions will continue to follow historic patterns.
Furthermore, research and empirical evidence tell us that hourly pay alone is not an incentive for high performance, and may even be a disincentive. Most of us do what is in our best interests. Physicians are no different. No additional compensation to the emergency medicine physician for this added work and risk translates into lower admissions performance. The national average admission rate for the emergency department is 13%. Some HMD clients get as much as 16% to 18%. However, most small community hospitals get well below 8%, and some get as little as 4%.
We have heard these explanations for the resistance to admissions again and again which makes it easy to see why out migration occurs and why small community hospitals are not getting the admissions they should. In light of this evidence, it would seem appropriate to attack out migration in the emergency department. However, with growth in emergency department admissions, the office-based attending physician will become even less efficient and more inconvenienced. So, can a solution to the revenue problem that begins in the emergency department be designed to also solve the convenience problem to the office-based attending physician as well?
Small community hospitals cannot continue increasing costs without some offset. Any option chose must be financially feasible. This means a solution must reduce cost per patient day, produce additional revenue, or both. Otherwise, the option is a defensive effort to avoid losing revenue from physician resistance to rounding and/or being on unattached call. A defensive effort is not an appropriate strategy because it is a net cash drain.
The cost of either a rounder or a hospitalist can vary widely depending on the local market and the willingness of a physician to be a rounder on an “as needed” basis. A Rounder could cost $100,000 per year with no prospect of additional revenue, and a full time hospitalist could cost $250,000. In some small markets, these may be minimums. The absolute amount is somewhat irrelevant, however, unless there is a substantial increase in revenue to offset even the more modest cost.
What are the opportunities to reduce cost?
Since a physician that rounds can bill for only one encounter per day, there is no incentive to spend as much time as a hospitalist spends to reduce costs. Nursing labor costs are difficult to reduce for smaller inpatient volumes in the small community hospital. There are opportunities with a hospitalist to reduce medication costs, supply costs, and average patient length of stay. But at low average daily census and acuity, the savings are not substantial enough to offset the cost.
What are the opportunities to increase revenue?
The use of either a rounder or a hospitalist in community hospitals is relatively new. Therefore, it is unclear if either option leads to increased admissions. And, our experience suggests that declines in direct admits are a small part of total out migration. If true, it is unlikely that any increase in direct admissions revenue will be sufficient to offset the costs.
If the rounder or hospitalist is an internist, and can attend a higher level of acuity, one might expect some additional admissions. However, options such as these seldom achieve benefits beyond what they are designed to achieve, and both of these options are designed to offer convenience to the office-based attending physician. Therefore, any prospective revenue is a gamble and risky in light of the cost for either option.
What about continuity and duration of care?
The limitation on billing for one encounter per day imposes an economic limit on the amount of time an attending is willing to spend on an inpatient which, in turn, adversely impacts continuity and duration of care. Continuity of care with the rounder model is no different than with the traditional model in which the office-based attending physician rounds once daily. The only improvement in continuity and duration of care occurs with a hospitalist.
Behavioral changes resulting in reduced admissions from reduced reimbursement are often subtle. Office-based attending physicians’ admissions always seem to ebb and flow to some degree, and downward trends at first are gradual and hard to detect. But, if out migration is simply the result of the inefficiency and inconvenience of rounding and call, providing a “rounding and call” alternative is a reasonable solution. There are generally two solutions considered for this problem. One, hire a part-time physician to only round, or two, engage a hospitalist.
Hospitals are not permitted to pay office-based attending physicians for rounding. Hospitals can pay a third-party physician to round. However, in order to entice a physician to round, the small community hospital will have to subsidize reimbursement, making this option a significant additional expense. The amount of time spent on direct patient care for the rounding option is identical to the office-based attending physicians rounding on their own patients, and rounding reimbursement is no more efficient to a rounding physician than to an office-based attending physician.
Many vendors are promoting these part-time rounding services and are referring to them as hospitalists. A rounding physician is not a hospitalist. Promoting this service as a hospitalist service is misleading. The traditional hospitalist model originated in the larger, urban hospital to meet their specific needs. Its purposes were to reduce the cost per patient day, and improve the continuity and quality, of inpatient care. To achieve these purposes, it was, and is, essential that the physician be committed to full time inpatient care at least eight hours per day, serve the hospital in a leadership role, and develop more cost-effective care practices.
A dramatic paradigm shift began to occur in the 1990s causing physician reimbursement for inpatient rounding to decline.
Rounding during regular office hours reduces the office-based attending physician’s income unless the physician sees more patients during the same office hours or extends office hours. Extended hours, and rounding before or after office hours, make for a long day. In light of reimbursement declines for rounding, rounding and call have become more and more unattractive. Old-era physicians and younger ones as well have learned that their office practices generate the greatest income per hour, and are reducing less efficient admissions and considering withdrawing from active status on their medical staffs to avoid call.
In the widespread discussion of universal health insurance and soaring medical costs, one of America’s most cherished traditions – the hometown community hospital – has been largely forgotten.
Many analysts suggest that small community hospitals are especially vulnerable – with smaller populations, limited services, and small medical staffs. Yet their value is unquestioned. Read the rest of this entry »
The nursing shortage. What more can be said? Actually, a lot. A lot needs to be said that has not been said. Your hospital does not have to participate in the nursing shortage. You have a choice.
Hospitals in the U. S. are at risk and must change or fail. Transformation will either be forced on the industry or it can help shape transformation. Transformation starts with “self-transformation.” This requires change from within. When leadership changes first, and then adopts contemporary management strategies, full transformation will occur.
