Home Feature Clueless about what your group earns and spends?

Clueless about what your group earns and spends?

August 2008

Published in the August 2008 issue of Today’s Hospitalist

Do you know how much your group spends on payroll each year? How much money comes in from Medicare? How much goes to malpractice insurance?

If you answered “no” to any or all of these questions, you’re far from alone. That’s because many hospitalists “whether they’re rank-and-file physicians or group managers “aren’t doing a good job when it comes to tracking their finances.

In a presentation at the Society of Hospital Medicine (SHM) annual meeting this spring, Burke Kealey, MD, said that the association’s most recent survey found that about one-third of hospital medicine group leaders don’t know their program’s annual expenses. A similar number, he added, are in the dark about their program’s annual revenue from professional fees.

Dr. Kealey said he finds those statistics “jaw-dropping.” Program directors need to know how much cash is coming in and going out not only to manage the bottom line, he explained, but to keep the group growing. That type of information is key to making the case for increasing staffing or compensation, launching a new service line and designing quality incentives.

Perhaps just as importantly, keeping on top of your group’s finances is key to competing for scarce hospitalist recruits.

“You’ve got to be able to show recruits what your program is like, because the other programs down the street can,” said Dr. Kealey, who is assistant medical director of hospital medicine for Health- Partners Medical Group in St. Paul, Minn. “You’ve got to out-compete the next hospitalist group.”

Whether your group is just getting started or has been in existence for years, Dr. Kealey said, it should be using the following measures to track “and control “its performance.

“Data drive decisions,” said Dr. Kealey, who is chair of SHM’s benchmarks committee. “If you’re going to gather data, then have a plan to use them.”

1. Productivity figures. Productivity is a key metric on the minds of recruits, Dr. Kealey pointed out, because it gives them an idea of how hard they’ll work and the kind of patient volume they’ll face as a member of your group.

According to Dr. Kealey, most physicians are familiar with the concept of relative value units (RVUs) as a productivity measure for physician services. But because Medicare has recently recalibrated its RVU values, the metric is now confusing.

“Until the RVU situation settles out,” Dr. Kealey said, “looking at the number of physician encounters is very helpful. That’s something that doesn’t change no matter how encounters are coded or how payers pay for them.”

When collecting data on physician encounters, Dr. Kealey said it’s critical to also examine encounters per hour. That will give you a productivity snapshot of a day, evening or night shift. It will also tell you if staffing and schedules are appropriate for patient flow.

2. Core measures. How well physicians are meeting the Joint Commission’s core measure reporting requirements should be another hot button for hospitalist groups. Because these measures are publicly reported, hospital administrators follow them closely. “That performance is increasingly considered a reliable indicator of quality,” Dr. Kealey said.

If you’re collecting these data, be sure to focus only on those measures that you can attribute to hospitalists. Those include measures that target acute MI, heart failure and community-acquired pneumonia.

“Door-to-needle time isn’t something that you can really control,” Dr. Kealey pointed out, “but aspirin and beta-blocker on admission and discharge for acute MI are.”

3. Patient satisfaction. Because patient satisfaction scores are also being publicly reported, they are near and dear to hospital administrators. “If you don’t embarrass your hospital CEOs,” Dr. Kealey said, “they look upon you very favorably.”

Patient satisfaction scores are typically drawn from surveys administered by vendors such as the Picker Institute and Press Gamey Associates and are available from your quality department. When interpreting these data, it’s important to remember that patients frequently see more than one physician in the hospital.

“It can be hard to drill down to the hospitalist group, let alone individual physicians on questions like, ‘Did the doctors who saw you treat you with respect?’ ” Dr. Kealey explained. “Still, we need to take this on and improve patient satisfaction, and that may mean working with our specialty colleagues.”

4. Length of stay. While this is a more sophisticated measure than patient satisfaction, Dr. Kealey said, length of stay is a key to demonstrating hospitalist value.

“Administrators are looking to you to keep this down so they can keep patients flowing through their facility,” he explained. “Paired with other measures, these data can show high quality and good cost effectiveness.”

Dr. Kealey recommended tracking length of stay at the group level rather than for individual physicians. Groups that want to compare themselves to national averages can find length-of-stay benchmarks by diagnosis.

And if your group cares for a disproportionate number of uninsured patients, be sure to point out that they typically have longer lengths of stay when discussing these data with administrators, Dr. Kealey said.

5. Case mix index (CMI). Case mix index, which refers to the severity of illness of your Medicare patients, has significant financial implications. The higher your hospital’s case mix index, the more substantial payments it will receive.

Hospitalists should pay particular attention to case mix index because that figure is determined by physicians’ documentation. “How you write your notes directly influences the illness severity that is given your patients,” said Dr. Kealey. “It’s all about documenting smarter.”

You could be seeing very sick patients, he explained, “but not documenting correctly. It may look like the illness burden of your patients isn’t very high.”

6. Per-case costs. These data get at patient costs per day or per discharge. By tracking your per-case costs, you can help establish how much your group is saving the hospital.

Dr. Kealey urged hospitalists to make sure the data they’re using don’t factor in fixed costs “heat and electric, for example “over which hospitalists have no control. Instead, pay attention to your group’s variable costs related to lab, pharmacy, imaging and one-to-one nursing staff.

Along with length-of-stay figures, you can use these cost data to compare your group to other physicians on the medical staff. Drawing on an example from an actual group, Dr. Kealey showed how one hospitalist program’s variable costs stacked up to those of a group of inpatient rounders for a multispecialty group and to nonhospitalist internists.

The hospitalists delivered a $700 profit for CMI-adjusted cost per case compared to the other two groups. In that same example, the hospital was losing $80 per case for each patient cared for by the nonhospitalist internists.

“This is a very compelling argument to a hospital,” Dr. Kealey said. “You might use this to justify a staffing increase.”

7. Readmission rates. Your hospital’s finance or quality department can provide readmission data, which are typically tracked for seven or 30 days. Readmission rates can help ensure that hospitalists aren’t focusing too much on reducing length of stay. These rates can also reflect the high caliber of a group’s hand-offs.

But Dr. Kealey warned that when it comes to readmission rates, “it’s easy for a hospital to look at a physician group and say, ‘You guys fix this.’ It may really be a system measure, not just one that applies to physicians.”

Readmission rates, for example, can reflect the care that patients receive once they leave the hospital.

“There can be a big failure of outpatient systems associated with readmission rates,” Dr. Kealey explained. “The longer the timeframe “30 days instead of seven “the greater that contribution.”

8. Provider satisfaction. Another measure that groups frequently track is the satisfaction of referring primary care physicians, specialists and nurses.

Groups typically get these data from home-grown surveys. Dr. Kealey said his group sends out a survey to referring physicians and other providers once a year. He tries to keep it simple, limiting the number of survey questions to about 10.

His program has used satisfaction surveys to hone in on communication problems with individual physicians.

“It doesn’t happen too often, but it’s helpful when it does,” Dr. Kealey said. While surveys can reveal communication and coordination snafus, he added, “take these data with a grain of salt because response levels are low.”

Phyllis Maguire is Executive Editor of Today’s Hospitalist.

Picking the right measures to track

WHEN GATHERING DATA to track their performance, hospitalists need to tailor data to their group or hospital goals. According to Burke Kealey, MD, who spoke at a practice management presession at the Society of Hospital Medicine annual meeting, groups might want to consider the following measures:

* Hospitalist satisfaction. While it’s good to gauge the satisfaction of referring physicians, don’t lose sight of your own group members. Dr. Kealey said HealthPartners Medical Group, where he works in St. Paul, Minn., uses an American Medical Group Association survey every year that asks the hospitalists within the group how they feel about such potential trouble spots as workload and compensation.

* Mortality rates. Tracking in-hospital deaths per quarter or per year might show quality improvement trends or suggest interventions, such as the need to launch a rapid response team. Dr. Kealey pointed out, however, that mortality rates are a poor indicator of specific clinical quality, and they are meaningless for individual physicians “unless there is a gross outlier.

* Housestaff satisfaction. In many academic settings, hospitalists are now doing most of the teaching. Surveying housestaff satisfaction is one way to allow them to evaluate you and your group members as teachers.

* Use of order sets. As far as measuring clinical performance, Dr. Kealey said he prefers to look at hospitalists’ performance on Joint Commission core measures. However, tracking use of order sets can be helpful, he said, particularly when you’re rolling out a new hospitalist group or a new disease management program.

* Percentage of verbal orders. This is an important measure when launching a CPOE or electronic medical records systems. “Doctors can be very passive-aggressive and say, ‘I’m not going to do this. I’m just going to give verbal orders to the nurses.’ That brings down the nurses’ morale and they go to another hospital across town.”

* Charge lag. Hospitalists who don’t turn in billing cards have an enormous impact on billing and cash flow, particularly for private and multispecialty groups. Tracking charge lag can identify problems.

* Flow and throughput. If you decide to track ED door-to-bed times, make sure everyone “including the ED physicians “is held accountable to the same standard as hospitalists. Just as with any other performance metric, you want to be able to show improvement over time, Dr. Kealey said, and not take heat for circumstances beyond your control.

* Discharge timing patterns. This is another measure that can reveal throughput problems. Use this metric to track if you want to redesign discharge processes to move more patients out of the hospital in the morning.