Published in the October 2007 issue of Today’s Hospitalist
Editor’s note: While many hospitalist groups have their hands full delivering the basics, a number of practices are looking beyond the daily-census crunch to identify and launch new services. Here’s the first in a new Today’s Hospitalist series of profiles on hospitalist groups that have launched services to expand their clinical reach and augment their revenues.
GROUP: Hospitalists of West Michigan
LOCATION: Grand Rapids, Mich.
NEW SERVICES: Outpatient infusion service and in-house addiction medicine consult service
When Hospitalists of West Michigan (HOWM) decided to launch an infusion service in 2004, it was a good example of how the group has excelled at identifying business opportunities and then developing new services around them.
HOWM, which was created in 2001 as the expansion of a decade-old “in-house internist” service, has always had an entrepreneurial bent. The practice was among the first hospitalist groups in the country, for instance, to use physician assistants, who now outnumber HOWM’s 11 physicians a little more than two to one.
(See “Midlevels make a rocky entrance into hospital medicine” in the January 2007 Today’s Hospitalist.)
“When we see care gaps that negatively affect any of our customers “whether it’s patients and their families, PCPs, specialists, or managed care companies and employers “we look into it,” says Khan Nedd, MD, the group’s president. “Sometimes it’s a value added service. Other times it’s a business opportunity.”
The latter was the case with the infusion service. “There are a lot of patients with cellulitis or dehydration, for example, or the MS patient who needs five days of steroids, who can be safely cared for as outpatients,” Dr. Nedd explains. “We saw the infusion service as a way to decompress the hospital.”
How the infusion service works
The service is staffed by two hospitalists skilled in infusion, four full-time nurses and a pharmacist. It operates nine hours a day, seven days a week.
As the service has grown, so has the patient population. In addition to handling patients with cellulitis and delivering antiemetics for hyperemesis gravidarum, the service now takes on patients who need newer biologic compounds (such as inflixamab and adalimumab) or an especially long course of antibiotics, such as for osteomyelitis or endocarditis. The service even handles certain local patients who are being primarily managed by experts at the Mayo Clinic in Rochester, Minn., or the Cleveland Clinic.
The center tries to offer only services that can be delivered in the outpatient setting within its nine-hour work day. “We try to use only once-daily drugs to simplify management,” Dr. Nedd explains.
Still, he admits it’s no small feat to launch and operate such a service. Even though the venture has been both a financial and clinical success, Dr. Nedd insists that it’s a tough service to take on because of its complexity.
It took HOWM more than a year, he notes, to work out the bugs: figuring out where an infusion service would fit into the local market; physically outfitting the facility; learning the ins and outs of purchasing and stocking infusion drugs; and working out a relationship with payers, which took some political maneuvering and negotiation.
“It requires business acumen and a range of different skill sets,” Dr. Nedd explains, to put such a full-scale stand-alone service in place.
A good example of that acumen can be seen in the group’s decision to not physically locate the center in either of the two hospitals where HOWM physicians work. The reasoning? The group didn’t want to limit its potential referral base or market the service as one affiliated only with the hospitals.
That tactic has worked well. The infusion center now draws from a wide range of hospital-based and community physician groups. “We guard the relationships patients have with their physicians and hospitals,” Dr. Nedd says, “so this seemed like the best way to avoid potential turf issues.”
Addiction medicine service
About a year after starting its infusion service, HOWM tackled another area “addiction medicine “that is closer to home for most hospitalists. It’s also a good example of how a new service can expand hospitalists’ traditional in-house service base.
The genesis of the idea for such a program was fairly simple: The group’s physicians noticed that many patients on the medicine wards had either unreported addiction or concurrent addiction and psychiatric illness.
“We discovered that about 25% of our patients have addiction or a combination of addiction and psychiatric disorder issues,” Dr. Nedd recalls. Delays in making those diagnoses often led to longer hospital stays, he observes, and poor coordination of post-discharge services.
To address that need, Dr. Nedd’s group tapped two hospitalists with interest and special training to be its “addictionologists.” The service is based on a business partnership with the local psychiatric hospital. Consults are provided in any one of three settings: inpatient at either the acute hospital or the psychiatric facility, or on an outpatient basis, as appropriate, for discharged inpatients. Three PAs also staff the service and help with patient management.
Besides consulting on patients with alcohol, opiate or benzodiazepine addiction, the service operates a suboxone clinic along with medication tapering. Coordinating the service with the psychiatric hospital helps ensure that patients who need behavioral services or inpatient treatment are referred as soon as possible.
“We provide the medicine-consult services, and the psychiatric hospital provides the behavioral services,” Dr. Nedd says. “We’ve seen that delays in treating the addiction are costly to the hospital and the payers, especially in terms of length of stay.”
The addiction medicine service was easier to launch than the infusion center, he adds, because it’s not nearly as complex. While he declined to discuss revenue, Dr. Nedd said that the new service achieves its objectives of providing needed care and timely referrals. While it’s not profitable yet, he expects it soon will be.
Politics and barriers
As Dr. Nedd is quick to point out, mastering the clinical operations of a new service is just the tip of the iceberg. There are all kinds of other issues to consider, some of which may surface late in the game.
Take the group’s decision to operate both new services as separate, independent ventures with their own revenue streams. Dr. Nedd says the strategy has not only made the services easier to manage, but more attractive to the group’s physicians.
“When you have different revenue streams,” he explains, “your physicians are more likely to stay put because of the opportunities. If you don’t, when you’re competing, you’re only as good as the next group, and that group can just say, ‘Hey, I can pay you more.’ ”
Because both services had the potential for turf issues, Dr. Nedd and his colleagues explored the waters very carefully before proceeding. As it turned out, both services answered a local need, and he says there has been no pushback.
“With the infusion center, we were able to make the case for why it helps the PCPs, the specialists and the hospital,” says Dr. Nedd. “The litmus test for our group is making sure that whatever we’re doing doesn’t negatively affect our customers.”
Practices interested in launching such services have to work around financial and logistic barriers, according to Dr. Nedd. A group has to be large enough to entertain the notion of a full-on new service, he maintains, and financially equipped for the capital expense.
On the political front, he points out that it helps to maintain close working relationships with hospital administrators and local physicians. Without that close relationship, he explains, groups will have a much harder time identifying needed services.
Bonnie Darves is a freelance writer specializing in health care. She is based in Chadds Ford, Pa.
“¢ Steer clear of competing services. “If you want to please your customers you have to step outside the box a bit to identify needs,” says Khan Nedd, MD, president of Hospitalists of West Michigan in Grand Rapids, Mich. “Don’t go into services that directly compete.”
“¢ Seek out initiatives that benefit primary care physicians. “It’s not enough to just tell the PCPs that you’ll ‘take care of their patients on the inside,’ " Dr. Nedd says. “Create services that might benefit them, because they’re struggling and hospitalists need to help them be successful.”
“¢ Research and understand your marketplace. Do the due diligence to find out if the service is needed. You also have to make sure that it can be launched without creating political fallout with your existing referral base.