Home Feature The business case for hospitalists heats up: Is your program ready?

The business case for hospitalists heats up: Is your program ready?

May 2005

Published in the May 2005 issue of Today’s Hospitalist.

As hospital administrators begin to recognize that hospitalists can do more than care for unassigned patients, they are certain to face exciting opportunities for growth “and challenges to ratchet up the services they provide.

Martin Buser, MPH, a founding partner of Hospitalist Management Resources LLC, a hospitalist consulting firm with offices in San Diego and Colorado Springs, Colo., says that smart administrators are beginning to ask what they need to invest in a program to achieve the results. “When they understand that hospitalist programs are an investment and not a cost,” he says, “we’re halfway home.”

Many of the hospital administrators Mr. Buser talks to, for example, want help from hospitalists in addressing issues like patient throughput. “Demand is outstripping the supply of beds at many hospitals,” Mr. Buser explains. “Allowing a medical patient to ‘linger’ in the hospital an extra day is too expensive for most hospitals.”

To illustrate his point, he cites the statistics that he presents to hospitals that are considering starting a hospitalist program: Every time a hospital cares for a medical patient, he says, that facility can expect to apply about $5,000 from that case to its overhead. In the same analysis, Mr. Buser adds, surgical patients allow hospitals to pay down overhead by about $15,000, or roughly three times that of medical patients.

(Mr. Buser notes that the amounts represented are not profit, but money hospitals can use to pay their bills. These numbers vary from hospital to hospital, he adds, but they are a good benchmark.)

“If you’re short a bed and you have to divert a surgery,” Mr. Buser explains, “you’ve just lost a huge financial opportunity.” Hospital administrators know that one of the hallmarks of hospitalist programs “the ability to reduce length of stay “can go a long way toward that goal, a case that Mr. Buser likes to make with more statistics.

Shave a day off your average length of stay, he says, and you can expect to save about $500 in direct expenses. (Most of those savings come from discharging the patient one day earlier.) If a hospitalist program admits 2,000 patients a year and reduces length of stay by one day on every case, Mr. Buser reasons, that program should save the hospital $1 million.

That’s why hospital officials are beginning to realize that when it comes to the issues that keep them awake at night, hospital medicine may be an important part of the solution to their problems.

Inpatient rounders vs. hospitalists

While some hospital administrators are looking at new roles for hospitalists, Mr. Buser says some are taking a second look at the hospitalist programs in their institutions.

“Often times when we come in to a hospital,” Mr. Buser explains, “administrators tell us that they want a ‘real’ hospitalist program. They want hospitalists on-site all day, and they want those physicians to move patients through the hospital effectively and efficiently to free up beds.”

While what constitutes a “real” hospitalist is a matter of opinion, Stacy Goldsholl, MD, national medical director for Cogent Healthcare Inc. in Irvine, Calif., and a veteran hospitalist who has created several hospitalist programs, draws a firm line between “inpatient rounders” and hospitalists.

The distinction? True hospitalists see patients more than once a day, she says. That allows them to not only provide top-notch patient care, but tightly manage length of stay.

She is currently analyzing data she collected while serving as director of the hospitalist program at Covenant HealthCare in Saginaw, Mich. Those results, she says, point to differences between true hospitalists and physicians who “round and run.”

According to Dr. Goldsholl, those data show that her group reduced length of stay by a day and a half when compared to outpatient physicians and by a full day over other hospitalists working in the same hospital.

While the data are limited and reflect the experiences of one program, they are nonetheless interesting because they compare two different models of hospitalist care. Dr. Goldsholl says her group was able to reduce length of stay “and save the hospital more than $1.2 million “because her physicians had time to see the patients more than once a day.

“If you bring in hospitalists and give them a decent workload, they should be able to sweetly manage length of stay,” she says. “That means their patient load is not such that they can only see a patient once a day, but they can make multiple visits in the afternoon.”

“The difference between hospitalists and inpatient rounders,” she continues, “is that hospitalists manage length of stay. I don’t just see volume, because volume becomes counterproductive to length of stay at some point.”

Reasonable volume

While Dr. Goldsholl’s approach to the issue of patient volume reflects the perspective of a hospitalist who has spent most of her professional life working for hospital-employed programs, she is far from alone in her view of volume.

Sound Inpatient Physicians, for example, a hospitalist management group located just outside of Seattle, contracts with nine hospitals in the Puget Sound area. It too tries to limit the number of patients its hospitalists see on any given day, aiming for what Robert Bessler, MD, the group’s president, says is the group’s “sweet spot” in terms of patient census: 12 to 15 patients a day.

“Reasonable volume is the No. 1 way we promote quality and satisfaction among patients and physicians,” Dr. Bessler says. “The future for us is not about trying to see more patients per doctor per day. Seeing patients two or three times a day and working with case managers every day is going to lead to a much better return on investment.”

To help make the business case for programs that focus on quality, hospitalists like Dr. Goldsholl point to data that demonstrate the benefits of tightly managing length of stay. She says that her previous group’s physicians, for example, produced more profit for the hospital on a case-by-case basis than other hospitalists and primary care physicians.

After calculating revenue and deducting total costs, Dr. Goldsholl says, her hospital-employed physicians produced a profit of $700 for every case they managed. The other hospitalists, by comparison, produced a profit of $80, while the outpatient physicians produced a loss of $80.

Cost vs. quality solutions

Exactly how familiar hospital administrators are becoming with the potential of hospitalists is not clear. Adam Singer, MD, CEO of IPC-The Hospitalist Company in North Hollywood, Calif., says that in many quarters, attitudes haven’t shifted much at all.

Many hospital administrators, he says, still look to hospitalist programs for what he calls a “cost solution,” not a “quality solution.” Instead of focusing on the specialty’s ability to improve care and streamline costs, in other words, many are still more interested in the basics.

“The bulk of hospitals we contract with are still saying they need a hospitalist program because their medical staff wants the program and they have a problem managing their unassigned patients,” Dr. Singer says.

He adds, however, that he sees signs that hospitals are beginning to realize that hospitalist programs can do more than care for unassigned patients and accept referrals from primary care physicians. There is growing interest, for example, in add-on services.

“In every program we contract with,” Dr. Singer explains, “the list of demands being placed on the hospitalist program is getting longer and longer. We haven’t seen how long the list of demands on hospitalist groups will get.”

That doesn’t mean that cost is not a concern. “Our biggest obstacle is convincing CFOs that they should not view hospitalist programs as cost buckets,” explains Ronald Greeno, MD, founder and chief medical officer of Cogent Healthcare Inc. in Irvine, Calif. “They should look at this as a financial opportunity.”

Even if your hospital isn’t willing to fund additional services for your program, there are still ample opportunities to bolster your presence by making sure that you align yourselves with the goals of your facility.

Dr. Greeno recently visited a hospital that is interested in creating a hospitalist group. While hospitalists already care for patients at the hospital, Dr. Greeno says those physicians also care for patients at a competing hospital across town. The physicians bounce back and forth between the two facilities, leaving hospital officials feeling less than satisfied with their service.

Dr. Greeno says the hospital is thinking of starting a program in part to make sure the hospitalists on its wards do more than just round on patients. It is looking for a hospitalist program that also addresses issues like quality and length of stay.

Meeting hospital goals

That anecdote echoes Mr. Buser’s experience with hospital administrators who have been dissatisfied with the hospitalists working at their institution. “The administrators are saying that they don’t want to think their patients are being cared for by someone darting all over the place who thinks good rounds are at 9 or 10 at night,” he says.

Dr. Greeno agrees that hospitals want programs that not only give them a greater physician presence, but will help them reach their goals. Some are worried that if they don’t take control of their hospitalist programs now, they are going to lose an opportunity.

“Hospitals are seeing that if they let these programs emerge and don’t have any say in the goals or how they’re run, there won’t be any going back,” he explains. “These groups will get large and become powerful and develop a program that has nothing to do with improving quality of care or patient satisfaction. They will focus on creating a successful physician practice.”

“Hospital medicine is at a moment in time when it’s trying to define itself,” Dr. Greeno adds. “Is it going to be a specialty in the traditional sense that is driven by a practice model where physicians’ main goal is to build a successful practice,” or one where its physicians focus more on working closely with hospitals to change the way health care is delivered? “There’s nothing wrong with that model. It’s just a missed opportunity in my mind.”

He also predicts that hospitals will become disinterested in that kind of model “and they’ll try to avoid it by starting their own programs. “There are more hospitals that are saying they need to really take advantage of hospitalist programs,” Dr. Greeno says, “that they need to drive the process.”

That’s why he says that hospitalist programs need to make sure their goals are aligned with the goals of their hospitals. While following a hospital’s lead may stick in the craw of some physicians, he thinks it’s a natural for hospitalists.

“It’s hard to argue that the goals of hospitals are not admirable,” he explains. “They’re being measured for their quality, and they know they have to provide care in a cost-effective manner, and they know they need happy patients, or those patients are not going to come back to their institution for care. If a hospitalist program by the nature of its relationship with the hospital is designed to meet those goals, that’s a good thing.”

Edward Doyle is Editor of Today’s Hospitalist