Published in the July 2009 issue of Today’s Hospitalist
Have you ever wondered what it would be like to work in a hospitalist group that takes a completely different approach to the way it is managed?
If you work for a hospital-owned group, for example, you might have visions of going independent and making more autonomous scheduling decisions. If you work for a private practice, you might crave the security of a salary and a larger program to share call.
While it’s human nature to think that the grass may be greener on the other side, a number of hospitalist groups decided to test that hypothesis. Fed up with sky-high patient loads or shrinking profits, these groups abandoned one business model in search of a better way.
In some cases, hospitalists left the safety of employment to become part of a private, multispecialty group. In other cases, they switched private ownership for hospital ownership.
Today’s Hospitalist talked to the leaders of four groups who tried to substantially change the way they do business. While they weren’t always successful, they all felt compelled to make the type of sweeping change that most groups only dream about.
As director of a 10-physician hospitalist group, Andrew Weber, MD, was ready to make the jump from hospital employee to becoming independent. He and the other members of Aspirus Hospitalists, who are employed by Aspirus Clinics in Wausau, Wisc., felt limited in their ability to make day-to-day operational decisions.
That was due in part to unsustainable requests to take over patient admissions and management from specialists and new primary care referrals, all with little notice. “We were being asked to accept inappropriate transfers and admissions,” Dr. Weber says. “We were running our staffing thin.”
The group also faced a revolving door of administrators, each of whom took a different tack with the hospitalist program. One month, Dr. Weber says, physicians would be promised new quality incentives. At a later meeting, a new wave of administrators would ask him to trim the budget instead.
Dr. Weber and his colleagues were frustrated over their inability make decisions about their work lives. Going private, he says, would “give us the autonomy to chart our own ‘smart growth.’ ”
He tried to sell the idea of being independent to administrators, explaining that he could reduce (though not eliminate) the hospital’s subsidy and improve quality. He also explained that a private group would have more leeway to hand off certain stable patients to midlevels. That would free up physician time to take over projects “like quality assurance initiatives “that would be better managed within the group, not spread out across the medical staff.
At first, Dr. Weber adds, the idea was well-received, and an initial pro forma was drawn up similar to the model used by the hospital’s emergency physicians. But the proposal was finally abandoned, in part because it did not have the support of 100% of the administration.
While efforts to take the group private fizzled, the process led to some important gains for the group. It’s helped that the current administration has taken group concerns to heart.
The hospitalists, for example, are now looking at having service guarantees so each physician’s daily census is between 13 and 15, better than the 18-plus before. And their compensation model may be restructured to reward them when RVUs exceed a predetermined threshold.
Still, Dr. Weber says that taking the group private “remains a goal. Hospitalists wouldn’t feel like they were punching a clock, but would evolve to being a true member of the medical staff.”
Another advantage would be more recruitment options. Dr. Weber says he’s received several calls from experienced hospitalists who’d seriously consider joining if he spins off the group.
“They are saying, ‘Call me when you do,’ ” Dr. Weber says, “but they don’t want to jump ship just to end up in a similar employed situation.”
Averting disaster in Massachusetts
In Massachusetts, another hospitalist program found that switching to hospital employment has not only given them more autonomy, but some desperately needed stability.
One big reason for the group’s new-found freedom is the fact that its new director is also vice president of medical affairs for the health system that purchased it. Peter H. Short, MD, was already VPMA for Northeast Hospital Corporation in Beverly, Mass., when he became director of the hospital-employed hospitalist program last year. (The system includes the 158-bed Beverly Hospital and the 32-bed Addison Gilbert Hospital in Gloucester.)
When the hospitalists were part of a private group, Dr. Short recalls, there was dissatisfaction among their ranks and frustration among the referring community.
Primary care physicians had to wait more than a year to get their inpatients on the hospitalist service roster. The private group ended up losing 25% of its hospitalists in less than a year and proposed cutting back services, which would have forced outpatient physicians who hadn’t done inpatient care in years to round once again.
“That was the straw that broke the camel’s back,” Dr. Short recalls. “It was quickly becoming a quality-of-care issue.”
The hospital served notice on the private group that had been there since 2001 and took over the program. “We met with the physicians, negotiated a new contract and then delivered on our promises, on time,” Dr. Short explains. “That allowed us to earn the hospitalists’ trust.”
He was able to retain the remaining hospitalists and hired several more, including nocturnists. Today, the program has 21 full-time hospitalists and a handful of moonlighters.
As VPMA, Dr. Short has made it a policy to deal with hospitalist concerns within 24 hours. His dual role “as administrator and hospitalist director “allows the group to resolve issues quickly and to move on members’ ideas. For example, the hospitalists decided that last summer’s switch to unit-based staffing wasn’t working because it actually increased hand-offs when patients moved from one unit to another.
As a result, Dr. Short scrapped that model and took the hospitalists’ recommendation for “hybridized” unit-based staffing. The physicians now divide admissions according to specific units, then follow patients throughout their stay, even if they’re moved to another unit.
The group also started piloting another one of its own proposals: pairing individual hospitalists with particular primary care groups. That modification is boosting primary care satisfaction and direct admissions, and decreasing the burden on the emergency department.
Patient satisfaction scores are also up, and the hospitalists are happier. “I’ve met with most of them individually, and they’ve all told me they’re staying with us,” says Dr. Short. “This is the first year we’re looking at that sort of retention.”
Gaining more autonomy
In March 2008, James Leyhane, MD, was finally able to wrest his struggling hospitalist program from the ownership of a local primary care group, taking it to hospital ownership instead at Auburn Memorial Hospital in Auburn, N.Y.
As a small subset within the internal medicine group, the hospitalists found they had virtually no voice in policy or service decisions. The private group insisted, for instance, that night-shift hospitalists cover the internists’ night-time outpatient phone calls.
“They wouldn’t listen to us when we asked to limit the non-urgent calls that came in between midnight and 7 a.m.,” Dr. Leyhane recalls.
The hospitalists were also instructed not to address any inpatient issues or problems directly with the hospital medical staff, but to funnel their concerns through the internists instead. And the group didn’t pay hospitalists a competitive salary.
“We were a group of three hospitalists until one quit and I handed in my resignation to the internists,” says Dr. Leyhane. “The very next day, the hospital CEO called me into his office and asked what it would take for me to stay.” Dr. Leyhane put together a proposal for a program that he would lead, under the hospital’s ownership; the internal medicine group also submitted a proposal. Dr. Leyhane’s was unanimously accepted.
Dr. Leyhane and the remaining hospitalist recruited back the physician who’d left, as well as one other. Today, he adds, the internal medicine group refers to the now hospital- employed hospitalists.
For the hospitalists, the switch immediately meant more money and better benefits. For Dr. Leyhane, the move also expanded the power of his position.
“In the previous arrangement, I had no say in anything other than scheduling without first gaining the group’s approval,” Dr. Leyhane recalls. He also had almost no access to data on the program’s financial performance. (Once he began receiving that data within the new group, he saw exactly how much money the hospital had been paying the internists for the hospital medicine service “money that the hospitalists, he points out, saw “little of.”)
The ownership change has brought new referrals from other primary care groups and specialists. The group also began admitting some “straightforward” orthopedic cases and it has taken over the bulk of admissions for several cardiologists, helping to get those cases out of the ED faster.
Dr. Leyhane urges program directors who are eyeing a change in ownership ” from independent to employed or vice versa “to collect as much data as they can, particularly on revenue, before starting discussions. He also suggests consulting with someone who’s been through the process. Neither was an option for him at the time, which made the process more nerve-wracking.
“Right now, I’m just glad that things came out the way they did,” he says, adding that in the current economic crisis, he’s grateful to have the hospital’s financial support. “This is exactly where I want to be.”
Spin-off survival tests New Mexico group
In 2007, when Lovelace Health System in Albuquerque decided to break up its integrated system and spin off its multispecialty medical group, the decision was one of economic survival for the system’s health plan and five hospitals. But the move left the hospitalist group relatively few options.
“There wasn’t really much of a choice for us between working for the hospital or the group,” recalls Jason Cohen, MD, who was assistant director of the now 22-hospitalist group. (While Dr. Cohen this spring accepted a full-time teaching position, he continues to work with Lovelace part time.) “We’d been practicing with the medical group initially, and it was going independent.”
While the hospital might have entertained the idea of hiring the hospitalists directly, “it was trying to get rid of as many debt-causing doctors as possible,” says Dr. Cohen, “and the hospitalists were losing a lot of money.” Through haphazard billing practices and a costly dependence on locum tenens, the hospitalist group was losing up to a half-million dollars a year “far more than other specialty segments.
For the hospitalists, the first year as part of the independent group had both ups and downs. The good news was that the medical group was so busy getting off the ground that the hospitalists received scant attention.
“There wasn’t much pressure on us to start making money or start losing less,” Dr. Cohen says. A temporary subsidy from Lovelace helped ease the transition.
Last spring, however, the medical group told the hospitalists that they too had to start turning a profit. The group cut locums out of the picture, forcing them to pick up extra shifts.
The medical group also asked the hospitalists to admit all orthopedics patients, then to pick up more cardiology admissions. Now the group admits all cardiology patients, except those with positive troponins or ST-elevation MIs, or patients going straight to procedures.
“We agreed reluctantly because we were struggling to maintain or expand staffing,” says Dr. Cohen, pointing out that hospitalists in independent groups have to contend with both the medical group’s financial pressures and the hospital’s staffing demands. Fortunately, more hospitalists were hired and salaries went up. “That cushioned the blow.”
Adding services increased workload “and profitability. In March, the hospitalists lost only $7,000, “a much celebrated fact,” Dr. Cohen reports. He chalks that up to not only more services but to hospitalists becoming much more proficient at billing and coding.
To accommodate the new service lines, the hospitalists pioneered more flexible scheduling, bringing in more admitters during “swing” and night shifts, and maintaining a flex physician on call during the day who can round when the census runs high.
Despite the rocky spells, the hospitalists have ended up being much more business-savvy and are in a better position under the medical group’s governance. Total staffing is up considerably, and turnover has dropped from 20% a year two years ago to almost nil.
“Morale is at one of its highest points now,” says Dr. Cohen, who has been with the group since 2006. “There’s been so much turmoil in the last few years, but people are happier now.”
Bonnie Darves is a freelance health care writer based in Lake Oswego, Ore.
Staying independent: plenty of courting but no commitment
DESPITE THE TOUGH ECONOMY and an increasingly competitive market, one privately-owned group in Memphis has no interest in seeing what life is like as someone’s employee.
Founded in the mid-1990s, Inpatient Physicians of the Mid-South has many “suitors,” according to co-founder, Wiley Robinson, MD. Both hospitals and national hospitalist companies have tried to entice the group into coming on board. But Dr. Robinson, who’s also president of the 13-member group, says he and his colleagues want to stay independent. In his mind, it makes even more sense in tough times to be out on your own.
He spoke to Today’s Hospitalist about why his group “which serves in 10 area hospitals, including long-term care and rehabilitation facilities “may “date” companies interested in a merger, but remain uncommitted.
How does your payer mix contribute to your financial success?
We’re like a traditional internal medicine practice, with about 50% Medicare and 50% commercial insurance. We now see fewer unassigned patients because as TennCare [the state Medicaid program] has come in, almost every patient now has a doctor.
We also benefit from the fact that the Memphis market was slow to adopt the hospitalist model. Until five years ago, we were the only full-fledged group in town.
There are others now, and the national companies have a presence here. Each of the hospitals where we see patients has contracted relationships with other hospitalist groups, primarily to take unassigned ER call, but we don’t view them as true competitors. That’s because we secured the referral business.
What about staffing and compensation?
We function in a more traditional model than many groups. We work mostly days and have nocturnists who work for us part time.
We don’t take hospital subsidies. And we’re pretty much entirely productivity based, which works for everyone. Someone who doesn’t want to work as hard as the next person doesn’t have to. I suspect that has a lot to do with why we’ve had minimal turnover in 15 years.
Are you hearing that hospitals are asking hospitalist departments to cut back?
That’s happening, even locally. One hospital wanted to terminate its relationship with a hospitalist group, but it backed off when the administration “not the one that penned the original deal “realized that half the group’s salary was allocated for teaching residents.
Hospitals concerned about costs are now looking at the hospitalist service as a potential savings. Suddenly, when hospitals start doing poorly, the relationship with the hospitalists becomes a cost center rather than a valued service.
That’s a real problem employed groups are running into, having to go to the mat all over again and explain their value to their hospitals. If there’s no clear leader to articulate that “it’s not going to be the hospitalist who works every other week or just leaves when a shift is over “the group will have difficulty showing that value.