Home Cover Story Health reform is coming. Are you ready to BULK UP?

Health reform is coming. Are you ready to BULK UP?

June 2011

Published in the June 2011 issue of Today’s Hospitalist

In Boise, Idaho, the hospitalists at St. Luke’s Regional Medical Center looked around one day last fall and realized they were swamped. By counting up the health system’s newly employed physicians, hospitalist director Elizabeth Olberding, MD, finally figured out why the 20-FTE hospitalist group was suddenly so short-staffed.

Cardiologists, endocrinologists, pulmonologists, neurologists, neurosurgeons, urologists, surgeons, primary care physicians: Dr. Olberding reels off a list of physicians who, in the last two years, have joined the hospitalists as health system employees. Last September, St. Luke’s announced that it employed 218 physicians, up from 111 in 2008. And according to Dr. Olberding, that rate of growth hasn’t slowed.

“As the health system expanded, we were a little flat-footed in bumping up our own staffing,” Dr. Olberding says. The higher census that has become the new normal is “the evolution of all these physicians coming under the health system umbrella,” she adds. “We do a majority of their admissions, and there is a push for us to do more.”

Hospital systems around the country are bulking up in part to get ready for health care reform. According to an article published online on March 30 by the New England Journal of Medicine, “more than half of practicing U.S. physicians are now employed by hospitals or integrated delivery systems.” A September 2010 HealthLeaders survey revealed that 74% of hospital leaders plan to increase physician employment within the next one to three years.

The last time hospitals went on a physician-practice buying spree in the 1990s, the idea was to corner hospital referrals. While that’s still a major goal, another concern is how to succeed locally if insurers change their reimbursement and providers have to start bearing financial risk for managing patients.

Another difference from the ’90s: Hospitals aren’t acquiring only primary care providers, but specialists. If hospitals want to succeed as accountable care organizations (ACOs), the thinking goes, they’ll need tightly integrated physician networks to better coordinate care. And physicians may find it easier to slice up bundled or capitated payments if they’re all under one big corporate tent.

While no one knows how the rush to integrate will shake out long-term, hospitalists like Dr. Olberding have seen a glimpse of the future, and it’s going to be busy.

Doing more with less
According to Martin Buser, MPH, a founding partner of Hospitalist Management Resources LLC in Del Mar, Calif., a hospitalist consulting firm, hospitalists are feeling the effects of the physician-buying spree in two ways. First, hospitalists now have to cope with more patients.

“We used to see hospitalist groups with between 20% and 40% of the inpatient census,” says Mr. Buser. “Now, they are managing between 75% and 90% of the census, excluding OB and peds.” Hospitalist programs that have worked with a patient-to-hospitalist ratio of 15-to-18 to one, he adds, may now find themselves at 18-to-20 to one.

Second, Mr. Buser says, hospital executives are looking to hospitalists more than ever to improve management, cut waste, and boost efficiency, care coordination and quality. Administrators, for example, are putting more pressure on hospitalists to reduce 30-day readmission rates.

“We are also starting to see hospitalist-run transition clinics as a way to manage patients for those golden 30 days to keep them from bouncing back,” Mr. Buser says. Hospitalist groups are also being pressured to step up plans to move to unit-based staffing, to save themselves time in the hospital.

According to Mr. Buser, the inevitable boost in census that comes from bigger physician networks means that hospitalist groups are looking to do more with less “and struggling to recruit experienced hospitalists. Hospitalist program directors should also, he says, expect even more pressure to improve handoffs, both among hospitalists and between hospitalists and outpatient physicians.

Longer days
In Boise, Dr. Olberding says that the hospitalists know that the end result of the hospital’s rapidly expanding physician network will be “a more organized, safe system with better coordinated care.” But for now, she says the added volume means “long days, busier night physicians and fatigue all around.”

A back-up system set up to cover emergencies, like a physician being out sick, was originally designed to be used no more than 30% of the time. But since November, she adds, “it’s rare that the back-up physician hasn’t worked at least part of the week to help with the volume.”

While the group is actively recruiting, Dr. Olberding notes that the hospitalists in the short-term are relying on locum physicians and slowly incorporating both physician assistants and nurse practitioners.

And while the group is adding a teaching service, other service lines that the hospital wanted the group to add have been put on hold. “We are holding the line at adding anything extra until we have a handle on staffing,” she points out.

Moving to more specialty care
Growing patient loads and ongoing recruiting are also a fact of life at Carilion Clinic in Roanoke, Va. Carilion has spent the last five years transforming itself from a hospital system that owned some doctors into a multispecialty physician-led clinic that owns some hospitals. (Think of the Mayo Clinic as a model.) The multispecialty practice now has about 600 clinicians.

Earlier this year, Carilion announced its plan to collaborate with Aetna on an ACO. “If ACOs are a game of poker”, says James B. Franko, MD, Carilion’s hospitalist medicine section chief, “we’re all in.”

As the clinic has grown, so has the hospitalist service, which Dr. Franko says is now short-staffed, despite having 36 hospitalists and “a vigorous midlevel presence.” He estimates that he needs 44 doctors. The good news is that the newly bulked up clinic (as well as Carilion’s involvement in a new medical school) has brought in many “specialty colleagues,” says Dr. Franko. “That in turn has helped us recruit.” For the hospitalists, Carilion’s growth has meant “more patients, duties, responsibilities, comanagement,” Dr. Franko explains. The hospitalists have started pro- viding orthopedic comanagement, for instance, and are now much more involved in stroke care under the guidance of two neurologists who joined the clinic.

The silver lining, says Dr. Franko, is that physicians get to “stretch their boundaries and do more than just internal medicine.” With hospitalists doing all the GI and pulmonary admits and taking most of the hospital’s non-surgical transfers, he explains, “It’s a completely different world here than a few years ago. Initially, our hospitalist program was designed to provide inpatient care as a surrogate for primary care colleagues. Now, we’re providing inpatient care for specialist colleagues as well.”

Hedging bets
In southern New Jersey, Virtua Medical Group has upped its number of employed physicians more than six-fold since 2007. The group, which serves five hospitals, has gone from 30 employed physicians to 190. While 40% are primary care physicians, the rest are surgeons, cardiologists, hospitalists, anesthesiologists, maternal-fetal medicine specialists and others.

“In many cases, the doctors are reaching out to us” asking to be employed, says Robert M. DiRenzo, MD, the chief medical officer of Virtua Medical Group. Growth is likewise being driven by system executives who realize that scale is essential to any health system interested in population-based care. Executives also want to hedge their bets in such an unsettled environment.

“We are building a clinical model to position our- selves for whatever happens because you don’t know from a regulatory or legislative standpoint exactly how ACOs are going to play out,” Dr. DiRenzo explains. “But if you are the clinical leader, everything else will take care of itself.”

The health system has also grown through strategic alliances. This past winter, for instance, Virtua announced a partnership with the Children’s Hospital of Philadelphia (CHOP) that has CHOP’s employed pediatric specialists seeing patients at Virtua’s New Jersey hospitals. Before that deal was struck, says Virtua’s hospitalist director Erik DeLue MD, MBA, the system had discussed hiring its own pediatric hospitalists.

Expanding hospitalist role
For hospitalists, the growth spurt has meant in part improved communications.

“Everyone is on the same secure e-mail and following the same Twitter feed,” Dr. DeLue says. “And everyone is part of the same team, in spirit and in practice.”

Growth also means busier workdays with more referrals. And while it’s not mandatory that Virtua’s employed doctors refer their patients to their employed hospitalist colleagues, Drs. DiRenzo and DeLue say it would be awkward if they didn’t.

“A lot of subspecialists want to just consult on patients rather than taking primary responsibility for them,” says Dr. DiRenzo. “The role of the hospitalist is only going to expand.”

One big unknown for all hospital systems bulking up, however, is whether hospitalists will continue to refer to subspecialists who aren’t part of their network.

“Referral patterns will change,” says Dr. DeLue, “and we have to assume that our health care system wouldn’t hire someone sub-par, so these are the people we are going to be working with.” At the same time, he notes, the issue of shifting referral patterns “may take a number of years to wash out. Hospitalists will always respect a patient’s previous relationship with a subspecialist.”

Subtle pressure
Consultant Mr. Buser agrees that hospitalists should expect some pressure in hospital systems that now own both large numbers of primary care and specialist physicians to streamline their referral patterns.

“It will be unspoken in the beginning,” he notes. “Hospitals won’t push it because they don’t want to get at sixes and sevens with private guys in the community who might say, ‘I’m not going to admit to your hospital any more because you cut me off.’ ” But as payers move to capitated fees and shared risk, physicians who refer outside of their bulked-up group “are diluting their own risk pool,” Mr. Buser points out. “Over time, doctors will definitely move to a greater use of the employed group, and there will be subtle pressure to do that.”

Other fallout from having new specialist partners, he adds: Because hospital employers expect productivity from their new employees, newly employed surgeons may put a lot of pressure on hospitalists to co- manage patients. Hospitalists may find their volumes climbing even more while feeling that they have to “take one for the team.”

But as ACOs get up and running, “the obvious next step for hospitals acquiring doctors is to right-size the employed group and get rid of anyone extra,” Mr. Buser notes. Because the imbalance between generalists and subspecialists is no secret, specialists are the ones likely to be on the chopping block “if their productivity doesn’t measure up.”

Partnered but independent
Experts insist that only larger systems will have the expertise and resources to successfully share risk. And many predict that the small independent physician group, whether primary care or hospitalist, may be going by the wayside. (See “The new era of ‘bigger is better‘ “) But some primary care practices ” and local hospitalist groups “are looking for ways to join forces but remain independent.

In south Florida, Raj Mahadevan, MD, owner of an independent hospitalist group, finds himself in that position. His group, Cape Coral Hospitalists, provides hospitalist care in all four of the Lee Memorial Health System hospitals in Ft. Myers and in a fifth hospital in Bradenton. Having grown the practice from one to 11 doctors in five years, he says that he’s keeping his ears tuned to potential developments in town.

While the area’s largest hospital system has been trying to buy outpatient practices, it doesn’t appear to be making many inroads. Instead, Dr. Mahadevan says, solo and small group outpatient practices are talking about creating their own independent virtual network. “Seventy percent of the primary care market is not hospital-owned,” he says.

Local physician practices are also talking to a national insurer about forming a physicians’ network, and they’ve been approached by a large multispecialty group in south Florida that is “acquiring practices to consolidate into a bargaining entity, when the time comes,” Dr. Mahadevan notes. “I would seek to be in- dependent but contracted in some way to have access to their patients.”

For the time being, his group is caring for the patients from one of the two large primary care groups in his area, which may try to form its own ACO.

At the same time, Dr. Mahadevan says, physician coverage for nursing homes “is wide open and ready for taking over. I am not worried,” although he admits that there is “a general sense of uneasiness right now.”

For him, the big unknown is whether the hospital will want to employ all hospitalists or contract with national or local hospitalist companies. But what’s certain is that “the family physicians are not going to come back to the hospital,” he says. “They will still need us.”

Deborah Gesensway is a freelance writer who covers U.S. health care from Toronto.

The new era of “bigger is better”

“‘BIGGER IS BETTER’ IS OUR MANTRA,” says Adam Singer, MD, chairman and CEO of IPC The Hospitalist Company Inc., the nation’s largest national hospitalist practice company, which has been adding new groups to its roster nearly every month for the last couple of years.

According to Dr. Singer, IPC made 15 acquisitions last year. That brought its workforce to a grand total of 1,697 hospitalists at the end of 2010, up from 1,490 at the end of 2009. And already this year, several more groups have joined the company.

But while solid growth has been a constant for IPC and other national hospitalist groups, one big difference is that IPC is now going full-steam ahead acquiring physicians who may not practice within hospitals.

“We are acquiring and managing doctors in hospitals, LTACs, rehab and psych facilities, skilled nursing, assisted living, and even some hospice,” says Dr. Singer. “Hospitalists are not just doctors in the hospital, but doctors who can manage facilities: facilityists. That’s the definition of a hospitalist, I think.”

In terms of continuing growth, Dr. Singer says, “economies of scale are certainly going to be required to provide better quality care” in the future. He believes that same philosophy applies to both hospital systems and physician groups. When providers are paid a fixed amount of money to care for patients instead of a fee for service, they need enough business on their books to spread risk.

They’ll also need market clout, professional managers, sophisticated information technology systems and administrators skilled enough to collect and analyze data. “Small groups can’t do that,” Dr. Singer says.

Jerry Wilborn, MD, a physician in Detroit who trained in critical care and pulmonology, agrees. Last spring, he sold his 27-provider group, which sees patients in 55 long-term care, skilled nursing and rehabilitation facilities, to IPC. Since becoming part of a larger group, Dr. Wilborn says, he now has built in referrals from acute care hospitals and is now in five new facilities.

Another big bonus of joining a large group, Dr. Wilborn says, is that it’s much easier to hire physicians. “We have a national recruitment pipeline now,” he points out.

His group has also helped reduce the readmission rates for the hospitals he works with, a key metric under health care reform. Having an affiliation with doctors working in post-acute care, he notes, also works toward hospitalists’ advantage in acute-care facilities.

“They can send patients to me a day or two sooner,” Dr. Wilborn says, “and lower their length of stay.”