Raises and subsidies are back on the table

WHILE HARDIK VORA, MD, MPH, will remember many things about working through the pandemic, here’s one of the better memories: During his 12 years as a hospitalist, he’s never experienced the kind of gratitude from patients that he received last year.

“Pretty much every single patient we took care of was so appreciative of all we do, and I wasn’t doing anything different,” says Dr. Vora, medical director of hospital medicine for Riverside Health System in Newport News, Va. Unfortunately, he adds, “that lasted two or three months, and now we’re back to baseline levels.”

Also back to baseline: “business as usual” in terms of hospitalist programs having to once again make their case for continued—or even enhanced—financial support. While discussions about compensation were pretty much suspended last year, they are ramping up again.

“Our daily census today might be 15 patients where it used to be 19.”

~ Stephen Behnke, MD, MBA
MedOne Hospital Physicians

“What I like to call ‘the honeymoon phase’ of the pandemic where we’re not being asked how we add value has flown by,” says Dr. Vora, who chairs the practice management committee for the Society of Hospital Medicine.

While administrators continue to voice their appreciation for how hospitalists went above and beyond, he doesn’t see how pandemic considerations will play any part in financial negotiations. “Compensation will still revolve around the value question,” he says, “and that has not changed.”

Kimberly Bell, MD, MMM, takes an even starker view of the financial discussions that are now starting up as the pandemic (hopefully) winds down.

“People have been saying for years that having subsidies continue to rise while hospitalist compensation also goes up just can’t be sustained,” Dr. Bell points out. “We’re now at the point where it’s not sustainable.” Her take: Hospitalists should plan on having to become more productive—with more encounters in fewer hours—even as their compensation remains the same or takes a hit.

Changing times
According to Dr. Bell, who is regional medical director for the West division of TeamHealth, the pandemic accelerated trends that were already at play. Some big hospital chains have actually done OK during covid due to extensive cost cutting, and government bailouts have helped the industry nationwide. They may continue to do so, if an infrastructure bill that includes more hospital relief gets passed.

“Doctors can’t optimize productivity if they’re stuck providing 100% of all the care patients need.”

~ Martin Buser, MPH
Hospitalist Management Resources LLC

 

But many hospitals are financially strapped and unsure when (or if) their volume of admissions, ED visits and elective surgeries will bounce back to pre-pandemic levels. That means that everything is on the table as hospitals look to cut costs.

In the Society of Hospital Medicine’s “COVID-19 Addendum” to its 2020 State of Hospital Medicine Report, more than 40% of responding groups said they had reduced provider compensation during the pandemic, with 8.5% believing that reduction would be permanent. More than 30% reported that their hospitals had reduced their financial support, with 6.5% saying that reduction was likely a permanent one.

As Dr. Bell explains, the need to boost productivity is “a new reality” for groups everywhere—if not now, then down the road. It’s a new concept for hospital medicine, although it isn’t in emergency medicine.

“Hospital medicine has had a period of grace for the past 25 years because there weren’t that many of us and lots of people wanted us,” she says. “But times have changed, and we have to adjust to the environment we’re in.” While many groups are already very productive, others are “falling below minimum expectations.”

Getting creative
That may sound incongruous after a year of overwhelming hospital surges. But 2020 also brought deep slumps in census, with many groups getting creative to not lay clinicians off or to soften the blow of less compensation.

“I think any compensation increase will be tied to some kind of performance.”

~ Hardik Vora, MD, MPH
Riverside Health System

 

Last year, Riverside’s Dr. Vora says his group relaxed members’ productivity targets as well as their expected performance on metrics like citizenship. They also credited them with some RVUs to help maintain their compensation. In Columbus, Ohio, Stephen Behnke MD, MBA, CEO of MedOne Hospital Physicians, a private local group, says he and his colleagues handled slumps by working fewer shifts.

They shared that pain, although some clinicians— particularly those with school-age children who were stuck at home—volunteered to give up shifts. As Dr. Behnke points out, he and his colleagues heavily weigh their income toward productivity. They decided to pay a flat rate for those “covid shifts” when clinicians stayed home.

“The rate was about two-thirds what we pay for working an actual shift, so people didn’t lose a lot of income,” he explains. And while hospitalists and advanced practice clinicians (APCs) were “furloughed” between three and five shifts a month, they each still worked at least 13 shifts a month at full rate.

“We didn’t have to move to a base salary,” says Dr. Behnke, “and we didn’t have to lay anybody off.”

Fee schedule reductions
Dr. Behnke points out that his group’s income is a combination of both professional billing and hospital contracts. Right now, their professional billing is down about 10%. That’s because their patient volume is 90% of what it was before the pandemic. “We have the same patient acuity we had before,” he notes. “But our daily census today might be 15 patients where it used to be 19.”

“If we maximize the output or productivity of each group, then the amount of subsidy required from the facility goes down.”

~ Kimberly Bell, MD, MMM
TeamHealth

As a private group, he and his colleagues have also taken a hit from the CMS’ 2021 physician fee schedule changes. The group has about 95 physicians and 60 APCs in five acute-care hospitals, two long-term care hospitals and about 80 nursing homes.

“The fee schedule adjustment for us ended up being about a 2.5% reduction in the hospital and a 1.7% hit in nursing homes,” says Dr. Behnke. But so far, his group’s income from hospital contracts remains stable.

“I don’t think our hospitals know yet what our post-covid steady state will be,” he says. “They’re taking a wait-and-see approach to the long-term impact of covid on hospital volumes, and they’re putting a lot of programs on hold.”

Targeting the subsidy
As the director of an employed group, Dr. Vora says he doesn’t think his rank-and-file physicians are even aware yet of the fee schedule changes. He expects those to trickle down into financial considerations for employed hospitalists in 2022.

And unlike in Dr. Behnke’s hospitals, Dr. Vora says that inpatient volumes—and hospitalist staffing needs—in his health system have bounced back to pre-pandemic levels. At the beginning of the year, his group began recruiting again.

Going forward, he believes programs “will need to be even more proactive in demonstrating our value in tangible forms.” Still, Dr. Vora expects, as in years past, that group members will receive a raise.

But he also expects more of that potential compensation to be put at risk. “I think any compensation increase will be tied to some kind of performance,” he points out. “While performance metrics now make up 10% of our compensation, I expect that will become 15%. My message to our physicians will be, ‘Our targets are still all achievable, but you have to work a little bit harder to get to where you want to be.’ ”

Dr. Bell with TeamHealth doesn’t think compensation raises are in the cards. In fact, she believes members of many groups could have to boost their productivity while also contending with lower inpatient volumes. That means working fewer shifts or shifts that are less than 12 hours, or both—and perhaps a commensurate cut in pay.

For doctors, Dr. Bell admits, that would be a sizeable dissatisfier. But she believes that increased productivity is now a key component in hospitalists’ value equation. “If we maximize the output or productivity of each group, then the amount of subsidy required from the facility goes down. That makes us a better value.”

More intensive teamwork
Martin Buser, MPH, founding partner of the national hospitalist consulting firm Hospitalist Management Resources LLC, agrees that many hospital medicine groups should expect increased productivity to become the new normal.

“Some items that the hospitalist industry has come to believe is the way to go—like having a daily census of between 13 and 15 patients—can’t be sustained,” says Mr. Buser. “That’s just too low.” He also agrees that hospital executives have no appetite for bigger subsidies.

“Administrators want to keep pace with industry in terms of paying physicians, so they’re OK with compensation increases if needed,” Mr. Buser explains. “But they want the subsidy to go down. Anything hospitalists can do to chip away at that—move it from almost $200,000 per doc to $160,000, for instance— is going in the right direction.”

To make that happen, Mr. Buser thinks programs will have to experiment with re-designs and do a better job with division of labor. In groups he consults for, he sees much more intensive and coordinated teamwork between physicians and APCs.

“Doctors can’t optimize productivity if they’re stuck providing 100% of all the care patients need,” he says. “Instead, they need to delegate.”

He’s talking to groups where teams of doctors and APCs round together, divide the work that needs to be done and then continuously check in with one another. “The idea that we all show up in the morning, then split and touch base at the end of the day—that doesn’t maximize patient satisfaction or billing.” Instead, he sees highly-effective physician-APC pairs able to treat and bill for 30 patients a day. That assumes, Mr. Buser adds, that those teams can spend their entire day on only one unit. “Groups just can’t afford the 20% loss of time due to moving from unit to unit.”

Assertive coding
Financially efficient groups are also increasingly working with professional coders who “give constant feedback to doctors about charting. They are assertive—not aggressive, but assertive—with coding,” Mr. Buser says. He finds, for instance, that only a minority of hospitalist groups bill advanced care planning codes.

“They are pretty good-paying codes that you should get credit for,” he says. If, according to the latest SHM survey, the average number of weighted RVUs per encounter is 1.88, “we’re seeing the best-performing programs come in at about 2.3. When you multiply it times the 12,000 patients your program sees every year, it really adds up.”

He also expects hospitals to put substantial portions of hospitalists’ subsidy at risk. “They might identify four performance metrics that are each tied to $100,000 in subsidy for the group,” Mr. Buser says. “Then everyone is going to wake up every morning focused on what the hospital needs to help its bottom line because it also affects their income.”

In return, it’s hospitals’ job to remove the irritants that sabotage physician performance. Those include the 60 phone calls every night that nocturnists are barraged with in hospitals that don’t provide encrypted messaging, or the 10 minutes hospitalists waste repeatedly on the phone throughout the day trying to figure out who’s on the ED call panel.

“It’s the CMO’s job to fix those irritants for physicians,” he notes. “If the CMO can’t get it done, you need another CMO.”

Reviving population health
Such unsettled economic times come with plenty of wildcards. Covid is a big one, and at press time, covid hospitalizations were rising again, particularly in Michigan and the Northeast.

Mr. Buser highlights another challenge: Under the new federal administration, insurance rolls are growing, due to the expansion of the Affordable Care Act. While that may boost hospital volumes, more coverage also means higher hospital costs.

Also on the horizon is a renewed interest in population health and value-based purchasing. “I’m starting to hear words—like ‘PMPM,’ ‘managed care’ and ‘ACOs’— that were erased from our lexicon for the past four years. But now, they’re starting to creep back,” says Mr. Buser. So what could that trend mean? “It means that hospitalists will continue to be very valuable.”

Phyllis Maguire is Executive Editor of Today’s Hospitalist.

Published in the May/June 2021 issue of Today’s Hospitalist