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Trying to beat the competition

July 2008

I consider myself a competitive person. I played plenty of sports in high school and college, and probably would have chosen a professional career in the NBA over being a hospitalist. That’s if I didn’t happen to be vertically challenged to the tune of at least five inches, not to mention having less-than-lightening-quick moves on the court.

So, it grated a bit when my peers implied in 2000 that my chosen career path as a hospitalist was merely a glorified version of residency (albeit with better pay) or, even worse, simply a fad. I dedicated a lot of talk and energy to trying to prove them wrong.

Well, turns out I was right. We hospitalists currently number more than 20,000 and have made a significant impact on improving patient care and institutional efficiency. But at my position here with Virtua Health, I’m now confronting competition of another sort: another hospitalist group. That’s a triumph of sorts, that we have reached a point where our greatest competition is ourselves.

I can’t find any data on how many hospitalist groups actually compete with one another in the same facility. But I have a sense that this is becoming more prevalent. The phenomenon raises this first question: What does this mean for hospitalist medicine as a whole?

We pride ourselves on our efficiency, so having two groups practicing at the same place clearly creates some redundancy, even when each tries to carve out its own niche.

In my case, our group is hospital-employed. The other group is a solo practice private. Our patient volume comes largely from unassigned call, while the other group receives all of its referrals from private practice primary care physicians. As a hospital-employed program, our salaries are subsidized by the hospital; the other group’s revenue depends solely on what they can collect. This subsidy disparity seems fair, given the fact that we cover for ICU patients at night as intensivist extenders, take in-house call and admit all of the uninsured patients.

Both groups are of course very collegial. However, there is no question my group would like to have the same respect that the other group has in the eyes of the majority of the private physicians. Although there are plenty of patients at my hospital and we’ve worked hard to improve the hospitalist program, we hope that the quality of our work will attract more private physicians to refer to us as well.

In this respect, I think competition is good for both programs. We are much like consultants, vying for the eye of the private primary doctors. I have always believed that without competition comes complacency, in all aspects of life. Our group understands that there is no room to be complacent when there is another excellent group ready to do our work if we are not up to the task.

Here’s another question: Will this trend continue, or will there be too much pressure to consolidate, doing away with more than one group competing at a single site?

I think the answer can be found in large part in SHM survey data. The 2005-06 survey results found a drop in local private hospitalist groups from 20% to 12%. That figure goes back up to 14% in the 2007-08 survey results–but it’s still far below the percentage of hospital-employed groups, which is running at 40%.

Over this same period, we have seen the growth of the 24/7 program. At the end of the day, the financial viability of a hospitalist group depends on a hospital subsidizing its existence, and I believe both trends–implementing more multistate practices and moving to 24/7 coverage–demonstrate the phenomenon of hospitals choosing to subsidize a single hospital group.

It also seems to indicate that only a subsidized group can survive. Indeed, I do not think that any health care system will be interested in subsidizing two separate groups. In the end, I suspect this trend of competing groups (in many ways as odd, to my mind, as having two distinct ER groups working in the same ER) may grow in the short term, but will begin to disappear over the next five or 10 years.