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Where the money is

Subsidies are a hot topic in hospital medicine right now. The latest SHM-MGMA survey indicates that the average hospitalist receives about $136,000 in support from hospital funds other than fee collections. The Affordable Care Act (aka Obamacare) requires an annual 1.4%, reduction in Medicare payments to hospitals, and a CMS actuary recently told a congressional committee that 40% of hospitals will be insolvent by 2050. The day of reckoning for hospitalists will come much sooner than that because nearly every physician who treats hospital patients is standing in line for a handout from the institution. The surgeons and cardiologists will be paid because they bring in patients for well-reimbursed procedures. What’s the business case for supporting hospitalists? The early growth in hospital medicine came after administrators found that hospitalists help reduce average length of stay by about one day. The average subsidy has doubled since then, so we need to come up with something else. SHM leaders tout quality improvement (QI) and patient safety as the new business case for hospital medicine, but the numbers don’t add up. If you value a hospitalist’s time at $130 per hour, then the physician would have to devote more than 1000 hours a year to this activity, on top of clinical time, to justify the subsidy.  Even if it were possible to do this, the hospital could hire two nurses with formal training in QI and get 4000 hours a year of work for the same price.

The best hope for justifying hospitalist salaries is in reducing the cost of care. The average hospitalist treats about 500 patients a year, so a mean reduction of $260 in cost per case is needed. Antibiotics are an obvious target for cost control, but what about the indiscriminate use of PPIs that are not needed for the routine medical admission? There is no justification for broad spectrum antibiotic therapy once culture results are known. Oxygen is another item used profligately. Most hospitals assign the responsibility for tapering oxygen to the respiratory therapists, but it is not done consistently. Unnecessary testing is another opportunity for savings, though the accounting here is tricky. Much of the cost is in the labor of technologists. Unless the test volume reduces enough to eliminate a position, the savings will be limited to the cost of the materials used. This is not easy stuff, but hospitalists can sit down with the finance staff in the hospital to find opportunities for savings. This kind of cost accounting has not been done very much in hospitals, so don’t expect an enthusiastic reception from management, but with few other opportunities for savings, this is an opportunity for leadership.

Provide hospitalists with adequate billing and coding training

One of the best things that hospitalist program managers can do to ensure adequate training is to work with the billing department to find an individual who is qualified to educate hospitalists about billing.

“More and more practices have a certified coder on staff whose job it is to work with the doctors, train them, and conduct audits of the documentation to give them feedback on what they are doing right and wrong,” says Leslie Flores, MHA, partner at Nelson Flores Hospital Medicine Consultants in La Quinta, CA.

Not all hopsitalist programs have a certified coder available. In that case, the program may need to rely on a noncertified individual in the billing department or a hospitalist who is charged with training newcomers. However, having a hospitalist conduct the training may be dangerous, says Flores. “If that physician has developed bad habits, he may pass them on to new people.”

Another option for hospitalist programs is to hire an external consultant. “It is more expensive, but I think it is worth it,” says Jonathan Lovins, MD, SFHM, hospitalist and assistant clinical professor of medicine at Duke University School of Medicine in Durham, NC. Facilities may be able to find coding auditors and trainers through the Society of Hospital Medicine or the American Association of Certified Coders.

The rule of thumb, says Lovins, is for every hospitalist to receive at least two hours of training on billing and coding when they first start and refresher courses every year. The training should include notes from previous encounters with patients. “If you do it without notes, it is very abstract, and people don’t take away much from it. Bring in real hopsitalist notes.”

Check out the June 2011 issue of Medical Staff Briefing for more information about training hospitalists in billing and coding (subscription required).

The ‘S’ word

As value-based purchasing approaches, hospitalists are going to feel the heat from hospital administrators. I believe that this is largely a shell game played by the Centers for Medicare & Medicaid Services to give hospitals the idea that they can win at this game, when all but a few will lose. The reality is that Medicare needs to reduce payments to hospitals to avoid impossible deficits. There will be pressure in all areas to reduce costs, and I can’t help but believe that hospitalist subsidies will be a prime target.


Practice creep or value opportunity?

As hospital medicine continues to grow and demonstrate a positive impact on the nation’s healthcare delivery system, hospitalists are being asked to provide a greater variety of services. In some circles, this is known as the dreaded “practice creep,” but, in others, some of these services are viewed as an opportunity to add value to the hospital and local healthcare system, which, in turn, can lead to increased compensation. At my company, we have experienced both the good and the bad of this multi-faceted topic.
Here are some things to consider when administration comes knocking with a request for expanded services:

  • Is the current program staffed appropriately?
    If the current program is understaffed for the current workload and acuity, be prepared to articulate and defend the current staffing needs, explaining why more staff are needed to cover the current load. When administrators request expanded services, it’s a good time to revisit the current staffing model.


Live from SHM: Experts’ advice on hospitalist recruitment

“The group that can retain hospitalist can recruit hospitalists,” said Winthrop Whitcomb, MD, MHM, hospitalist at Mercy Medical Center, Springfield, MA, at the Society of Hospital Medicine Best Practices pre-course on Thursday.

Where can you find candidates? Whitcomb suggested seeking out your local primary care physicians. “The best ‘fellowship’ is to be a PCP,” he said about the training that can help prepare them for the inpatient setting.

Increasingly, more programs look to the pool of recently graduated residents. Whitcomb encouraged to draw a 75-100 mile radius around your institution and connect with residency directors and chief residents. That outreach establishes relationships. Remember to be mindful of the recruitment cycle for residents based on their graduation date.


The Hospitalist Full Employment Act

By Richard Rohr, MD, MMM, FACP, FHM

Well, Mr. Obama and Mrs. Pelosi twisted enough arms to get their healthcare bill through the House and Senate and into law. No, they didn’t call it the “Hospitalist Full Employment Act,” but they could have. I received a question from a reader in response to one of my earlier postings; he is a medical resident and wants to know if hospital medicine will be a good career in coming years. The answer is yes, but let me explain the “yes” first.

Expanded coverage will mean more patients for hospitals, and they will need doctors to treat them. There is nothing in the new law that would encourage primary care and specialty physicians to manage patients in the hospital. There is a provision that would give primary care physicians a 10% boost in fees, but the law defines a primary care doctor as someone whose ambulatory and nursing home billings are at least 60% of total Medicare billings. We can expect to see primary care physicians further reduce their involvement in hospital care, as office work will be even more attractive than it is presently.


Bending the cost curve: Who gets what?

By Jonathan Lovins, MD, SFHM

Because hospitalists are the medical team leaders for episodes of acute care, their decisions help determine how much is spent and on what services. The elimination of consult codes by CMS in January was a shot across the bow at utilization, and some would argue that it was an attempt to make hospitalists think twice about who really needs a subspecialist or proceduralist co-managing the care of a patient.

I project that this major evaluation and management change and the emergence of bundling will minimize co-management. We may see more specialists attending on their patients instead of handing all care over to the hospitalist (so the specialists can bill for the higher consult code and not deal with the less-reimbursed discharge planning). 

Cardiologists admitting chest pain? Gastroenterologists admitting GI bleeds? It may not be as bizarre as it sounds. Bundling inpatient costs is just the beginning, and if taken to its logical conclusion, it will include readmissions as well as extended/rehabilitative care and outpatient care. Bundling is much easier done in integrated systems like the Mayo Clinic, Kaiser Permanente, and Intermountain Health. Merger fever is here to stay because the smaller systems are finding it harder to survive in this increasingly competitive environment with diminishing operating margins. Hospitalist leaders are wise to align themselves with integrated systems to take advantage of economies of scale and expertise of successful programs that have been through expansion.           

Exactly how the cost curve bends remains to be seen, but have no doubt that it will bend at an extreme angle. Hospitalists are uniquely positioned to use their expertise in quality, patient-centered care and system-based thinking, and as leaders of the healthcare team, they are poised to help hospitals and systems implement strategies that substantially reduce costs while improving quality. Those that do will set the standard for the rest of us.

Hospitalist can help reduce the nation’s spiraling healthcare costs

By Jonathan Lovins, MD, SFHM

Expanding access to care is critical but will actually make escalating costs worse if we don’t bend the cost curve, as we’re seeing in Massachusetts now. The Massachusetts healthcare reform enacted in 2006 mandates almost every resident to have health insurance, and gives free care to those making less than 150% of the federal poverty level (FPL). It subsidizes some care for those earning up to 300% of the FPL, meaning that hundreds of thousands of people who were not previously covered are now covered. Massachusetts went from 9% uninsured to 4%, the lowest in the country. However, this further strained patient’s access to providers, particularly primary care. As a result, ER overcrowding and demand for primary care physicians has increased.

Enter hospitalists. In numerous studies, hospitalists initially demonstrated their value by providing the same quality care that primary care doctors can provide while saving money by reducing length of stay. Hospitalists generally reduce length of stay by 15-20% by making themselves available to provide expert, efficient inpatient care. However, those savings may shift the cost of providing healthcare downstream to the rehabilitation facility that accepts the patient or to the facility that re-admits the patient if he or she needed more time or didn’t get the necessary outpatient care. 

Medicare, among other entities, is piloting a variety of strategies to reduce costs while enhancing quality–a daunting task but one that must be done.  Scott Flanders, MD, FHM, president of the Society of Hospital Medicine, recently commented in detail to Senator Reid regarding H.R. 3590, the “Patient Protection and Affordable Care Act,” substantial portions of which will likely be present in any bill that Congress passes. He conveyed the society’s support for Medicare’s three-year pilot program to reduce avoidable readmissions and referred to SHM’s Project BOOST(Better Outcomes for Older adults through Safe Transitions), which has the same goal. 

Reducing readmissions will save enormous healthcare dollars while improving quality by keeping people healthy in their homes. No specialty is as engaged as ours in helping make sure it happens. Most healthcare pundits believe that success will require community physicians to become involved, but hospitalist leaders across the country are already working hard in their own hospitals to lower readmission rates. One large hospital system based in Charlotte, NC reduced its readmission rate by more than two-thirds by simply requiring pharmacists to call high-risk patients after discharge to make sure they were taking their medications properly and had an appointment with their primary care physicians within a week or two.

“Bundling” hospital and provider payments may be the most effective means of bending the cost curve. This is already being done successfully in countries with universal healthcare coverage. Medicare is piloting the Acute Care Episode (ACE) Demonstration, bundling payments for hospital and professional services for surgical episodes of care. While there may be fewer resources to distribute when it comes to medical admissions, that won’t keep the pilot from expanding into that arena, where more collaborative, efficient care can make the DRG payment go much further. The Commonwealth Health Insurance Connector Authority has been commissioned to map out plans for introducing “global payments,” which may very well prove that Massachusetts is the model for efficient, integrated healthcare delivery. 

Get ready to ride the wave: Hospitalist practice will transform in the next 5 years

By Jonathan Lovins, MD, SFHM

Spiraling health care costs, advances in bio- and information technology, and the political will to initiate substantial healthcare reform are causing the tectonic plates that make up the healthcare system to shift. As a result, waves of change are approaching our shores. Below are five of the biggest waves:

  • The cost curve must bend, and hospitalists will bend it
  • Healthcare IT will improve quality, reduce costs, and improve healthcare delivery, and hospitalists will lead its meaningful use
  • Hospitalists are maturing into an independent specialty and are filling the ranks of medical staff leadership and healthcare policy makers
  • Hospitalists are leading the safety and quality charge
  • Nocturnal tele-medicine will provide 24/7 hospitalist presence and make hospital medicine an even more attractive career

In the coming months, I will discuss each of these waves in turn. Let’s start with the cost curve. Before we can cover hospitalists’ roles in bending that curve, let’s first review a little background on the shifting political sands of healthcare reform: However difficult it was for Congress to eke out their reform bills, there was more insurance reform than healthcare reform. I give them kudos for expanding coverage to 30 million uninsured and preventing predatory managed care practices, particularly for patients who are insured independently.

However, our nation’s history of reform reeks with incrementalism, so expecting universal healthcare coverage with medical homes, integrated delivery systems, meaningful tort reform, and deep Medicare spending cuts sung in bipartisan harmony to the tune of Kumbaya, would be… well…unrealistic. The filibuster-proof legislation that survived was an important start, but it is now in jeopardy because of the loss of the 60th democratic vote in Massachusetts. 

The Obama administration could start from scratch, but that’s unlikely given the possibility that this may lead to no reform at all, á la Bill Clinton. Alternatively, it may push the current bills through without republican support through a process called “reconciliation,” meaning that Congress would only need a simple majority (51%) to pass legislation. If the bills go through as is, they would be more comprehensive than the current system, but they would also expend political capital that could (and has) come back to bite democrats in midterm elections, and possibly in the next presidential election. 

Is a bold move to change the healthcare game worth the political risk? You bet it is. The alternative is status quo, which promotes medical bankruptcies, exporting jobs and industries to countries with cheaper healthcare, squeezing the middle class with premiums and co-pays, and saddling our children with a monstrous national debt that will suck their taxes into paying  its interest rather than their children’s schools and their healthcare. 

As Reed Abelson wrote in “The Cost of Doing Nothing on Healthcare,” in The New York Times last week, “Policy makers, in the end, may be forced to address the issue.” In that same article, the Pacific Business Group on Health, an employer consortium, stated clearly that doing nothing “is a course that is literally bankrupting the federal government and businesses and individuals across the country.” 

The Congressional Budget Office soundly estimated that the previous House reform bills would save approximately $200 billion over 10 years. This was based on assumptions that Congress would drive home anticipated cuts (remember the Botox tax that became a tanning bed tax?). The recent empowerment of lobbying groups by the Supreme Court will not make any of this easier.  

What’s the incentive?

By Richard Rohr, MD, MMM, FACP, FHM

What inspires us to work harder or more effectively? Most hospitalist programs offer physicians some sort of bonus or incentive compensation, but the evidence to support this practice is limited. Medical practices have traditionally offered employed nonpartner physicians a portion of collected revenues beyond a certain threshold. This is intended to spur new physicians to actively generate patient referrals and build their practices quickly. This seems to work in office practices, but how well does it apply to hospitalists? In some communities, hospitalists must obtain referrals from outpatient physicians to build up their volume. Incentives based on billings would seem to be appropriate in that case, but what about programs that draw all of their patients from the ED? Productivity for individual physicians in such cases is dependent on the luck of the draw. It still may be reasonable to compensate doctors for unequal workloads, but it won’t do much to build up the group.

How is your hospitalist program dealing with the recent Medicare CPT code changes?

In October 2009, The Centers for Medicare & Medicaid Services announced that as of January 1, 2010, it would no longer reimburse physicians for consultation codes. This has caused quite a stir as hospitalist programs try to figure out just what this change means for them.

I recently spoke with Leslie Flores, partner at Nelson Flores Hospital Medicine Consultants in La Quinta, CA, for an upcoming article for Hospitalist Leadership Advisor, a supplement to Medical Staff Briefing. She says that some hospitalist program managers are educating physicians about the new current procedural terminology (CPT) coding processes and asking them to find out what insurance each patient is covered by to ensure accurate coding. Although this doesn’t sound like a bad idea, “There is a huge amount of work for the manager in educating physicians on the codes and which patients they apply to,” says Flores.

This strategy causes another problem because most hospitals prefer that physicians are insurance-blind to avoid any possible bias in care. However, because private insurers often follow Medicare’s lead, many are expected to also eliminate the consult codes. “By the end of the year, this could be a moot point,” says Flores.

Other programs are taking a different route. They are instructing physicians to continue coding as they normally would. These programs are relying on their internal or external billing service to determine the appropriate codes. “They have taken the position that until this change gets implemented across the board, it is too much work to track the patients’ payor,” says Flores.

How is your hospitalist program dealing with the new inpatient coding changes imposed by CMS? Please share your thoughts in the comment box below.

Hospitalist salary: How much to pay them during a recession?

DollarSignsHospitalists’ salaries haven’t been hit by the economic downturn, according to the latest survey data from Today’s Hospitalist. The average hospitalist salary in 2009 was $204,227, up by 7% from the previous year, says the survey.

Today’s Hospitalist and Accelara Research conducted the hospitalist employment and compensation survey from May–August 2009 with more than 700 hospitalist respondents, not hospitalist practice managers, the survey notes.

Does $204k sound like fair market value? Is it too much? A quick scan through some other sources might indicate so. shows that the current average hospitalist salary is about $180k. And previous data from the Society of Hospital Medicine 2007-2008 Biannual Survey shows that the average hospitalist compensation was $193,300.

I know many people (whose who are lucky to still have jobs) have had their salaries frozen, furloughs implemented, or extra benefits cut. Has your program cut back on your hospitalists’ salary during hard times? Have you increased pay with standard yearly increases?

[via Happy Hospitalist]