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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.

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.


Does employment equal alignment?

With the massive healthcare reform bill now the law of the land, everyone is asking the question, “What does this mean for me?”  Accountable care organizations (ACO’s) and bundled payments, combined with Medicare cuts and paying for quality versus quantity, emphasize the need for better alignment across all elements of the healthcare delivery system.

So, is the answer for all hospitals to employ all the physicians? Physicians are adding plenty of fuel to the employment fire with their own anxiety about the new bill, combined with the increased hassles of operating a business in the complicated healthcare industry. Hospital administrators are taking steps now to employ physicians and try to create alignment to position themselves for success in the coming new era. Most view physician employment as an imperative strategy to accomplish alignment.  As a result, healthcare lawyers have already seen a huge surge in the business of negotiating physician employment deals on behalf of their hospital and/or physician clients. 

Wanted: Hi-fi for hospitalists

The recent publication of an article in the Journal of Hospital Medicine showing higher costs for gastrointestinal bleeding patients treated by hospitalists should have given many leaders in the field cause for concern. We have sold the hospitalist concept on the basis of decreased costs. What’s going on here? It brings to mind something that happened many years ago in the electronics industry.

As radios and phonographs became more popular, manufacturers looked for ways to improve their products by delivering better sound. They tried expanding the frequency response range by offering more bass and treble, but the public thought that the old models with more limited frequency range sounded better. Even professional musicians preferred the limited sound.


10 tips to understanding practice finances

TIPWe’ve heard it before–physicians need to care about hospital finances. But how can we get busy doctors to pay attention to spreadsheets and numbers?

In a newly released white paper, “Why Should Physicians Care About Hospital Finances?” by Jonathan Burroughs, MD, MBA, FACPE, CMSL, senior consultant at The Greeley Company, offers 10 tips to help the medical staff understand the finances of a community care hospital:

  1. Support all medical staff members and their leaders to become cognizant of, if not near-fluent in the arcane language of finance.
  2. Go over annotated financial statements with interpretive dashboards and scorecards at MEC meetings.
  3. Provide financial training to medical staff members and their leaders on an ongoing basis.
  4. Demonstrate what decreasing length of stay can mean to the hospital and the medical staff in terms of decreased costs and increased reinvestment.
  5. Help management to understand the clinical implications of financial decisions.
  6. [more]

GMSI Live: Symposium kicks off


The Greeley Medical Staff Institute Symposium takes place at the Ritz-Carlton, Naples, FL. ( Photo / Karen M. Cheung)

We’re here in beautiful Naples, FL, at the Ritz-Carlton!

The Greeley Medical Staff Institute Symposium Pre-conference kicked off today with attendees in the three tracks of ED Call, Medical Staff Bylaws, and Physician Performance Measurement for intimate, interactive workshops.

Led by speakers, Richard A. Sheff, MD, CMSL, Michael R. Callahan, Esq., Jonathan H. Burroughs, MD, MBA, FACPE, CMSL, and Robert J. Marder, MD, CMSL, the workshops were a three-hour intensive, chock-full of good information.

Particularly interesting was Marder’s session on how to select indicators and targets for the six general competencies and OPPE.

“Who’s a mediocre physician?,” asked Marder for a show of hands in the room of medical staff leaders who chuckled. Most people simply use data to distinguish between acceptable and not acceptable performance. Instead, Marder explained, medical staffs need to have targets to distinguish between excellent, average, and not average performance, and not simply the traditional acceptable/nonacceptable data. Physicians should be distinguished between mediocre and those who go above and beyond. Therefore, set targets.

“If you don’t have targets, it’s not a performance measurement; it’s just data,” said Marder.

Get some rest tonight for a full day tomorrow as we dive into the programs of Physician-Hospital Alignment, Peer Review and Physician Performance, Hospitalist Program Management, and Health Law, Bylaws, and Regulatory Issues. Keep a look at for more stories and pictures from GMSI Live!


The Ritz-Carlton features balconies that overlook Naples, FL. ( Photo / Karen M. Cheung)


See you in Naples!

HCPro and Greeley are gearing up and flying out to Naples, FL for The Greeley Medical Staff Institute Symposium (November 8-9, Naples, FL)!

Will you be joining us this weekend? Come over and say hello to me or another HCPro or Greeley representative. All the speakers would love to see you too. We’d love to meet you!

Can’t join this year? Don’t worry; you can still follow the action right here on for stories and photos. Remember, you can always follow me on Twitter.

Contest entry: Physician hotline for patient and physician satisfaction

phone-on-deskKeeping patients and physicians happy sometimes requires some creative thinking. We liked this tip that came from Gloria Ziegler, CPCS, medical staff services director of Val Verde Regional Medical Center.

Gloria says that her institution strives to improve patient and physician satisfaction. How do they accomplish that goal?

The Val Verde Regional Medical Center currently uses a physician hotline for physicians to call reference any complaints, praises, or new ideas that might be helpful in improving patient/physician satisfaction.

She says,

“We also have established a patient/customer hot line to deal with any concerns that our community might have dealing with their care at our facility. Our administration works extra hard to assure that anyone having concerns or issues which need to be resolved are addressed in a timely manner. We are the only facility in town within a 300-mile radius and must work extra hard to keep our patients from going to San Antonio or San Angelo for care.”

Thanks for sharing!

Keep those contest entries coming, and you could win the free registration to The Greeley Medical Staff Institute Symposium (Nov. 8-9, Naples, Fl)!

We’ll share the entries on the blog and select the best one at the end of the month.

To enter the drawing, submit your best practice, tool, or tip to us. Find more details here!

Physicians ready to retire? Flexible work options could be the fix

By Nancy Burns, MBA

Despite findings from government think-tanks that that our nation appears to be emerging from economic woes, the fact remains that there are a great many physicians today who wanted to retire this year but didn’t because of economic and financial pressures.

According to a recently released 2008 Physician Retention Survey by Cejka Search and the AMGA, nearly two-thirds (62%) of survey respondents believe that physicians are delaying retirement due to the economy. How did organizations respond to the threat of their physicians’ retirement? Almost half (49%) of respondents said they find that part-time options are enabling physicians to delay retirement.

Medical groups are also generally willing to modify work schedules of pre-retirement physicians to encourage them to stay longer:

  • 73% of respondents offer their pre-retirement physicians reduced hours
  • 56% allow for no-call responsibility
  • 20% allow for specialization with certain patient groups

“Physicians can’t retire now,” said Kathy Murray, senior director of recruitment partnerships of the physician search division of Cejka Search. Murray further explained that “increasing numbers of physicians who have retired are looking to get back into the workforce or to supplement their retirement income.”

How has your facility dealt with retiring physicians this year? What have you done for retention? Please share your tips below in the Comments section.

Health reform and the hospitalist

capitol-bldgBy Richard Rohr, MD, MMM, FACP, FHM

Some sort of health reform is likely to be enacted by Congress before the year is out, and we can be sure that it will change hospital medicine in some manner, but details are still hazy.

We will see some expansion of coverage to the currently uninsured, which would help hospital medicine groups, but I am not sure that universal coverage will be achieved this year. Don’t look for a single payer system–this country is too pluralistic to accept that. Private insurers will continue to play an important role, and you’ll probably keep all or most of your present billing numbers.

Most pediatric hospitalist programs subsidized by hospitals

girl-with-medsThe majority of pediatric hospitalist programs in the United States are subsidized by hospitals, according to a recent study, “Assessing the value of pediatric hospitalist programs: The perspective of hospital leaders,” published in the May issue of Academic Pediatrics.

Out of the 77 hospital executive respondents, 78% of those hospitals subsidized their pediatric programs. The hospitals paid for nearly half (49%) of the total pediatric program costs. Although most hospitals do not anticipate that they can financially cover those costs, they do not plan on cutting off support to the pediatric hospitalist programs. Why? Most respondents noted that it was not about money, but rather other patient benefits and satisfaction from referring physicians.

You can read more about the growth of this specialty, featured in the upcoming July issue of Hospitalist Leadership Advisor, supplement to the Medical Staff Briefing newsletter.

Update: Changing IOM resident work hours to cost billions more

Despite initial reports that the cost of implementing suggested resident work hour changes from the Institute of Medicine (IOM) would be $1.6 billion, it could cost teaching hospitals billions more—$3.2 million annually—according to a new study published in the New England Journal of Medicine (NEJM).

The analysis stated that the IOM's estimated $1.6 billion is based on 2006 dollars. The actual cost could range between $1.6 billion and $2.5 billion by today’s currency, said study researchers at the RAND Corporation and University of California, Los Angeles.