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Nocturnist: A new concept?

One of my colleagues, Richard Rohr, MD, MMM, FACP, FHM, posts frequently about hospitalist issues. I thought I would poke a little too.

In a recent issue of the Tennessean, the concept of “nocturnists” was discussed. The article states what we all know: Hospitals are not safe places. Truth be told, we all knew this prior to the Institute for Medicine’s 1999 report, but it was one of healthcare’s dirty little secrets that we kept from the public. However this article cited several studies showing that hospitals are even less safe on nights and weekends. (Would that be another of our secrets?)

So is a nocturnist a new concept or is this a better dressed house doctor of yesterday? Should the goal of a hospital be to have physicians at night, or should the nocturnist really be a member of an integrated hospitalist system? I’ll agree that if there isn’t a physician in house at night (exclusive of the ED) that having one is a great first step. However having a nocturnist should not be the end game. Consistent coverage by a team of well-trained, experience hospitalists should be the goal. Thoughts?

The New Normal

Most press coverage of the Affordable Care Act (or Obamacare, as it is known to some) has emphasized the expansion of insurance coverage , leaving the impression that overall healthcare costs will increase under this law. An article by Gail Wilensky in the New England Journal of Medicine points out that the act requires costs to decrease. Although almost everyone will have access to care, payments to medical providers will be reduced by the extent necessary to achieve savings. Unlike the Sustainable Growth Rate initiative, Medicare costs will not be allowed to grow at all, and the cuts will be borne by all providers, not just doctors.  This confirms my earlier impression that value-based purchasing is basically a shell game. 

Uncle Sam is now dealing three-card monte. There will be no winners in this game, but some will lose less than others. Hospitals may lose up to 10% of Medicare revenue by the time the Affordable Care Act is fully implemented.  In Philadelphia, where I now live, only one of the 16 hospitals had an operating profit margin greater than 10% last year. None of the 27 hospitals in Connecticut achieved a 10% margin in 2009.  Hospitals are not entirely dependent on Medicare, but private insurers are not likely to make up the losses from Medicare. In fact, many insurance providers are developing their own pay-for-performance systems. 

Where is this going? One could envision that multiple rounds of payment cuts could force most of the hospitals in America out of business. This will not occur, as public demand will cause modifications once access to care is significantly reduced, but at least some hospitals will close. 

Everyone reading this must understand that healthcare in America will be less lucrative than in the past.  Some physicians and hospitals may benefit at others’ expense.  Hospitalists need to prepare for very difficult negotiations with hospitals and expect to come away with less money for a given level of effort.  It is time to abandon the notion that one is entitled to a certain level of income by virtue of holding a medical license or a particular set of skills.  Your work is worth what the market will pay for it.  I am old enough to remember when a visit with a doctor cost only two dollars, and patients paid out of their own pockets.  We are not returning to those days, but the era of unlimited taxation to support the medical-industrial complex is over.  Get ready for the new normal.

ACO fuzzy math?

The details surrounding the proposed rules for creating an accountable care organization (ACO) continue to become more complicated—specifically the cost associated with establishing and sustaining an ACO.  The Centers for Medicare & Medicaid Services (CMS) originally estimated a cost of $1.8 million in its proposed rule for start-up and one year of ongoing operations.  Now, according to the American Hospital Association (AHA) study released in mid-May, the start-up investmentmay not be accurately represented by the number that CMS released.  The study found that the cost associated with the elements necessary to manage the care of a population is much higher.  The study revealed start-upcosts of $5.3 million to $12.0 million based on size of the hospital or health system.  That’s a far cry from $1.8 million.

According to the AHA, CMS falls well short on their estimation.  It doesn’t necessarily surprise me that CMS would underestimate the costs of establishing and running a successful ACO.  After all, they don’t operate a business.  However, these numbers are extremely far apart, and it seems to me that this is something that may reflect how little is truly certain or reliable about the costs associated with ACOs.  To me, it seems prudent to re-evaluate the ACO cost models before putting the regulations in place.  So what do you think? Whose estimation should we trust more? Should we believe the true number is somewhere in the middle? Or do we need to sharpen the pencils again to determine the real costs of launching an ACO?

Free form: Physician-hospital alignment questionnaire template

If a group of physicians approached your hospital about doing an underarrangement, the hospital might immediately say no because underarrangements come prepackaged with negative legal consequences. However, the hospital might attempt to craft another kind of model that would obtain the same or similar business goals for both the hospital and the physician group. In other words, can the hospital turn the no into a yes?

The physicians should establish the type and definition of the business arrangement they want with the facility.

This questionnaire helps to frame business arrangement discussions. Ask physicians to describe proposed arrangements with the hospital using this template before approaching the administration with the business proposal. The questionnaire serves as a filter, separating the physicians who are serious about pursuing a business arrangement and those who are not. By filtering the requests, the organization saves its administrators and medical staff leaders significant time researching proposals.

Download the Physician-Hospital Alignment Questionnaire Template (Word doc.) here. It comes from comes the new book, Engage and Align the Medical Staff and Hospital Management: Expert Strategies and Field-Tested Tools, published by HCPro, Inc.

Physician alignment: How do you decide to say yes or to say no to an alignment opportunity?

Hospitals often are approached with opportunities to align with physicians, and the hospital often decides it desires an alignment relationship and initiates the “ask.” How does an organization decide how to say yes, and how do they decide to pass and say no thanks? In today’s market, equity in judgment is vital to making physician friends and keeping them on the team, as well as maintaining alignment with an entire medical staff.

Organizations many times make decisions that create enemies and cause jealousy that ultimately lead to destruction of vital market business. Quick decisions are the surest ways to be blindsided with relationship destruction. Slow decisions can also serve to starve an essential opportunity; we all have heard of death by the “Slow No.”

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. 

Physicians drive hospital revenue, says Merritt Hawkins

A single physician generates an average $1,543,788 a year in net revenue on behalf of his or her affiliated hospital, according to a Merritt Hawkins press release. A full-time neurosurgeon generates an average of $2,815,650 on behalf of his or her hospital, and a family physician pulls in about $1,622,832 per year. Mark Smith, the president of Merritt Hawkins says that these numbers underscore just how important physicians are to hospitals’ bottom lines.

“The most powerful tool in healthcare remains the physician’s pen,” Smith notes. “Patients are not admitted to the hospital or discharged, tests ordered, or procedures performed without a physician’s signature.  Hospitals depend on doctors to drive patient care, which in turns drives revenue,” Smith says.

Although it is not news that physicians earn money for their affiliated hospitals, the fact that they make between $1 and $3 million points to the importance of aligning physicians’ financial goals with those of the hospitals at which they provide services.