Musings of a Dinosaur

A Family Doctor in solo private practice; I may be going the way of the dinosaur, but I'm not dead yet.

Thursday, November 13, 2008

More on Hospitalist Economics

Many thanks to all those who commented on my recent post. Just a few more points to clarify my position:

Several people pointed out that Emergency Room (Emergency Department, if you're WhiteCoat) doctors also have difficulty generating cash flow for their hospitals. The difference is that for the most part, they are aware of the basic economics of their situation. Hospital administrators can and do come down to the ER (EDiyWC) and let it be known when the income produced isn't enough to cover the salaries of the doctors working there. There is the understanding that such a situation is not viable over the long haul. Doctors are expected to take some kind of action; either addressing billing and efficiencies to enhance income, or accepting pay cuts to reduce expenses. ERs (EDiyWC) have closed, as have hospitals, because of these financial realities. At least the docs don't go crowing on the internet that the value they bring to the hospital somehow exempts them from the basics of economics.

While we're on the subject of "value," recall that this is a concept that works in two directions. Look at it this way: Happy the Hospitalist generates a certain amount of income for his hospital via billing for the services he provides. The amount he draws in salary above this amount (the part "subsidized" by the hospital) presumably represents compensation for all the extra "value" he brings. As it happens, there are other ways that a hospital (or any employer, for that matter) can express its appreciation for the things an employee brings to the job above and beyond money. So what's to stop a hospital from paying Happy a salary more commensurate with what he actually brings in, along with an annual "Hospitalist Appreciation Day," complete with bad coffee, stale donuts, mugs with the hospital's logo on it and a lapel pin. Surely HH and his colleagues would begin laughing uproariously, not stopping until they were well out the door on the way to their new jobs, because the only real way to convey that an employee is "valued" is with cold, hard cash. (Funny how the hospitals seem to think the former works fine for nurses.) (They are wrong, by the way.)

Perhaps what really annoys me is Happy's claim that he has somehow managed to rise above the rough and tumble, no-win economic reality of the Medicare National Bank, as he has christened it. He reminds me of a young doc just out of training, working as an employed phsyician (so that he doesn't have to "worry about the business, but just practice medicine," as so many of my friends in residency used to say.) He may start out proudly taking as much time as he wants with his patients without paying heed to the income he's producing for his employer, but sooner or later that employer is going to have to sit him down and explain that it doesn't work that way. Happy can either take the talk to heart, or go out and find another employer who recognizes all the (non-monetary) "value" he brings to the enterprise.

Here's what's really happening: we are in a Hospitalist bubble. Just like the dot-com boom, bubble and bust and the houseing boom, bubble and, now, bust, eventually the hospitalist model will have to address this economic reality.

I recognize that hospitalists are here to stay, so all those commenters warning of dire consequences if the positions were eliminated are completely off-base. I am just pointing out that they are not immune from the basic economic principles of supply and demand, even though Happy seems to believe otherwise. Just as the housing market eventually collapsed, hospitals will not be able to indefinitely pay hospitalists significantly more than they are able to generate in revenues.


At Thu Nov 13, 11:49:00 PM, Blogger Unknown said...

First of all, I'm changing the name of the ED to something else. You heard it here first.
Second, regarding EDs, the hospital administrators know that there is only so much blood you can squeeze out of a turnip. In bad payor markets, how are ED physicians supposed to *safely* double their productivity in order to break even? Can't happen. So the hospital either pays the group a premium (at a loss) for docs to work there or subsidizes groups that bill on their own. The loss is a necessary evil. Otherwise, you'd have invasive cardiologists running the ED between caths. The system has been this way for at least half of the EDs in which I have worked over the years. Many EDs are running in the red.
Hospitalists are a little different in that they are filling a niche that didn't exist 10 years ago. "Back then" the primary care docs saw their own patients in the hospital or arranged for coverage. But the hospital wouldn't get the money for the physician services - the primary care docs billed for and kept the money. With hospital-employed Hospitalists, Happy has a point in that hospitalists have "evolved" the practice of medicine (so to speak) so that not only does the hospital capture the income that was going to the PCPs, but the hospital also captures money that would have been missed because PCPs don't know the language to use to optimize billing. One example - "hip fracture" pays around $4000, "hip fracture due to osteoporosis" pays hospital around $6500. Most docs don't give a crap about diagnoses as long as they get their E/M codes. But by adding the extra diagnosis, hospital makes 60% more money for treating the same patient and condition. Even with private hospitalist groups - whether or not the hospital has to pay a subsidy to the group, patient care is handled more efficiently. No trying to find the doctor in office hours. No problems with "I accidentally turned off my pager" or "my pager ran out of batteries." These docs are in-house and you can overhead page them if you can't reach them by pager. Hospitalists help the hospitals get all their "quality indicator" badges. You can't tell me that the goodwill and efficiency isn't worth *something* even if that something is not the almighty buck. Hospitals are seeing the value which is why the market for hospitalists is growing.
By the way, hospitalists also add benefit for primary care docs by letting them stay in their offices to see patients. They may even let the primary care docs sleep a little at night.
The flip side is that if you do not believe in the value of the hospitalist, don't use one. See your patient after hours, get home at 9PM after your kids are asleep, get woken up all night with phone calls, and be miserable in the morning. The "Chinese Pager Torture" post I made way back when was actually taken from a couple of my wife's call nights - before she left primary care practice.
How much would primary care docs pay for a better lifestyle? Depends on what you time is worth.
If it's a hospitalist bubble, then the primary care docs who admit the patients would have voted with their feet already. They would just keep admitting and caring for their own patients. Then there would be no need for the hospitalist. So far, I don't see that happening.
As far as hospitals closing - many times that is due to the payor mix. I don't have any data to back up my assertion, but I'd be interested to see anything showing that subsidies paid to hospitalists are a significant factor in any hospital closing.
Time to go think up a new name for the "emergency department."

At Fri Nov 14, 12:01:00 AM, Anonymous Anonymous said...

Sorry I disagree and I am not "some young doc just out of residency" as you so snidely put it. I've worked in hospitalist groups that you would not get a bonus unless you maed money ABOVE your salaries. Guess what...nice bonus always. I've also been an outpatient doc. No argument it is hard work that is not reimbursed as it should be. Look in any magazines the simple fact is that there are many more jobs than people as hospital medicine. The simple fact is most viable hospitalist practices do moderatly better than successful IM practicies (successful IM 140-170K plus, hospitalist 140-200K). I have left out bonuses. They are not raking in procedural doc incomes. Take off the rose colored glasses. Additionally, some are subsidized by hospitals so what. Nurses don't bring in money. Should hospitals fire them (of course not). HH happens to be correct as long as the model is making money. Multispecialty practices often "subsidize" PCP's with specialists money brought in. Following you reasoning they should fail. They haven't (though some specialists leave). Lastly and very simply, though there may be mild adjustments in salary the simple fact is there will be no collapse (salary or otherwise) simply because you abdicated your role in admitting your own patients. Somebody has to do it if you will not.

At Fri Nov 14, 12:25:00 AM, Anonymous Anonymous said...

^^Almost as unreadably bad writing as Happy's!

Can you people at least learn to write sentences?

At Fri Nov 14, 04:03:00 AM, Blogger Elaine said...

Just a thought.

How do administrators justify their pay? Are their hours billable?

or do they add value to the service?

At Fri Nov 14, 06:27:00 AM, Blogger #1 Dinosaur said...

@Anon 12:25 -- I sure hope you mean Anon 12:01 and not me.

At Fri Nov 14, 07:30:00 AM, Anonymous Anonymous said...

while it is true that the hospital captures extra revenue by carefully billing the diagnoses, they employ nurses to do that, not hospitalists. the hospitalists merely check the boxes that the nurses remind them too. it is certainly likely that the hospitalists learn eventually which boxes need to be checked but i haven't seen any of these nurses fired so the extra costs of employing these nurses remain whether the hospitalist is there or not, in my experience.

how far do you have to be out of residency to not be just out of residency? 7 years? 10 years? the anger displayed by 12:01 reminds me of someone 5 -10 years out which to my mind is still just out but i could be wrong. i am sure there are some models that are not 'bubble' programs. i read dinosaur's comments to say that if the salaries continue to increase then the model will be unsustainable. when you start paying your new hires more than you are making, that is not a stable thing. or maybe you can comment on that part and educate us. if the new hires demand 300k, are you able and willing to provide that? if the hospital somehow agrees to subsidize 150k per physician instead of 100k, are you going to get that money for free or will they in return demand more responsibilities, like post discharge clinics if no primary doc can be found to accept them. after all, got to keep the patients happy and coming back. return to house officer issues (being at beck and call for all patients in hospital?).

i agree with whitecoat when s/he says that the subsidy isn't driving the hospitals bankrupt. whether they improve quality hasn't been proven. whether they improve timeliness to nurse calls also hasn't been proven. i've watched them take 40 minutes to return pages as much as other docs have. i see them b!tching around the hospital floors a lot more than other docs simply probably because they are always around the hospital. that is destabilizing in many ways and demoralizing to patient who hear them as well as hospital employees. this is not to say that all hospitalists complain, and certainly i don't know if they complain more than other docs. i see it more because they happen to be around public hospital areas more, and again this is only my anecdotal experience.

At Fri Nov 14, 10:18:00 AM, Anonymous Anonymous said...

"Almost as unreadably bad writing as Happy's!"

Anon 12:25 maybe you should proofread your own writing for complete sentances before critiquing others.

At Fri Nov 14, 10:44:00 AM, Anonymous Anonymous said...

"the anger displayed by 12:01 reminds me of someone 5 -10 years out which to my mind is still just out but i could be wrong"

Anon 12:01 here. Wrong, I have been out since Ronald Reagan was president. But that is not the point. The point is I don't minimize others input because they have not been out in the world as I have been. In fact I have learned more than a thing or two from those "new grads" that you and dino minimize who are more up to date on some recent medical changes. Maybe you should open your ears, you may learn something. You should re-read my complete post as I emphasized the sustainable hospitalist models don't offer anywhere near 300K for new grads. Speaking as somebody who has been on both sides of the fence, the grass is always greener on the other side of the fence. Your thought that hospitalists will be expected to see patients in a clinic after discharge is just plain doesn't make sense. Who runs this clinic from a logistics standpoint? What about after that "first followup" visit? I have been both an outpatient and inpatient doctor. These two areas of medicine are not freely interchangable, especially for new grads who are hospitalists and older docs who have only done outpatient medicine. That is something I think even dino would agree with me on. Do you work in a hospital? Hospitals don't employ nurses to maximize billing they employ most of them to be nurses (as should be the case) Maximize billing is the role of the billing dept and practice billing management group in conjunction with the docs. I am here to tell you first-hand that checking boxes does only so much. Billing from a hospitalist standpoint comes from the completeness of the note I have written to justify the code. Nurses have nothing to do with that. It is the billing group that has always pointed out when I have miscoded (usually on the low side).

At Fri Nov 14, 12:11:00 PM, Blogger Crucis said...

Would all you Anonymous use some creativity and come up with some new names!

Geez! It's confusing enough to read a single paragraph of 500+ words.

At Fri Nov 14, 08:54:00 PM, Anonymous Anonymous said...

anon 7:30 here
i don't think dino ever said that s/he has nothing to learn from new grads. i certainly didn't.

the idea of follow up clinic is not new, it is a consequence of lack of availability of primary care docs, particularly for uninsured and/or medicaid patients. if your administrator hasn't proposed it yet, you are not as underserved as some areas. it is not a new idea. i agree with you it doesn't make sense, but that doesn't mean the administrators of the hospital won't consider it if guaranteeing hospital follow up becomes a prioritized issue for reimbursement by the government.

lastly i find it hard to believe there is any hospital in this country that doesn't have some nurses in employ whose job is to check charts to make sure adherence to 'quality' standards are met (obviously not all nurses are taxed with this responsibility, there are usually a few burned out ones or individuals who went to public health school). at least for the last 11 hospitals i worked in.
the billing department can only bill what is documented, therefore the nurses are there to ensure that the highest level of billing can be done.
you may not think these checklists work, but they probably do help compliance with heart failure or post mi goals. they certainly help allow the hospital to publish that they meet the highest quality indicators for condition x.
as i posted before, the heart failure patients in my current hospital only manage to provide ace-inhibitor or arb or reason that such cannot be provided to patient 75% of time, compared with 99% before the hospitalist program was created. cardiologists still at 99%. formal review suggested the hospitalists are now admitting the majority of heart failure patients and are dragging average down, way way way below national standards. hence, checkbox nurse was sicked on them.

i apologize if your tone was not angry, it 'read' that way to me.

At Sat Nov 15, 10:04:00 AM, Anonymous Anonymous said...

"the billing department can only bill what is documented, therefore the nurses are there to ensure that the highest level of billing can be done."

No, incorrect that is the purpose of our practice management group who I can assure you ensure the highest level of billing. Are there RN's employed. Yes. The point in they are not directly employes by the hospital. You have given CHF/ACE-I/ARB as an example of "checking boxes". Overall I do think this is a good idea. HOWEVER, remember this guideline is by the feds (giving an ACE/ARB or stating why not) Before, the guideline I simply did an ACE in hyperkalemia, allergy, severe renal dysfunction, etc. The more important issue is how many people in that 25% SHOULD have received and ACE/ARB and did not. You have not answered that question.
In conclusion dino misses the mark because he doesn't appear to realize that hospitals support other docs (in the ER as pointed out by whitecoat) and have indeed done so for decades. He also doesn't realize that many hospital groups are indeed money producers (I have worked for them). The income disparity is long term working model groups is not that large from primary IM. This model will only fail if PCP's come back and admit their own patients and no doc patients when on call. I don't seethat happening.

At Sat Nov 15, 12:06:00 PM, Blogger The Happy Hospitalist said...

The Happy Hospitalist Responds


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