Not a time for modesty

With the economy shaky and hospital budgets tight, hospitalists are being asked more and more to prove their worth. Value may be the word that hospital administrators and consultants use to describe what hospitalists are being expected to demonstrate, but what it boils down to is this: Are hospitalists earning their keep?.

With the economy shaky and hospital budgets tight, hospitalists are being asked more and more to prove their worth. Value may be the word that hospital administrators and consultants use to describe what hospitalists are being expected to demonstrate, but what it boils down to is this: Are hospitalists earning their keep?

“We're seeing administrators, even ones who aren't paying financial support to their hospitalists, asking ‘What is this really costing me?’” said Martin B. Buser, who runs consulting firm Hospitalist Management Resources, LLC, in San Diego. “Administrators are scrutinizing budgets more closely and demanding results. They're asking, ‘I put out that money, now what do I get back?’”


The bar for hospitalists has been raised because of the many economic forces bearing down on hospitals, according to Mr. Buser.

“One is that the financial support being paid to hospitalist groups is getting bigger and bigger. A second is that hospitals are getting ready for another major crunch time in their reimbursements and they realize they better have their house in order and not take a laissez-faire approach to the hospitalists.”

Hospitalists are increasingly being asked to justify their performance from multiple perspectives. Not only are financial measures such as length of stay and cost per case important, but administrators also are considering whether, for instance, hospitalists are helping to expand the hospital's geographic reach or making it easier to attract new primary care physicians and specialists to the community.

More than length of stay

“Many of the hospitalist groups are in a more mature place and a lot of the benefits they delivered initially, like reducing length of stay, they've already accomplished that,” said Leslie Flores, co-founder of Nelson Flores Hospital Medicine Consultants, in La Quinta, Calif. “The hospitals are saying, ‘Great, you did that for us five years ago. What have you done recently?’”

The question is a fair one considering the investment most hospitals make in their hospitalists. According to the latest survey by the Society of Hospital Medicine, the average financial support for a hospitalist is $97,375 per year, most of it coming in the form of a subsidy from the hospital. The same survey also found that hospitalists' salaries are going up—from an average of $171,000 in 2005-2006 for physicians who care for adult patients to $193,300 in 2007-2008—while their production has remained relatively flat.

Adam D. Singer, ACP Member and chairman and CEO of IPC The Hospitalist Company, said he thinks many hospitalist groups put themselves in a bad position from the get-go by assuming that they needed to be subsidized.

“The hospitalist industry has built itself on the idea that hospitals would be paying a portion of the physician's salary,” Dr. Singer said. It would be better, he said, if hospitalist groups established their own self-sustainable business models centered on productivity, efficiency and quality.

That said, Dr. Singer and other consultants agreed that hospitals aren't about to eliminate subsidies for hospitalist programs, in large part because they've come to rely on the services. Instead, hospitals will likely hold the physicians to ever-increasing expectations.

Be ready

Proving your worth is now part of the job, according to Mr. Buser. “Successful programs never take their financial support for granted,” he said. “They are constantly measuring their worth and proving it every month.”

Rather than sitting back until budget time rolls around, hospitalists should become proactive in collecting and presenting data-driven evidence of their worth, the experts said. The list of “value” factors that need to be tracked include length of stay, cost per case, amount of revenue generated by the group, coverage of unassigned patients, readmission rates, improvements in capacity optimization, adherence to core measures and clinical guidelines, and mortality rates.

By cultivating working relationships with people in the hospital's finance, billing and information technology departments, hospitalist groups can access the data they need. Outside sources such as government databases, insurance companies and professional organizations that set quality standards can also help groups size up their performance. One key consideration: How did the patients under the hospitalists' care fare compared to patients who were not covered under their service?

In addition, hospitalists need to think in terms of not just the value they provide to the hospital as a whole, but what value they bring to primary care doctors and specialists in the community, nurses and other staff members, insurers and patients, Dr. Singer said. “You need to build your hospitalist program focusing on all your different constituencies,” he said.

William D. Atchley, FACP, chief of the division of hospital medicine for Sentara Medical Group, which operates hospitalist programs at five hospitals in southeastern Virginia, recently went through the yearly budget process. “You really have to be making the case for continuing to support the cost of the program,” he said, which means being well versed in numbers related to revenue enhancement, cost savings, staffing and clinical quality.

“You need to show how your program volume is growing and what your physician referral patterns look like,” Dr. Atchley said. He and other physician leaders make a point of talking to hospital administrators periodically to stay on top of any ongoing issues. “Whether the data is positive or negative, you need to understand what's behind it,” Dr. Atchley said, noting that reacting defensively doesn't do any good.

He said it's also important to demonstrate how the hospitalists' goals are aligned with the mission, values and goals of the system. For instance, if a hospital wants to reduce waiting times in the emergency department and prevent ED diversions, hospitalists can point to data showing how their work supports that effort.

Value goes both ways

Kenneth G. Simone, DO, president and founder of the consulting company Hospitalist and Practice Solutions, said he typically is called in to consult for one of two reasons: either the hospital is questioning the value of the hospitalist program or the hospitalists themselves feel undervalued.

He recently dealt with a hospitalist group that was performing admirably when it came to cost efficiency, but the hospital was not completely satisfied. As Dr. Simone probed more, it became clear that the hospitalists weren't demonstrating how they were helping the hospital meet its goal of recruiting more primary care physicians. By more closely analyzing admissions data, the group was able to show that not only was it generating more business, but also getting new business, Dr. Simone said.

Dr. Simone acknowledged that with so much data to be considered, “most hospitalist groups do not have the necessary resources to monitor all of these metrics on their own.” But he said hospitalists should expect some help from various hospital departments since tracking and appropriately acting on these measures will benefit the hospital's bottom line and should improve patient care and clinical outcomes in the long run.

One of Dr. Simone's clients is Jane Phillips Medical Center in Bartlesville, Okla. Scott Phillips, vice president for physician services there, said the 150-bed hospital, which subsidizes its hospitalist program, is working with the consultant and the hospitalists to find ways to both reduce costs and improve quality. “It's a process that never stops,” he said.

Hard to quantify benefits

But one of the challenges of trying to assess value is that not everyone defines it the same way and not every benefit is easily measurable. Length of stay and cost per case are straightforward, but the value that hospitalists bring by participating on committees, teaching medical students and residents, and communicating with patients and their families is not necessarily obvious.

For instance, Dr. Simone pointed out, surveys have shown that nursing satisfaction and retention are higher when there is a hospitalist program in place. “There is a lot of value that hospitalists bring that you can't put a price tag on,” he said.

Ms. Flores said while it may seem bothersome to hospitalists to have to prove their seemingly obvious value (“The truth is most hospitals can't do without them,” she said), the process benefits everyone. It can improve relationships between physicians and administrators, she said, and the doctors may well end up with more resources to do their jobs.