Next time you see your hospital's CEO and CFO, consider giving them each a hug, or at least a pat on the back. Times are tough in hospital finance, and upcoming changes in health care payments are only going to intensify the pressure.
As financial pressures mount, hospitalists need to be on the administration's good side.
“The arguments are going to have to be better than they've been,” said Robert Wachter, MD, FACP, chief of the medical service and the division of hospital medicine at the University of California, San Francisco. “It's a near-certainty that dollars will be tighter and therefore there will be more people vying for them.”
As hospitals face declining inpatient volume, changing payment mechanisms, and a consolidating market, hospitalists need to be ready to prove their value, according to Dr. Wachter and other experts.
The good news is that hospitalists have skills that can help hospitals flourish in this new environment. “All the things that we say constitute a good hospitalist program—standardization of care, process measures, good communication with other providers, patients, and families—all of those things in the health care system of the future are going to create a tremendous amount of value,” said Ron Greeno, MD, executive vice president of strategy and innovation for Cogent Healthcare.
The challenge, then, is to perfect and prove these benefits of hospitalist care. Experts offered their advice on how to do this, as well as their predictions on how the financial upheaval will affect hospitalists.
One trend already affecting hospitals is a decline in patient volume, as care is shifted to the outpatient setting and preventable admissions are reduced. That's good for patient health, bad for hospital profits, and so far mostly indifferent for hospitalist programs.
“The amount of care that we render within the walls of the institution may not drop, even though the number of inpatients in acute care status decreases,” said Talbot McCormick, MD, ACP Member, chief executive officer of Eagle Hospital Physicians.
That's probably because other factors are increasing demand for hospitalist services enough to compensate for the drops in inpatient volume. “Our same-site growth is north of 7%, and the reason is we're taking over share from other physicians,” said Rob Bessler, MD, chief executive officer of Sound Physicians. Primary care physicians are still gradually turning over their inpatient loads to hospitalists, and more specialists are looking for comanagement services, he explained.
There are also hospitals that are just beginning to look for hospitalists. “About 30% of American hospitals don't have hospitalists,” said Dr. Wachter. “I don't think the hospitalist market has saturated yet.”
“If we scale back 10%, 20%, 30% on hospital utilization, we're still going to have lots of need,” agreed Kevin A. Schulman, MD, FACP, professor of medicine and business administration at Duke University in Durham, N.C.
Health system experts are predicting that the scaling back will reduce the number of hospitals in the U.S., however. “Most thoughtful people looking at the future believe that there will be substantially fewer hospitals, maybe 10% fewer, maybe 20% fewer,” said Dr. Wachter.
They predict an even greater reduction in the number of companies owning hospitals. “There's going to be tremendous consolidation,” said Dr. Greeno. “There are about 650 health care systems in the country now. When this all shakes out, the people I'm talking to think we're going to end up with somewhere between 50 and 70 huge health care systems.”
Those systems will be more than just conglomerations of hospitals, he predicted, and will take on functions of insurance companies and physician groups. “At the end of the day, we're all going to be in the same business. We're going to be in the population health business, and we will all be part of large integrated health care systems that are accountable for and take risks on populations of patients,” Dr. Greeno said.
Impacts on hospitalists
If all that change sounds frightening, the experts do have some reassuring words for hospitalists.
“There are still several jobs for every hospitalist out there,” said Dr. Greeno. “I don't know of a single hospitalist program that isn't basically recruiting all the time.”
That's particularly true in rural areas, according to Dr. Bessler. “If you think about an hour outside of major metropolitan areas, there's still a massive supply/demand imbalance. I don't think that's going away,” he said.
And a reduction in the number of hospitals isn't likely to change that situation, even if it does put some hospitalists out of a job in the short term. “At least some hospitalists may find themselves displaced if their hospital closes,” Dr. Wachter acknowledged. He added, however, “Even if 10% of the hospitals in the country close, the vast majority of hospitalists would still be able to find perfectly good jobs.”
The shift in hospitals' incentives—from the current system where preventing admissions lowers profit to a new one where keeping patients out of the hospital saves money—is the change most likely to affect every hospitalist, the experts said. Whether it happens through payer/provider consolidation, bundled payments, or accountable care organizations, it will alter how hospitals look at their hospitalists.
One effect that some markets are already seeing as the payment models begin to shift is a decline in reimbursement. “We are seeing hospital reimbursement going down, and we're seeing physician fee-for-service reimbursement going down. That does, from the hospitalist perspective, create challenges,” said Dr. McCormick.
Traditionally, hospitalists have looked to hospitals to make up for fee-for-service shortfalls with subsidies, but that may change. “Hospitals are going to begin to not want to subsidize hospitalists anymore but will make arrangements where they pay for performance,” said Adam Singer, MD, ACP Member, chairman and chief executive officer of IPC The Hospitalist Company.
Hospitals will want to pay for performance because that's how they're starting to be paid already, even without a complete shift to accountable care. “The average hospital had a 3% margin last year and in 2017, 7% of a hospital's revenue— virtually all of their earnings—are at risk for performance,” said Dr. Bessler.
But some degree of subsidy is going to stick around for a while, according to other experts. “What we're expecting over the next several years is for those hospital subsidies to flatten,” Dr. McCormick said. “I don't know that they're going to go down on average, but the growth which has been occurring every year, of those subsidies going up, I think is going to be flattening.”
In exchange for keeping subsidies in place, administrators may increasingly demand evidence that they are getting high-value performance from their hospitalists. “Hospitals will be asking more pointed questions about what they're getting for their money if they do financially support the hospitalist program,” Dr. Wachter said.
In many cases, their expectations will be similar to what hospitalists already ask of themselves. “Are they hitting the elements of the ‘triple aim’? Are they lowering costs and are they improving outcomes? It's going to be about that simple,” said Dr. Greeno.
However, some hospitalist programs may need to shift their focus in response to the new incentives. “The skill sets needed are different for the hospitalists. Hospital medicine programs are going to have to reward work that is harder to do. It is much harder to discharge a patient from the ER and spend all the time to coordinate care than it is just to do the admission to the ER,” said Dr. Bessler.
Given the time-consuming tasks required, some programs will have to become more efficient, providing “a quantity and quality of service that approaches optimal efficiency,” said Dr. McCormick.
Improving efficiency could require changing scheduling, Dr. Singer predicted. “Seven on/7 off is very popular in the hospital world, but it is going away,” he said. “You'll see traditional call systems be put in place to reduce the overall cost of the program.”
Or programs may find new ways to maximize the work of nonphysician providers. “Anything that can be done by lower-cost providers should really go in those directions,” said Dr. Schulman. “Make sure you're practicing at the top of your license.”
Hospitalists and their programs will be more successful if they find other ways to maximize value for their hospitals besides seeing more patients, he added. “They're going to get lots of instructions to run faster on the hamster wheel, but that's not necessarily going to solve anyone's economic issue,” he said.
On the contrary, hospitalists should be able to provide value, and be appreciated by administrators, using skills that they already have. “Resource utilization, the totality of care, the efficiency around the proper use of diagnostics and therapeutics—hospitalists impact those areas a lot, but in a fee-for-service world, it's seldom that they can be recognized economically for that contribution,” said Dr. McCormick.
And hospitalists will also still be needed and appreciated for the basic services they provide. “Who is going to cover those patients at the weekends or nights? For certain surgical patients, who is actually going to manage their medical problems while they're here in the hospital?” said Dr. Wachter. “If the support payments aren't enough to keep a group of people happy, and they all leave, who would you replace them with?”
Hospitalists are also making themselves increasingly irreplaceable by leading hospital-wide efforts in information technology, cost reduction, patient experience, and other areas. “The penetration of hospitalists in these senior leadership roles is extraordinary....We're seeing CEOs of hospitals coming out of the hospitalist world, and lots of CMOs. Medicare's top physician, Patrick Conway [MD], is a hospitalist, as is the Surgeon General nominee, Vivek Murthy [MD, ACP Member],” said Dr. Wachter.
Not every hospitalist will need the skills to run a hospital, but experts think administrators and program leaders will be expecting more from their physicians. “Certainly, the demand for good hospitalist physicians is going to go up. Right now...there's a pretty low bar for some programs in terms of who they hire, because they're so desperate just to get people,” said Dr. Greeno.
Annie Fowler, vice president of physician services for Sound Physicians, agreed. “The hire is most certainly getting harder because of the criteria and the scope of work that's being required,” she said. “It requires us to source only those hospitalists who are adaptable and have very strong communication skills.”
Dr. Singer described the changes he's seen in recent years. “Hospitalists came out of training—young ones—and just said, ‘OK, I'll just work my shifts.’...Now you need to develop the core competencies that are necessary to be a hospitalist. That means how to build teams, how to develop strategies with hospitals [for] unit-based rounding or dealing with throughput or dealing with different kinds of metrics—length of stay, readmission rate, patient satisfaction.”
The increasing importance of preventing readmissions is also pushing hospitalists to acquire skills outside of traditional inpatient care. “The activities of hospitalists are kind of blurring the edges—not just from when the patient gets admitted, before they're admitted with preop evaluations, observation units...then on the back end, with discharge clinics, skilled nursing facilities, rehabs,” said Dr. McCormick.
That back end is going to increasingly involve hospitalists, the experts predicted. “You're going to see more cross-linkages between the acute setting and the post-acute setting. As hospitals close, there will be post-acute settings, skilled nursing facilities, that will be taking care of patients that today would be in hospitals,” said Dr. Wachter.
It's only logical that those facilities would look to hospitalists for help taking care of such patients. “They have a skill set that might be really useful,” said Dr. Schulman. “It's a good time to really ask the tough question, ‘What is the expertise of a hospitalist?’ Is it being a doctor that works in a hospital, or is it being a doctor that takes care of a certain kind of patients?”
Many hospitalists will continue to stick with the first answer, experts agreed. “Working in a nursing home isn't something someone strives for when they start out,” said Dr. Singer. “You don't go to medical school, do your 3 years of training, come out and tell your mom, ‘I want to work at Queen Elizabeth Convalescent.’”
However, the post-acute jobs may be appealing to the experienced internists who have been giving up primary care and swelling the ranks of hospital medicine over the years. “We're finding a lot of primary care physicians that are now leaving outpatient medicine find that to be a very satisfying next step,” said Dr. Singer.
Other trends could also shift the balance that has led so many internal medicine residency graduates to enter hospitalist practice in recent years. “It just can't be that in the future of health care, a primary care internist is making $180,000 a year and a radiologist is making $450,000,” said Dr. Wachter.
Hospitals and payers focused on preventing hospital admissions may make primary care salaries more competitive with hospitalist salaries. “If the field of primary care becomes more attractive, and I hope it does, there will be some people on the margin who choose to go into or stay in primary care rather than be hospitalists,” said Dr. Wachter.
Payment changes meant to reward quality primary care could affect hospitalist charges, for example, if payments for evaluation and management (E/M) services become more like those for procedural services. But hospitalists shouldn't expect they'll get paid more overall, according to Dr. Wachter.
“If the payment system paid better for hospitalist work, particularly for E/M codes, my guess is that all that would happen would be hospitals would cut their subsidy,” he said. “You don't hear many people argue that hospitalists are underpaid.”
However, you do hear a lot about reducing unnecessary health care expenses. Dr. Greeno is optimistic that such work could be profitable for hospitals and hospitalists who succeed at it under new payment models. “The dollars that are available to doctors and hospitals actually increase, because they get rewarded for taking waste out of the system,” he said.
Although there are a lot of changes coming in inpatient care delivery and payment, hospitalists should do just fine, the experts agreed. “I think it should make them more excited,” said Dr. Singer. “There are really exciting things you can do to improve the quality of care for your patients. I don't think the appeal is going to go away, and I still think you get a really nice income.”