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Steps to define your hospitalist program's contribution

Hospitalist Management Advisor, April 1, 2008

The hospitalist program is the clinical staff’s exciting new toy—fresh, inventive, and promising. But from the C-suite point of view, administrators may consider the program costly and unproven.

That means experienced and inexperienced hospitalist leaders alike face the challenge of proving their program’s worth to an administration that isn’t necessarily informed of the work staff members do in the hospital.

But according to hospitalist experts, there are both hard and soft data to tap into that can illustrate the importance of the hospitalist program to the organization. The key is determining what information to pull and how to present it.

“It’s important to understand that accurately collected data don’t lie; it’s the interpretation that can be misleading,” says Aaron Gottesman, MD, FACP, CHCQM, director of hospitalist services at Staten Island (NY) University Hospital.

More importantly, these data are necessary to keep your program financially afloat, says Ronald Greeno, MD, chief medical officer at Cogent Healthcare, based in Irvine, CA.

“Hospitals are investing significant dollars, so you have to financially justify what the program brings to the hospital,” Greeno says. “That means putting numbers around it.”

Data and metrics

Every hospitalist program produces hard, relevant data. But first you must define the metrics by which your organization will judge the program. “There needs to be an agreement between all stakeholders,” says Gottesman.

That consensus requires those stakeholders—i.e., the CEO, the chief operating officer, the chief financial officer (CFO), the vice president of finance, etc.—to commit to the time it will take to develop a plan, and that will likely require several initial meetings, says Gottesman. “It’s very difficult to agree upon and achieve consensus unless everyone has done their research,” he says.

Program leadership should research a comparable program in size and scope to model. If possible, leadership should search for regional or local models, as opposed to national ones, says Gottesman.

There can be many significant differences among programs that may, on the surface, look like similarities, such as the percent of insured vs. uninsured patients.

“Rigid numbers are not comparable across the board,” Gottesman says. “But the basis of comparison must be consistent.”

Quantifying value

Greeno says a process of quantifying value is the most effective way to tell your story. Quantifying value allows a hospital to:

  • Understand to what extent it can invest in the program
  • Recognize the role the program can play in its overall strategic planning
  • Use existing infrastructure to maximize program performance
  • Conversely, it allows a hospitalist leader to:
  • Emphasize the facets of the program that create the most value
  • Create aligned incentives for the hospitalist team
  • Justify compensation necessary to hire physicians in a fiercely competitive environment

Cost reduction

The three categories of value creation are cost reduction, revenue generation, and cost avoidance, says Greeno.

Cost reduction is the easiest to calculate, as it requires accurate, severity-adjusted hospital data. For example, look at the cost reduction your organization achieves by using hospitalists to treat specific cases, as opposed to not using hospitalists. Take that reduction and multiply it by the number of those specific cases your hospitalists handle in a given time frame, and you’ll have hard financial data that support the work of the hospitalist team.

Another example you can look at is drug costs. Specifically, determine how much lower the average number of medications was per patient when using hospitalists, as well as the length of IV therapy and gastrointestinal medications. The cost savings will give your program another way to put a number on the work of the hospitalist team.

Revenue generation

Revenue generation is more difficult to sell because it usually involves softer evidence. Still, the information can be convincing, and it’s important to consider these data when making your case.

“The hospitalist movement is here to stay,” Gottesman says. “We need to optimize the hospitalists as faculty within the institution and work on the return on investment, though not always in dollar terms.”

Revenue generation could include the following, says Greeno:

  • Increased inpatient bed capacity
  • Improved patient throughput and ER diversions
  • Improved market share
  • Improved satisfaction of patients and community physicians
  • Appropriate documentation
  • Quality measures and pay-for-performance initiatives

If you can demonstrate that your hospitalist program keeps your hospital’s ER from diverting patients, you can make a strong case for your program, Greeno says.

Not only are you moving patients in and out of the ER and fostering strong patient satisfaction, you’re not turning away your paying customers. When your hospital is full, it must still treat the emergent cases, but it often must turn away the elective cases. That’s the group of patients that can make a notable, positive financial impact.

“So if you’re not on diversion, and you’re accepting these cases, you’re markedly increasing the ability to admit the patient you want to admit and need to admit to be financially successful,” says Greeno.

Your CFO might argue that this scenario only makes a financial difference if you can fill that hospital bed. But Greeno says that even if you cannot, “you now require less nursing support.”

Additional cost-saving avenues to explore should include screening inappropriate admissions. Payers often deny payment when a case does not meet the criteria for admission, and hospitalists have become more involved in that decision, says Greeno.

Coding is likely another financial challenge for your organization. “If you can teach one hospitalist how to document correctly, it allows the hospital to do a much better job of billing for the services,” Greeno says. “You would then have a much easier time showing that reimbursement goes up.”

Another revenue generator is your hospital’s ability to attract primary care physicians to conduct testing. Use your success in this area to advertise the program as a hospital service line and get a competitive advantage in your market, says Greeno.

Cost avoidance

Investing in your hospitalist program may decrease readmission rates of your uninsured patients, resulting in savings for unpaid care. Greeno cites an example of a hospital that initiated a discharge plan and saved $4.5 million in three years.

You may realize another cost avoidance in staff retention. “Nursing turnover is a tremendous cost to hospitals,” says Greeno; it may cost an organization more than $50,000 when it loses a nurse.

Staff satisfaction

That said, staff satisfaction should be one of the administration’s top priorities. For the most part, clinical staff members appreciate and depend on the work of the hospitalist teams within their organizations.

So finding clinical support should be easy. To gauge the appreciation, Gottesman sometimes jokingly tells someone on the case management team that the hospitalist program is leaving the hospital to see his or her reaction to the news.

“The look on [his or her] face is like they’re having an MI right there on the spot,” he says. “The hospitalists have become so indispensable that it’s like saying that we’re going to shatter the foundation of the institution.”

It might be useful to align other members of the leadership team, such as nursing, case management, the emergency department, and other clinical realms, to write letters of support for the hospitalist program, says Gottesman—”not generic letters with platitudes, but letters to define effectively how having a hospitalist program has helped their ability to function, and how not having the program would have dire consequences, and defining those consequences.”

One long-term strategy should be to integrate hospitalists into all areas of the institution, such as having them participate in projects and on committees, so they become more visible to the C-suite.

“It’s important to have individuals who are experts, physicians being the drivers of quality,” says Gottesman. “Hospitalists are showing their ability to champion patient safety. That shows tremendous value [in the program].”

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