Medical Staff

Economic Credentialing: Has its time come?

Medical Staff Leader Insider, March 22, 2012

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Dear Colleague,


For many years, physicians shunned anything that smacked of economic credentialing. As physicians, we championed doing the right thing for the patient regardless of cost, knowing with certainty that by doing so we were fulfilling the moral imperative of our profession.  Tainting credentialing decisions with such base considerations as economics threatened the high ethical standards of good medical practice.


Although laudable, this stance contributed to the crisis we face in healthcare today. Rising healthcare costs have outpaced our willingness, and in many cases, our ability, to pay for the healthcare we now consume. Towns and counties must fire police officers, firefighters, and teachers to cover healthcare benefits for their remaining employees. Employers restrain investments in new jobs to afford rising health benefits for their existing employees. State and federal governments must either raise taxes or cut healthcare coverage for Medicare and Medicaid beneficiaries and their own employees. 


What has all this to do with economic credentialing? More than we may realize. Let’s begin by recognizing that we do not have an agreement in the credentialing field on a single definition of economic credentialing. For some, it means the introduction of any consideration other then technical competence into credentialing decisions. However, long ago, we accepted that requiring physicians to carry malpractice insurance—economic requirement—constitutes a reasonable credentialing criterion. So such a strict definition of economic credentialing isn’t helpful today. For others, economic credentialing means making decisions regarding who gets on or stays on a medical staff based upon the amount of business the physician brings or refers to the hospital. While this strategy may appeal to some CEOs, it runs afoul of the federal Anti-Kickback and Stark statutes. This, too, is not a helpful definition of economic credentialing.


The meaning of economic credentialing coming to the fore today relates to cost effectiveness.  We who do credentialing are charged with matching privileges granted to demonstrated competence. Traditionally, physicians have assessed competence based upon technical issues, such as fund of knowledge, clinical judgment, and technique. Has the time come to include cost effectiveness in the very definition of physician competence? This question should be asked and answered by every medical staff in America. Failure to do so contributes to the runaway healthcare costs that threaten so much that we hold dear.


Tackling economic credentialing in this sense of the term will be a journey. Most, if not all, medical staffs today are not prepared to kick a physician off the medical staff because of long lengths or stay or other measures of excessive costs of care, nor should they. The place to begin is by including cost effectiveness in the definition of physician competence for your medical staff. Even this step requires serious dialogue throughout the medical staff regarding whether physicians should be focused not just on quality but on costs as well. Such discussions will serve physicians, the hospital, and patients as we face the increasing pressures bearing down on healthcare providers.


Once cost effectiveness becomes a performance expectation for physicians, metrics to measure cost effectiveness will become part of peer review. These should, of course, be severity of illness adjusted to make the metrics as valid as possible. Physicians will then rapidly learn that severity adjusting programs all depend upon coding, which in turn depends upon physician documentation. As a result, physicians will learn to document their patients’ severity of illness with greater accuracy.

Feedback on performance, including cost effectiveness, will then follow. This will appreciate those physicians who are already cost effective and provide an opportunity for self improvement for those who are not. If a physician’s costs remain excessive, then medical staff leaders will be responsible for meeting personally with the physician in a series of efforts to help the physician buy in to the expectation of being cost effective and to change how the physician practices medicine to improve his or her cost effectiveness.


All of these steps should be taken today. The step most medical staffs are not prepared to take today is to refuse reappointment to a physician who resists practicing cost effective medicine in spite of these efforts. Of note, this issue causes few problems when physicians share ownership of a hospital or ASC. If it’s their own money at stake, they don’t hesitate to “kick out” a fellow physician who does not act as a responsible steward of their shared resources. Is the day near when a similar decision will be made by a self-governed medical staff on behalf of a hospital? The answer depends on how the forces impacting physicians and hospitals play out over the next few years.


All the best,


Rick Sheff, MD

Principal and Chief Medical Officer

The Greeley Company


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