Hospitals Hiring Physicians: Why the Trend Is on the Rise

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When Laurence Wellikson, CEO of the Society of Hospital Medicine, first started guest lecturing in health care management classes at the University of Pennsylvania a decade or so ago, he needed to explain to students what a “hospitalist” is. But then the ranks of hospitalists, defined as physicians who work on staff at hospitals, ballooned — from 500 in 2000 to 44,000 today — and the tenor of his presentation changed. “I talk now about how the health care system is moving from volume to value, and what hospital medicine specialists have been able to do to improve the quality of care,” he notes.

The emergence of the hospitalist specialty began more than 15 years ago, but hiring continues to grow — and with the pressure to control health care costs on the rise, that trend shows no signs of slowing. The implementation of the Affordable Care Act and Medicare reforms have tied hospitals’ reimbursements to their ability to improve patient satisfaction, reduce the average length of stay and prevent readmissions — all part of the “value” equation that Wellikson says hospitalists can help them reach.

The notion that hospitalists can bring financial value to the health care system has been borne out in several studies, including some conducted by Wharton health care management professor Guy David. For example, in 2009, David co-wrote a study comparing hospitalists with medical residents on such measures as diagnostic efficiency, the ordering of the most appropriate medical tests and reductions in lengths of stay. On average, hospitalists outshined residents, according to the study, which was published in the journal Medical Care Research and Review.

According to David, much of the benefits offered by hospitalists boil down to one simple fact: They are always there. Unlike patients’ regular internists — who might do rounds every morning and then disappear — hospitalists take care of patients around-the-clock, allowing for efficiencies that were not possible before.

“Hospitalists interface with patients longer. That makes them better at diagnosing conditions, interpreting tests and understanding the care pathway for patients,” David says. “They are also very involved in safety and patient quality improvement.”

But that’s just half the story, David adds. “Hospitalists improve length of stay because they build relationships with individuals in the organization. And when they build relationships, they get consultations faster, they get people tested faster and they are generally on top of things. They can go on rounds at five in the afternoon, which means the patient can be discharged the next morning, or even the same night. [Patients] don’t have to wait” until their regular doctor shows up for rounds, he adds.

“Hospitalists interface with patients longer. That makes them better at diagnosing conditions, interpreting tests and understanding the care pathway for patients.” –Guy David

According to the Society of Hospital Medicine, hospitalists can reduce lengths of stay by up to 30% and hospital costs by up to 20%. A 2007 study in the New England Journal of Medicine estimated that patients treated by hospitalists were in the hospital about a half-day less than those treated by their primary care physician. The society did the math and determined that even that small a difference would allow the average hospital to treat 500 more patients a year without increasing its number of available beds.

Migrating to Academia

One of the newest trends in hospital medicine is a growth in hiring of hospitalists by academic medical centers. David says university hospitals started gravitating towards hospitalists in 2003, when the Accreditation Council for Graduate Medical Education first started putting limits on how many hours residents can work.

“The house staff [at academic medical centers] was always the attending physicians and the residents,” David notes. “The residency hour restrictions gave them less resident hours to use, and it made residents very expensive. Residents are cheap if you can work them 80 hours. But if you can only work them 16 hours, it tends to be pretty expensive.” Consequently, many academic hospitals moved to a model where they staffed some units with residents and others with hospitalists, he says. “These organizations weren’t buying into the story that hospitalists are great. They were hiring them more out of necessity.”

David predicts that the financial pressure on attending physicians will also drive demand for hospitalists. “If you go back two decades to the pre-hospitalist era, each primary care physician had a number of hospitalized patients at any given point in time” because it wasn’t common for patients to be treated in outpatient settings. “So, if you were a physician and you had six or seven patients in the hospital, you could drive there first thing in the morning, see your patients and then drive to the office and see more patients. This was profitable for physicians. If you look at the situation today, maybe there’s one patient on your roster who is in the hospital at any given time. It’s really not profitable to drive to the hospital to see that one patient, and also there’s not a lot you can do for that person. It makes sense for you to hand off those patients to someone else.”

Even as the hiring of hospitalists increases, a parallel trend — the acquisition of private physician practices by hospitals — is on the decline. That’s no surprise to hospital industry experts, who point out that the motivation for acquiring private practices was quite different than the reasoning behind hiring hospitalists.

In short, acquiring physician practices was all about volume, not value. “Hospitalists treat the patients once they’re in the hospitals, but having hospitalists is not going to bring you many more patients,” says Robert Town, professor of health care management at Wharton. “The idea of purchasing physician practices was that they would align with the system and thus be more likely to refer their patients to the system’s hospital.”

“Hospitalists treat the patients once they’re in the hospitals, but having hospitalists is not going to bring you many more patients.” –Robert Town

Now that those physicians are under the wing of the hospitals, however, it has become clear that volume alone isn’t going to produce a significant return on investment, Town notes. “The issue that’s really at play is how the physicians are going to be paid and under what criteria,” he says. “When hospitals buy physician practices, the physicians think, ‘Oh great, I’m going to move to a salary-based system and a more relaxed lifestyle.’ Then physicians don’t work as hard, activity goes down and that has consequences for the profitability of the practice. The question is, when you buy a physician’s practice, how are you going to make it work better than it did before? The answer is ultimately that you have to pay the physicians less. Once you get going down that road, it’s going to be a hornet’s nest.”

Keeping Patients and Doctors Happy

Christopher Whinney, chair of the Cleveland Clinic’s hospital medicine department, says one advantage of hospitalists over outside physicians is that hospitalists are more likely to adopt the facility’s culture, which often is motivation enough for them to align with its financial goals. For example, one way the Cleveland Clinic works to prevent readmissions is by completing a “discharge summary” for every patient by the time he or she goes home. Hospitalists help ensure those documents are completed on time, which in turn helps the discharge team communicate seamlessly with the patients’ outside caregivers, Whinney says. “It’s especially beneficial if patients are going to primary care physicians within the Cleveland Clinic system,” because those doctors can easily access the discharge summaries through the hospital’s electronic medical record system. The completion of those summaries on discharge days rose from 30% in 2012 to 70% now. “Part of that is embedding in the culture that the summary must be completed,” he notes.

The Cleveland Clinic started with three hospitalists in 1997 and is now up to 91 across its five main campuses. The hospital has started rolling out a risk-sharing model, where if certain metrics — such as a reduction in readmissions — are reached, the hospitalists will receive additional compensation on a sliding scale, according to Whinney. “That helps us practice more efficiently and maximize the patient experience, all of which is transparent in the metrics.”

“One real problem has been that hospitals can’t get physicians to work as teams or pay attention to the costs of their decisions. The challenge for the future is being able to control those people more.” Mark V. Pauly

It’s important for hospitals to focus on keeping their doctors happy and engaged in the facility’s success — a task that’s easier with staff physicians than it is with independents, says Wharton health care management professor Mark V. Pauly. “One real problem has been that hospitals can’t get physicians to work as teams or pay attention to the costs of their decisions. The challenge for the future is being able to control those people more. The hospitalist movement is the leading edge of that, because [hospitalists] directly owe their allegiance to the hospital.”

The knowledge that the hospital is going to pick up the cost of malpractice insurance and other expenses that traditionally are a burden on independent physicians will likely drive more physicians into the hospitalist specialty — particularly young doctors, Pauly predicts. “The younger physicians are less devoted to the old independent practice model and are more used to working in groups, so it’s less of a challenge for them.”

Still, hiring doctors isn’t cheap, and it could be difficult for hospitals to continue to justify the expense if they can’t show a return on the investment, Pauly says. He anticipates that some hospitals will look seriously at less expensive options for completing the tasks that hospitalists traditionally tackle. For example, specially trained nurses could manage patient discharges efficiently as well, he points out. “[A common] reason for readmissions is that the family didn’t get a clear explanation when the patient was discharged. Or something happens after they are discharged and they are confused, and the easiest thing to do is just call 911.”

Research Pauly has done in conjunction with the University of Pennsylvania’s School of Nursing has examined specialized programs where nurses meet the patients in the hospital and then are available to them for 30 days after discharge to answer questions and manage communications with primary care physicians. The research has shown that such programs can cut readmissions by 30%, he says.

The Society of Hospital Medicine’s Wellikson says the field continues to grow and is expanding well beyond general internal medicine. There are now hospitalist specialists, such as OB-GYNs who spend all day delivering babies and orthopedic surgeons who work on staff in emergency rooms handling patients who have been in car accidents.

And what do patients think of getting handed off to a doctor they don’t know after they have been admitted to the hospital? Wellikson says his organization encourages hospitalists to measure patient satisfaction and even provides tools to help them do so. The feedback from patients indicates that working with hospitalists is a tradeoff. “What we hear is that if there is a negative, it’s that people miss seeing their general doctor,” he notes. “But it turns out that’s balanced by what they love, which is that the doctor who is taking care of them is in the hospital all the time. Overall, this profession would not have grown if the patients didn’t like it.”

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