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Establishing A Hospitalist Program

The number of hospitalists practicing in the US is approximately 10,000. Each week new Hospitalist programs are being developed. Many hospitals are at least evaluating whether a Hospitalist program is right for their institution. Starting a Hospitalist practice is not necessarily easy, but with the proper planning and preparation, the chances for a successful and sustainable Hospitalist program are achievable.

First, some general advice:

1. Understand the local environment. Is there a need? Why do you want to set up a dedicated inpatient medicine program?

2. Determine if you can do it yourself or if you need a partner. Who is the obvious partner in your particular situation? The hospital itself? A national Hospitalist company? A local multi-specialty group practice? A local IPA? Another group of Hospitalists?

3. Give yourself time. Don't rush into the implementation phase without careful planning. Don't over commit. The planning can take several months, but it is worth the time invested in the long run. Remember you are trying to create something that can be successful in the short term and have the capacity to evolve and change over time, but that can be a platform for a long career for you and an asset for your community. 4. Find the right help. It can be helpful to hire a consultant, who has experience in establishing and managing Hospitalist practices. For sources of help, (link to: Hospitalist Practice Management Consultants on www.hospitalhedicine.org)

5. Evaluate your opportunity carefully. A program that gets off to a rocky start and is misdirected can end up a terrible failure, leaving the medical staff very reluctant to try again.

6. Use existing Hospitalist programs as a guide in your planning. Try to identify a program with as many similarities to your own situation as possible. But realize that every situation is unique. Be as clear as you can be in understanding what you are trying to achieve, what problems you are trying to solve, what resources you have at your disposal, and what obstacles are in your way.

A. Program Evaluation

Once you have decided that your general idea has merit and is worth pursuing, it is time to get into specifics. The first is program evaluation. The following make up a three-step plan for determining whether establishing a Hospitalist practice is viable:

1. Develop a Business Plan

a) You can collect the data necessary to put together a viable business plan yourself, but a number of consultants specialize in this work. It may be worth your time and money to hire one. You should look for the following qualifications in a consultant:

• Practical hands on experience in starting a Hospitalist program
• References on other Hospitalist programs they have developed
• Management skills that match with your specific needs (e.g. IS, Billing, staffing)
• An easily understood and appropriate cost structure for the consulting work
• Availability to meet your time schedule

b) The Business Plan should include the following components:

1) Expected Volumes

This analysis of how many and what kind of cases can be expected from the Emergency Department, private physician referrals and managed care referrals is the most important you can do as it sets the foundation for all future projections. The volume analysis should identify payer mix as well of source of referral. Frequently, this data is difficult to find because many hospitals do not have such statistics readily available.

Example

Potential Sources of Admissions

Primary Care Providers

2) Revenue Projections

Once you have projected the volume of work, you can project how much revenue there is to be earned. This will incorporate the mix of payers in your area and the expected payment from each for the level of service or the procedures you have identified. Sources for payment information for each CPT code or level of service (admission H&P, daily visit, etc.) would include your local Medicare carrier and each insurer or HMO operating in your area. In addition, you need to determine how the mix of capitation and fee-for-service in your community will affect this analysis.

Example

3) Staffing Matrix

First, you need to decide what kind of hospitalist practice you want to establish. Do you want to be able to provide coverage 24/7/365 or does your hospital really only have need for a hospitalist rounder on weekdays, weekends, days or night?

The second step is establishing a staffing grid that will define daytime and nighttime coverage. This should also include some idea of costs.

(Note: In the coming months, the Resource Center will have a section on: Compensation)

The third part of this exercise is determining who will be part of this new practice. Are there physicians in the community who want to do the work, or will you be recruiting in new physicians? What are the issues regarding costs/expenses of this effort that Hospitalists looking to establish a new practice should be considering.

(Note: In the coming months, the Resource Center will have a section on: Hospitalist Staffing Requirements)

4) Expense Projection

To complete the projection of how much the new practice will realistically cost to operate, you need to add in other regular expenses. These include things such as legal (e.g. employment, insurance, hospital contracts), malpractice insurance, coding and billing, information services and computers, and other office and administrative expenses. Remember that typically there is a lower percentage overhead for a strictly hospital based practice than the traditional PCP overhead (often more than 50%).

When hospitals are employing the Hospitalist group, they are wise to look at the following categories of expense. Numbers in parenthesis are only for example for a 3 FTE hospitalist group.

If a case manager is utilized to allow the Hospitalists to spend more time on direct patient care then add an additional $40-45,000 for salary and benefits

5) Projected First Year Profit and Loss Statement

By comparing the revenue with the expense projections, you can determine if the program should be able to financially survive on its own or if a subsidy will be required-at least in the short-term.

Don't be discouraged if your program needs to be subsidized initially. This is more than rule than the exception. The reality is that a Hospitalist program adds a significant amount of value to the hospital and the rest of the medical community that needs to be factored into the equation.

The metrics of demonstrating the value of a Hospitalist program will be explored in the near future in the Resource Center in a section on: Proving the Value of Your Hospitalist Program. These issues are discussed generally in the Return on Investment section below.

Sources for a subsidy include the hospital itself, local primary care and multispecialty groups, local IPAs, and national Hospitalist companies. Although the hospital is the obvious source of a subsidy (e.g. as a solution to care for its Emergency Department's unassigned patients), be aware that the federal government's fraud and abuse and tax laws may limit your hospital's ability to provide your start-up Hospitalist practice with monetary assistance. This phase will require input from the hospital's legal counsel.

6) Return on Investment

At this stage, the analysis should show whether establishing a hospitalist program solves a problem for the hospital, medical staff and community in a cost-efficient manner. In other words, is it worth the investment? This evaluation should also include some comparative clinical performance data that can be used to convince your hospital, an IPA, medical groups or other potential partners that the opportunity has merit.

In addition to looking at the ability for the hospitalist program to "support" itself through revenues generated by collections of billings from patient care, other issues can be examined that may be the basis for proving the value of your Hospitalist program.

• Reduction in Length of Stay
• Reduction in use of resources (e.g. drugs, tests, supplies)
• Reduction in Cost per case
• Reduction in Mortality rate
• Reduction in Complication rate
• Reduction in Readmission rate
• Increase in implementation of practice guidelines
• Leadership in Hospital Quality Initiatives
• Leadership in Patient Safety Activities
• Retention or attraction of PCPs to the Medical Staff
• Increased PCP and Specialist Satisfaction
• Increased Patient Satisfaction
• Reduced Congestion in Emergency Department
• Solution to Care of Unassigned Patients
• Improved management of Observation Unit
  

B. Identification of Political Sensitivities

The best programs have been thought through carefully, openly discussed and analyzed with the hospital's medical staff. Programs developed in isolation of the medical staff or imposed on them are doomed to failure. And even the most successful ones have had some political fall-out and some conflict with various hospital departments or medical staff.

There are some strategies for minimizing this kind of interdepartmental conflict:

1) In general, honest and candid discussion of difficult and sensitive professional and economic issues raised by a hospitalist program proposal can go a long way toward gaining support. Addressing concerns up front will save many headaches down the road.

2) One-on-one interviews with key leadership of the medical and nursing staffs and the hospital administration should occur from the very start of planning, so that there is at least basic understanding of the concept of a hospitalist program. Don't assume your colleagues know what you are talking about.

3) If you can find some "champions" on the hospital staff and administration that can take the lead in this time of change.

4) Try to identify potential obstacles or individuals who might perceive that having a hospitalist program might damage their practice or medical career.

5) Develop a promotional plan and materials to "sell" your program to the medical staff. Remember this is your referral base and you need their active support to be successful.

6) Download the SHM developed Patient Information Brochure and customize it for your program and use this as a tangible link between you and the patient you will be seeing.

C. Execution

Once you have completed the business plan and identified the sensitive political areas, it is time to implement. The key here is providing sufficient support to the Hospitalists to ensure long-term viability of the hospitalist program. Successful programs include the following systems:

• Recruitment of Qualified Physicians

Opponents of the Hospitalist model will be looking for a way to denigrate your program. It is very important to recruit physicians with the training, experience, credentials (e.g. board certification), and bedside manner that can make them not just as good as the existing medical staff, but as potential role models in the arena of hospital medicine.

• Specific Hospitalist Training

While there are an ever increasing number of residency programs specifically designed to train hospitalists, the reality is that most hospitalists will come from traditional internal medicine and pediatric residencies. These training experiences should have an emphasis on the hospitalized patient.

• Orientation for Entire Medical Staff

The promotion of your hospitalist program is not something to be taken for granted. Issues mentioned above in the Political Sensitivities section need to be explored and the specific situation at your hospital evaluated. Clearly, let the Medical Staff understand how referrals will be made to the Hospitalist service, what hours you are available, how the communication with the PCPs will occur, and most importantly who you are as individuals and professionals.

• Orientation and Training for Hospital's Healthcare Team

A Hospitalist program can be an enormous benefit to the other professionals who work in the hospital (e.g. nurses, therapists, ER). Your availability and frequent visits to the patient makes the staff's job easier. Inform them from the beginning of how your Hospitalist program will work and let them help advocate for your success.

• Management of Sensitive Issues

Try to anticipate who might "lose" if your hospitalist program is successful. Try to look at their concerns (e.g. loss of income, loss of power or influence at the hospital, loss of specialty referrals) and come up with data or a strategy to neutralize these concerns.

• Development of Clinical Pathways

Hospitalists can provide leadership in using existing clinical pathways or in instituting new ones or modifying existing guidelines. This is a non-monetary value that Hospitalists can add to their medical community.

Clinical Practice Guidelines

• National Guideline Clearinghouse (www.guideline.gov)
• Primary Care Clinical Practice Guidelines (www.medicine.ucsf.edu)
• Agency for Health Care Policy & Research (www.ahcpr.gov)

• Communication Systems for Proper Feedback to the PCP

In the coming months the Resource Center will have a section on: Communicating with PCPs

• Scheduled Regularly (e.g. Monthly) Meetings with the Hospital

Don't wait for disasters to strike or problems to develop. From the beginning set up a regular meeting with the hospital administration and/or key medical staff leaders. Define what parameters (e.g. referrals to hospitalists, PCP or patient satisfaction, LOS) you will be reviewing at each meeting. Know where you stand and look for ways to improve. This is a work in progress and you are developing this as you go.

• Operational Systems

You will rely on the hospital for key data such as number of admissions, patient demographics and billing information, and referring physicians. Understand the capabilities and limitations of your hospital's systems and try to clearly articulate your needs.

• Coordination with Emergency Department

Clearly define your role in regards to the ED. Will you be evaluating patients in the ED and determining who gets admitted? Will you admit ALL unassigned patients? Will the ED have a list of all PCPs who will directly admit their patients from the ED to you? What is your role in overseeing the Observation Unit?

• Administrative Support, including a properly staffed and supplied office

If you are being charged an administrative fee by the hospital, make sure the fees are significantly less than for an office based physician. For a discussion of issues on this important administrative aspect of Hospitalist practice, look for a future section in the Resource Center on: Billing and Collection

• Case Management

It is important to define your role in case management. If the Hospitalist performs this important function, then it is non-revenue generating time. In some hospitals the hospital will employ a case manager for every 3-4 hospitalist FTEs to perform the following functions:

• Assign patients to nursing care pathways
• Coordinates discharge planning and post discharge care
• Arranges follow up with PCP

One study showed that while a dedicated case manager may have a salary and benefits of $40-45,000, the Hospitalists had more than a 40% increase in patient care activities when a case manager was working with a Hospitalist team.

• Information Systems

(Note: In the coming months, the Resource Center will have a section on: Information Systems for Hospitalists)

• Quality Measurements

This will be an important area not only for hospitalists to prove their value to their medical community, but also to provide leadership as the patient and payers seek demonstrable quality as part of the health care equation. Some of the potential areas for setting parameters are listed in the Return on Investment section above.