In response to a myriad of pressures, many hospitals once again have chosen to hire their own physicians. Although not a prime target, hospital medicine, still coming into its own as a medical specialty, has been swept into the current as hospitals add employed physicians in all fields. For this medical specialty, however, we believe that partnering with a proven and established hospitalist group on an outsourced basis provides the hospital a number of benefits and opportunities that are less available when the hospital invests in developing a group internally.
The strategic and philosophical underpinnings demonstrating the value and importance of hospital medicine are strong, with increasing numbers of academic studies to support this claim. Accordingly, there has been unbridled growth in the number of hospitalists over the past 15 years. Rising from non-existence in the early 1990s to over 30,000 providers today, hospital medicine represents the fastest growing specialty in the history of medicine. The current stage of development may be likened to an adolescent whose growth spurt exceeds his maturity; much evolving and seasoning still lies ahead. In this circumstance, a hospital may find itself facing several challenges in keeping up with and incorporating the changing dynamics in the evolving art and science of hospital medicine.
Independent hospitalist practice groups are confronted with many of the same challenges and pressures that face their colleagues employed directly by the hospital. However, the independent group benefits from advantages inherent in their status as an outsourced entity. Following are ten reasons why it continues to make sense for hospitals to consider outsourcing their hospitalist service to an independent practice.
1. Independent practices offer focused expertise. As the field of hospital medicine matures, there is a growing understanding among hospitalists that in order to demonstrate their value and fulfill their potential they need to function as much more than simply internal medicine doctors without an office. This deeper level of understanding is best developed in an environment offering intense and focused experience steeped in the medical specialty. For the physician, a truly focused hospitalist experience is most readily available from within an independent hospitalist practice wholly immersed in hospital medicine and free from competing organizational distractions.
2. Independent groups generate more productivity without sacrificing quality. Hospitalists who work for independent groups have a demonstrated track record of greater productivity than those who work for hospitals. The recently released 2009 hospitalist survey conducted by the Medical Group Management Association shows that a hospitalist not employed by a hospital sees an average of 19 percent more patients than their institutional counterparts who are employed by hospitals. It is also interesting to note that nowhere in the literature is there evidence that the increased productivity diminishes quality of care. Indeed it is reasonable to argue that the synergistic effect of added focus, expertise and training afforded to independent hospitalists is precisely why improved productivity can be achieved with no sacrifice in quality. To be sure, all practices should stringently monitor their providers on quality measures to ensure that quality is maintained in the face of enhanced productivity.
3. An outsourced practice is the low-cost option. The more advanced independent practices have already developed the business and administrative support systems specifically geared to optimizing efficient and effective practice of hospital medicine. This may include including billing, accounting, recruiting, legal services, regulatory compliance, training, quality control, IT and marketing. In most cases an independent practice is capable of delivering this physician support at a lower cost than an institution or other practice groups. This translates into less physician subsidy and less risk for the hospital. The MGMA survey shows that the median financial support for an outsourced hospitalist is $90,000 per FTE, compared with $103,500 per FTE for hospital-employed hospitalists, a significant 15 percent differential. Equally noteworthy, there are several highly effective and reputable practice groups that provide high quality hospitalist services with little or no financial support from their hospitals.
4. Maintaining relationships with the physicians in the community is the lifeblood of independent hospitalists. For the independent hospitalist practice, nurturing and cultivating strong relations with community physicians is a high priority. This is essential to implementing an effective discharge planning and transition of care program, a key component to eliminating unnecessary readmissions. Outwardly focused by nature, the independent hospitalist survives by performing to the expectations of the primary care physician and specialist who are entrusting their patients to the hospitalist’s care. Sensitive to the need to provide an extra level of “customer service”, the independent practice will often hire a business development manager to coordinate meetings, phone calls and other clinical communications with outpatient physicians in the community.
5. Hospital medicine is best served with its own software solutions. From streamlined charge capture to real-time clinical communications to post-discharge care, hospital medicine performs most efficiently with its own dedicated technology platform. For the most part such technology resides currently outside of most hospital EMRs. To ask hospitalists to work only with the hospital EMR could lead to compromised performance. A better solution adopted by many independent practices is to integrate their software programs with the hospital’s EMR. The combination results in enhanced compliance, better charge capture and improved data quality, thereby setting the stage for an improved transition of care for the patient post-discharge.
6. The recruiting and on-boarding process is unique for hospitalists. Hiring, maintaining and developing a tight-knit practice group require an ongoing commitment by a practice. A unique characteristic of hospital medicine is the extraordinarily high level of interdependence between practice group members. The team-building effort to create the right fit among team members, with built-in processes to reach consensus and resolve conflicts, starts with the recruiting process and never stops. Hospital staff can play an important role in this process, but team-building has to be done by the team members themselves.
7. Independents have mastered the art of fitting in. This is a skill set that may be overlooked and underappreciated by hospitals: a practice group experienced in a variety of hospital cultures stands a better chance of knitting itself into the hospital’s organizational fabric than a group that has done it only once. By fostering a relationship of transparency and accountability between hospitalists and healthcare executives, independent practices can forge a true partnership in which the hospital’s strategic and tactical objectives are achieved in a manner specific to that facility. For example, independent physicians should be expected to be on at least one hospital committee within their first year in order to become integral with the institution’s goals and performance.
8. Independent practices are flexible practices. Responding to new circumstances and changing situations happens faster and easier with an independent practice. This is an inherent advantage for any small business. For example, managing and resolving conflict can be handled more expeditiously in a small group than in an institutional setting. Also, the ability of an independent practice group to clinically integrate with sub-acute facilities in the community, while availing itself of a wide range of referral sources, is an advantage derived from its nimbleness, adaptability and independence that a hospital-based group may not enjoy.
9. Independent practice leadership is accountable leadership. Independent practices cannot lay claim to having a corner on the market for hospitalist leaders. However, it can be fairly said that many of these programs have created a distinct advantage in developing leadership skills that will be required of physician leaders of the future. Most independent practice organizations of size put all of their practice group leaders and medical directors through their own uniquely designed hospitalist leadership programs. Perhaps most significant is that the clinical leaders of independent groups live with the vulnerability of having to perform every day to maintain their position in the hospital, and this drives the clinical leaders to being directly accountable to the goals of the hospital.
10. Aligning hospital goals with an outsourced group is faster and easier. Team-oriented and interdisciplinary by nature, hospitalist groups measure their success by how effectively they meet the goals and objectives of the hospital. Equating alignment with accountability is and should be the expectation for any successful partnership between hospital and practice group regardless of who owns the practice. Most healthcare executives intuitively understand that it is easier to develop alignment with an outsourced practice because physicians in such practices recognize that alignment with their hospital is critical to the success of their practice.
Although the trend toward employment of physicians seems to be returning, it is important to note that in recent months some new developments have emerged. Several major independent practices report an increase in the number of hospitals requesting an evaluation of their employed practices to assess their performance in all aspects including scheduling, quality, utilization, compensation and profitability. A thorough evaluation process should result in an internal discussion that leads to many of the issues we’ve discussed. With increasing frequency these discussions point towards a restructuring of the hospitalist practice into an outsourced program.
Hospital management would be wise to enter this process with an open mind, prepared to entertain the possibility that the employment model may not be in the long-term interest of the hospital. An independent team of hospitalists can provide hospital management an additional measure of input to assess whether or not an outsourced solution is the right answer. For a growing number of hospitals, we think the answer will be yes.
Patrick G. Hays was president and chief executive officer of the Blue Cross Blue Shield Association, the national coordinating body for the nation's then 49 independent Blue Cross/Blue Shield plans. Mr. Hays was founding CEO of Sutter Health in Sacramento, California in 1980, where he served as its chief executive officer for fifteen years. He is board certified in healthcare management and a Fellow of the American College of Healthcare Executives. He is an immediate past chairman of the board of directors of Trinity Health, a large multi-state faith-based healthcare organization, based in Michigan. He currently serves on the board of directors of IPC The Hospitalist Company, and has had governance experience in both privately held and publicly traded companies. Mr. Hays holds a B.A. from the University of Tulsa and an M.H.A. from the University of Minnesota. He also serves as a clinical professor at University of Southern California's Graduate Health Services Administration Program.
C. Thomas Smith served for over 11 years as president and chief executive officer of VHA Inc., Prior to VHA Inc., Mr. Smith spent over 30 years managing hospitals, with nearly half of this time as chief executive officer of Yale New Haven Hospital in New Haven, Connecticut. He has held board and leadership positions in several national associations, including chairman of the board of the American Hospital Association. Mr. Smith currently serves on the boards of directors of Kinetic Concepts, Inc., Informatics Corporation of America and Advanced ICU Care in addition to IPC The Hospitalist Company. Over the last two decades, Mr. Smith has served on the boards of six publicly traded and five private equity boards of health care companies. Mr. Smith holds a B.A. from Baylor University and an M.B.A. from the University of Chicago.
The strategic and philosophical underpinnings demonstrating the value and importance of hospital medicine are strong, with increasing numbers of academic studies to support this claim. Accordingly, there has been unbridled growth in the number of hospitalists over the past 15 years. Rising from non-existence in the early 1990s to over 30,000 providers today, hospital medicine represents the fastest growing specialty in the history of medicine. The current stage of development may be likened to an adolescent whose growth spurt exceeds his maturity; much evolving and seasoning still lies ahead. In this circumstance, a hospital may find itself facing several challenges in keeping up with and incorporating the changing dynamics in the evolving art and science of hospital medicine.
Independent hospitalist practice groups are confronted with many of the same challenges and pressures that face their colleagues employed directly by the hospital. However, the independent group benefits from advantages inherent in their status as an outsourced entity. Following are ten reasons why it continues to make sense for hospitals to consider outsourcing their hospitalist service to an independent practice.
1. Independent practices offer focused expertise. As the field of hospital medicine matures, there is a growing understanding among hospitalists that in order to demonstrate their value and fulfill their potential they need to function as much more than simply internal medicine doctors without an office. This deeper level of understanding is best developed in an environment offering intense and focused experience steeped in the medical specialty. For the physician, a truly focused hospitalist experience is most readily available from within an independent hospitalist practice wholly immersed in hospital medicine and free from competing organizational distractions.
2. Independent groups generate more productivity without sacrificing quality. Hospitalists who work for independent groups have a demonstrated track record of greater productivity than those who work for hospitals. The recently released 2009 hospitalist survey conducted by the Medical Group Management Association shows that a hospitalist not employed by a hospital sees an average of 19 percent more patients than their institutional counterparts who are employed by hospitals. It is also interesting to note that nowhere in the literature is there evidence that the increased productivity diminishes quality of care. Indeed it is reasonable to argue that the synergistic effect of added focus, expertise and training afforded to independent hospitalists is precisely why improved productivity can be achieved with no sacrifice in quality. To be sure, all practices should stringently monitor their providers on quality measures to ensure that quality is maintained in the face of enhanced productivity.
3. An outsourced practice is the low-cost option. The more advanced independent practices have already developed the business and administrative support systems specifically geared to optimizing efficient and effective practice of hospital medicine. This may include including billing, accounting, recruiting, legal services, regulatory compliance, training, quality control, IT and marketing. In most cases an independent practice is capable of delivering this physician support at a lower cost than an institution or other practice groups. This translates into less physician subsidy and less risk for the hospital. The MGMA survey shows that the median financial support for an outsourced hospitalist is $90,000 per FTE, compared with $103,500 per FTE for hospital-employed hospitalists, a significant 15 percent differential. Equally noteworthy, there are several highly effective and reputable practice groups that provide high quality hospitalist services with little or no financial support from their hospitals.
4. Maintaining relationships with the physicians in the community is the lifeblood of independent hospitalists. For the independent hospitalist practice, nurturing and cultivating strong relations with community physicians is a high priority. This is essential to implementing an effective discharge planning and transition of care program, a key component to eliminating unnecessary readmissions. Outwardly focused by nature, the independent hospitalist survives by performing to the expectations of the primary care physician and specialist who are entrusting their patients to the hospitalist’s care. Sensitive to the need to provide an extra level of “customer service”, the independent practice will often hire a business development manager to coordinate meetings, phone calls and other clinical communications with outpatient physicians in the community.
5. Hospital medicine is best served with its own software solutions. From streamlined charge capture to real-time clinical communications to post-discharge care, hospital medicine performs most efficiently with its own dedicated technology platform. For the most part such technology resides currently outside of most hospital EMRs. To ask hospitalists to work only with the hospital EMR could lead to compromised performance. A better solution adopted by many independent practices is to integrate their software programs with the hospital’s EMR. The combination results in enhanced compliance, better charge capture and improved data quality, thereby setting the stage for an improved transition of care for the patient post-discharge.
6. The recruiting and on-boarding process is unique for hospitalists. Hiring, maintaining and developing a tight-knit practice group require an ongoing commitment by a practice. A unique characteristic of hospital medicine is the extraordinarily high level of interdependence between practice group members. The team-building effort to create the right fit among team members, with built-in processes to reach consensus and resolve conflicts, starts with the recruiting process and never stops. Hospital staff can play an important role in this process, but team-building has to be done by the team members themselves.
7. Independents have mastered the art of fitting in. This is a skill set that may be overlooked and underappreciated by hospitals: a practice group experienced in a variety of hospital cultures stands a better chance of knitting itself into the hospital’s organizational fabric than a group that has done it only once. By fostering a relationship of transparency and accountability between hospitalists and healthcare executives, independent practices can forge a true partnership in which the hospital’s strategic and tactical objectives are achieved in a manner specific to that facility. For example, independent physicians should be expected to be on at least one hospital committee within their first year in order to become integral with the institution’s goals and performance.
8. Independent practices are flexible practices. Responding to new circumstances and changing situations happens faster and easier with an independent practice. This is an inherent advantage for any small business. For example, managing and resolving conflict can be handled more expeditiously in a small group than in an institutional setting. Also, the ability of an independent practice group to clinically integrate with sub-acute facilities in the community, while availing itself of a wide range of referral sources, is an advantage derived from its nimbleness, adaptability and independence that a hospital-based group may not enjoy.
9. Independent practice leadership is accountable leadership. Independent practices cannot lay claim to having a corner on the market for hospitalist leaders. However, it can be fairly said that many of these programs have created a distinct advantage in developing leadership skills that will be required of physician leaders of the future. Most independent practice organizations of size put all of their practice group leaders and medical directors through their own uniquely designed hospitalist leadership programs. Perhaps most significant is that the clinical leaders of independent groups live with the vulnerability of having to perform every day to maintain their position in the hospital, and this drives the clinical leaders to being directly accountable to the goals of the hospital.
10. Aligning hospital goals with an outsourced group is faster and easier. Team-oriented and interdisciplinary by nature, hospitalist groups measure their success by how effectively they meet the goals and objectives of the hospital. Equating alignment with accountability is and should be the expectation for any successful partnership between hospital and practice group regardless of who owns the practice. Most healthcare executives intuitively understand that it is easier to develop alignment with an outsourced practice because physicians in such practices recognize that alignment with their hospital is critical to the success of their practice.
Although the trend toward employment of physicians seems to be returning, it is important to note that in recent months some new developments have emerged. Several major independent practices report an increase in the number of hospitals requesting an evaluation of their employed practices to assess their performance in all aspects including scheduling, quality, utilization, compensation and profitability. A thorough evaluation process should result in an internal discussion that leads to many of the issues we’ve discussed. With increasing frequency these discussions point towards a restructuring of the hospitalist practice into an outsourced program.
Hospital management would be wise to enter this process with an open mind, prepared to entertain the possibility that the employment model may not be in the long-term interest of the hospital. An independent team of hospitalists can provide hospital management an additional measure of input to assess whether or not an outsourced solution is the right answer. For a growing number of hospitals, we think the answer will be yes.
Patrick G. Hays was president and chief executive officer of the Blue Cross Blue Shield Association, the national coordinating body for the nation's then 49 independent Blue Cross/Blue Shield plans. Mr. Hays was founding CEO of Sutter Health in Sacramento, California in 1980, where he served as its chief executive officer for fifteen years. He is board certified in healthcare management and a Fellow of the American College of Healthcare Executives. He is an immediate past chairman of the board of directors of Trinity Health, a large multi-state faith-based healthcare organization, based in Michigan. He currently serves on the board of directors of IPC The Hospitalist Company, and has had governance experience in both privately held and publicly traded companies. Mr. Hays holds a B.A. from the University of Tulsa and an M.H.A. from the University of Minnesota. He also serves as a clinical professor at University of Southern California's Graduate Health Services Administration Program.
C. Thomas Smith served for over 11 years as president and chief executive officer of VHA Inc., Prior to VHA Inc., Mr. Smith spent over 30 years managing hospitals, with nearly half of this time as chief executive officer of Yale New Haven Hospital in New Haven, Connecticut. He has held board and leadership positions in several national associations, including chairman of the board of the American Hospital Association. Mr. Smith currently serves on the boards of directors of Kinetic Concepts, Inc., Informatics Corporation of America and Advanced ICU Care in addition to IPC The Hospitalist Company. Over the last two decades, Mr. Smith has served on the boards of six publicly traded and five private equity boards of health care companies. Mr. Smith holds a B.A. from Baylor University and an M.B.A. from the University of Chicago.