Costs and Consequences for Hospitalist Growth

Hospitalist physicians have continued to increase and hospitalist related costs paid by American hospitals have risen to 11 billion dollars a year. Academic hospitals appear to benefit most and this is where studies have mostly been done. Not all full service hospitals benefit from this design, but full service hospitals are pretty much forced to hire hospitalists. Too few hospitalists per inpatient can negate the savings to a hospital. Hospitalists arise from primary care training - a design that has resulted in rapid additional primary care decline  as a consequence of rapid hospitalist growth. The rise of hospitalist workforce was also dictated by cost cutting designs such as Diagnosis Related Groups that were implemented in 1983. Hospitalists are a primary example of the consequences of design changes - consequences that are typically not anticipated and can cause disruptions in important areas inside or outside of health care.

Hospitalists have again reached the headlines. Instead of slowing after reaching 30,000 the surveys indicate 44,000 as hospitalists. The figure of 44,000 times $250,000 in compensation is 11 billion in additional cost to hospitals for this new workforce.

Are Hospitalists Worth 11 Billion More in Cost to Hospitals?

Hospitals for three decades have faced a payment design that has paid less, forcing hospitals to trim costs and maximize revenue for decades. Why would they increase their costs with hospitalists?

This rapid cost growth apparently has been worth it. Hospitalists can help shave half a day from the average hospital admission. Savings of 20 - 30% in costs plus a similar boost in admissions over a year combine for substantial gains. Less resources expended per patient and more patients admitted per year is exactly what hospital payment demands as a response. But not all hospitals benefit as noted in the literature and in discussions with rural and small hospital administrators.

The Usual Problem with Healthcare Literature: 
Claimed Benefits for Some Many Not Work for Others

In a research review, 11 of 17 studies supportive of hospitalists were from teaching hospitals. Teaching hospitals are some of the largest, most specialized, and most limited in bedspace. Also the rapid rise of hospitalist workforce helps to solve a major problem for teaching hospitals - the loss of resident workforce due to resident work hours limitations. These characteristics explain success in teaching hospitals - but have other hospitals been dragged into situations with more cost and less gain?

Smaller hospitals, rural hospitals or hospitals with limited bedspace have mixed results as they may not be able to shave costs or increase admissions as compared to largest hospitals. Rural hospitals receive mixed benefits and consequences. These hospitals have been forced to add hospitalists and emergency room physicians in recent decades. In fact the increased costs of hospitalists and emergency room physicians may undermine these hospitals. When the bed utilization cannot be predicted as easily, savings in personnel cost can be limited and hospitalists may not result in more admissions a year for greater revenue.

When hospitals fail to have enough hospitalists, the hospitalist advantage can go away. A likely reason is that too many patients per hospitalist results in the hospitalist getting to see and manage the patient too late to save a half day or admission.

The move to hospitalist workforce forced other hospitals to go along as physicians outside of the hospitals have grown more dependent upon hospitalists. The result has been outside physicians less willing to do hospital work. In rural settings, some rural primary care physicians converted to become hospitalists. Family physicians that are listed as hospital based in the AMA Masterfile have 26% rural location rates as compared to 20.4% for active family physicians. It is not surprising that rural hospitals have turned to family physicians for hospital and emergency room workforce as rural communities are most dependent upon the three times family multiplier to rural locations. Further deteriorations of internal medicine primary care will increase the importance of family medicine where care is needed and for aging populations.

Resistance appears to be futile, but hospitalist changes have impacted the full range of settings and, as usual with rapid, major changes, the adverse impacts are most often visited upon the most vulnerable.

Rapid Growth of Hospitalists Results in Rapid Decline in Primary Care Result

The creation and growth of emergency room physicians came initially at the cost of primary care workforce. With the rapid growth of emergency medicine training, there was less loss of existing workforce and more loss of future primary care workforce as medical students have opted for ER training.

Hospitalists continue to arise predominantly from primary care trained graduates. The nation already suffers from primary care deficits due to insufficient investment in primary care training and insufficient payment for primary care services.

It is not a surprise that additional primary care training failure is seen due to the rapid growth of hospitalist workforce. After all, the national design
  • Sends primary care training funds to hospitals (not primary care facilities) 
  • Trains primary care physicians predominantly in hospitals
  • Trains primary care physicians increasingly by faculty who are hospitalists
Hospitalists are also seen as most influential in training programs - programs that influence primary care resident career decisions and also medical student decisions.

The salaries for hospitalists are higher than primary care salaries, particularly for the newer graduates that can get paid the least when entering the primary care workforce. When internists fail to get the prestigious fellowship positions and still desire hospital practice, they can and do choose hospitalist careers in the years after graduation. Hospitalist gains are cumulative over the first 5 - 10 years after graduation as more decide to focus on hospitalist careers and fewer remain as primary care physicians. 

The impact of better salaries and hospital care focus is magnified by the poor support for primary care in ways that increase primary care departure. Nurse practitioners and physician assistants are also increasing in hospitalist activities.

Based on the 44,000 figure and hospitalists predominantly from the last 15 years of primary care trained physician graduates, about 22% of the nation's potential primary care arising from physicians has been diverted away from primary care.

Internal medicine was already sinking below 20% office primary care result. One would think that a more rapid decline toward 10% primary care result would indicate the futility of spending training dollars on internal medicine with the expectation of primary care result, but… Internal medicine has received primary care training expansion dollars and even the new Teaching Community Health Center  program included some internal medicine programs. 

Diagnosis Related Groups + Prospective Payment = Hospitalists

The primary motivation for hospitalists has been the payment design - the hospital payment design. In 1983 after only one year of testing in one atypical state (NJ), Diagnosis Related Groups were implemented nationwide. As with most innovations for the past 31 years, the major intent was reigning in costs. Prospective Payment was really about cost cutting and hospitals were a first major target. Smaller hospitals faced significant cuts in payment as they were paid less for the same services under the new design.

DRG plus PPS has resulted in a squeeze play involving hospital personnel such as nurses. The impact is substantial on nursing since nurses have been 85% employed by hospitals in the first years of their career. The constant focus upon cost cutting has resulted in less than satisfactory work environments for nurses. To some degree the rise of nursing careers outside of hospitals and nurse practitioner workforce has been fueled by the cost cutting squeeze.

Hospitalist increases also fit with the pattern of higher proportions of physicians as employed workforce - not private or independent. In addition hospitals can now exert more control over those who shape patient stays. Fragmentation of care was another result as well.

A major consequence is that hospitals were incented to dump patients sooner while lowering costs of delivery. Such was the attraction of the hospitalist model. Those with more resources were able to use less and those with fewest resources were taxed more. Patients sent home were less ready to function and the additional financial and resource stain was pushed their way. The burden was shifted to community practices and resources. Communities with fewer resources again can lose out when hospitals do less. 

Quality issues have resulted from earlier discharge. One of the top risks in health care involves the management of blood thinners. Patients placed on these risky drugs are sent home before they are stabilized. Discharge has not always been smooth. Patients also need to be seen soon after discharge for a number of medications, treatments, or therapies. The primary care office, particularly the primary care nurse, is forced to gather the information, act quickly, and arrange follow up. Busy Monday mornings trying to triage primary care patients were made more challenging. Insurance contracts require these services even though there may not be any previous visit or other connection to the patient. The primary care office may also acquire the burden without receiving any revenue. Such is a national design change that has many consequences that were not considered. 


Hospitalist changes and consequences should help instruct the nation about unintended consequences. What may work for certain settings may not work out well for much of the nation.

The rise of hospitalists may well complete the divorce between inpatient and outpatient. New questions are raised. Does it make sense to fund primary care via hospitals or train primary care via hospitals?

Sources

Review Study: The impact of hospitalists on length of stay and hospital costs

Hospitalists have again reached the headlines. Instead of slowing after reaching 30,000 the surveys indicate 44,000 as hospitalists. 

Hospitalists and Care Transitions: The Divorce of Inpatient and Outpatient Care

Rural hospitals receive mixed benefits and consequences.

Recent Works

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Family Medicine Needs a New Beginning - Current Preparation, Admission, and Medical School Plus Health Policy Interact To Prevent Family Medicine Choice - and Health Access Result

Starting to Solve Societal Inequities - Support for a SMART Start from the Very Beginning

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What Veterans Need Is Family Practice - No Other Type of Clinician Comes Close to the Location or the Scope

Declines in Health Care Delivery Despite Increases in Health Spending - If We Keep Accelerating Non-Delivery Costs, We Can Continue to Remain Behind Health Care Demand

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The Standard Primary Care Year           Physician Distribution By Concentration

Dr. Bowman is the North American Co-Editor of Rural and Remote Health. He was the founding chair of the Rural Medical Educators Group of the National Rural Health Association and the long term chair of the STFM Group on Rural Health.

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