Ten Practices for Increasing Hospital Profitability: Tip #9

As we wrap up the list of profitability practices today and tomorrow, we once again turn to a tip involving the role of physicians. Many hospitals have turned to using hospitalists to manage a significant number of their inpatient admissions, and with great success if handled right.

Tip #9: Consider hiring hospitalists to manage inpatient care

The utilization of hospitalists has grown significantly over the last few years. At first, hospitalists were used primarily at larger institutions. Now you will find them everywhere including small community hospitals. Their use has increased because they help hospitals deal with two important issues: 1) minimizing length of stay and unnecessary testing 2) addressing lifestyle issues of primary care physicians who prefer an office only practice.

Many studies have shown that effective hospitalists can save a hospital millions in costs and generate additional revenue through their practices. Their availability inhouse helps facilitate admissions through the ED. They can significantly lower length of stay and reduce the amount of inpatient testing. Further they can enhance revenue through thorough and appropriate documentation that allows the hospital to maximize coding.

But this assumes that the hospitalist is a skilled acute care provider. I have seen hospitalist programs fail to deliver these returns because the physicians filling this role are the same inefficient providers that they were in their private practice. The point of a hospitalist program is to have the inefficient providers turn their care over to someone effective at managing acute care. Many times the physicians who seem to get lost providing inpatient care are happy to do this and appreciate the opportunity of having a hospitalist. But there are those physicians who refuse to turn over any aspect of their patient's care (inpatient or out). The only advantage of having a good hospitalist program for these physicians is that it provides a good internal benchmark for comparison. If you can show them that their case mix index is lower than the hospitalist's patients yet their length of stay and test utilization is higher, this provides a strong argument to influence their practice patterns.

The second benefit of a hospitalist program is that many of the primary care physicians, particularly the younger ones, prefer not having to deal with inpatient care. I had a family practice physician tell me that he needed only three more office patients a day to match the revenue he got by following inpatients which took over 2 1/2 hours of his day. For him, the decision to support a hospitalist program was easy. Unfortunately for me, he was also a very efficient inpatient provider. But the point is that you can generally improve the efficiency of your inpatient care while making life easier for a number of primary care physicians.

One last note, starting a hospitalist program is usually not free. Most hospitalists do not fully support themselves through billing alone, particularly in small hospitals. There is usually a subsidy involved to get the coverage needed. This must be weighed against the benefits gained to determine the financial feasibility. Most hospitals, including small ones, are finding this worthwhile.

More on the last profitability tip tomorrow.

Mark Brodeur