The chang­ing world of the na­tion's hospitalists

As con­sol­i­da­tion be­gins to sweep through health­care, hospitalists ex­pect to see the trend ac­cel­er­ate in their sec­tor

Modern Healthcare - - FRONT PAGE - An­dis Robeznieks

Con­sol­i­da­tion is hap­pen­ing ev­ery­where in health­care, so it’s not sur­pris­ing that it’s hap­pen­ing among hospitalists. Ex­perts, how­ever, say it’s not as wide­spread as peo­ple may think—but they also ex­pect the trend to con­tinue and prob­a­bly ac­cel­er­ate.

Pa­tients may not no­tice a dif­fer­ence, but doc­tors will—with many en­joy­ing what a large op­er­a­tion has to of­fer and oth­ers see­ing a sit­u­a­tion with fewer op­tions and an en­vi­ron­ment where “mis­align­ment” be­tween lo­cal and na­tional goals and opin­ions is a con­stant con­cern.

Hos­pi­tal­ist con­sol­i­da­tion deals that caught the health­care in­dus­try’s at­ten­tion last year in­cluded Dal­las-based Ea­gle Hospi- tal Physi­cians ac­quir­ing Prime­doc Man­age­ment Ser­vices of Asheville, N.C., in July and then buy­ing In­pa­tient Man­age­ment of St. Louis a month later. Brent­wood, Tenn.based Co­gent Health­care ended its 2010 by ac­quir­ing En­dion Hos­pi­tal­ist Sys­tems in De­cem­ber and then it merged with Hospitalists Man­age­ment Group last May. The newly named Co­gent HMG then kept on con­sol­i­dat­ing with the Au­gust ac­qui­si­tion of the In­ten­sivist Group of Lake Zurich, Ill.

Since the deals in­volved pri­vate com­pa­nies, the fi­nan­cial terms of these trans­ac­tions have been kept un­der wraps. But the largest hos­pi­tal­ist group, North Hol­ly­wood, Calif.-based IPC The Hos­pi­tal­ist Co., went public in Jan­uary 2008 with a public stock of­fer­ing that net­ted $45.8 mil­lion, which the com­pany has used to grow by ac­qui­si­tion.

Ac­cord­ing to its 10-K an­nual re­port filed with the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion for the fis­cal year ended Dec. 31, 2011, IPC has ac­quired and in­te­grated into its or­ga­ni­za­tion 36 prac­tice groups since 2009. This in­cludes 13 that were ac­quired last year for a to­tal es­ti­mated pur­chase price of more than $24.8 mil­lion, ac­cord­ing to the re­port.

For those keep­ing score, IPC has 1,200 hospitalists in its ranks, Co­gent HMG has more than 1,000 and Ea­gle has more than 350 plus about 200 locum tenens doc­tors fill­ing tem­po­rary po­si­tions. (Ac­cord­ing to the IPC an­nual re­port, its fig­ure in­cludes physi­cians, nurse prac­ti­tion­ers and physi­cian as­sis­tants, but no break­down is of­fered and none was given when re­quested by Mod­ern Health­care.)

An­other ma­jor physi­cian-staffing com­pany, Em­care, says it has 574 hospitalists.

Ac­cord­ing to its re­port, IPC hospitalists work in 220 lo­cal prac­tice groups in 29 mar­kets where they op­er­ate in 365 hos­pi­tals as well 550 other in­pa­tient and post-acute-care fa­cil­i­ties in 25 states. De­spite this wide­spread pres­ence, more than 60% of the com­pany’s rev­enue is gen­er­ated from op­er­a­tions in Ari­zona, Florida, Michi­gan, Mis­souri and Texas.

“You read press re­leases about ac­qui­si­tions, but it’s still very frag­mented,” says Robert All­day, ex­ec­u­tive vice pres­i­dent of cor­po­rate and busi­ness de­vel­op­ment for Ea­gle Hospi­tal Physi­cians. He adds that about 80% of his com­pany’s busi­ness is in the South­east and along the At­lantic Coast.

Most hospitalists still prac­tice in small groups, ac­cord­ing to State of Hospi­tal Medicine: 2011 Re­port Based on 2010 Data, a sur­vey of 4,633 hospitalists in 412 groups pub­lished by the So­ci­ety of Hospi­tal Medicine and MGMA-ACMPE. Ac­cord­ing to sur­vey re­spon­dents, al­most 16% of hos­pi­tal­ist prac­tices have four or fewer full-time physi­cians and al­most 24% have only five to 10. Less than 8% of the groups had be­tween 101 and 150 physi­cians, while just be­low 13% had 151 or more.

Ac­cord­ing to Mod­ern Health­care’s an­nual Physi­cian Com­pen­sa­tion Sur­vey (July 18, 2011, p. 22), hos­pi­tal­ist com­pen­sa­tion typ­i­cally ranged be­tween $190,333 and $236,500 and av­er­aged $217,858. This rep­re­sented al­most a 4.3% in­crease from the pre­vi­ous year’s av­er­age of $208,925.

Dr. Joseph Li, an as­so­ci­ate pro­fes­sor at Har­vard Med­i­cal School and the di­rec­tor of the hospi­tal medicine pro­gram at Beth Is­rael Dea­coness Med­i­cal Cen­ter in Bos­ton, notes that there are 34,000 hospitalists prac­tic­ing in the U.S. So, even if you added all the hospitalists to­gether at IPC, Co­gent HMG, Em­care and Ea­gle, they would ac­count only for a small frac­tion of the to­tal hos­pi­tal­ist work­force.

“In gen­eral, I’m an op­ti­mistic per­son,” says Lee, a past pres­i­dent of the 11,000-mem­ber, Philadel­phia-based So­ci­ety for Hospi­tal Medicine, who notes that there are both up and down sides to the con­sol­i­da­tion trend.

The chief op­por­tu­nity that Li sees in con­sol­i­da­tion is to greatly re­duce vari­a­tion in care. Wher­ever you go, you can walk into a Mcdon­ald’s or Star­bucks with clear ex­pec­ta­tions about the cost and qual­ity of the prod­ucts and ser­vices. But he says hos­pi­tals have wide vari­a­tion in cost and qual­ity—even in the same com­mu­nity. Go­ing fur­ther, Li says, cost and qual­ity can vary greatly in an in­di­vid­ual hospi­tal de­pend­ing on whether you come in dur­ing the day or night or dur­ing the week or week­end.

“One could ar­gue that the (hos­pi­tal­ist) man­age­ment com­pa­nies are ahead of the ball­game on this,” Li says about the stan­dard­iza­tion and qual­ity im­prove­ment ini­tia­tives of the larger or­ga­ni­za­tions.

In look­ing at the down­side of con­sol­i­da­tion, Li com­pared it to lo­cal re­tail­ers try­ing to com­pete against Wal-mart for cus­tomers and em­ploy­ees. At his own in­sti­tu­tion, Li ex­plains how of­fer­ing op­por­tu­ni­ties to teach or do re­search is one way it can lure hospitalists from the larger, na­tional or­ga­ni­za­tions.

Mov­ing to hospi­tal em­ploy­ment

In ad­di­tion to con­sol­i­da­tion, there is also a trend from self-em­ploy­ment to hospi­tal em­ploy­ment, says Dr. Robert Wachter, a pro­fes­sor of medicine at the Univer­sity of Cal­i­for­nia at San Fran­cisco and chief of the UCSF Med­i­cal Cen­ter di­vi­sion of hospi­tal medicine.

The up­side to this, Wachter says, is that ev­ery­one is fol­low­ing the same guide­lines and us­ing the same in­for­ma­tion tech­nol­ogy sys­tems, but there is at least one ma­jor dis­ad­van­tage.

“Hos­pi­tals aren’t very good at man­ag­ing doc­tors, so the po­ten­tial for mis­align­ment is there,” Wachter says. “When it works well, it works very well. But it can be prob­lem­atic.”

Dr. Lori Heim, who is one of five hospitalists at 152-bed Scot­land Me­mo­rial Hospi­tal in Lau­r­in­burg, N.C., said she is em­ployed by her hospi­tal but the pro­gram is man­aged by a larger sys­tem to take ad­van­tage of economies of scale with pur­chas­ing. Heim, a past pres­i­dent of the Amer­i­can Academy of Fam­ily Physi­cians, says “mis­aligned in­cen­tives” be­tween hospitalists at a lo­cal in­sti­tu­tion and their na­tional cor­po­rate of­fice could re­sult in prob­lems with staffing and re­sources.

She said small groups can set their own poli­cies based on need and ex­pe­ri­ence, while—with large groups—those poli­cies may “come down from on high” with lit­tle lo­cal in­put. Not­ing how she works in one of the poor­est com­mu­ni­ties in her state, Heim ob­serves how her pri­or­i­ties—such as im­prov­ing tran­si­tions of care—are dif­fer­ent than in Raleigh or other parts of the state.

Dr. Tamara Doehner is one of 16 hospitalists with 460-bed Ne­braska Methodist Hospi­tal in Omaha, though she notes she is em­ployed by the af­fil­i­ated Methodist Physi­cians Clinic. Doehner says her group will be adding two more hospitalists by the sum­mer and adds that she does not see con­sol­i­da­tion with a larger or­ga­ni­za­tion com­ing any­time soon.

“They don’t have any­thing to of­fer that we don’t al­ready have,” Doehner says. “There’s not a lot of rea­son to change from where I sit.”

Wachter, who runs a 50-hos­pi­tal­ist depart­ment, says the na­ture of the field— pro­vid­ing cov­er­age 24 hours a day while per­form­ing few if any pro­ce­dures—makes for re­im­burse­ment chal­lenges.

Some­times there are “lulls in the ac­tion” or a hos­pi­tal­ist may have to spend an hour with a pa­tient’s fam­ily for an end-of-life care meet­ing, which is a ser­vice that—un­like per­form­ing a pro­ce­dure—is “rel­a­tively poorly funded by our pay­ment sys­tem.” But, gen­er­ally, a hos­pi­tal­ist may su­per­vise the care of 12 to 16 pa­tients a shift, Wachter says, and

“in most mar­kets, that will not pay a hos­pi­tal­ist’s salary and ben­e­fits.”

So, even if not di­rectly em­ployed by a hospi­tal, Wachter says most hospitalists re­ceive a sub­sidy from the in­sti­tu­tion they work at on top of their share of a pa­tient’s bill. He sees this “de­pen­dence on the kind­ness of strangers” as a ma­jor force be­hind hospitalists’ qual­ity and ef­fi­ciency im­prove­ment ef­forts.

“We have to be in­dis­pen­si­ble,” Wachter says. “If we are not in­dis­pen­si­ble, we will be dis­pensed with.”

Wachter, who is cred­ited with coin­ing the term “hos­pi­tal­ist” in a 1996 New Eng­land Jour­nal of Medicine ar­ti­cle, is proud of how last month the So­ci­ety for Hospi­tal Medicine be­came the first physi­cian as­so­ci­a­tion to be rec­og­nized with a John H. Eisenberg Award for in­no­va­tion in pa­tient safety and qual­ity at the na­tional level.

The award, co-cre­ated by the Joint Com­mis­sion and Na­tional Qual­ity Forum, rec­og­nized the SHM for its ef­forts to im­prove care tran­si­tion, glycemic con­trol and ve­nous thrombo-em­bolism preven­tion, as well as its ef­forts to men­tor new lead­ers, share best prac­tices and mea­sure qual­ity. “We have to show value,” Wachter says. All­day, with Ea­gle Hospi­tal Physi­cians, agrees.

“We be­lieve in an­a­lyt­ics—you have to com­pare re­sults,” he says, not­ing how the in­fra­struc­ture of his or­ga­ni­za­tion pro­vides the ex­per­tise and mar­ket knowl­edge nec­es­sary to mea­sur­ably re­duce hospi­tal lengths of stay and read­mis­sions.

Value propo­si­tion

John Don­ahue be­came the new CEO of Co­gent HMG in Jan­uary and has em­barked on a mis­sion to visit each of the 120 or so hos­pi­tals where his com­pany’s doc­tors work. He’s been to about 20 so far, go­ing on rounds with Co­gent HMG hospitalists and sit­ting in on care-co­or­di­na­tion meet­ings.

His im­pres­sion is that there will be a “dra­matic ramp up of hos­pi­tal­ist con­sol­i­da­tion” in com­ing years in a large part be­cause of new qual­ity re­quire­ments hos­pi­tals are be­ing ex­pected to meet and the abil­ity large hos­pi­tal­ist com­pa­nies have to mea­sure their pos­i­tive im­pact on get­ting an in­sti­tu­tion to elim­i­nate hospi­tal-ac­quired con­di­tions and re­duce lengths of stay.

“All of these met­rics are im­pacted by what a hos­pi­tal­ist can do,” Don­ahue says. “The hos­pi­tal­ist value propo­si­tion has been dra­mat­i­cally en­hanced and spot­lighted by these re­quire­ments.”

Dr. T. Clif­ford Deveny is the se­nior vice pres­i­dent of physi­cian prac­tice man­age­ment for Catholic Health Ini­tia­tives, which had al­most 402,000 hospi­tal ad­mis­sions in fis­cal 2011. The care for about half of those pa­tients was han­dled by hospitalists.

“We’ve got Co­gent peo­ple,” he says. “And, ev­ery com­pany out there, we prob­a­bly have a con­tract with them.”

Deveny says more merg­ers and ac­qui­si­tions are ex­pected be­cause of the ex­ist­ing frag­men­ta­tion, which cre­ates con­fu­sion when at­tempt­ing to es­tab­lish stan­dards even to the point where there is not a com­mon stan­dard about who ex­actly qual­i­fies to be a hos­pi­tal­ist.

He adds that CHI is in the mid­dle of a process in which it’s try­ing to stan­dard­ize the way it pays hospitalists since now there are dif­fer­ent method­olo­gies at work in­clud­ing pay­ing per shift or per hour with in­cen­tives linked to pro­duc­tiv­ity or pa­tient sat­is­fac­tion scores and in­creased pay for caring for pa­tients with more dif­fi­cult needs. He notes hos­pi­tal­ist re­spon­si­bil­i­ties vary per set­ting as those in small crit­i­cal-ac­cess hos­pi­tals of­ten work in the emer­gency depart­ment.

“Physi­cians want to see their par­tic­i­pa­tion make a dif­fer­ence,” Deveny says. “They don’t want to be a com­mod­ity; they want to have a sense of pur­pose.”

To that end, Don­ahue notes how his com­pany has cre­ated the Co­gent HMG Lead­er­ship Academy, where physi­cians role-play and put them­selves in the pa­tients’ place and learn ways to ex­plain com­plex med­i­cal con­cepts and how to just get pa­tients to re­lax.

Dr. Adam Singer, IPC chair­man, CEO and chief med­i­cal of­fi­cer, says the com­pany he founded in 1995 has a sim­i­lar pro­gram— run by Wachter—where each year 40 of the or­ga­ni­za­tion’s hospitalists learn man­age­ment and team-build­ing tech­niques, med­i­cal eco­nom­ics and “how to drive the de­liv­ery sys­tem.” He says there is even an ex­er­cise in which physi­cians learn how their own per­son­al­ity types “af­fect XYZ per­son­al­ity types” and what they need to do to win peo­ple over and af­fect change.

“It’s rais­ing the bar for ev­ery­one,” Singer says, adding that, typ­i­cally, “doc­tors aren’t trained to do all that stuff.”

Singer, named Physi­cian En­tre­pre­neur of the Year by Mod­ern Physi­cian in 2008, says IPC’S size en­hances its abil­ity to carry out these train­ing ac­tiv­i­ties as well al­lows it to have the in­fra­struc­ture in place to mea­sure and sup­port con­stant im­prove­ment.

“Tran­si­tory ca­reer path”

Smaller groups “don’t have the abil­ity or ex­per­tise to do these things,” Singer says.

What IPC also of­fers, ac­cord­ing to Singer, is an op­por­tu­nity “to work like real peo­ple and like the other doc­tors in the hospi­tal do,” not­ing how a cur­rent trend to­ward hav­ing hospitalists work seven days on (of­ten in a 12-hour shift), fol­lowed by seven days off could be “the un­do­ing of the hos­pi­tal­ist move­ment.”

“Doc­tors should work Mon­day through Fri­day and share (week­end) call,” he says, not­ing that many hospitalists also work dur­ing their seven days off fill­ing tem­po­rary locum tenens spots.

Not­ing the “tran­si­tory ca­reer path” some younger hospitalists have, Heim says of the seven-on-seven-off trend, “I couldn’t stand it. I couldn’t work and man­age my per­sonal life.” She adds that there is noth­ing in­trin­si­cally wrong with work­ing dur­ing those seven days off for some­one else. “When I was much younger, I used to moon­light, too. It all de­pends on where you are in your ca­reer.”

Turnover can be a prob­lem. The SHM and MGMA-ACMPE sur­vey found that prac­tices had an av­er­age turnover rate of al­most 14% and a me­dian rate of 7.7%. Ac­cord­ing to its an­nual re­port, IPC had a 16% turnover rate in 2011.

At Ne­braska Methodist, Doehner says, hospitalists work five to seven days in a row with doc­tors in the Univer­sity of Ne­braska Med­i­cal Cen­ter fel­low­ship pro­gram fill­ing in any gaps. She says the goals are to pro­vide con­ti­nu­ity while avoid­ing burnout, adding that the fo­cus is on achiev­ing a work-life bal­ance that helps lead to a hos­pi­tal­ist’s longevity on the staff as well as in his or her

Hos­pi­tal­ist Dr. Quazi Hos­sain and nurses Dara Kreeger and Nancy Calderon con­fer at Tem­ple Univer­sity Hospi­tal in Philadel­phia. All are Co­gent HMG em­ploy­ees.

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