Becker's Hospital Review

55 Executive Briefing: The Value of Specialist Hospitalist Support Sponsored by: H ospitalist programs have seen a significant rise in popularity in the past two decades. According to Cheryl Clark from Health- Leaders Media, the number of dedicated hospitalists has increased dramatically from "100 in 1996, to 11,000 in 2003, to 44,000 [in 2014]." Well over a majority of hospitals rely on the services of hospital- ists; according to Ms. Clark, "The percent- age of hospitals using hospitalists has ris- en from 29 percent in 2003 to 50 percent in 2007 to 72 percent in 2014." This rise can be attributable to the follow- ing factors: • The proportion of uninsured and Med- icaid patients at hospitals nationwide. These financial classes typically yield reimbursement levels that are insuffi- cient to cover the cost of patient time; • Decreasing willingness by physicians, including primary care providers, to provide call coverage of hospital emergency rooms and inpatient units; • An unwillingness among office-based primary care physicians to interrupt services at their private practices to round on hospital inpatients; and • Improved patient outcomes/satisfac- tion and reduced hospital length-of- stay associated with dedicated hospi- talist programs. A material proportion of hospitalist practices desire to maintain independence from hos- pital employment, resulting in professional services arrangements between hospitals and hospitalist practices. Due to the nature of hospitalist medicine, these independent contractor groups are increasingly finding the need to obtain financial support from the hospitals in order to cover the costs. According to the Society for Hospitalist Medicine's "2014 State of Hospital Medi- cine Report," based on 2013 data, 94 per- cent of adult hospitalist practices and 87 percent of pediatric hospitalist practices reported financial shortfalls. The need of independent hospitalist groups for finan- cial support from hospitals will remain a consistent feature of the healthcare mar- ketplace for the following reasons: • Compensation of hospitalists has increased substantially in the past seven years. For example, according to the "2014 Hospital Compensation Report" published by Today's Hospi- talist, "Over the seven years that To- day's Hospitalist has been surveying readers, full-time adult hospitalists have seen their earnings jump 26 percent, more than double the rate of inflation over [the] period [from 2008 to 2014]." • Reimbursement for primary care ser- vices in a hospital setting has been fairly stagnant over those seven years. For example, from 2008 to 2014, national average Medicare re- imbursement for current procedural terminology (CPT) code 99233 (a level three subsequent care visit in a hospital setting) increased from $90.65 to $104.24, for an increase of 15 percent. This rate of increase is well below the growth rate in hospital- ist compensation cited above. • As mentioned earlier, the patient payer mix at hospitals has become less favorable in terms of patient re- imbursement over time. In summary, the rise of hospitalist medicine has been accompanied by increasing prev- alence of the compensation of independent hospitalist groups by hospitals. In order to ensure compliance with Stark Law and the Anti-Kickback Statute, hospitals must en- sure that their financial support payments are consistent with fair market value. The appearance of special- ized-hospitalist programs Hospitals have discovered that the suc- cess of hospitalists in managing the pri- mary care needs of the general inpatient population can be expanded to the spe- cialized care of select patient subpopula- tions. In the past 2 years, HealthCare Ap- praisers has observed a notable increase in hospitalist programs focused specifical- ly on non-primary care disciplines includ- ing but not limited to the following: • Gastroenterology (GI hospitalists) • General Surgery (surgicalists) • Neurology (neurohospitalist) • Obstetrical care (laborists) • Orthopedic Surgery (orthopedic hos- pitalists) As mentioned in the introduction, many specialized physicians are unwilling to pro- vide call coverage to hospital patients due to the burden of 24/7 availability and inter- ruptions to private-practice services. Ac- cordingly, hospitals have sought to employ or enter into PSAs with board-certified spe- cialists to secure dedicated hospital cover- age of the aforementioned specialties. The advantages of dedicated specialist hospital coverage include the following: • Guaranteed full-time specialty cover- age, not subject to the inefficiencies associated with securing coverage from private-practice physicians. • Procedures performed in a hospital setting can differ substantially from the outpatient procedures more typi- cally performed by private-practice specialists (e.g., endoscopic retro- grade cholangiopancreatography, or ERCP, in a hospital versus a more standard endoscopy in an outpatient setting). As a result, operating room The Growth of Specialized Hospitalist Programs — A Valuator's Perspective An introduction to the growth in hospitalist medicine By Luis A. Argueso, Director, and Todd J. 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