How High Can Your Support Payments Go?

Last December, St. Peter’s Hospital, a 122-bed acute-care facility in Helena, Mont., crossed a symbolic line in the decade-long evolution of the financial payments that hospitals have provided to HM groups to make up the gap that exists between the expenses of running a hospitalist service and the professional fees that generate its revenue.

Hospital administrators asked the outpatient providers at the Helena Physicians’ Clinic to pay nearly $400,000 per year to support the in-house HM service at St. Peter’s, according to a series of stories in the local paper, the Helena Independent Record. The fee was never instituted and, in fact, some Helena patients and physicians have questioned whether the high-stakes payment was part of a broader campaign for the hospital to take over the clinic, a process that culminated in March with the hospital’s purchase of the clinic’s building.

Still, the Montana case focused a spotlight on the doughnut hole of HM ledger sheets: hospital subsidies. More than 80% of HM groups took financial support from their host institutions in fiscal year 2010, according to new data from SHM and the Medical Group Management Association (MGMA), which will be released in September. And the amount of that support has more than doubled, from $60,000 per full-time equivalent (FTE) in 2003-2004 to $136,400 per FTE in the latest data, according to a presentation at HM11 in May.

HM leaders agree the growth is unsustainable, particularly in the new world of healthcare reform, but they also concur that satisfaction with the benefits a hospitalist service offers make it unlikely other institutions will implement a fee-for-service system similar to that of St. Peter’s (see “Pay to Play?,” p. 38). As hospital administrators struggle to dole out pieces of their ever-shrinking financial pie, hospitalists also agree that they will find it more and more difficult to ask their C-suite for continually larger payments (see Figure 1, “Growth in Hospitalist Financial Support,” p. 37). Even when portrayed as “investments” in physicians that provide more than clinical care (e.g. hospitalists assuming leadership roles on hospital committees and pushing quality-improvement initiatives), a hospital’s bottom line can only afford so much.

“It’s not sustainable,” says Burke Kealey, MD, SFHM, medical director of hospital specialties at HealthPartners in Minneapolis and an SHM board member. “I think hospitals are pretty much tapped out by and large.

Growth in Hospitalist Financial Support

Money paid to HM groups from hospitals and other sources has been around from the earliest days of the specialty. At right are median survey data per full-time equivalent (FTE) from SHM and the Medical Group Management Association (MGMA) on how much has been provided over the past eight years. The data currently represent adult HM groups but in past years have included pediatric groups, so this chart is reflective of “all hospital medicine groups.” In the two most recent surveys, the data were collected jointly for the SHM-MGMA State of Hospital Medicine report (the 2011 report will be released in September). All previous data were collected solely by SHM.

About Richard Quinn

Richard Quinn is an award-winning journalist with 15 years’ experience. He has worked at the Asbury Park Press in New Jersey and The Virginian-Pilot in Norfolk, Va., and currently is managing editor for a leading commercial real estate publication. His freelance work has appeared in The Jewish State, The Hospitalist, The Rheumatologist, ACEP Now, and ENT Today. He lives in New Jersey with his wife and three cats.

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