Measures of Success

The headlines are harrowing: corporate layoffs; foreclosures on the rise; 401(k) retirement plans halved; government bailouts adding to the national debt. The worst economic downturn since the Great Depression has generated some unexpected outcomes, yet not all of them are bad for hospitalists. Below, four vignettes highlight HM groups that have achieved success despite—or in some cases because of—these troubled times.

A Better Business Agreement

It has taken nearly two years—and sometimes as many as four meetings a week—but Rajeev Alexander, MD, and his colleagues are nearing the finish line of an evolving business arrangement. The new arrangement has come about due to the economic downturn, which forced Oregon Medical Group (OMG), a multispecialty physician group serving hospitals in the Eugene/Springfield area and the HM group’s employer since 1988, to want to divest themselves of the hospitalist group. Now, after a lengthy negotiation, Dr. Alexander’s group of eight hospitalists is busier than ever.

Through what were essentially multiple quasi-buyouts, divestitures, and mergers, Dr. Alexander’s hospitalist group “spun off” from OMG and affiliated with PeaceHealth, a nonprofit health system serving seven hospitals in Oregon, Washington, and Alaska. The new contract means Dr. Alexander’s group is directly employed by Sacred Heart Hospital, a 541-bed PeaceHealth-owned facility in Eugene.

The new contract included a non-compete clause with OMG, which currently employs five hospitalists, yet Dr. Alexander’s group has maintained its patient volume. Compensation held steady and employee benefits improved. During an independent and slow-moving negotiation, Dr. Alexander’s group has merged with another HM service that originally was employed by PeaceHealth. The two HM groups (technically competitors) now practice in the same hospital and are ironing out the terms of the merger. At the moment, the groups have created a mutually respectful joint governance council.

“We’ve tackled the thorniest of problems,” Dr. Alexander says, “first, creating a combined work schedule to distribute patients and divide the work. Those of us on the governance council figured if we could get the docs to actually work together and share patients and communicate with each other as if they were one group, then the momentum for an actual administrative/contractual merger would feel inevitable.”

Rajeev Alexander, MD

Rajeev Alexander, MD

Achieve Success in a Tough Economy

“In this economy,” says Martin Izakovic, MD, medical director of the hospitalist program at Mercy Hospital in Iowa City, Iowa, “fiscal accountability means fusing and delivering the art, science, and business of medicine simultaneously.” A few more tips to survive the struggling economy:

  • Rethink your infrastructure. To drive down costs, think beyond simple budget cuts (e.g., reducing payroll) and consider your infrastructure. For instance, Dr. Izakovic says to question whether you could downsize the formulary for certain medications, such as low-molecular-weight heparin. Do you need four anticoagulants, or will two suffice? Is there a better deal available if you buy in bulk? Can you negotiate with suppliers? Clarify what is important and save money where it is least important.
  • Delineate your management philosophies. “There is a discipline and structure to being organized effectively, and that involves using a management process and data at the start of each and every discussion,” says Joe Woodin, president and CEO of Gifford Medical Center, a critical-care-access hospital in Randolph, Vt. “Weighing your risks has always been a good management philosophy.”
  • Set money aside. The team of hospitalists at Gifford ensures their capacity to fund quality care and replace equipment through a depreciation fund. “Our portfolio has taken a major hit, but our structured approach to cash management, which involves putting aside funds for depreciation, continues to prove to be a good approach,” Woodin says. “This type of long-term planning allows you to more reliably access capital. You can fund programs and equipment when you need to without ripping through your capital budget.”
  • Make careful, staff-related decisions. Use the right people, including mid-level employees, to do the right job. Match labor level to cost needs.
  • Assertively tackle the issue of call. This includes the expense, commitment to patient, commitment to hospitalist teams, and the expectations of PCPs.
  • Consider swing beds. For hospitals with fewer than 100 beds, consider instituting transitional-care-unit beds, also known as swing beds. “A robust rehabilitation swing-bed component can help small hospitals stay productive and provide appropriate care,” says Martin Christopher Johns, MD, associate medical director of emergency services and hospitalist services at Gifford Medical Center. “We have to be more flexible now about what constitutes an inpatient and which patients are cared for in-hospital that previously could have been cared for at home due to overburdened and understaffed home-health services.”
  • Partner for prevention. “To ultimately make healthcare consumers responsible for their own health will require a concerted refocusing: first, to deliver high-quality care upfront, and second, to link it with outpatient care,” Dr. Izakovic says.—AS

Although negotiations are expected to last through the end of the year to finalize such details as compensation, recruiting, and a group mission statement, the medical staff at Sacred Heart considers the merger a “done deal” and has thrown its support behind the effort. “Community outpatient docs have been clamoring for our services, and we have been having to hand out numbers and ask them to wait in line, so to speak,” Dr. Alexander says.

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