Today’s hospitals must address a variety of challenges stemming from the expectation to provide more services and better quality with fewer financial, material, and human resources. According to the annual survey conducted by the American Hospital Association (AHA) in 2003, total expenses for all U.S. community hospitals were more than $450 billion. In managing these expenditures, hospitals face the following pressures:
- Cost increases in medical supplies and pharmaceuticals.
- Record shortages of nurses, pharmacists, and technicians.
- A growing uncompensated patient pool.
- Annual potential reductions in Medicare and Medicaid reimbursements.
- Rising bad debt resulting from greater patient responsibility for the cost of care.
- The diversion of more profitable cases to specialty and freestanding ambulatory care facilities and surgery centers.
- Soaring costs associated with adequately serving high-risk conditions, such as cancer, heart disease, and HIV/AIDS.
- Discounted reimbursement rates with insurers.
- Increasing pressure to commit financial resources to clinical information technology.
- The need to fund infrastructure improvements and physical plant renovations as well as expansions to address increasing demand (1).
To overcome these challenges, hospitals must find innovative ways to balance revenues and expenses, fund necessary capital investments, and satisfy the public’s demand for quality, safety, and accessibility.
Hospitalist Programs: A Good Investment
One solution to the above-mentioned situations is a hospitalist program, which, in its short history, has already had a profound impact on inpatient care. Robert M. Wachter, MD, associate chair in the department of medicine at the University of California, San Francisco (UCSF) and medical service chief at Moffitt-Long Hospitals, coined the term Hospitalist in an article in the New England Journal of Medicine in 1996 (2). At the 2002 annual meeting of the Society of Hospital Medicine (SHM), Wachter presented findings from a study conducted at his institution. The results demonstrate a significant return on investment (ROI) of 5.8:1 when a hospitalist program is utilized (See Table 1 for details) (3).
How do hospitalists reduce length of stay (LOS) and cost per stay? William David Rifkin, MD, associate director of the Yale Primary Care Residency Program, offers three basic reasons why hospitalist programs contribute to effective and efficient use of resources. Since hospitalists are physically onsite, they are better able to react to condition changes and requests for consultations in a timely manner, he asserts. Also, being familiar with the hospital’s systems of care, the hospitalist knows who to call and how to utilize the services of social workers and other contingency staff when arranging for post-discharge care. Third, Rifkin indicates that inpatients today are sicker than they were in past years, a fact well known and understood by hospitalists. “There is an increased level of acuity,” he says. “Hospitalists are used to seeing these kinds of patients. They are more comfortable taking care of these patients and will see more of them with any given diagnosis” (4).
In one of his studies, Rifkin noted a reduction in LOS for inpatients with a pneumonia diagnosis. “The hospitalist had switched the patient from IV (intravenous) to oral antibiotics,” he says. Reacting quickly to indications that the patient was ready for a change in treatment modality facilitated an earlier discharge (5).
L. Craig Miller, MD, senior vice president of medical affairs at Baptist Health Care, reports that his hospital saved $2.56 million in 2 years as a direct result of its inpatient management program (6). Although attention to technical and clinical details is important, Miller emphasizes the critical role the human factor plays, specifically the impact of teamwork, on achieving resource utilization savings.