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Follow the Money


I eagerly await results from SHM’s survey of hospitalist productivity and compensation every two years. I’m most curious about whether a typical hospitalist has experienced an improvement in his/her “juice to squeeze ratio” (aka compensation per unit of work).

I was pleased to see in the recently released “Society of Hospital Medicine 2007-08 Survey: The Authoritative Source on the State of the Hospitalist Movement” that average hospitalist salaries increased the most for any two-year interval since we began surveying in 1997. If you haven’t seen the survey results, go to SHM’s Web site Production remained flat, while compensation increased to an average of $188,500. (The survey showed an adjusted mean annual compensation of $193,300, and a median salary of $183,900. See complete survey for explanation regarding the adjusted mean, which refers to data for hospitalists who care for adult patients only.)

The 2008 survey has a couple of findings even more compelling than the gratifying improvement in compensation:

  • 37% of HMG leaders did not know their annual expenses; and
  • 35% of HMG leaders did not know their annual professional fee revenues.

Think about this for a minute. One-third of hospitalist group leaders don’t know enough about their own practice’s financial picture to know high-level details related to income and expenses. We only can presume an even larger portion of non-leader hospitalists don’t know these things about their practice.

These numbers are disconcerting, and they’re even a little worse than the numbers reported two years ago. How can this be?

A comprehensive understanding of the practice’s budget and financial performance should probably be on everyone’s list of talents for an effective leader.

Behind the Numbers

My first inclination is to look for reasons the data are misleading. Maybe some leaders chose to respond by indicating they don’t know these numbers, when in fact they do have the numbers but were just too busy to look them up and complete that part of the survey. So they might be better informed than the survey suggests, but just too busy to demonstrate it.

Or, some group leaders in large organizations, like Kaiser, may track and account for productivity and financial health in ways that differ from a typical practice. They may know a lot about their practice, but the metrics the survey asks for aren’t relevant to them.

Maybe the survey results are misleading and group leaders know a lot more about their practice financials than these numbers suggest. Well, maybe.

Unfortunately, in my consulting work up close and personal with hundreds of practices, I regularly meet group leaders who don’t see financial accountability as one of their duties. I think the survey numbers may be a reasonably accurate reflection of reality.

I typically ask group leaders things like what portion of their practice budget is funded by professional fee collections vs. payment from the hospital (or other “sponsoring organization”) and what the pro fee collection rate is. As in the survey, a large portion don’t know. They often say it’s up to someone else to keep track of those numbers and worry about the practice budget. I worry that a leader with such a hands-off approach to the practice budget can’t be very effective.

I also ask leaders things like what is their most important duty as group leader. “Making the schedule” is too often the disappointing answer. Clearly the schedule is a critical part of operating a practice, but in many practices it is reasonable, even optimal, to have a clerical person manage the schedule, or rotate responsibility for creating it among all members of the group. This frees some time the leader can spend on other activities like managing the group’s financial performance, among other things.

What Leaders Do

The ideal hospitalist practice leader’s job description will vary from place to place. It includes many things in addition to ensuring the schedule gets created. There are a handful of things that should probably be on every leader’s list. For my money, this leader should:

  • Understand where the money comes from, where it goes, and what portion comes from professional fee collections vs. other sources. Also, to ensure all members of the group are updated on financial parameters regularly;
  • Put in place mechanisms to ensure the hospitalists provide high-quality care to patients;
  • Facilitate communication among hospitalists, hospital personnel, and medical staff to foster effective working relationships and facilitate problem-solving and conflict resolution;
  • Proactively identify opportunities for the practice to enhance the service it provides to its constituents and the organization in general, and negotiating a reasonable balance between such opportunities and the practice’s resources and clinical expertise;
  • Serve as a point of contact for referring primary care physicians;
  • Representing the group when working and negotiating with the hospital administration; and
  • Take an active role in recruitment while addressing behavior and performance issues within the practice.

Whether the leader handles these issues alone, delegates responsibility but still provides oversight, or forms a committee with other hospitalists, will vary from place to place. In every case, though, the leader should make sure these things are happening effectively.

Our field is young, and I think tends to attract people who want to avoid managing a complex practice. Perhaps it is no surprise some leaders may not be handling their job optimally. Fortunately, help is available.

Any group leader who wants to function more effectively can do several things. First, start talking to other practice leaders in your hospital. You could ask the lead doctor in another group what he/she regards as the most important components of their leadership role, and strategies that person used to become an effective leader.

Additionally, SHM has a highly regarded Leadership Academy designed to provide group leaders with the skills and resources required to successfully lead and manage a hospital medicine program now and in the future.

Each group leader should periodically step back from the day-to-day work to think about whether his/her time and energy is optimally allocated. Is the mix of clinical and administrative work reasonable? Does the leader devote time to activities (e.g., making the schedule) that could be handed off to others?

The standards used to differentiate between an effective and ineffective leader are hard to pin down and will vary a lot depending on the characteristics of a practice. Still, a comprehensive understanding of the practice’s budget and financial performance should probably be on everyone’s list. I hope the next SHM survey in late 2009 shows a lot more group leaders know things like their group’s annual expenses and revenues. We’ll see. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. He is also part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

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