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Fiduciary Responsibility


Editor’s note: Second of a two-part series.

Many issues that influence hospitalist budgets, specifically the amount of financial support provided by the hospital, are common in most HM practices. Last month I addressed issues related to collecting professional fee revenue (see “Budget Checkup,” October 2009, p. 54). This month I’ll turn to operations that have a significant influence on the practice’s financial picture.

Staffing and Scheduling

My experience is that hospitalists think carefully about the effect of their chosen schedule on a physician’s lifestyle (e.g., make HM a career path and minimize the risk of burnout) and patient-hospitalist continuity. But rarely do I find evidence that the group has acknowledged the effect of their schedules on the budget.

Here’s a common example. As patient volume grows, most groups find that the volume of admissions from late in the afternoon to around 10 or 11 p.m. is too high for one doctor to manage. So the group decides to add an evening shift (often called a “swing shift”). And because all previous shifts in the practice have been 12 hours long, they decide to make the evening shift last 12 hours as well. Many groups adhere to this physician schedule even if patient volume only requires evening-shift coverage from 5 p.m. until around 10 or 11 at night. By choosing a 12-hour evening shift, rather than the five or six hours that are really needed, the practice may be paying for about six hours of unnecessary coverage each day. Six hours more per day is 42 hours per week; I don’t have to tell you that this system can get really expensive very quickly.

Another common example: A group that uses a seven-on/seven-off schedule will add two new full-time equivalent (FTE) employees at the same time to preserve the symmetry required by the schedule, even if patient volume justifies adding only 0.5 to 1.0 FTE.

My point in these examples is not to suggest the right schedule for your group, but to provide a reminder that the schedule has a significant impact on the budget (see “Staffing Strategies,” January 2007, p. 50).

Some hospitals have systems of care that interfere with hospitalist productivity. … Every practice should think carefully about workflow and which systems might be getting in the way of efficiency.

NPP Roles

Physician assistants and nurse practitioners, which I refer to collectively as non-physician providers (NPPs), can make valuable contributions to hospitalist practices. Just as it would do for an MD hospitalist, a practice should assess NPP contribution to important metrics, such as quality of care, throughput, stakeholder satisfaction, and practice economics. I have worked with practices that never give much thought to whether their NPPs occupy the right roles in the practice—positions that allow NPPs to make significant, cost-effective, and career-satisfying contributions.

A simple exercise that can be very helpful is to determine the total cost to employ NPPs (salary and benefits) and think about whether the practice would be better off if those dollars were spent on physicians. If the return on investing in NPPs is less than the return on investing in physicians, the practice should consider adjusting the NPPs’ roles and/or schedules (see “Role Refinement,” September 2009, p. 53).

I’m not suggesting that the only measure of NPP value is in dollars or professional fee revenue billed. Instead, the group’s return on investment should be viewed broadly and include things that don’t appear in financial statements, such as quality, efficiency, patient satisfaction, etc.


For more information on scheduling and practice analysis, check out Dr. Nelson’s past columns by visiting and searching for “schedule.”

Arbitrary Definitions

SHM’s “2007-2008 Bi-Annual Survey on the State of the Hospital Medicine Movement” shows full-time hospitalists work an average of 2,172 hours annually. This might not be a reliable figure. Even so, many practices define full-time work based on annual hours (or shifts), but the doctors regularly adjust actual number of hours worked depending on that day’s workload, and few practices rigorously track actual hours worked. So I think data on hours worked annually (from SHM or other sources) should not be used as reliable or valid target for a practice.

Annual number of shifts worked can be reported by a practice more reliably but usually isn’t included in surveys because shift lengths can vary significantly from one place to the next. Ultimately, the number of hours or shifts that define full-time work for a given practice is arbitrary. And it has an impact on the budget.

Many—maybe most—practices arrive at a definition of full-time work based on annual hours, and any provider who works more than that number is paid for “extra” hours or shifts. If the number of hours or shifts that define full-time work is set low, the practice will end up paying for a lot of extra hours or shifts. Payment beyond the projected salary allowance can cause the practice budget to balloon.

One test to see if this might be an issue in your practice is to total the compensation and productivity (e.g., work relative value units, or wRVUs, or billable encounters) for each doctor in the practice. Analyze how the compensation per wRVU or encounter compares with survey data. If your group is higher than survey data, then the definition of full-time work might be unreasonably low, and vice versa.

Night-Shift Costs

Hospitalist night shifts tend to result in low productivity until the practice has grown enough that there are six to eight daytime hospitalists (rounder/admitter) for every night-shift doctor. Still, most small practices find that it is worthwhile to schedule a separate in-house night shift. The cost of the additional FTEs required to staff a separate night shift can be significant, and is a reason many very small practices require more financial support per FTE hospitalist from the hospital than larger practices.

In most cases, I think it is in the hospital’s best interest to provide support for a separate night shift (see “Finding and Keeping Dedicated Noctornists,” February 2008, p. 61). If the practice budget, or amount of support required of the hospital, is seen as excessive, it is worth estimating how much of the excess is attributable to the expensive night shift.

One simple way to do this is to think about the amount of hospital support that goes to each doctor during each shift. For example, if a hospitalist works 182 shifts a year and is compensated $230,000 (salary and bonus at $200,000, and benefits at $30,000 annually), then the doctor costs the practice $1,264 per shift. You might conduct an analysis and learn that the doctor averages $900 in collected professional fees during a day shift and $500 during a night shift. That means more hospital support goes to cover a night shift ($764) than a day shift ($364). Put another way, in this example, each night shift worked by a doctor requires $400 more hospital support per shift than the day-shift hospitalist ($764 vs. $364). In most cases, the hospital realizes a significant return on spending the extra money on the night shifts.

Hospitalist Productivity

Some hospitals have systems of care that interfere with hospitalist productivity. These could be such things as a poorly organized medical record, an IT system that requires logging into multiple programs to retrieve data on a single patient, or hospitalists being required to do clerical work. Productivity also is influenced by time spent on nonclinical activities, which leads to decreasing professional fee revenue. Every practice should think carefully about the systems and activities that might be getting in the way of efficiency. 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 Hospital Medicine Consultants, a national hospitalist practice management consulting firm ( He is co-director and 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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