Hospital executives, or whoever is responsible for coming up with funding to support the practice, often look at a larger practice as one that can take advantage of economies of scale. For example, executives may project that when the practice is larger, the hospital’s contribution to the practice on a per-FTE or per-encounter basis will become smaller. But just like the elusive scheduling benefit of larger groups, few practices realize any economies of scale. The vast majority of the costs in most programs are provider labor costs, which scale with program volume. So in most cases, the larger a practice becomes, the larger the overall hospital financial support will be on a roughly linear basis.
More often than not, night-shift work does become more cost-effective as practices grow. For example, an in-house night shift for a practice of eight FTEs might generate $200 to $400 in collected professional fee revenue each night, leaving the hospital to pay the remaining $700 to $900 each night. (These numbers are for illustration and aren’t intended to represent benchmarks or realistic targets for any practice.) But as the practice grows to support 20 FTE hospitalists in total, nights get busier. The night doctor might average three or four admissions per night in an eight-FTE practice but could average 10 or more in a 20-FTE practice. Those 10 admissions might generate around $1,200 in professional fee revenue, leaving the hospital to contribute only a small fraction (about $200 per night) of the cost of each night shift. So night shifts typically require diminishing dollars of hospital support as the practice grows.
Unfortunately, any economy of scale for night-shift coverage usually is offset by inefficiencies and costs that larger practices incur—and small practices often don’t—such as a significant amount of management infrastructure, professional administration, dedicated physician leader time, and an information technology infrastructure. These resources often are necessary to manage the complexity of a large practice, but every practice should challenge itself to demonstrate that these things actually improve the practice’s efficiency and performance enough to justify the money spent on them.
The larger the practice, the more likely there have been attempts to implement a triage pager system in which all new admissions and consults are routed to one pager (the triage, or “hot,” pager), which is held by one hospitalist at a time. In large practices, the “triage hospitalist” is usually so busy answering pages that they can do little else. And in many cases, ED doctors may describe a new admission to the triage hospitalist in detail only to have the triage hospitalist pass the information along to a colleague who will actually see the patient. This is an inefficient chain of communication, and I think most groups could do away with the triage pager. I described this issue in detail in my December 2008 column (“Technological Advance or Workplace Setback,” p. 69).
Large hospitalist groups work in large hospitals and end up doing a lot of inefficient walking between nursing units during the day. They may have patients on 10 or more nursing units and end up spending only a little time on each unit, which probably diminishes the “constant availability” that most see as key to the hospitalist model. So many groups decide to have each hospitalist cover only a small number of nursing units. This really has become a hot topic in the past couple of years, and I discussed it in detail in my September 2007 column (“Unit-Based Hospitalist Practice,” p. 84).
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 also is 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.