Hospitals as major employers and community resources can do nothing but reflect the realities of our country’s recession, now in its second year. For hospitalists who are integral to a hospital’s performance and are, at the same time, dependent on the institution’s financial success, there is the shared concern often seen by passengers in a two-person airplane buffeted by storms and fierce winds.
Hospitals are hit by a variety of forces during recessions, including tightening credit, increased borrowing costs, reduced returns from investments, decreased philanthropic donations, and the unkindest cut of all: more patients with less ability to pay.
American hospitals, which employ more than 5 million people, have witnessed all these forces magnify the long-standing issue of under-reimbursements from Medicare and Medicaid, which generally don’t even cover the rising costs of labor and technology. In New Jersey, 47% of hospitals were in the red in 2007, and five of the state’s 79 acute-care hospitals closed in 2008.
According to recent data, more than 65% of surveyed hospitals saw decreases in elective procedures and an increase in nonpaying patients. The hit to hospitals’ investments has mirrored the 401(k) crisis. More than 550 hospitals watched their recent investment declines combine for a total loss of $832 million in the third quarter of 2008, compared with a $396 million aggregate gain in the same time period in 2007. All this bad news led Moody’s to change its 12- to 18-month outlook for both profit and nonprofit hospitals from stable to negative due to increasing bad debt, credit tightening, and loss of investments.
Hospitals are keenly affected by local employment, too. When local businesses have layoffs, former employees often lose their insurance coverage. When companies cut back on expenses to hold on to their workers, often that translates into no health insurance or very high deductibles. When patients lose their jobs or their insurance, they stop getting preventive care; they stop buying prescriptions. The end result is increased ED visits and admissions for decompensated heart failure, flu that turns into pneumonia, or out-of-control diabetes.
More admissions might mean more business for hospitals and hospitalists, but it certainly does not mean more money. It likely means more no-pays and increasing bad debt. It means turning a precarious, marginally balanced bottom line into losses and layoffs.
As if that weren’t bad enough, 44 of our 50 states are operating in the red and looking at trimming big-ticket items to stem the losses. For most states, the budget items under scrutiny include education, prisons, and healthcare. Medicaid payments—already inadequate—are shrinking further at a time when more people need a safety net.
Prove Thy Worth
These are tough times to be running a hospital, but aren’t hospitalists, so dependent on the viability of their hospitals, also on a slippery slope—and running downhill? Actually, these tough times might make hospitalists—and our value—all the more important to their hospitals, helping administrators weather the storm and be resources for their healthcare communities.
Hospitalists can deliver just what we need today—efficient and effective care with appropriate use of resources, better hospital throughput, attention to safety, and measurable efforts to improve performance.
In addition, as primary-care physicians (PCPs), surgeons, and subspecialists retrench to stay away from no-pays so they can find a better payor mix in order to survive, patients keep coming to hospitals, and hospitalists are positioned to pick up the slack and jump right in. Obviously, there is the chance PCPs and others in difficult times might actually come back to inpatient care as office and procedure revenues dwindle, but this is less likely to affect hospitalists when we seem to always have far more work than we have staff or time to manage.
Times of crisis create opportunities for real change. President Obama and many key legislators and thought leaders have signaled a genuine desire to change a system that rewards performance (value-based purchasing) and bundles hospital and physician payments, which will be tied to key outcomes and performance. SHM has been able to show Washington decision-makers that hospitalists can reduce preventable deep vein thrombosis (DVT) in hospitalized patients from 50 per year to three per year. We have shown that hospitalists, using SHM’s BOOST protocols, can improve the discharge process, identify high-risk patients, and reduce ED visits and readmissions. This is just the type of system improvement that leads to better care at a lower cost—the Holy Grail in hard times.
Couple all this with the Institute of Medicine’s call to further reduce residency hours, which only leads to a greater need for hospitalists in teaching institutions, and there is an increasing demand for hospitalists seemingly everywhere. And even in a recession, high demand with a small supply leads to the need to nurture and reward hospitalists, especially those who are experienced and can deliver efficient and effective inpatient care.
At a national level, we will see experimentation with demonstration projects to look at rewarding performance and bundling payments for inpatient care. Similarly, hospitalists should be emboldened to use the current crisis to experiment locally by using teams of hospitalists, nurses, pharmacists, and case managers to revise the way care is delivered. There are opportunities to responsibly involve nurse practitioners and physician assistants as integral parts of your hospitalist team.
While the rest of medicine might be forced to look out for themselves in tough times, hospitalists, by their very positioning, must focus on the survival and improvement of the system, of their hospital, and of the healthcare community. In hospital medicine, we recognize that the days of “Lone Ranger” physicians carving out their own destinies are long gone. In many ways, physicians are intricately intertwined. And that forces us to survive or fail together. That will be hospitalists’ salvation in these hard times: knowing there are better times ahead for us, our hospitals, and our patients. TH
Larry Wellikson is CEO of SHM.