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Under Pressure


Hospitalist Stephanie Jackson, MD, medical director of patient safety at Sacred Heart Medical Center in Eugene, Ore., was preparing for SHM’s meeting with lawmakers in Washington, D.C., in March. As a member of SHM’s Public Policy Committee, she knew the annual powwow with Congressional leaders would be particularly sensitive this year as the economy continues to crater, healthcare reform hangs in political purgatory, and HM advocates look to insulate the industry from growing pressures.

But while she was prepping to tackle national issues, Dr. Jackson was dealing with serious problems closer to home. Her own hospital administrators were preparing to slash the safety initiatives she was championing, including an ambitious new bar-coding system to reduce medication errors and a long-planned information technology upgrade, from the budget. Hospital executives held emergency financial meetings two weeks running. At the time, Sacred Heart had less than 70 days’ cash on hand, compared with its usual 350-day buffer. In essence, the threat to her HM program had sprouted up so severely and quickly that Dr. Jackson was too busy batting them down to travel 3,000 miles to talk about the issues.

“It’s hard to leave when your organization is not doing well,” she says. “You need to be home. Our whole mission is to provide safe, high-quality, compassionate patient care. When budget cuts are made, it will affect patient care. There’s absolutely no way it can’t.”

Major Threats

HM is enduring its first recession since the specialty was established in the mid-1990s. As the national economy teeters and hospitals falter, threats to HM’s future continue to emerge. Leaders say the biggest threats are:

  • Hospital closings. Two Chicago hospitals, Lincoln Park and Michael Reese, recently closed their doors, placing hundreds of healthcare professionals in the unemployment line. More hospitals are floundering financially, and as institutions close, they will eliminate job opportunities for HM groups to provide services. Then again, demand for hospitalists remains high, so even out-of-work practitioners have options. “There’s still going to be so much more demand for good hospitalists than there is supply that, if I was going to quit academic study and get a job as a hospitalist, I’d be pretty confident,” says Dr. Centor, the associate dean at the Huntsville Regional Medical Campus in Alabama.
  • Hospitals reducing HM program subsidies. As administrators struggle to balance budgets because of declining revenues and rising charity-care costs, payments to HM programs focusing on QI and nonessential care practices are fodder for cutbacks. “We’re appreciated nine months out of the year,” says UC San Diego’s Dr. Maynard, “and three months of the year, it’s budget hell.”
  • Cutting HM programs altogether. This is seen as the least likely scenario, given how entrenched hospitalists have become in most institutions. However, most are expecting a slowdown in the expansion of current programs and the creation of new ones. One notable exception is the recent announcement that pediatric hospitalists from The Children’s Hospital of Philadelphia would provide 24/7 coverage at the University Medical Center of Princeton in New Jersey.—RQ

It’s the new HM paradigm: a landscape in which hospitalists confront a growing confluence of threats to their livelihood. The pressures are rooted in the economic downturn, as hospitals nationwide face sagging revenues and daily fights to raise capital as investors lower their investment ratings. Questions abound:

  • Will more primary-care physicians (PCPs) return to hospitals to supplement their practices, siphoning encounters from HM groups?
  • Will an infusion of government money into community health centers draw patients away from hospital stays?
  • Will HM’s workforce expansion continue as hospitals close or lose the ability to pay competitive subsidies? Even the Federal Reserve, in its latest Beige Book survey, reported falling patient volumes for elective procedures and an increase in emergency services.
  • Will the very real fears of physician overload and burnout—and the possible departure of qualified hospitalists for other specialties or careers—grow as institutions cut ancillary medical staff and put more duties on the HM checklist?

The threats are real, of course, but HM advocates and practitioners say that, for now, they remain just that. HM groups continue to grow, and HM job postings are plenty. To date, hospital administrators have been mostly loathe to lay off the staffers they count on to lower costs through patient safety initiatives, reduced length of stay, and faster throughput. The most optimistic of hospitalists view the threats as opportunities to further establish themselves as thought leaders who can prove their worth through quantifiable metrics. Still, hospitals are increasingly in dire straits, and that means hospitalists could be in the same situation.

“The dilemma is that hospitalists are tied to the hospital as an institution,” says Larry Wellikson, MD, CEO of SHM. “It doesn’t really matter what causes the hospital to have less discretionary capital. … These things play against the hospitalist.”

Beyond Staff Cuts

Dr. Jackson’s case is typical. Her institution—a two-hospital center with 510 combined beds—recently eliminated 70 positions. None were physicians, but several care-management jobs were lost. Add in a local unemployment rate of almost 12%, and it’s no surprise the hospital is buckling under the weight of uncompensated charity care. And even though Sacred Heart lists patient safety initiatives as a top priority, “it always comes up that it can be cut,” Dr. Jackson says.

The bar-coding initiative was put on hold until the end of 2010, despite the hospital’s purchase of a packager that separates medications into individual packets. Dr. Jackson thinks the new technology could cut medication errors by at least 25%. Updates in information technology have been put on hold. And even if President Obama’s stimulus plan supplies money for electronic medical records (EMR), much of that money might not make it to the hospital-floor level for another 12 to 18 months.

Budget cuts aren’t relegated to large-scale initiatives, either. “Positions have been frozen, perks disappearing,” Dr. Jackson says. “At medical staff meetings, food is getting sparse. Educational opportunities that would have been there before, they’re not going to pay for that. My money to go to [HM09] is frozen right now.”

Stay the Course

Greg Maynard, MD, MS, clinical professor of medicine and chief of the division of hospital medicine at the University of California at San Diego Medical Center, also identifies the threats to HM in personal terms. Cutbacks on spending are hard to avoid in tough economic times, he reasons, but the key for hospitalists is to not allow those discussions to affect the interpersonal relationships between HM groups and hospital executives. He also echoes the sentiments of burnout fears and morale issues. In the past year, his 24-member HM group has added primary coverage of the adult oncology unit and adult cystic fibrosis patients, among other responsibilities. It also started night coverage shifts. All the while, Dr. Maynard and his staff have heard UC San Diego is having financial issues, including troubles with its pension investments. Budget discussions are more strained because of the overall economic crisis, which makes professional relationships even more important to maintain, he says.

You have to empathize with the medical center administrators as they struggle. I think there’s a threat of a dialogue. When pressure comes on, debates can become contentious. It’s important to avoid that.

—Greg Maynard, MD, chief, hospital medicine division, UC San Diego Medical Center

“You have to empathize with the medical center administrators as they struggle,” he adds. “I think there’s a threat of a dialogue. When pressure comes on, debates can become contentious. It’s important to avoid that.”

Dr. Maynard blames some of the current friction between hospitals and hospitalists on HM’s growth—estimated at 28,000 physicians and still growing—and the lagging increases in Medicare, Medicaid, and private insurer reimbursement. A new reimbursement system is at the top of Obama’s agenda for national healthcare reform; however, the economy has slowed the advance of those initiatives. Obama has set aside roughly $20 billion in stimulus funding to encourage EMR programs.

Other plans are likely to gain momentum in coming months, with the expected confirmation of Kansas Gov. Kathleen Sebelius as secretary of the U.S. Department of Health and Human Services.

“You can’t grow and grow, and not grow the amount of money needed,” Dr. Maynard says.

Return of the PCP

Another oft-discussed threat to the HM model is the potential return of primary-care physicians (PCPs) to the hospital. PCPs pulling back to focus on their private outpatient practices helped birth the HM movement. Many of the nation’s uninsured forego primary care and instead seek care in the ED, which often leads to hospital admission and HM care. If PCPs return to the hospital, it could mean a decrease in hospitalist patient census.

Don’t Back Down

Threats to the HM business model paint a hazy picture of an industry in struggle, but while the challenges to the industry are serious, the impact on individual hospitalists is more clouded. In fact, experts say, the demand for hospitalists puts HM practitioners in the driver’s seat—if they can take advantage of the situation. Here’s how:

  • Provide data points on specific cost savings. It’s difficult for hospital administrators to justify losing physicians who prove they save the institution money. As the economy tightens, those savings may be harder to quantify, which is why HM leaders are pushing for creativity in cost savings.
  • Remember it’s a buyer’s market. There is no shortage of open hospitalist positions, and the more jobs that are available in hospitals, the more difficult it can be for institutions to retain their top talent. That can be a bargaining tool.
  • Realize size matters. While large HM groups clearly benefit from economies of scale, smaller groups can have the nimbleness to quickly adjust to a hospital’s needs. Some HM leaders believe there is an opportunity for new groups to form, offering to start new programs for lower costs than more-established groups.

“It’s a unique kind of situation,” says Dr. Wellikson. “Many of the things that will happen will play into the favor of individual hospitalists.”—RQ

The plight of the unemployed, which has ballooned to more than 500,000 per month since December 2008, is another consideration. Will PCPs need to fill an encounter gap when millions of American families lose their employee-funded medical benefits? And what about the billions being set aside to open new community health centers, which theoretically would siphon potential PCP patients—and revenue? Will these centers push PCPs to resume caring for hospitalized patients?

“The only threat to HM is if we had major healthcare reform that included comprehensiveness, that included something to make it worthwhile for the PCPs to take care of their patients in the hospital,” says Robert M. Centor, MD, FACP, associate dean and director of the division of general internal medicine at Huntsville Regional Medical Campus in Alabama. “For more and more family physicians … it doesn’t make financial sense to travel to the hospital.”

Gene “Rusty” Kallenberg, MD, chief of family medicine at UC San Diego’s School of Medicine, points out PCPs can hurt hospitalists without returning to the hospital. More patients treated in primary care means fewer patients whom hospitalists can charge. Should Obama extend healthcare coverage to the estimated 47 million uninsured people in the U.S., patients once treated in the ED and admitted through HM programs likely would seek primary care before heading to the hospital, further limiting billing opportunities for HM groups. The irony, Dr. Kallenberg says, is that what is best for the patient isn’t necessarily best for the industry—HM included—that treats them.

“If you reward PCPs for doing what’s right, then somebody has to pay for it,” he says. “The specialists are going to pay for it. If what happens is epidemiologically fine, that we lower the census … where is the money coming from?”

For the well-positioned HM group, the money will come from the savings it can prove to hospital administrators, says Dr. Centor, a nationally recognized voice in the debate on the value of hospitalists. He and Dr. Wellikson agree that hospitalists should be viewed as even more valuable to a hospital in financial trouble.

“Good hospitalists demonstrate their value with pay-for-performance-type things, with the avoidance of events, getting involved in quality committees,” Dr. Centor says. “A really good hospitalist program is worth its weight in gold and makes the hospital money. If you’re in a hospitalist group that is just churning out patients and isn’t involved in quality and isn’t considered good clinically, then you might be in danger.”

Integration Model

At Boston Medical Center, hospitalists have a more secure place—even in worsening economic times—through a vertical integration program that uses physicians hired through the Department of Family Medicine. The doctors split time between community health centers and hospital inpatient units, and work directly with hospitalists led by Jeffrey Greenwald, MD, HM director and associate professor of medicine at Boston University School of Medicine.

Larry Culpepper, MD, MPH, chairman of family medicine at Boston University School of Medicine and Boston Medical Center, says the vertical integration helps the family medicine physician and hospitalist to find efficiencies. “It has huge advantages,” Dr. Culpepper says. “They’re closely tied to the hospital this way. They’re not out in the community health center getting burned out and drifting away from mainstream medicine. … They see—face to face—the urologist or the cardiologist. They’ve got great communication that helps both ways.”

Collaborative programs are likely to crop up more in the next 12 to 18 months as HM leaders look for creative ways to justify their hospital support. More than 90% of HM groups receive hospital support payments, and the average subsidy is nearly $900,000 per year, according to SHM’s “2007-2008 Bi-Annual Survey on the State of Hospital Medicine.” Dr. Wellikson says hospitalists are establishing initiatives to demonstrate their value, but independent experts say more empirical data is needed to quantify that value.

“Many studies report that hospitalist care is associated with shorter lengths of stay and reduced costs,” say the authors of a recent study in the New England Journal of Medicine.1 “However, most studies were single-center, observational studies, and the results of the few available randomized trials have been mixed.”

Dr. Wellikson says recognition of the symbiotic relationship between hospitals and the hospitalists that work there is a major step in and of itself. HM leaders need to recognize and appreciate the litany of current statistics tied to hospitals. He frequently quotes recent hospital data that show 65% of institutions experienced both a drop in elective procedures and an uptick in charity care.

Combine that information with fact that many hospitals saw credit ratings downgraded and investment portfolios trimmed to the tune of $1 billion, and it’s clear hospitalists need to be cognizant of the threats to their livelihood. That means HM and hospitals need to work together, Dr. Wellikson says, to make both businesses financially viable. Thought leaders who take a long-term view, one that aligns HM fortunes with hospitals’ fate, would be in the strongest position moving forward, he says.

“In any cycle in any industry, you have fat times and lean times,” he says. “You have to manage in both times, and this is the first lean time. … Eventually, this recession will pass and the strong hospitals will survive. The better hospitalists will survive, because they’re going to be more valuable to their institution.” TH

Richard Quinn is a freelance writer based in New Jersey.


  1. Hamel MB, Drazen JM, Epstein AM. The growth of hospitalists and the changing face of primary care. NEJM. 2009;360(11):1141-1143.

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