As the New Year dawns I, like many Americans, am afraid.
Over the past year we’ve experienced a global financial meltdown, a deepening recession, rampant home foreclosures, Humpty Dumpty-like nest eggs, and the once-proud American auto industry gasping for breath. All of this is balanced against the hope that springs from the election of the first black President, who promises “change we can believe in.”
Hospitals are in growing financial straits and those in charge are deeply concerned, if not downright scared. In some ways, this is hard to imagine. Most hospitals reported outstanding, if not record, profits for the 2007 and 2008 fiscal years. However, change is afoot. Hospital admissions are down at nearly a third of hospitals, with a similar number of hospitals reporting declines in lucrative elective procedures. Additionally, recession-induced layoffs have resulted in a sharp rise in the proportion of uncompensated care that, when coupled with mushrooming debt and tighter credit, is propelling many hospitals into the red.
As a result, Moody’s, the credit-rating giant, has reported a rash of hospital credit downgrades. In October and November alone, Moody’s downgraded 18 hospitals and upgraded only one. At the same time, Fitch, another credit agency, downgraded the entire hospital sector from “stable” to “negative.” Although the subject of credit downgrades is somewhat abstract for many practicing physicians, the upshot is that it will be more expensive to finance hospital debt.
Coming on the heels of the largest hospital-building boom in American history, billions of dollars of debt present a very thorny fiscal rose. When this coalesces with less hospital utilization, more nonpaying patients, and potential decreases in federal reimbursement, it represents a financial crunch of catastrophic proportions.
Thus, it is no surprise our hospital administrators are on edge.
Enter me, the director of a money-losing service line, into an executive-filled room to propose expansion of hospital support for my hospitalist program. With average hospital support running a tad under $100,000 per hospitalist nationally, and overall support of about a million dollars per hospitalist group a year, any request for expansion will be scrutinized with a jaundiced eye.
In my experience, growing our hospitalist group was welcomed when the hospital’s coffers were bulging, the ED was overcrowded, and hospital beds were expanding. Granted, we had robust data showing our presence cut the average length of stay, increased throughput, and improved patient satisfaction—in other words, we paid for ourselves through enhanced efficiencies and cost savings. Still, the current economic realities dictate an unprecedented level of cost-consciousness and fiscal diligence. The result is my negotiations with my hospital administration have intensified, with an increased examination of expansion proposals, infrastructure development, and salary support.
So what are we—or I, in this case—to do? As I look at the potential of a prolonged recession, I am convinced this situation offers us a profound opportunity. Let’s face it: The hospital medicine boom was born out of opportunity. Early hospitalists took advantage of the opportunity to staff unassigned patients in the ED, backfill the migration of primary care doctors out of the hospital, enhance DRG reimbursements, reduce length of stay, and improve patient, staff, and subspecialist satisfaction because of our ability and willingness to staff inpatients around the clock.
In the coming years, we will again be offered opportunities, although they likely will come disguised as challenges. Some will choose to ignore these challenges in the hope they just go away, preferring instead to fear the unknown. Others will turn this fear into action and prosper. Opportunities will center on our ability to enhance patient outcomes and experiences. As federal dollars dry up and more and more Americans become uninsured or underinsured, hospitals will be pushed to augment the level of service and care they provide.
On one hand, payors have determined (appropriately so) that they want quality over quantity, and those who can provide superior outcomes will be better reimbursed. With thinning margins, hospitals will look for effector arms to engage the type of process improvement necessary to improve outcomes and, subsequently, revenue. We should not cower from this challenge, rather, embrace it; this is our chance to shine. Hospitalists are better positioned, better than any other medical group, to re-engineer the processes of care required to improve the quality of hospital care.
At the same time, our customers—the patients—likely will be footing more of the bill. As such, this new breed of healthcare consumer will expect a higher level of service than previously delivered. Again, hospitals that can provide five-star service will be better positioned to capture this coveted but ever-shrinking cohort of paying patients. This again positions hospitalists well. In my hospital, our group cares for just over 25% of all hospitalized patients, about 5,500 admissions per year.
Many hospitalist groups have a reach well beyond that, perhaps approaching 75%. Consider the type of bargaining power a hospitalist group could have by systematically showing that your work improves patient satisfaction, retention, and referral.
Measurement Is Crucial
Which brings me to my final point: As the economy tightens further, we will feel a heretofore-unrealized pressure to document our benefit. If we cannot document the fact our work improves processes, reduces length of stay, enhances the quality of patient care, and increases patient satisfaction, then we run the risk of being a glaringly large, negative budgetary line item waiting to be slashed.
With resolutions in the air, I resolve to work closely with my group and our hospital to document our value, prove our worth, do it better. Indubitably, this will meet with resistance, as some will advocate turning a blind eye, afraid of the challenges we might encounter. I, however, am going to choose to embrace these opportunities by fearing the known, rather than the unknown.
I have no doubt an honest assessment of the work we do and the value we provide might be anxiety provoking. It will force us to evaluate our care in ways we fear, measure our outcomes in ways we fear, push ourselves to improve in ways we fear.
In a word, change. TH
Dr. Glasheen is associate professor of medicine at the University of Colorado Denver, where he serves as director of the Hospital Medicine Program and the Hospitalist Training Program, and as associate program director of the Internal Medicine Residency Program.