Practice Economics

Power Struggles


Many hospitalist practices are started by “traditionalists”: primary-care physicians (PCPs) active in the outpatient and hospital settings. The practice typically grows due in large part to the leadership of the founders. Ultimately, the practice is made up of both the founders and a cadre of part- or full-time hospitalists who don’t work in the outpatient setting. And sometimes they have different incentives and ideas about how the practice should operate.

When these individuals disagree, which group should break the tie—the founding “hybrid” or “rotating” doctors who work part time on the hospitalist service or the doctors who work only as hospitalists?

This is a reasonably common issue for “medical” hospitalist groups, and in many cases is becoming an issue for groups in other specialties that adopt the hospitalist model, such as surgical hospitalists, laborists, etc.

A Common Scenario

Let me illustrate this issue with a composite of several former consulting clients. Let’s say this is a hospitalist practice that serves a 250-bed community hospital. One large private internal medicine group adopted a “rotating hospitalist” model there in the late 1990s. One of the internists provided the daytime hospital coverage for all the group’s patients one week out of every six. Their hospital volume grew quickly. They were asked to take on responsibility for admitting an increasing portion of the unassigned patients, provide care for patients referred by other PCPs who wanted to drop out of hospital work, and increasingly were asked to consult on patients admitted by surgeons.

When faced with this situation, many PCP groups decided to exit the hospital themselves and turn that work over to hospitalists. This group stuck it out. At first, the one doctor in the group covering the hospital each week kept up with the growing volume by simply working harder and longer every day. Eventually, the group sought financial help from the hospital to hire hospitalists who didn’t have outpatient responsibilities.

Years passed, and this PCP group transitioned to employment by the hospital, just like the full-time hospitalists. And by this time, the hospitalist practice was seen as distinct from the original PCP group. About 80% of the staffing was provided by hospitalists who didn’t work in the outpatient setting, the remainder by PCPs who essentially founded the practice. The PCPs chose to continue providing hospital care, both because they found it professionally satisfying and their compensation formula made it attractive for generating production in the hospital.

Tensions arose between the hospitalists and the “hybrids.” The hybrids refused to work night shifts and generally were unable to fill in for unplanned absences by the hospitalists. And because of the PCPs’ compensation formula, and possibly the work ethic of more senior doctors, they favored managing larger patient volumes and decreasing weekend staffing significantly to allow more weekends off in total for everyone. The hospitalists had other ideas about these things, and they were unhappy that the PCPs would have first say about when they could work hospital shifts, thereby decreasing the hospitalists’ scheduling flexibility.

Divorce the office and hospital compensation schemes. There should be no connection between the compensation in the two settings, and both should be designed to ensure a competitive amount of money and performance incentives appropriate for that setting.

The hospitalists were all within a few years of their residency training, and most of the PCPs were midcareer. This created a social divide, making it that much more difficult for the two groups to work through the issues. While the hybrid doctors saw the hospitalists as good clinicians, and vice versa, each group said: “The other guys are difficult to work with. They don’t understand what it is like for us.”

Need for Paradigm Shift

At many sites, the doctors and their administrative counterparts get stuck in a stalemate and have the same, unhappy conversations repeatedly. These conversations are really gripe sessions more than anything else.

I think the best solution is for everyone to acknowledge the valuable contribution of the hybrid doctors in founding and leading the hospitalist practice through years of growth, but also to begin seeing the hospitalist practice as being owned and governed primarily by the hospitalists who do most of the work. For most issues in which the two factions can’t agree, the hospitalists should have the tie-breaking vote.

While this approach reduces the autonomy of the hybrid doctors to make operational decisions, it doesn’t mean they have zero influence. In fact, the practice usually has a critical need for the hybrid doctors to continue providing some of the staffing. This usually means that the practice will need to ensure it puts together a package of compensation and available shifts on the schedule to ensure the hybrids want to remain active in the practice.

In most cases, all involved should ensure that those hybrid doctors who want to remain active in the hospital, and perform well in the hospitalist practice, should have the opportunity to do so indefinitely.

Compensation Methods for Hybrids

Even if the hybrids and hospitalists are able to harmoniously agree on things like work schedules, the hybrid doctors often have compensation schemes such that when working in the hospital, they have different financial incentives from the hospitalists. (I’m using “hybrid” to describe physicians who work in both inpatient and outpatient settings, usually more time in the office practice.) A common situation is that the production (i.e. wRVUs) generated in the hospital counts toward their office productivity. So the hybrids and the hospitalists will have different ideas about how hard they want to work.

The solution here is to divorce the office and hospital compensation schemes. There should be no connection between the compensation in the two settings, and both should be designed to ensure a competitive amount of money and performance incentives appropriate for that setting. Such methods usually mean that a day of work in the office will result in a different-sized paycheck than what comes with a day of work in the hospital.

Dr. Nelson has been a practicing hospitalist since 1988 and is cofounder and past president of SHM. He is a principal in Nelson Flores Hospital Medicine Consultants, a national hospitalist practice management consulting firm. He is course codirector 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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