Practice Economics

Par Excellence


I’m often asked about the attributes associated with high-functioning practices, so I thought I’d offer a list of them in this column. I’ve written entire columns about some of them in prior issues of The Hospitalist, so I will provide only brief commentary about each of them here.

I think this list can serve as a valuable frame of reference for any hospitalist practice, though it is geared more toward nonacademic settings. It is based on my own career as a hospitalist, which spans more than 20 years, and 15 years’ work as a consultant with nearly 300 institutions around the country. While I think my experience has given me a valuable perspective, others might reasonably omit some attributes listed here or add others.

I believe the single most important measure of a practice is excellent outcomes for its patients. That said, all of the attributes I describe here have more to do with excellent operational, or business, performance. It is possible for a practice to have all of these attributes and still provide disappointing clinical quality for its patients, but that seems really unlikely to me. And even a practice that provides superior clinical care probably won’t be able to do so for long without high-functioning business operations.

I think each of these attributes might be a cause of a practice’s excellent performance, but it is possible that some are a result of it. They are listed in no particular order.

I think each of these attributes might be a cause of a practice’s excellent performance, but it is possible that some are a result of it.

A culture of practice ownership. The most important attribute associated with a high-functioning practice is that the providers in the group maintain a mindset of practice ownership. Even if you are employees of a hospital or other organization, you should think of yourselves as owners of the practice’s performance. When problems arise, you shouldn’t simply assume it is up to the practice leader alone, or an administrator outside of the practice to solve it. Instead, each doctor should always be thinking about how to improve the practice and taking action to make it happen. For more, see “Foster Ownership Culture” in the August 2008 issue, or visit my website and take a quiz ( to assess your ownership culture.

An effective group leader. All groups need a leader who takes the role seriously and doesn’t just view the job description as making the work schedule and attending more meetings than the other hospitalists. (Unfortunately, my experience is that this is precisely what a lot of leaders think.) Of the many markers that effective leaders display, one that seems pretty reliable to me is whether the group has routinely scheduled meetings, with an agenda provided in advance and minutes circulated a few days later. I wrote about effective group leaders in a June 2008 column titled “Follow the Money.”

Autonomy in making decisions. Even when you are an employee of a larger entity, the practice should be structured so that hospitalists have as much autonomy in decision-making as possible. For example, you should always be able to adjust the group’s work schedule (e.g. when shifts start and stop). You also should have a lot of say about your staffing and workload. The latter typically requires that the group is connected to the financial consequences of its choices, which usually means a compensation system based, to a significant degree, on productivity.

While still common for hospitalists, when the largest salary component is fixed, it will always follow that someone outside the group (e.g. an administrator at the hospital) will end up deciding how hard you will have to work to justify the promised salary. And the hospitalists will almost always find fault with that person’s decision—a recipe for constant frustration that inhibits the development of an ownership culture, among other things.

Each doctor sees the job as more than just providing care to patients. In addition to providing quality care for your patients, each hospitalist in the group must work to improve the performance of the hospital. This means work on clinical protocols, medical staff functions (e.g. credentials committee), documentation and coding for both CPT and DRG billing, etc.

Strong social connections. Every high-performing practice I’ve worked with is notable for the social connections between the hospitalists themselves, as well as between hospitalists and other physicians, nursing staff, and administrators. This shouldn’t be taken lightly. Social connections matter—a lot. And while the hospitalists in most groups feel reasonably connected with one another, too often they feel isolated from the other doctors and administrators at the hospital. I wrote some more thoughts about this in a June 2010 column, “Square Peg, Square Hole.”

Hospitalists actively involved in recruiting for their practice. The hospitalists themselves—at a minimum, the group leader—should be very involved in recruiting new members for the group. Professional recruiters are very valuable but can be a lot more effective if the hospitalists themselves participate in the process. The group will land better candidates that way. For more, see “We’re Hiring,” from July 2008.

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Want to share your unique perspective on hot topics in HM? Team Hospitalist is accepting applications for two-year terms beginning in April. If you are interested in joining the team, e-mail Editor Jason Carris at

Hospitalists know data about their performance. Too many practices fail to provide routine data about each provider’s clinical and financial performance. Make sure your group isn’t in this category. Develop a routine report of key metrics for your practice. Usually it is fine, and best, to provide to the whole group unblinded performance data about each individual hospitalist. For more information, check out “Measuring Hospitalist Performance: Metrics, Reports, and Dashboards” on the SHM website.

Don’t rely solely on consensus-based decision-making. Relying on consensus is reasonable for most decisions, if a group has about eight to 10 members. Larger groups need to decide how they’ll make decisions if consensus can’t be reached easily. And they need to have the discipline to stick to their agreed upon process, usually a vote. For more on this subject, see “Play by the Rules” in the December 2007 issue. TH

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 Hospital Medicine Consultants, a national hospitalist practice management consulting firm ( He is also course co-director 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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