Some Hospitalists Wary of Bundling Proposals

The concept of “bundling” of payments to physicians and hospitals has emerged as a potential element of health care reform, but some hospitalists are expressing concerns about the potential effects of untested bundling proposals.

Under at least one of the health care reform proposals being considered by Congress at press time, the Secretary of Health and Human Services would be required to “develop a detailed plan to reform payment for post acute care (PAC) services under the Medicare program.” The plan is to consider, among other things, “the nature of payments under a post acute care bundle, including the type of provider or entity to whom payment should be made, the scope of activities and services included in the bundle, whether payment for physicians' services should be included in the bundle, and the period covered by the bundle.”

Proponents of bundling say it would create a good incentive for hospitals to avoid readmissions by providing high-quality care, calling that an improvement over the current system, in which physicians get paid for every test or procedure they perform and hospitals get more money each time a patient is admitted.

But private-practice hospitalists—those who contract separately with the hospital—are concerned about how such arrangements would affect their revenues.

“Healthcare reform legislation holds the potential for a cataclysmic uprooting of the traditional fee-for-service payment system,” wrote the authors of a white paper from the Phoenix Group, an organization of private-practice hospitalists. Reform might “leave hospital medicine in a position of vulnerability, particularly with respect to the security and reliability of compensation. No longer would even a portion of a hospitalist's revenues remain free of control by the hospital.” (See www.phoenixgroupwhitepaper.com

Dr. Eric Siegal, chair of the public policy committee of the Society of Hospital Medicine (SHM), said that recent surveys show that roughly one-third of hospitalists are employed by hospitals, another third work in academia, and the remaining third are in private practice. “Depending on how you're reimbursed and how you structure relationships with hospitals, bundling has the potential to either be perceived as a positive or a negative.”

Bundling is “certainly worth exploring” as part of efforts to change the current “flawed payment methodology,” said Dr. Ron Greeno, who is cofounder and chief medical officer of hospitalist firm Cogent Healthcare and a member of the Phoenix Group. “The way we're paying doctors and hospitals now isn't working. It's misaligned, creates waste, and [incentivizes] for the wrong things.”

But bundling has not been tested enough to prove that it works, added Dr. Greeno, a member of the SHM's public policy committee. “There's no proof that [bundling] will lead to better care or less wasteful care. If it's going to be done, there needs to be careful consideration about how it's done, and they should try it a few places” before instituting it.

A key issue is how bundled payments will be administered, he said. “If there is a bundled payment, who is it going to go to? If you're dealing with a Kaiser or another fully integrated system, that's not a problem—it just goes to that entity. But for the average community hospital that doesn't employ physicians and has a volunteer medical staff, who does that payment go to? The hospital, most likely. Then the hospital has a bundled payment with no formal financial relationship with all the doctors that are going to take care of that patient. Are you going to negotiate a different arrangement with every single doctor on the staff?”

If the hospital has a hospitalist program in which hospitalists see 60% of the patients in the hospital, “that makes it a little easier because there is already a financial framework,” he continued. “But those doctors need surgeons and cardiologists to help them, so they still have to work out arrangements with them.”

Dr. Greeno noted that his company is already using bundling with some of its hospital clients. “We're pooling Part A and Part B [Medicare] dollars and using incentives for better care.”

Any discussion of bundling must include the view of hospitalists, he added. “Any discussion that doesn't involve the hospitalists' point of view is probably not going to work, because in the future the vast majority of hospital care is going to be provided by hospitalists. That's a very important point of view they need to consider.”

The concept of “bundling” of payments to physicians and hospitals has emerged as a potential element of health care reform, but some hospitalists are expressing concerns about the potential effects of untested bundling proposals.

Under at least one of the health care reform proposals being considered by Congress at press time, the Secretary of Health and Human Services would be required to “develop a detailed plan to reform payment for post acute care (PAC) services under the Medicare program.” The plan is to consider, among other things, “the nature of payments under a post acute care bundle, including the type of provider or entity to whom payment should be made, the scope of activities and services included in the bundle, whether payment for physicians' services should be included in the bundle, and the period covered by the bundle.”

Proponents of bundling say it would create a good incentive for hospitals to avoid readmissions by providing high-quality care, calling that an improvement over the current system, in which physicians get paid for every test or procedure they perform and hospitals get more money each time a patient is admitted.

But private-practice hospitalists—those who contract separately with the hospital—are concerned about how such arrangements would affect their revenues.

“Healthcare reform legislation holds the potential for a cataclysmic uprooting of the traditional fee-for-service payment system,” wrote the authors of a white paper from the Phoenix Group, an organization of private-practice hospitalists. Reform might “leave hospital medicine in a position of vulnerability, particularly with respect to the security and reliability of compensation. No longer would even a portion of a hospitalist's revenues remain free of control by the hospital.” (See www.phoenixgroupwhitepaper.com

Dr. Eric Siegal, chair of the public policy committee of the Society of Hospital Medicine (SHM), said that recent surveys show that roughly one-third of hospitalists are employed by hospitals, another third work in academia, and the remaining third are in private practice. “Depending on how you're reimbursed and how you structure relationships with hospitals, bundling has the potential to either be perceived as a positive or a negative.”

Bundling is “certainly worth exploring” as part of efforts to change the current “flawed payment methodology,” said Dr. Ron Greeno, who is cofounder and chief medical officer of hospitalist firm Cogent Healthcare and a member of the Phoenix Group. “The way we're paying doctors and hospitals now isn't working. It's misaligned, creates waste, and [incentivizes] for the wrong things.”

But bundling has not been tested enough to prove that it works, added Dr. Greeno, a member of the SHM's public policy committee. “There's no proof that [bundling] will lead to better care or less wasteful care. If it's going to be done, there needs to be careful consideration about how it's done, and they should try it a few places” before instituting it.

A key issue is how bundled payments will be administered, he said. “If there is a bundled payment, who is it going to go to? If you're dealing with a Kaiser or another fully integrated system, that's not a problem—it just goes to that entity. But for the average community hospital that doesn't employ physicians and has a volunteer medical staff, who does that payment go to? The hospital, most likely. Then the hospital has a bundled payment with no formal financial relationship with all the doctors that are going to take care of that patient. Are you going to negotiate a different arrangement with every single doctor on the staff?”

If the hospital has a hospitalist program in which hospitalists see 60% of the patients in the hospital, “that makes it a little easier because there is already a financial framework,” he continued. “But those doctors need surgeons and cardiologists to help them, so they still have to work out arrangements with them.”

Dr. Greeno noted that his company is already using bundling with some of its hospital clients. “We're pooling Part A and Part B [Medicare] dollars and using incentives for better care.”

Any discussion of bundling must include the view of hospitalists, he added. “Any discussion that doesn't involve the hospitalists' point of view is probably not going to work, because in the future the vast majority of hospital care is going to be provided by hospitalists. That's a very important point of view they need to consider.”

The concept of “bundling” of payments to physicians and hospitals has emerged as a potential element of health care reform, but some hospitalists are expressing concerns about the potential effects of untested bundling proposals.

Under at least one of the health care reform proposals being considered by Congress at press time, the Secretary of Health and Human Services would be required to “develop a detailed plan to reform payment for post acute care (PAC) services under the Medicare program.” The plan is to consider, among other things, “the nature of payments under a post acute care bundle, including the type of provider or entity to whom payment should be made, the scope of activities and services included in the bundle, whether payment for physicians' services should be included in the bundle, and the period covered by the bundle.”

Proponents of bundling say it would create a good incentive for hospitals to avoid readmissions by providing high-quality care, calling that an improvement over the current system, in which physicians get paid for every test or procedure they perform and hospitals get more money each time a patient is admitted.

But private-practice hospitalists—those who contract separately with the hospital—are concerned about how such arrangements would affect their revenues.

“Healthcare reform legislation holds the potential for a cataclysmic uprooting of the traditional fee-for-service payment system,” wrote the authors of a white paper from the Phoenix Group, an organization of private-practice hospitalists. Reform might “leave hospital medicine in a position of vulnerability, particularly with respect to the security and reliability of compensation. No longer would even a portion of a hospitalist's revenues remain free of control by the hospital.” (See www.phoenixgroupwhitepaper.com

Dr. Eric Siegal, chair of the public policy committee of the Society of Hospital Medicine (SHM), said that recent surveys show that roughly one-third of hospitalists are employed by hospitals, another third work in academia, and the remaining third are in private practice. “Depending on how you're reimbursed and how you structure relationships with hospitals, bundling has the potential to either be perceived as a positive or a negative.”

Bundling is “certainly worth exploring” as part of efforts to change the current “flawed payment methodology,” said Dr. Ron Greeno, who is cofounder and chief medical officer of hospitalist firm Cogent Healthcare and a member of the Phoenix Group. “The way we're paying doctors and hospitals now isn't working. It's misaligned, creates waste, and [incentivizes] for the wrong things.”

But bundling has not been tested enough to prove that it works, added Dr. Greeno, a member of the SHM's public policy committee. “There's no proof that [bundling] will lead to better care or less wasteful care. If it's going to be done, there needs to be careful consideration about how it's done, and they should try it a few places” before instituting it.

A key issue is how bundled payments will be administered, he said. “If there is a bundled payment, who is it going to go to? If you're dealing with a Kaiser or another fully integrated system, that's not a problem—it just goes to that entity. But for the average community hospital that doesn't employ physicians and has a volunteer medical staff, who does that payment go to? The hospital, most likely. Then the hospital has a bundled payment with no formal financial relationship with all the doctors that are going to take care of that patient. Are you going to negotiate a different arrangement with every single doctor on the staff?”

If the hospital has a hospitalist program in which hospitalists see 60% of the patients in the hospital, “that makes it a little easier because there is already a financial framework,” he continued. “But those doctors need surgeons and cardiologists to help them, so they still have to work out arrangements with them.”

Dr. Greeno noted that his company is already using bundling with some of its hospital clients. “We're pooling Part A and Part B [Medicare] dollars and using incentives for better care.”

Any discussion of bundling must include the view of hospitalists, he added. “Any discussion that doesn't involve the hospitalists' point of view is probably not going to work, because in the future the vast majority of hospital care is going to be provided by hospitalists. That's a very important point of view they need to consider.”