Public Policy

Amid the recent focus on Medicare’s spiraling costs and efforts to rein in government spending, media accounts have painted a grim picture of Medicaid financing as well:

• With record enrollment, Kentucky’s Medicaid program is facing a budget shortfall of nearly $500 million. In Arizona, the gap is expected to be $1 billion.
• In September, Washington state announced $112.8 million in Medicaid cuts, a reduction that the state’s Medicaid director described as “devastating.”
• According to the Kaiser Family Foundation, Louisiana cut Medicaid inpatient hospital rates 3.5% in fiscal year 2009, 12.1% in 2010, and an additional 4.6% for 2011 to help close budget gaps.
• Maine politicians are facing off over a $380 million state debt owed to hospitals providing Medicaid services.

Safety-net hospitals that care for a disproportionate share of uninsured and Medicaid patients are likely to feel the most pain. So what does that mean for hospitalists? Experts say they will be increasingly looked to for guidance and leadership in identifying cost-saving measures and in helping hospitals avoid further penalties by focusing on such critical metrics as readmission rates.

Political ‘Hot Potato’

The pressure isn’t likely to ease anytime soon. The American Recovery and Reinvestment Act provided $87 billion to help states pay for Medicaid costs from October 2008 through the end of this year by temporarily boosting the federal Medicaid matching rate, officially known as the Federal Medical Assistance Percentages (FMAP). In August, Congress passed legislation that provided an additional $16.1 billion to provide six more months of scaled-back relief through June, when the fiscal year ends in most states.

That’s when things could get really sticky. According to an annual survey conducted by the Kaiser Family Foundation, average state spending on Medicaid jumped 8.8% last year, the biggest increase in eight years and higher than the initial prediction of 6.3%. State Medicaid officials reported swelling ranks of eligible families due to the recession as a main reason for the rise. The pace is expected to cool slightly next year, but states that had relied heavily on federal aid to meet budget shortfalls are now facing the prospect of doing without amid a continued expansion of Medicaid enrollees.

“That’s the catch-22 that you’re in right now,” says Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, Va. “There is increased demand and increasing numbers of uninsured. States are still in fiscal crisis, and there’s a delay before new dollars become available.”

New federal funds become available in 2014 to help pay for insuring those who currently lack insurance. That money will flow either through subsidies to state-administered exchanges or through direct Medicaid payments. But that same year, Kugler says, safety-net hospitals will begin seeing hefty reductions in Medicare disproportionate share (DSH) payments and possibly Medicaid DSH payments, too.

In theory, more people will have some form of health insurance by then, lessening the need to pay hospitals to help them recoup the cost of treating uninsured and underinsured patients. However, Kugler is urging caution on the DSH pay cuts, warning that it’s not clear what the ranks of the newly insured will be. Current projections, she says, suggest that half of those insured patients will fall under Medicaid programs, meaning that significant cuts could pose a financial hardship to hospitals that serve those populations.

Beyond reductions in services and reimbursement rates to doctors and hospitals, few politicians have had the stomach to propose major overhauls in how Medicaid is managed and financed. In New York state, however, a suite of proposals by Lt. Gov. Richard Ravitch has earned praise from The New York Times.¹ One would streamline management of the program, now administered by 58 local governments and multiple state agencies. Ravitch also supports reducing the political wrangling over how reimbursement fees are calculated by wresting that power away from the state legislature and giving it to the state’s Medicaid director, who would be advised by an expert panel.

Another unresolved issue is how to pay for the long-term care of chronically ill patients, which in New York accounts for nearly half of its Medicaid spending. Kugler says the high incidence of chronic conditions, including mental illness, among patients in urban settings can contribute to the high readmission rates the new law is set to begin penalizing in 2012. Other studies have found that among Medicaid patients at high risk for frequent hospital admissions, substance abuse can be a major contributor.²

The difficult task, then, is to ensure that the hospitals serving these populations don’t lose even more resources through penalties due to subpar quality metrics. “Do the legwork now. Get your IT systems in place to be able to provide the coordinated care,” Kugler advises. Identifying efficiencies while maintaining the appropriate level of care will be key, whether in appropriate reductions in length of stay or in increased focus on communication with outpatient providers and other forms of outreach.

Hope for the Safety Net

Despite the financial and logistical challenges, Lenny Lopez, MD, MPH, a hospitalist at Brigham and Women’s Hospital and an assistant in health policy at Massachusetts General Hospital, both in Boston, says the situation is far from hopeless for safety-net hospitals. “The idea that if you’re a DSH hospital you’re somehow pegged and destined to provide low-quality care—that does not have to be the case,” he says. Nor do problems such as disparities in how patients are treated necessarily require expensive solutions.

In a recent paper in Academic Emergency Medicine, Dr. Lopez and his colleagues found that among patients with chest pain admitted to EDs, blacks, Hispanics, and those who lacked insurance or were on Medicare were less likely to receive urgent triage care.³ “These are problems that are fixable in a low-cost way,” he argues. “We don’t need another fancy machine to diagnose chest pain.” Rather, he suggests, the problem is really one of quality improvement that centers on boosting guidelines, not buying more equipment or involving more personnel.

Properly defining the problem, Dr. Lopez says, can lead to effective measures to boost quality. Amid the continuing budget crunch, pinpointing where interventions could provide the biggest bang for the buck also might prove enormously helpful.

Of the roughly 4,200 acute-care hospitals in the country, Dr. Lopez and his colleagues found that less than 10% care for the bulk of minority patients, and those on Medicaid or lacking insurance. That means such care is concentrated in about 400 hospitals, “which is a huge opportunity for intervention options for this kind of an issue,” he says. TH

Bryn Nelson is a freelance medical writer based in Seattle.

References

1. 1. Benefits and burdens of Medicaid. The New York Times website. Available at: www.nytimes.com/2010/09/22/opinion/22wed2.html?_r=2&hp. Accessed Oct. 23, 2010.
2. 2. Raven MC, Billings JC, Goldfrank LR, Manheimer ED, Gourevitch MN. Medicaid patients at high risk for frequent hospital admission: real-time identification and remediable risks. J Urban Health. 2009;86(2):230-241.
3. 3. López L, Wilper AP, Cervantes MC, Betancourt JR, Green AR. Racial and sex differences in emergency department triage assessment and test ordering for chest pain, 1997-2006. Acad Emerg Med. 2010:17 (8):801-810.

Amid the recent focus on Medicare’s spiraling costs and efforts to rein in government spending, media accounts have painted a grim picture of Medicaid financing as well:

• With record enrollment, Kentucky’s Medicaid program is facing a budget shortfall of nearly $500 million. In Arizona, the gap is expected to be $1 billion.
• In September, Washington state announced $112.8 million in Medicaid cuts, a reduction that the state’s Medicaid director described as “devastating.”
• According to the Kaiser Family Foundation, Louisiana cut Medicaid inpatient hospital rates 3.5% in fiscal year 2009, 12.1% in 2010, and an additional 4.6% for 2011 to help close budget gaps.
• Maine politicians are facing off over a $380 million state debt owed to hospitals providing Medicaid services.

Safety-net hospitals that care for a disproportionate share of uninsured and Medicaid patients are likely to feel the most pain. So what does that mean for hospitalists? Experts say they will be increasingly looked to for guidance and leadership in identifying cost-saving measures and in helping hospitals avoid further penalties by focusing on such critical metrics as readmission rates.

Political ‘Hot Potato’

The pressure isn’t likely to ease anytime soon. The American Recovery and Reinvestment Act provided $87 billion to help states pay for Medicaid costs from October 2008 through the end of this year by temporarily boosting the federal Medicaid matching rate, officially known as the Federal Medical Assistance Percentages (FMAP). In August, Congress passed legislation that provided an additional $16.1 billion to provide six more months of scaled-back relief through June, when the fiscal year ends in most states.

That’s when things could get really sticky. According to an annual survey conducted by the Kaiser Family Foundation, average state spending on Medicaid jumped 8.8% last year, the biggest increase in eight years and higher than the initial prediction of 6.3%. State Medicaid officials reported swelling ranks of eligible families due to the recession as a main reason for the rise. The pace is expected to cool slightly next year, but states that had relied heavily on federal aid to meet budget shortfalls are now facing the prospect of doing without amid a continued expansion of Medicaid enrollees.

“That’s the catch-22 that you’re in right now,” says Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, Va. “There is increased demand and increasing numbers of uninsured. States are still in fiscal crisis, and there’s a delay before new dollars become available.”

New federal funds become available in 2014 to help pay for insuring those who currently lack insurance. That money will flow either through subsidies to state-administered exchanges or through direct Medicaid payments. But that same year, Kugler says, safety-net hospitals will begin seeing hefty reductions in Medicare disproportionate share (DSH) payments and possibly Medicaid DSH payments, too.

In theory, more people will have some form of health insurance by then, lessening the need to pay hospitals to help them recoup the cost of treating uninsured and underinsured patients. However, Kugler is urging caution on the DSH pay cuts, warning that it’s not clear what the ranks of the newly insured will be. Current projections, she says, suggest that half of those insured patients will fall under Medicaid programs, meaning that significant cuts could pose a financial hardship to hospitals that serve those populations.

Beyond reductions in services and reimbursement rates to doctors and hospitals, few politicians have had the stomach to propose major overhauls in how Medicaid is managed and financed. In New York state, however, a suite of proposals by Lt. Gov. Richard Ravitch has earned praise from The New York Times.¹ One would streamline management of the program, now administered by 58 local governments and multiple state agencies. Ravitch also supports reducing the political wrangling over how reimbursement fees are calculated by wresting that power away from the state legislature and giving it to the state’s Medicaid director, who would be advised by an expert panel.

Another unresolved issue is how to pay for the long-term care of chronically ill patients, which in New York accounts for nearly half of its Medicaid spending. Kugler says the high incidence of chronic conditions, including mental illness, among patients in urban settings can contribute to the high readmission rates the new law is set to begin penalizing in 2012. Other studies have found that among Medicaid patients at high risk for frequent hospital admissions, substance abuse can be a major contributor.²

The difficult task, then, is to ensure that the hospitals serving these populations don’t lose even more resources through penalties due to subpar quality metrics. “Do the legwork now. Get your IT systems in place to be able to provide the coordinated care,” Kugler advises. Identifying efficiencies while maintaining the appropriate level of care will be key, whether in appropriate reductions in length of stay or in increased focus on communication with outpatient providers and other forms of outreach.

Hope for the Safety Net

Despite the financial and logistical challenges, Lenny Lopez, MD, MPH, a hospitalist at Brigham and Women’s Hospital and an assistant in health policy at Massachusetts General Hospital, both in Boston, says the situation is far from hopeless for safety-net hospitals. “The idea that if you’re a DSH hospital you’re somehow pegged and destined to provide low-quality care—that does not have to be the case,” he says. Nor do problems such as disparities in how patients are treated necessarily require expensive solutions.

In a recent paper in Academic Emergency Medicine, Dr. Lopez and his colleagues found that among patients with chest pain admitted to EDs, blacks, Hispanics, and those who lacked insurance or were on Medicare were less likely to receive urgent triage care.³ “These are problems that are fixable in a low-cost way,” he argues. “We don’t need another fancy machine to diagnose chest pain.” Rather, he suggests, the problem is really one of quality improvement that centers on boosting guidelines, not buying more equipment or involving more personnel.

Properly defining the problem, Dr. Lopez says, can lead to effective measures to boost quality. Amid the continuing budget crunch, pinpointing where interventions could provide the biggest bang for the buck also might prove enormously helpful.

Of the roughly 4,200 acute-care hospitals in the country, Dr. Lopez and his colleagues found that less than 10% care for the bulk of minority patients, and those on Medicaid or lacking insurance. That means such care is concentrated in about 400 hospitals, “which is a huge opportunity for intervention options for this kind of an issue,” he says. TH

Bryn Nelson is a freelance medical writer based in Seattle.

References

1. 1. Benefits and burdens of Medicaid. The New York Times website. Available at: www.nytimes.com/2010/09/22/opinion/22wed2.html?_r=2&hp. Accessed Oct. 23, 2010.
2. 2. Raven MC, Billings JC, Goldfrank LR, Manheimer ED, Gourevitch MN. Medicaid patients at high risk for frequent hospital admission: real-time identification and remediable risks. J Urban Health. 2009;86(2):230-241.
3. 3. López L, Wilper AP, Cervantes MC, Betancourt JR, Green AR. Racial and sex differences in emergency department triage assessment and test ordering for chest pain, 1997-2006. Acad Emerg Med. 2010:17 (8):801-810.

Amid the recent focus on Medicare’s spiraling costs and efforts to rein in government spending, media accounts have painted a grim picture of Medicaid financing as well:

• With record enrollment, Kentucky’s Medicaid program is facing a budget shortfall of nearly $500 million. In Arizona, the gap is expected to be $1 billion.
• In September, Washington state announced $112.8 million in Medicaid cuts, a reduction that the state’s Medicaid director described as “devastating.”
• According to the Kaiser Family Foundation, Louisiana cut Medicaid inpatient hospital rates 3.5% in fiscal year 2009, 12.1% in 2010, and an additional 4.6% for 2011 to help close budget gaps.
• Maine politicians are facing off over a $380 million state debt owed to hospitals providing Medicaid services.

Safety-net hospitals that care for a disproportionate share of uninsured and Medicaid patients are likely to feel the most pain. So what does that mean for hospitalists? Experts say they will be increasingly looked to for guidance and leadership in identifying cost-saving measures and in helping hospitals avoid further penalties by focusing on such critical metrics as readmission rates.

Political ‘Hot Potato’

The pressure isn’t likely to ease anytime soon. The American Recovery and Reinvestment Act provided $87 billion to help states pay for Medicaid costs from October 2008 through the end of this year by temporarily boosting the federal Medicaid matching rate, officially known as the Federal Medical Assistance Percentages (FMAP). In August, Congress passed legislation that provided an additional $16.1 billion to provide six more months of scaled-back relief through June, when the fiscal year ends in most states.

That’s when things could get really sticky. According to an annual survey conducted by the Kaiser Family Foundation, average state spending on Medicaid jumped 8.8% last year, the biggest increase in eight years and higher than the initial prediction of 6.3%. State Medicaid officials reported swelling ranks of eligible families due to the recession as a main reason for the rise. The pace is expected to cool slightly next year, but states that had relied heavily on federal aid to meet budget shortfalls are now facing the prospect of doing without amid a continued expansion of Medicaid enrollees.

“That’s the catch-22 that you’re in right now,” says Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, Va. “There is increased demand and increasing numbers of uninsured. States are still in fiscal crisis, and there’s a delay before new dollars become available.”

New federal funds become available in 2014 to help pay for insuring those who currently lack insurance. That money will flow either through subsidies to state-administered exchanges or through direct Medicaid payments. But that same year, Kugler says, safety-net hospitals will begin seeing hefty reductions in Medicare disproportionate share (DSH) payments and possibly Medicaid DSH payments, too.

In theory, more people will have some form of health insurance by then, lessening the need to pay hospitals to help them recoup the cost of treating uninsured and underinsured patients. However, Kugler is urging caution on the DSH pay cuts, warning that it’s not clear what the ranks of the newly insured will be. Current projections, she says, suggest that half of those insured patients will fall under Medicaid programs, meaning that significant cuts could pose a financial hardship to hospitals that serve those populations.

Beyond reductions in services and reimbursement rates to doctors and hospitals, few politicians have had the stomach to propose major overhauls in how Medicaid is managed and financed. In New York state, however, a suite of proposals by Lt. Gov. Richard Ravitch has earned praise from The New York Times.¹ One would streamline management of the program, now administered by 58 local governments and multiple state agencies. Ravitch also supports reducing the political wrangling over how reimbursement fees are calculated by wresting that power away from the state legislature and giving it to the state’s Medicaid director, who would be advised by an expert panel.

Another unresolved issue is how to pay for the long-term care of chronically ill patients, which in New York accounts for nearly half of its Medicaid spending. Kugler says the high incidence of chronic conditions, including mental illness, among patients in urban settings can contribute to the high readmission rates the new law is set to begin penalizing in 2012. Other studies have found that among Medicaid patients at high risk for frequent hospital admissions, substance abuse can be a major contributor.²

The difficult task, then, is to ensure that the hospitals serving these populations don’t lose even more resources through penalties due to subpar quality metrics. “Do the legwork now. Get your IT systems in place to be able to provide the coordinated care,” Kugler advises. Identifying efficiencies while maintaining the appropriate level of care will be key, whether in appropriate reductions in length of stay or in increased focus on communication with outpatient providers and other forms of outreach.

Hope for the Safety Net

Despite the financial and logistical challenges, Lenny Lopez, MD, MPH, a hospitalist at Brigham and Women’s Hospital and an assistant in health policy at Massachusetts General Hospital, both in Boston, says the situation is far from hopeless for safety-net hospitals. “The idea that if you’re a DSH hospital you’re somehow pegged and destined to provide low-quality care—that does not have to be the case,” he says. Nor do problems such as disparities in how patients are treated necessarily require expensive solutions.

In a recent paper in Academic Emergency Medicine, Dr. Lopez and his colleagues found that among patients with chest pain admitted to EDs, blacks, Hispanics, and those who lacked insurance or were on Medicare were less likely to receive urgent triage care.³ “These are problems that are fixable in a low-cost way,” he argues. “We don’t need another fancy machine to diagnose chest pain.” Rather, he suggests, the problem is really one of quality improvement that centers on boosting guidelines, not buying more equipment or involving more personnel.

Properly defining the problem, Dr. Lopez says, can lead to effective measures to boost quality. Amid the continuing budget crunch, pinpointing where interventions could provide the biggest bang for the buck also might prove enormously helpful.

Of the roughly 4,200 acute-care hospitals in the country, Dr. Lopez and his colleagues found that less than 10% care for the bulk of minority patients, and those on Medicaid or lacking insurance. That means such care is concentrated in about 400 hospitals, “which is a huge opportunity for intervention options for this kind of an issue,” he says. TH

Bryn Nelson is a freelance medical writer based in Seattle.

References

1. 1. Benefits and burdens of Medicaid. The New York Times website. Available at: www.nytimes.com/2010/09/22/opinion/22wed2.html?_r=2&hp. Accessed Oct. 23, 2010.
2. 2. Raven MC, Billings JC, Goldfrank LR, Manheimer ED, Gourevitch MN. Medicaid patients at high risk for frequent hospital admission: real-time identification and remediable risks. J Urban Health. 2009;86(2):230-241.
3. 3. López L, Wilper AP, Cervantes MC, Betancourt JR, Green AR. Racial and sex differences in emergency department triage assessment and test ordering for chest pain, 1997-2006. Acad Emerg Med. 2010:17 (8):801-810.

Recent media reports about the dangers surrounding unused prescription medications, including abuse by teens and medications finding their way into the water supply, have prompted an increase in inquiries to healthcare providers about disposing of unused medication. These issues are complicated when controlled substances are involved.

Often, providers are unsure how to respond to patient questions about medication disposal. For example, what would you do if a patient requests an alternative medication because of an unwanted side effect and brings the originally prescribed medication back to you? What if the family of a recently expired patient brings unused medication to you and asks you to donate it to other patients? What if you have a colleague who performs mission work; could you accept and donate unused medication for use in another country?

Unfortunately, the Controlled Substances Act (CSA) does not provide a readily available mechanism to accomplish efficient, secure, and environmentally sound methods to collect and use or dispose of unwanted controlled substances. This article explains the rules physicians must adhere to and guidelines for “taking back” controlled substances.

The Legislation

Enacted in 1970, the CSA combined all existing federal drug laws into a single statute. It created five “schedules” in which certain drugs are classified. These “scheduled” drugs are commonly referred to as controlled substances. A drug’s classification depends on its potential for abuse and its currently accepted medical use in the U.S. Additionally, provisions of international treaties impact classification.

Under the classification system, Schedule I drugs have a high potential for abuse and have no currently accepted medical use in treatment in the U.S. In contrast, Schedule V drugs have a low potential for abuse and do have a currently accepted medical use in treatment in the U.S.

The CSA governs the manufacture, import, export, possession, use, and distribution of controlled substances. In doing so, the CSA established a system to register those authorized to handle controlled substances. Manufacturers, dispensers, distributors, and individual practitioners who prescribe controlled substances must be registered with the Drug Enforcement Administration (DEA).

The CSA requires registrants to keep certain records for at least two years related to their handling of controlled substances. For example, physician registrants must keep records of controlled substances in Schedules II, III, IV, and V that are dispensed via methods other than prescribing or administering (e.g., industry samples). Inventories of controlled substances are required. Most notably, physicians generally are not required to keep records of prescribed medications; however, records must be kept if drugs are dispensed or administered. Moreover, there are heightened recordkeeping responsibilities for providers who prescribe, dispense, or administer for maintenance or detoxification.

Controlled Substance “Takeback”

The system of registration established by the CSA prohibits a DEA registrant from acquiring controlled substances from nonregistered entities and, in turn, bars an end-user from distributing pharmaceutical controlled substances to a DEA registrant. In other words, physicians cannot receive controlled substances from anyone who does not also have a registration. Thus, physicians may not “take back” prescribed medications from patients or their family members. Similarly, except in cases of a drug being recalled or a dispensing error, patients are not allowed to return controlled medications to a pharmacy.

Information on how a patient or family member should properly dispose of medication is commonly misunderstood. DEA regulations provide a process for nonregistrants to dispose of unused medication; however, it is cumbersome and meant to be used only when dealing with large quantities of controlled substances (e.g., large quantities of abandoned drugs). In such cases, the DEA special agent in charge (SAC) may instruct on disposal, which may include transfer of the substance to a DEA registrant, delivery to a DEA agent or office, destruction in the presence of an agent of the administration or other authorized person, or by other means. The person must submit a letter to the local SAC, which includes:

• Name and address of the person;
• Name and quantity of each controlled substance to be disposed of;
• Explanation of how the applicant obtained the controlled substance, if known; and
• Name, address, and registration number, if known, of the person who possessed the controlled substances prior to the applicant.

Federal legislation also provides a way for the DEA to grant approval to law-enforcement agencies to operate “takeback” programs. The regulation states that “any person in possession of a controlled substance and desiring to dispose of such substance may request assistance from the SAC in the area in which the person is located.” The regulation allows the SAC to authorize and specify the means of disposal to assure that the controlled substances do not become available to unauthorized persons.

State and local government agencies and community associations might hold takeback programs only if law enforcement makes the request, takes custody of the controlled substances, and is responsible for the disposal.

The U.S. Office of National Drug Control Policy has published guidelines for medication disposal. These guidelines advise flushing medications only if the prescription label or accompanying patient information specifically states to do so. Instead of flushing, the guidelines recommend that medications be disposed of through a takeback program or by:

• Taking the prescription drugs out of their original containers;
• Mixing the drugs with an undesirable substance, such as cat litter or used coffee grounds;
• Placing the mixture into a disposable container with a lid, such as an empty margarine tub, or into a sealable bag;
• Concealing or removing personal information, including Rx number, on the empty containers by covering it with black permanent marker or duct tape, or by scratching it off; and
• Placing the sealed container with the mixture, and the empty drug containers, in the trash.

Unused Medication Donation

The rising cost of prescription medication leaves many questioning whether there is a need for a safe method to allow unused medication to be donated to others. At least 10 states have passed laws allowing or encouraging the donation of unused pharmaceutical drugs. Many of these programs involve healthcare facilities, nursing homes, or pharmacies. The CSA and current DEA regulations, however, prohibit patients from delivering or distributing controlled substances to a DEA registrant, even if it is for the purpose of a donation. Moreover, the Food and Drug Administration (FDA) does not permit redistribution of medications, except under limited circumstances.

Consequently, state law may be inconsistent with federal law for donation and reuse of controlled substances.

Conclusion

Physicians who fail to comply with CSA handling requirements are subject to criminal charges, discipline against their DEA registration, and discipline against their license to practice medicine. Consequently, physicians should use caution whenever handling unused medication.

The application of various aspects of the CSA and implementing rules is situation-specific. Moreover, the DEA may issue additional regulations. Accordingly, if you have a question about a specific situation, consult an attorney, or contact your local DEA field division office and ask for the diversion duty agent. TH

Patrick O’Rourke works in the Office of University Counsel, Department of Litigation, University of Colorado Denver.

Recent media reports about the dangers surrounding unused prescription medications, including abuse by teens and medications finding their way into the water supply, have prompted an increase in inquiries to healthcare providers about disposing of unused medication. These issues are complicated when controlled substances are involved.

Often, providers are unsure how to respond to patient questions about medication disposal. For example, what would you do if a patient requests an alternative medication because of an unwanted side effect and brings the originally prescribed medication back to you? What if the family of a recently expired patient brings unused medication to you and asks you to donate it to other patients? What if you have a colleague who performs mission work; could you accept and donate unused medication for use in another country?

Unfortunately, the Controlled Substances Act (CSA) does not provide a readily available mechanism to accomplish efficient, secure, and environmentally sound methods to collect and use or dispose of unwanted controlled substances. This article explains the rules physicians must adhere to and guidelines for “taking back” controlled substances.

The Legislation

Enacted in 1970, the CSA combined all existing federal drug laws into a single statute. It created five “schedules” in which certain drugs are classified. These “scheduled” drugs are commonly referred to as controlled substances. A drug’s classification depends on its potential for abuse and its currently accepted medical use in the U.S. Additionally, provisions of international treaties impact classification.

Under the classification system, Schedule I drugs have a high potential for abuse and have no currently accepted medical use in treatment in the U.S. In contrast, Schedule V drugs have a low potential for abuse and do have a currently accepted medical use in treatment in the U.S.

The CSA governs the manufacture, import, export, possession, use, and distribution of controlled substances. In doing so, the CSA established a system to register those authorized to handle controlled substances. Manufacturers, dispensers, distributors, and individual practitioners who prescribe controlled substances must be registered with the Drug Enforcement Administration (DEA).

The CSA requires registrants to keep certain records for at least two years related to their handling of controlled substances. For example, physician registrants must keep records of controlled substances in Schedules II, III, IV, and V that are dispensed via methods other than prescribing or administering (e.g., industry samples). Inventories of controlled substances are required. Most notably, physicians generally are not required to keep records of prescribed medications; however, records must be kept if drugs are dispensed or administered. Moreover, there are heightened recordkeeping responsibilities for providers who prescribe, dispense, or administer for maintenance or detoxification.

Controlled Substance “Takeback”

The system of registration established by the CSA prohibits a DEA registrant from acquiring controlled substances from nonregistered entities and, in turn, bars an end-user from distributing pharmaceutical controlled substances to a DEA registrant. In other words, physicians cannot receive controlled substances from anyone who does not also have a registration. Thus, physicians may not “take back” prescribed medications from patients or their family members. Similarly, except in cases of a drug being recalled or a dispensing error, patients are not allowed to return controlled medications to a pharmacy.

Information on how a patient or family member should properly dispose of medication is commonly misunderstood. DEA regulations provide a process for nonregistrants to dispose of unused medication; however, it is cumbersome and meant to be used only when dealing with large quantities of controlled substances (e.g., large quantities of abandoned drugs). In such cases, the DEA special agent in charge (SAC) may instruct on disposal, which may include transfer of the substance to a DEA registrant, delivery to a DEA agent or office, destruction in the presence of an agent of the administration or other authorized person, or by other means. The person must submit a letter to the local SAC, which includes:

• Name and address of the person;
• Name and quantity of each controlled substance to be disposed of;
• Explanation of how the applicant obtained the controlled substance, if known; and
• Name, address, and registration number, if known, of the person who possessed the controlled substances prior to the applicant.

Federal legislation also provides a way for the DEA to grant approval to law-enforcement agencies to operate “takeback” programs. The regulation states that “any person in possession of a controlled substance and desiring to dispose of such substance may request assistance from the SAC in the area in which the person is located.” The regulation allows the SAC to authorize and specify the means of disposal to assure that the controlled substances do not become available to unauthorized persons.

State and local government agencies and community associations might hold takeback programs only if law enforcement makes the request, takes custody of the controlled substances, and is responsible for the disposal.

The U.S. Office of National Drug Control Policy has published guidelines for medication disposal. These guidelines advise flushing medications only if the prescription label or accompanying patient information specifically states to do so. Instead of flushing, the guidelines recommend that medications be disposed of through a takeback program or by:

• Taking the prescription drugs out of their original containers;
• Mixing the drugs with an undesirable substance, such as cat litter or used coffee grounds;
• Placing the mixture into a disposable container with a lid, such as an empty margarine tub, or into a sealable bag;
• Concealing or removing personal information, including Rx number, on the empty containers by covering it with black permanent marker or duct tape, or by scratching it off; and
• Placing the sealed container with the mixture, and the empty drug containers, in the trash.

Unused Medication Donation

The rising cost of prescription medication leaves many questioning whether there is a need for a safe method to allow unused medication to be donated to others. At least 10 states have passed laws allowing or encouraging the donation of unused pharmaceutical drugs. Many of these programs involve healthcare facilities, nursing homes, or pharmacies. The CSA and current DEA regulations, however, prohibit patients from delivering or distributing controlled substances to a DEA registrant, even if it is for the purpose of a donation. Moreover, the Food and Drug Administration (FDA) does not permit redistribution of medications, except under limited circumstances.

Consequently, state law may be inconsistent with federal law for donation and reuse of controlled substances.

Conclusion

Physicians who fail to comply with CSA handling requirements are subject to criminal charges, discipline against their DEA registration, and discipline against their license to practice medicine. Consequently, physicians should use caution whenever handling unused medication.

The application of various aspects of the CSA and implementing rules is situation-specific. Moreover, the DEA may issue additional regulations. Accordingly, if you have a question about a specific situation, consult an attorney, or contact your local DEA field division office and ask for the diversion duty agent. TH

Patrick O’Rourke works in the Office of University Counsel, Department of Litigation, University of Colorado Denver.

Recent media reports about the dangers surrounding unused prescription medications, including abuse by teens and medications finding their way into the water supply, have prompted an increase in inquiries to healthcare providers about disposing of unused medication. These issues are complicated when controlled substances are involved.

Often, providers are unsure how to respond to patient questions about medication disposal. For example, what would you do if a patient requests an alternative medication because of an unwanted side effect and brings the originally prescribed medication back to you? What if the family of a recently expired patient brings unused medication to you and asks you to donate it to other patients? What if you have a colleague who performs mission work; could you accept and donate unused medication for use in another country?

Unfortunately, the Controlled Substances Act (CSA) does not provide a readily available mechanism to accomplish efficient, secure, and environmentally sound methods to collect and use or dispose of unwanted controlled substances. This article explains the rules physicians must adhere to and guidelines for “taking back” controlled substances.

The Legislation

Enacted in 1970, the CSA combined all existing federal drug laws into a single statute. It created five “schedules” in which certain drugs are classified. These “scheduled” drugs are commonly referred to as controlled substances. A drug’s classification depends on its potential for abuse and its currently accepted medical use in the U.S. Additionally, provisions of international treaties impact classification.

Under the classification system, Schedule I drugs have a high potential for abuse and have no currently accepted medical use in treatment in the U.S. In contrast, Schedule V drugs have a low potential for abuse and do have a currently accepted medical use in treatment in the U.S.

The CSA governs the manufacture, import, export, possession, use, and distribution of controlled substances. In doing so, the CSA established a system to register those authorized to handle controlled substances. Manufacturers, dispensers, distributors, and individual practitioners who prescribe controlled substances must be registered with the Drug Enforcement Administration (DEA).

The CSA requires registrants to keep certain records for at least two years related to their handling of controlled substances. For example, physician registrants must keep records of controlled substances in Schedules II, III, IV, and V that are dispensed via methods other than prescribing or administering (e.g., industry samples). Inventories of controlled substances are required. Most notably, physicians generally are not required to keep records of prescribed medications; however, records must be kept if drugs are dispensed or administered. Moreover, there are heightened recordkeeping responsibilities for providers who prescribe, dispense, or administer for maintenance or detoxification.

Controlled Substance “Takeback”

The system of registration established by the CSA prohibits a DEA registrant from acquiring controlled substances from nonregistered entities and, in turn, bars an end-user from distributing pharmaceutical controlled substances to a DEA registrant. In other words, physicians cannot receive controlled substances from anyone who does not also have a registration. Thus, physicians may not “take back” prescribed medications from patients or their family members. Similarly, except in cases of a drug being recalled or a dispensing error, patients are not allowed to return controlled medications to a pharmacy.

Information on how a patient or family member should properly dispose of medication is commonly misunderstood. DEA regulations provide a process for nonregistrants to dispose of unused medication; however, it is cumbersome and meant to be used only when dealing with large quantities of controlled substances (e.g., large quantities of abandoned drugs). In such cases, the DEA special agent in charge (SAC) may instruct on disposal, which may include transfer of the substance to a DEA registrant, delivery to a DEA agent or office, destruction in the presence of an agent of the administration or other authorized person, or by other means. The person must submit a letter to the local SAC, which includes:

• Name and address of the person;
• Name and quantity of each controlled substance to be disposed of;
• Explanation of how the applicant obtained the controlled substance, if known; and
• Name, address, and registration number, if known, of the person who possessed the controlled substances prior to the applicant.

Federal legislation also provides a way for the DEA to grant approval to law-enforcement agencies to operate “takeback” programs. The regulation states that “any person in possession of a controlled substance and desiring to dispose of such substance may request assistance from the SAC in the area in which the person is located.” The regulation allows the SAC to authorize and specify the means of disposal to assure that the controlled substances do not become available to unauthorized persons.

State and local government agencies and community associations might hold takeback programs only if law enforcement makes the request, takes custody of the controlled substances, and is responsible for the disposal.

The U.S. Office of National Drug Control Policy has published guidelines for medication disposal. These guidelines advise flushing medications only if the prescription label or accompanying patient information specifically states to do so. Instead of flushing, the guidelines recommend that medications be disposed of through a takeback program or by:

• Taking the prescription drugs out of their original containers;
• Mixing the drugs with an undesirable substance, such as cat litter or used coffee grounds;
• Placing the mixture into a disposable container with a lid, such as an empty margarine tub, or into a sealable bag;
• Concealing or removing personal information, including Rx number, on the empty containers by covering it with black permanent marker or duct tape, or by scratching it off; and
• Placing the sealed container with the mixture, and the empty drug containers, in the trash.

Unused Medication Donation

The rising cost of prescription medication leaves many questioning whether there is a need for a safe method to allow unused medication to be donated to others. At least 10 states have passed laws allowing or encouraging the donation of unused pharmaceutical drugs. Many of these programs involve healthcare facilities, nursing homes, or pharmacies. The CSA and current DEA regulations, however, prohibit patients from delivering or distributing controlled substances to a DEA registrant, even if it is for the purpose of a donation. Moreover, the Food and Drug Administration (FDA) does not permit redistribution of medications, except under limited circumstances.

Consequently, state law may be inconsistent with federal law for donation and reuse of controlled substances.

Conclusion

Physicians who fail to comply with CSA handling requirements are subject to criminal charges, discipline against their DEA registration, and discipline against their license to practice medicine. Consequently, physicians should use caution whenever handling unused medication.

The application of various aspects of the CSA and implementing rules is situation-specific. Moreover, the DEA may issue additional regulations. Accordingly, if you have a question about a specific situation, consult an attorney, or contact your local DEA field division office and ask for the diversion duty agent. TH

Patrick O’Rourke works in the Office of University Counsel, Department of Litigation, University of Colorado Denver.

From the outset, HM has been about efficiency. And there was nothing wrong with that, for value is quality divided by cost. But in our story, we found that mere efficiency was not enough: The lowering of the denominator (cost) had to be met with an escalation of the numerator (quality) to ensure value.

And see us as being born in the right place at the right time. For with the national focus turning to the need for quality and patient safety, hospital medicine was in the right place and the right time to heed the call to action: appropriately stepping up to enact efforts to make the slope of the line (on a chart of quality vs. cost) “STEEEPER” … finding systems innovations to make care Safe, Timely, Efficient, Effective, Equitable, and Patient-centered.

Of course, the story continued with the Affordable Care Act and healthcare reform, greatly accelerating our evolution as change agents. And now we find ourselves fully invested in a “change the system” mentality, perfectly positioned to meaningfully change healthcare for millions of people. But threats loom—specifically, the “R” in the STEEEPER mnemonic: the risks to quality in the face of healthcare reform.

So in the next chapter of our story, I present to you our challenge: how to overcome the threats to quality in the context of healthcare reform. The first three are presented here; in subsequent articles, I will address the remainder. Overcoming all threats will hinge on mastering the four truisms of cultural change:

1. Systems drive function;
2. Every system is perfectly designed to produce the outcomes that it does;
3. This is not an issue of people needing to try harder; and
4. The “no blame” culture begins with a paradigm shift from the “person at fault” to the “system at fault.”

Threat 1: Failure to Fund Quality

SHM elected to merge its annual State of Hospital Medicine survey with the MGMA. Though not without risk, this has resulted in the anticipated benefits. The MGMA collaboration brings greater leverage in working with the C-suite, which is pre-programmed to react to MGMA surveys. From the most recent MGMA survey comes good news: The financial compensation for hospitalists has increased. A sobering insight, however, is that this increase in compensation has been met with a corresponding increase in work intensity—RVUs. Further, the link between RVUs and compensation appears to be tightening, quantifying what has long been of concern: The time devoted to the nonclinical “value added” duties of the hospitalist is shrinking.

The threat to the culture of quality is captured in the single question: How many RVUs is a quality-improvement (QI) project worth? I’m not sure we have that answer. But without an answer, it is difficult to believe that meaningful QI can be expected without time to do so. And again, as the gap between compensation and RVUs narrows, one is left wondering if there will soon be a day where there is no value-added time remaining to perform QI at all.

Fortunately, the Affordable Care Act might provide some movement in the right direction via value-based purchasing. Linking quality outcomes to financial reimbursement is a big step forward in the hospitalist’s quest to leverage the C-suite in trading RVUs for devoted QI time. Although we still are left asking the question of how many RVUs a QI project is worth, value-based purchasing at least sets the stage for the conversation. But in the interim, it is still upon hospitalists to design these QI projects, and to learn the skills necessary to see the design to its fruition.

Threat 2: Quality Stops at Core Measures

It is hard to argue that fulfilling “core measures” is a bad thing. Nonetheless, the core measures were not meant to be quality; instead, they were meant as surrogate measures of quality. The presumption of the core-measures initiative is that the system would exist without direct attention to the core measures, operating as it ordinarily would with generic attention to meeting all standards of quality for all diseases. And at some point in time, the core measures would be assessed to give an overall assessment of the system’s quality.

What has evolved, however, is a concerted attention to meeting the core measures, with little regard to the overall culture of quality.

Let’s say you were tasked with improving the public school system in your state. As a measure of the improvement, you choose five of the 1,000 schools as “core measure” schools. The state board of education is told that the performance of these five sample schools will be assessed at the end of the year, and financial support for the system as a whole will hinge on their performance. The intended result is that attention would be paid to improving the performance of every school in the system, and this improvement would be reflected in the performance of the five sample schools. The board of education could take the route of improving all schools, but the more pragmatic route would be to funnel all resources into these five schools, to the detriment of resources for the other 995 schools. The performance of the core measure schools would dramatically improve, and funding would be secured. But ask yourself: Did the performance of the school system as a whole actually improve?

Such is the risk of the core measures in healthcare. The original intent of the core measures was to instill a culture of QI for all points of care. And this has been a valuable contribution to changing the consciousness of the healthcare system. The presumption was that the core measures would be “seeds,” and that by emphasizing these select measures, the QI culture eventually would spread to all aspects of patient care. But this plan hinged on the presumption that that there is an unlimited amount of mental energy and resources to be devoted to all tasks within healthcare. The reality is that there is a fixed amount of intellectual energy and resources to be devoted to the various aspects of healthcare. One wonders if the overemphasis on meeting the core measures might actually have taken the wind out of the sails for QI in other non-core-measure patient care.

The implications are twofold. By definition, a core measure has to be applicable to all healthcare systems, and with a fixed amount of mental energy and resources, there is a real risk that what portion is reserved for QI finds its way only to the core indicators, especially if they are overemphasized in the system. The second implication is captured in our experience with time to antibiotics. With meeting the core indicator as the priority, many systems instituted the “work-around”: Give antibiotics to every patient presenting to the ED, and you will be sure to have met the four-hour window in the core indicator. The result was an exponential increase in inappropriate antibiotic administration and radiographic tests, all because meeting the indicator became more important than the overall goal.

As stewards of the hospital system, it is upon us to ensure that the original intent of core measures remains secure: The core measures seed a culture of quality, but do not become ends in and of themselves. QI apart from the core measures must remain an equal priority, and it is the hospitalist who will be central in ensuring this comes to fruition.

Threat 3: Misplaced Incentives

There is an interesting anecdote in Steven Levitt and Stephen Dubner’s book Freakonomics.¹ The story begins with a daycare center struggling with a problem: Some parents are showing up late to pick up their children at the end of the day, and this is costing the center in the way of overtime charges for the staff. To solve the problem, the center elects to institute a financial disincentive: Those showing up late to pick up their children will pay a modest financial penalty.

Fast-forward to months after the policy was put in place. The result? An exponential increase in the number of parents showing up late to pick up their children.

How do you explain worsening performance in spite of a financial disincentive? The answer resides in understanding human behavior. According to the authors, there are three primary motivations in life: financial, social, and moral. As ugly as it sounds, the decisions people make in life are driven by one of these three motivations. There is nothing wrong with providing incentives for behavior; incentives work.

But the danger arises when incentives are mismatched to behaviors. For example, if a financial outcome is the goal, then financial incentives make sense. If a social outcome (people should play better as a team) is the goal, the social incentives make sense (public recognition). But when the incentives get misaligned with their respective goals, trouble results.

What went wrong with the daycare’s plan is simple—most of the parents were motivated to pick up their children on time out of moral (“I gave my word”) or social (“I don’t want to be talked about by other parents”) incentives. But once a financial incentive was offered, the daycare center had essentially given the parents a way out in absolving their social and moral obligations. The parents had essentially cost-adjusted their behavior.

If you think this couldn’t happen to the healthcare system, let me ask you this. As a hospitalist, I see all of my patients early in the morning, because I see it as part of my obligation to the hospital team to discharge patients by 11 a.m. (social motivation).

But what if the CEO released this directive: “You will see all of your patients early in the morning, or you will take a $1,000 a year pay cut.” Is it possible that I might cost-adjust the $1,000 in exchange for sleeping in a little later and not having to deal with the morning traffic? I don’t know.

When it comes to financial incentives, there is a valley in the U-shaped curve. When the financial incentive is trivial, it is disregarded and the social/moral motivations of behavior persist (the kids are picked up on time; I persist in seeing patients early in the morning). When the financial incentive is huge, the financial incentive trumps all social/moral motivations, ensuring compliance with the goal behavior (every kid is picked up on time to avoid a penalty; I see all patients early in the day to avoid a larger penalty).

But in between is the risk zone: When the person feels they are paying an appropriate penance for not complying with the goal behavior, the financial disincentive absolves any social/moral guilt.

Healthcare reform is about incentives—and there is nothing wrong with that. But as the stewards of the inpatient healthcare system, it is upon us as hospitalists to ensure that the incentives remain matched to their intended goals, and that the untoward consequences of the incentives do not adversely affect the quality and safety of a patient’s care.

It is safe to say that the Affordable Care Act of 2010 moves us closer to a true environment of quality and patient safety. But it is equally safe to say that meaningful change will require more than what the law can provide. As stewards of the inpatient system, we have a responsibility to ensure that the healthcare system, particularly in how it responds to incentives, evolves to remain patient-centered, effective, and safe.

The next chapter in our story—the hospitalists’ story—will be one of accountability and responsibility. While there are things the government can do, the majority of what needs to be done will come directly from us. TH

Dr. Wiese is president of SHM.

Reference

1. Levitt SD, Dubner SJ. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York City: William Morrow; 2005.

From the outset, HM has been about efficiency. And there was nothing wrong with that, for value is quality divided by cost. But in our story, we found that mere efficiency was not enough: The lowering of the denominator (cost) had to be met with an escalation of the numerator (quality) to ensure value.

And see us as being born in the right place at the right time. For with the national focus turning to the need for quality and patient safety, hospital medicine was in the right place and the right time to heed the call to action: appropriately stepping up to enact efforts to make the slope of the line (on a chart of quality vs. cost) “STEEEPER” … finding systems innovations to make care Safe, Timely, Efficient, Effective, Equitable, and Patient-centered.

Of course, the story continued with the Affordable Care Act and healthcare reform, greatly accelerating our evolution as change agents. And now we find ourselves fully invested in a “change the system” mentality, perfectly positioned to meaningfully change healthcare for millions of people. But threats loom—specifically, the “R” in the STEEEPER mnemonic: the risks to quality in the face of healthcare reform.

So in the next chapter of our story, I present to you our challenge: how to overcome the threats to quality in the context of healthcare reform. The first three are presented here; in subsequent articles, I will address the remainder. Overcoming all threats will hinge on mastering the four truisms of cultural change:

1. Systems drive function;
2. Every system is perfectly designed to produce the outcomes that it does;
3. This is not an issue of people needing to try harder; and
4. The “no blame” culture begins with a paradigm shift from the “person at fault” to the “system at fault.”

Threat 1: Failure to Fund Quality

SHM elected to merge its annual State of Hospital Medicine survey with the MGMA. Though not without risk, this has resulted in the anticipated benefits. The MGMA collaboration brings greater leverage in working with the C-suite, which is pre-programmed to react to MGMA surveys. From the most recent MGMA survey comes good news: The financial compensation for hospitalists has increased. A sobering insight, however, is that this increase in compensation has been met with a corresponding increase in work intensity—RVUs. Further, the link between RVUs and compensation appears to be tightening, quantifying what has long been of concern: The time devoted to the nonclinical “value added” duties of the hospitalist is shrinking.

The threat to the culture of quality is captured in the single question: How many RVUs is a quality-improvement (QI) project worth? I’m not sure we have that answer. But without an answer, it is difficult to believe that meaningful QI can be expected without time to do so. And again, as the gap between compensation and RVUs narrows, one is left wondering if there will soon be a day where there is no value-added time remaining to perform QI at all.

Fortunately, the Affordable Care Act might provide some movement in the right direction via value-based purchasing. Linking quality outcomes to financial reimbursement is a big step forward in the hospitalist’s quest to leverage the C-suite in trading RVUs for devoted QI time. Although we still are left asking the question of how many RVUs a QI project is worth, value-based purchasing at least sets the stage for the conversation. But in the interim, it is still upon hospitalists to design these QI projects, and to learn the skills necessary to see the design to its fruition.

Threat 2: Quality Stops at Core Measures

It is hard to argue that fulfilling “core measures” is a bad thing. Nonetheless, the core measures were not meant to be quality; instead, they were meant as surrogate measures of quality. The presumption of the core-measures initiative is that the system would exist without direct attention to the core measures, operating as it ordinarily would with generic attention to meeting all standards of quality for all diseases. And at some point in time, the core measures would be assessed to give an overall assessment of the system’s quality.

What has evolved, however, is a concerted attention to meeting the core measures, with little regard to the overall culture of quality.

Let’s say you were tasked with improving the public school system in your state. As a measure of the improvement, you choose five of the 1,000 schools as “core measure” schools. The state board of education is told that the performance of these five sample schools will be assessed at the end of the year, and financial support for the system as a whole will hinge on their performance. The intended result is that attention would be paid to improving the performance of every school in the system, and this improvement would be reflected in the performance of the five sample schools. The board of education could take the route of improving all schools, but the more pragmatic route would be to funnel all resources into these five schools, to the detriment of resources for the other 995 schools. The performance of the core measure schools would dramatically improve, and funding would be secured. But ask yourself: Did the performance of the school system as a whole actually improve?

Such is the risk of the core measures in healthcare. The original intent of the core measures was to instill a culture of QI for all points of care. And this has been a valuable contribution to changing the consciousness of the healthcare system. The presumption was that the core measures would be “seeds,” and that by emphasizing these select measures, the QI culture eventually would spread to all aspects of patient care. But this plan hinged on the presumption that that there is an unlimited amount of mental energy and resources to be devoted to all tasks within healthcare. The reality is that there is a fixed amount of intellectual energy and resources to be devoted to the various aspects of healthcare. One wonders if the overemphasis on meeting the core measures might actually have taken the wind out of the sails for QI in other non-core-measure patient care.

The implications are twofold. By definition, a core measure has to be applicable to all healthcare systems, and with a fixed amount of mental energy and resources, there is a real risk that what portion is reserved for QI finds its way only to the core indicators, especially if they are overemphasized in the system. The second implication is captured in our experience with time to antibiotics. With meeting the core indicator as the priority, many systems instituted the “work-around”: Give antibiotics to every patient presenting to the ED, and you will be sure to have met the four-hour window in the core indicator. The result was an exponential increase in inappropriate antibiotic administration and radiographic tests, all because meeting the indicator became more important than the overall goal.

As stewards of the hospital system, it is upon us to ensure that the original intent of core measures remains secure: The core measures seed a culture of quality, but do not become ends in and of themselves. QI apart from the core measures must remain an equal priority, and it is the hospitalist who will be central in ensuring this comes to fruition.

Threat 3: Misplaced Incentives

There is an interesting anecdote in Steven Levitt and Stephen Dubner’s book Freakonomics.¹ The story begins with a daycare center struggling with a problem: Some parents are showing up late to pick up their children at the end of the day, and this is costing the center in the way of overtime charges for the staff. To solve the problem, the center elects to institute a financial disincentive: Those showing up late to pick up their children will pay a modest financial penalty.

Fast-forward to months after the policy was put in place. The result? An exponential increase in the number of parents showing up late to pick up their children.

How do you explain worsening performance in spite of a financial disincentive? The answer resides in understanding human behavior. According to the authors, there are three primary motivations in life: financial, social, and moral. As ugly as it sounds, the decisions people make in life are driven by one of these three motivations. There is nothing wrong with providing incentives for behavior; incentives work.

But the danger arises when incentives are mismatched to behaviors. For example, if a financial outcome is the goal, then financial incentives make sense. If a social outcome (people should play better as a team) is the goal, the social incentives make sense (public recognition). But when the incentives get misaligned with their respective goals, trouble results.

What went wrong with the daycare’s plan is simple—most of the parents were motivated to pick up their children on time out of moral (“I gave my word”) or social (“I don’t want to be talked about by other parents”) incentives. But once a financial incentive was offered, the daycare center had essentially given the parents a way out in absolving their social and moral obligations. The parents had essentially cost-adjusted their behavior.

If you think this couldn’t happen to the healthcare system, let me ask you this. As a hospitalist, I see all of my patients early in the morning, because I see it as part of my obligation to the hospital team to discharge patients by 11 a.m. (social motivation).

But what if the CEO released this directive: “You will see all of your patients early in the morning, or you will take a $1,000 a year pay cut.” Is it possible that I might cost-adjust the $1,000 in exchange for sleeping in a little later and not having to deal with the morning traffic? I don’t know.

When it comes to financial incentives, there is a valley in the U-shaped curve. When the financial incentive is trivial, it is disregarded and the social/moral motivations of behavior persist (the kids are picked up on time; I persist in seeing patients early in the morning). When the financial incentive is huge, the financial incentive trumps all social/moral motivations, ensuring compliance with the goal behavior (every kid is picked up on time to avoid a penalty; I see all patients early in the day to avoid a larger penalty).

But in between is the risk zone: When the person feels they are paying an appropriate penance for not complying with the goal behavior, the financial disincentive absolves any social/moral guilt.

Healthcare reform is about incentives—and there is nothing wrong with that. But as the stewards of the inpatient healthcare system, it is upon us as hospitalists to ensure that the incentives remain matched to their intended goals, and that the untoward consequences of the incentives do not adversely affect the quality and safety of a patient’s care.

It is safe to say that the Affordable Care Act of 2010 moves us closer to a true environment of quality and patient safety. But it is equally safe to say that meaningful change will require more than what the law can provide. As stewards of the inpatient system, we have a responsibility to ensure that the healthcare system, particularly in how it responds to incentives, evolves to remain patient-centered, effective, and safe.

The next chapter in our story—the hospitalists’ story—will be one of accountability and responsibility. While there are things the government can do, the majority of what needs to be done will come directly from us. TH

Dr. Wiese is president of SHM.

Reference

1. Levitt SD, Dubner SJ. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York City: William Morrow; 2005.

From the outset, HM has been about efficiency. And there was nothing wrong with that, for value is quality divided by cost. But in our story, we found that mere efficiency was not enough: The lowering of the denominator (cost) had to be met with an escalation of the numerator (quality) to ensure value.

And see us as being born in the right place at the right time. For with the national focus turning to the need for quality and patient safety, hospital medicine was in the right place and the right time to heed the call to action: appropriately stepping up to enact efforts to make the slope of the line (on a chart of quality vs. cost) “STEEEPER” … finding systems innovations to make care Safe, Timely, Efficient, Effective, Equitable, and Patient-centered.

Of course, the story continued with the Affordable Care Act and healthcare reform, greatly accelerating our evolution as change agents. And now we find ourselves fully invested in a “change the system” mentality, perfectly positioned to meaningfully change healthcare for millions of people. But threats loom—specifically, the “R” in the STEEEPER mnemonic: the risks to quality in the face of healthcare reform.

So in the next chapter of our story, I present to you our challenge: how to overcome the threats to quality in the context of healthcare reform. The first three are presented here; in subsequent articles, I will address the remainder. Overcoming all threats will hinge on mastering the four truisms of cultural change:

1. Systems drive function;
2. Every system is perfectly designed to produce the outcomes that it does;
3. This is not an issue of people needing to try harder; and
4. The “no blame” culture begins with a paradigm shift from the “person at fault” to the “system at fault.”

Threat 1: Failure to Fund Quality

SHM elected to merge its annual State of Hospital Medicine survey with the MGMA. Though not without risk, this has resulted in the anticipated benefits. The MGMA collaboration brings greater leverage in working with the C-suite, which is pre-programmed to react to MGMA surveys. From the most recent MGMA survey comes good news: The financial compensation for hospitalists has increased. A sobering insight, however, is that this increase in compensation has been met with a corresponding increase in work intensity—RVUs. Further, the link between RVUs and compensation appears to be tightening, quantifying what has long been of concern: The time devoted to the nonclinical “value added” duties of the hospitalist is shrinking.

The threat to the culture of quality is captured in the single question: How many RVUs is a quality-improvement (QI) project worth? I’m not sure we have that answer. But without an answer, it is difficult to believe that meaningful QI can be expected without time to do so. And again, as the gap between compensation and RVUs narrows, one is left wondering if there will soon be a day where there is no value-added time remaining to perform QI at all.

Fortunately, the Affordable Care Act might provide some movement in the right direction via value-based purchasing. Linking quality outcomes to financial reimbursement is a big step forward in the hospitalist’s quest to leverage the C-suite in trading RVUs for devoted QI time. Although we still are left asking the question of how many RVUs a QI project is worth, value-based purchasing at least sets the stage for the conversation. But in the interim, it is still upon hospitalists to design these QI projects, and to learn the skills necessary to see the design to its fruition.

Threat 2: Quality Stops at Core Measures

It is hard to argue that fulfilling “core measures” is a bad thing. Nonetheless, the core measures were not meant to be quality; instead, they were meant as surrogate measures of quality. The presumption of the core-measures initiative is that the system would exist without direct attention to the core measures, operating as it ordinarily would with generic attention to meeting all standards of quality for all diseases. And at some point in time, the core measures would be assessed to give an overall assessment of the system’s quality.

What has evolved, however, is a concerted attention to meeting the core measures, with little regard to the overall culture of quality.

Let’s say you were tasked with improving the public school system in your state. As a measure of the improvement, you choose five of the 1,000 schools as “core measure” schools. The state board of education is told that the performance of these five sample schools will be assessed at the end of the year, and financial support for the system as a whole will hinge on their performance. The intended result is that attention would be paid to improving the performance of every school in the system, and this improvement would be reflected in the performance of the five sample schools. The board of education could take the route of improving all schools, but the more pragmatic route would be to funnel all resources into these five schools, to the detriment of resources for the other 995 schools. The performance of the core measure schools would dramatically improve, and funding would be secured. But ask yourself: Did the performance of the school system as a whole actually improve?

Such is the risk of the core measures in healthcare. The original intent of the core measures was to instill a culture of QI for all points of care. And this has been a valuable contribution to changing the consciousness of the healthcare system. The presumption was that the core measures would be “seeds,” and that by emphasizing these select measures, the QI culture eventually would spread to all aspects of patient care. But this plan hinged on the presumption that that there is an unlimited amount of mental energy and resources to be devoted to all tasks within healthcare. The reality is that there is a fixed amount of intellectual energy and resources to be devoted to the various aspects of healthcare. One wonders if the overemphasis on meeting the core measures might actually have taken the wind out of the sails for QI in other non-core-measure patient care.

The implications are twofold. By definition, a core measure has to be applicable to all healthcare systems, and with a fixed amount of mental energy and resources, there is a real risk that what portion is reserved for QI finds its way only to the core indicators, especially if they are overemphasized in the system. The second implication is captured in our experience with time to antibiotics. With meeting the core indicator as the priority, many systems instituted the “work-around”: Give antibiotics to every patient presenting to the ED, and you will be sure to have met the four-hour window in the core indicator. The result was an exponential increase in inappropriate antibiotic administration and radiographic tests, all because meeting the indicator became more important than the overall goal.

As stewards of the hospital system, it is upon us to ensure that the original intent of core measures remains secure: The core measures seed a culture of quality, but do not become ends in and of themselves. QI apart from the core measures must remain an equal priority, and it is the hospitalist who will be central in ensuring this comes to fruition.

Threat 3: Misplaced Incentives

There is an interesting anecdote in Steven Levitt and Stephen Dubner’s book Freakonomics.¹ The story begins with a daycare center struggling with a problem: Some parents are showing up late to pick up their children at the end of the day, and this is costing the center in the way of overtime charges for the staff. To solve the problem, the center elects to institute a financial disincentive: Those showing up late to pick up their children will pay a modest financial penalty.

Fast-forward to months after the policy was put in place. The result? An exponential increase in the number of parents showing up late to pick up their children.

How do you explain worsening performance in spite of a financial disincentive? The answer resides in understanding human behavior. According to the authors, there are three primary motivations in life: financial, social, and moral. As ugly as it sounds, the decisions people make in life are driven by one of these three motivations. There is nothing wrong with providing incentives for behavior; incentives work.

But the danger arises when incentives are mismatched to behaviors. For example, if a financial outcome is the goal, then financial incentives make sense. If a social outcome (people should play better as a team) is the goal, the social incentives make sense (public recognition). But when the incentives get misaligned with their respective goals, trouble results.

What went wrong with the daycare’s plan is simple—most of the parents were motivated to pick up their children on time out of moral (“I gave my word”) or social (“I don’t want to be talked about by other parents”) incentives. But once a financial incentive was offered, the daycare center had essentially given the parents a way out in absolving their social and moral obligations. The parents had essentially cost-adjusted their behavior.

If you think this couldn’t happen to the healthcare system, let me ask you this. As a hospitalist, I see all of my patients early in the morning, because I see it as part of my obligation to the hospital team to discharge patients by 11 a.m. (social motivation).

But what if the CEO released this directive: “You will see all of your patients early in the morning, or you will take a $1,000 a year pay cut.” Is it possible that I might cost-adjust the $1,000 in exchange for sleeping in a little later and not having to deal with the morning traffic? I don’t know.

When it comes to financial incentives, there is a valley in the U-shaped curve. When the financial incentive is trivial, it is disregarded and the social/moral motivations of behavior persist (the kids are picked up on time; I persist in seeing patients early in the morning). When the financial incentive is huge, the financial incentive trumps all social/moral motivations, ensuring compliance with the goal behavior (every kid is picked up on time to avoid a penalty; I see all patients early in the day to avoid a larger penalty).

But in between is the risk zone: When the person feels they are paying an appropriate penance for not complying with the goal behavior, the financial disincentive absolves any social/moral guilt.

Healthcare reform is about incentives—and there is nothing wrong with that. But as the stewards of the inpatient healthcare system, it is upon us as hospitalists to ensure that the incentives remain matched to their intended goals, and that the untoward consequences of the incentives do not adversely affect the quality and safety of a patient’s care.

It is safe to say that the Affordable Care Act of 2010 moves us closer to a true environment of quality and patient safety. But it is equally safe to say that meaningful change will require more than what the law can provide. As stewards of the inpatient system, we have a responsibility to ensure that the healthcare system, particularly in how it responds to incentives, evolves to remain patient-centered, effective, and safe.

The next chapter in our story—the hospitalists’ story—will be one of accountability and responsibility. While there are things the government can do, the majority of what needs to be done will come directly from us. TH

Dr. Wiese is president of SHM.

Reference

1. Levitt SD, Dubner SJ. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York City: William Morrow; 2005.

If every system is perfectly designed to get the results it gets …

And if 15 million patients are harmed every year from medical care …

And if as many as 98,000 people die every year due to medical errors in hospitals …

Then what does that say about the system we have designed?

A System Designed to Competently Hurt Many

By now you’ve no doubt heard, read, and possibly even uttered the above facts and figures yourself. I think we all have our opinions about the veracity of these numbers, but I don’t think any of us would argue with the sentiment. The U.S. healthcare system comprises the most competent, compassionate, well-meaning, and caring professionals on this planet—who harm, maim, and kill countless people every year.

What a discomforting paradox.

Equity: The Overlooked Quality Domain

Many years back, the Institute of Medicine (IOM) published a list of six “domains” of healthcare quality. You’ve no doubt stumbled across the IOM’s Safe … Timely … Effective … Efficient … Equitable … Patient-Centered mnemonic recipe—STEEEP—for high-quality care.¹ In fact, it’s hard to read a journal, attend a medical presentation, or open a local newspaper without finding reference to these domains. It’s all the rage to talk about wrong-site surgery (safe), access to care (timely), comparative-effectiveness research (effective), lean concepts (efficient), and individualized medicine (patient-centered). However, the sixth domain often seems to get the Jan Brady treatment—minimized, marginalized, and oft-forgotten.

The IOM defines equitable care as that which “does not vary in quality because of personal characteristics such as gender, ethnicity, geographic location, and socioeconomic status.”1 To be sure, there is some hum at the national level about issues of equity, especially around healthcare coverage for all. And this is important. However, what appears lost in the rant surrounding the inherent inequities in our tiered health insurance system is that we have blantant inequalities baked into the everyday machinery of our hospitals. And they affect all, regardless of skin color, gender, or insurance status.

Think for a moment about your hospital. Are the type, level, and access to care equal at all times? Does the level of care change when the streetlights come on? How about on weekends and holidays? Do your operating rooms run on Saturdays and Sundays? Can patients get chemotherapy on the weekends? Does your hospital alter its nursing staff ratios after hours? Can you get an ultrasound at midnight? How about a urology or neurosurgery consult at 2 a.m.? How about getting interventional radiology to place an IVC filter on a holiday?

Now scratch a bit closer to home. Does your hospitalist group downstaff on weekends and holidays, even though the volumes probably warrant more coverage? Are your night providers part of your group, or are they moonlighters? Do your after-hours providers cross-cover and admit a reasonable number of patients, or are they frequently overwhelmed? Do they cover patients or admit for services that they don’t typically care for during the day (e.g. ICU, neurosurgical, subspecialty cardiology or oncology patients)? For the intensely ill patients admitted to U.S. hospitals today, should the type and availability of care differ when it’s delivered at 3 p.m. or 3 a.m., Sunday or Monday?

Disregarding the macro-inequities in our societal approach to healthcare, can we even ensure equitable care within our own hospital walls 24 hours a day, seven days a week?

The Answer: An Unfortunate “No”

For the record, I hate working nights, abhor working weekends, and resent working holidays. But the thing I’d hate even more than working nights, weekends, and holidays would be being a patient admitted during a night, weekend, or holiday. To understand why, I have to look no further than my hospital parking lot. During bankers’ hours, I can barely find a parking spot on the top floor of our multilevel parking structure.

Fast-forward to Saturday, and I have my pick of empty football fields’ worth of spots on all floors. Ditto Sundays, nights, and holidays.

Why is it that nationally, a collectively near-trillion-dollar hospital enterprise finds it acceptable to effectively shutter itself for a quarter to a third of the week? Especially when doing so seems to counter their primary mission of providing safe, timely, effective, efficient, equitable, and patient-centered care.

The Weekend Effect

There are, of course, economic and operational reasons to downshift during off hours—some hospitals don’t have the elective procedures to run operating rooms seven days a week, and very few patients want to have their elective colonoscopy at 11 p.m. or their chemotherapy during Thanksgiving dinner. However, in most cases, the reasons for doing so center on hospital staff and physician satisfaction. Most us of just don’t like working off hours. As a result, studies have shown significantly less access to such high-level care as coronary angiography and percutaneous coronary intervention on weekends.^2,3

And the effects of this “weekend effect” can be devastating.

A recent paper in the New England Journal of Medicine reported that for every 1,000 patients admitted with a myocardial infarction on a weekend, nine more would die than a comparable group admitted during the week.⁴ Their offense? Having the misfortune to get ill on a Saturday morning. The authors concluded that this higher mortality was secondary to a lower rate of invasive cardiac procedures, presumably because they were less available. And the weekend effect isn’t just limited to coronary care. Poorer outcomes, including higher mortality rates, have been reported for weekend admissions to the neonatal ICU and adult ICU, as well as admission for epiglottitis, ruptured abdominal aortic aneurysms, and pulmonary embolism.^5,6,7

So let’s connect the dots: A system designed with inequal access to lifesaving therapies and appropriate staffing results in worse outcomes, more harm, more deaths.

To be clear, 98,000 people don’t die every year because of my disdain for working nights and weekends. This is a much deeper problem that hinges on many unsatisfactory systems working unsatisfactorily in tandem (e.g. see the other five IOM domains of quality care). Furthermore, I don’t mean to suggest that hospitalists necessarily have a lot of say in cardiac catheterization schedules. Yet we do control our own systems of care—how many patients we admit and cover during a shift, how strongly we advocate for timely testing and consultation, how we staff weekends and cover patients at night.

And, more and more, we are in a position to enhance the care delivery systems of the hospital and its providers that surround us. With that comes a responsibility to ensure that these systems are highly functioning and equitable, regardless of the time of day, day of the week.

If we are going to fundamentally enhance the quality of care, then we have to design safer systems of care. It will take time and resources to alter many of our bruised systems of care, but we can begin by at least ensuring equity in how we deliver care at our own institutions. That is, unless we are comfortable with a system perfectly designed to harm. 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.

References

1. Institute of Medicine (IOM). Crossing the Quality Chasm: A New Health System for the 21st Century. Washington, D.C.: National Academy Press; 2001.
2. Bell CM, Redelmeier DA. Waiting for urgent procedures on the weekend among emergently hospitalized patients. Am J Med. 2004:117(3):175-181.
3. Magid DJ, Wang Y, Herrin J, et al. Relationship between time of day, day of week, timeliness of reperfusion, and in-hospital mortality for patients with acute ST-segment elevation myocardial infarction. JAMA. 2005;294(7):803-812.
4. Kostis WJ, Demissie K, Marcella SW, Shao YH, Wilson AC, Moreyra AE. Weekend versus weekday admission and mortality from myocardial infarction. N Eng J Med. 2007;356 (11):1099-1109.
5. Hendry RA. The weekend—a dangerous time to be born? Br J Obstet Gynaecol. 1981;88(12):1200-1203.
6. Barnett MJ, Kaboli PJ, Sirio CA, Rosenthal GE. Day of the week of intensive care admission and patient outcomes: a multisite regional evaluation. Med Care. 2002;40(6):530-539.
7. Bell CM, Redelmeier DA. Mortality among patients admitted to hospitals on weekends as compared with weekdays. N Eng J Med. 2001;345(9):663-668.

If every system is perfectly designed to get the results it gets …

And if 15 million patients are harmed every year from medical care …

And if as many as 98,000 people die every year due to medical errors in hospitals …

Then what does that say about the system we have designed?

A System Designed to Competently Hurt Many

By now you’ve no doubt heard, read, and possibly even uttered the above facts and figures yourself. I think we all have our opinions about the veracity of these numbers, but I don’t think any of us would argue with the sentiment. The U.S. healthcare system comprises the most competent, compassionate, well-meaning, and caring professionals on this planet—who harm, maim, and kill countless people every year.

What a discomforting paradox.

Equity: The Overlooked Quality Domain

Many years back, the Institute of Medicine (IOM) published a list of six “domains” of healthcare quality. You’ve no doubt stumbled across the IOM’s Safe … Timely … Effective … Efficient … Equitable … Patient-Centered mnemonic recipe—STEEEP—for high-quality care.¹ In fact, it’s hard to read a journal, attend a medical presentation, or open a local newspaper without finding reference to these domains. It’s all the rage to talk about wrong-site surgery (safe), access to care (timely), comparative-effectiveness research (effective), lean concepts (efficient), and individualized medicine (patient-centered). However, the sixth domain often seems to get the Jan Brady treatment—minimized, marginalized, and oft-forgotten.

The IOM defines equitable care as that which “does not vary in quality because of personal characteristics such as gender, ethnicity, geographic location, and socioeconomic status.”1 To be sure, there is some hum at the national level about issues of equity, especially around healthcare coverage for all. And this is important. However, what appears lost in the rant surrounding the inherent inequities in our tiered health insurance system is that we have blantant inequalities baked into the everyday machinery of our hospitals. And they affect all, regardless of skin color, gender, or insurance status.

Think for a moment about your hospital. Are the type, level, and access to care equal at all times? Does the level of care change when the streetlights come on? How about on weekends and holidays? Do your operating rooms run on Saturdays and Sundays? Can patients get chemotherapy on the weekends? Does your hospital alter its nursing staff ratios after hours? Can you get an ultrasound at midnight? How about a urology or neurosurgery consult at 2 a.m.? How about getting interventional radiology to place an IVC filter on a holiday?

Now scratch a bit closer to home. Does your hospitalist group downstaff on weekends and holidays, even though the volumes probably warrant more coverage? Are your night providers part of your group, or are they moonlighters? Do your after-hours providers cross-cover and admit a reasonable number of patients, or are they frequently overwhelmed? Do they cover patients or admit for services that they don’t typically care for during the day (e.g. ICU, neurosurgical, subspecialty cardiology or oncology patients)? For the intensely ill patients admitted to U.S. hospitals today, should the type and availability of care differ when it’s delivered at 3 p.m. or 3 a.m., Sunday or Monday?

Disregarding the macro-inequities in our societal approach to healthcare, can we even ensure equitable care within our own hospital walls 24 hours a day, seven days a week?

The Answer: An Unfortunate “No”

For the record, I hate working nights, abhor working weekends, and resent working holidays. But the thing I’d hate even more than working nights, weekends, and holidays would be being a patient admitted during a night, weekend, or holiday. To understand why, I have to look no further than my hospital parking lot. During bankers’ hours, I can barely find a parking spot on the top floor of our multilevel parking structure.

Fast-forward to Saturday, and I have my pick of empty football fields’ worth of spots on all floors. Ditto Sundays, nights, and holidays.

Why is it that nationally, a collectively near-trillion-dollar hospital enterprise finds it acceptable to effectively shutter itself for a quarter to a third of the week? Especially when doing so seems to counter their primary mission of providing safe, timely, effective, efficient, equitable, and patient-centered care.

The Weekend Effect

There are, of course, economic and operational reasons to downshift during off hours—some hospitals don’t have the elective procedures to run operating rooms seven days a week, and very few patients want to have their elective colonoscopy at 11 p.m. or their chemotherapy during Thanksgiving dinner. However, in most cases, the reasons for doing so center on hospital staff and physician satisfaction. Most us of just don’t like working off hours. As a result, studies have shown significantly less access to such high-level care as coronary angiography and percutaneous coronary intervention on weekends.^2,3

And the effects of this “weekend effect” can be devastating.

A recent paper in the New England Journal of Medicine reported that for every 1,000 patients admitted with a myocardial infarction on a weekend, nine more would die than a comparable group admitted during the week.⁴ Their offense? Having the misfortune to get ill on a Saturday morning. The authors concluded that this higher mortality was secondary to a lower rate of invasive cardiac procedures, presumably because they were less available. And the weekend effect isn’t just limited to coronary care. Poorer outcomes, including higher mortality rates, have been reported for weekend admissions to the neonatal ICU and adult ICU, as well as admission for epiglottitis, ruptured abdominal aortic aneurysms, and pulmonary embolism.^5,6,7

So let’s connect the dots: A system designed with inequal access to lifesaving therapies and appropriate staffing results in worse outcomes, more harm, more deaths.

To be clear, 98,000 people don’t die every year because of my disdain for working nights and weekends. This is a much deeper problem that hinges on many unsatisfactory systems working unsatisfactorily in tandem (e.g. see the other five IOM domains of quality care). Furthermore, I don’t mean to suggest that hospitalists necessarily have a lot of say in cardiac catheterization schedules. Yet we do control our own systems of care—how many patients we admit and cover during a shift, how strongly we advocate for timely testing and consultation, how we staff weekends and cover patients at night.

And, more and more, we are in a position to enhance the care delivery systems of the hospital and its providers that surround us. With that comes a responsibility to ensure that these systems are highly functioning and equitable, regardless of the time of day, day of the week.

If we are going to fundamentally enhance the quality of care, then we have to design safer systems of care. It will take time and resources to alter many of our bruised systems of care, but we can begin by at least ensuring equity in how we deliver care at our own institutions. That is, unless we are comfortable with a system perfectly designed to harm. 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.

References

1. Institute of Medicine (IOM). Crossing the Quality Chasm: A New Health System for the 21st Century. Washington, D.C.: National Academy Press; 2001.
2. Bell CM, Redelmeier DA. Waiting for urgent procedures on the weekend among emergently hospitalized patients. Am J Med. 2004:117(3):175-181.
3. Magid DJ, Wang Y, Herrin J, et al. Relationship between time of day, day of week, timeliness of reperfusion, and in-hospital mortality for patients with acute ST-segment elevation myocardial infarction. JAMA. 2005;294(7):803-812.
4. Kostis WJ, Demissie K, Marcella SW, Shao YH, Wilson AC, Moreyra AE. Weekend versus weekday admission and mortality from myocardial infarction. N Eng J Med. 2007;356 (11):1099-1109.
5. Hendry RA. The weekend—a dangerous time to be born? Br J Obstet Gynaecol. 1981;88(12):1200-1203.
6. Barnett MJ, Kaboli PJ, Sirio CA, Rosenthal GE. Day of the week of intensive care admission and patient outcomes: a multisite regional evaluation. Med Care. 2002;40(6):530-539.
7. Bell CM, Redelmeier DA. Mortality among patients admitted to hospitals on weekends as compared with weekdays. N Eng J Med. 2001;345(9):663-668.

If every system is perfectly designed to get the results it gets …

And if 15 million patients are harmed every year from medical care …

And if as many as 98,000 people die every year due to medical errors in hospitals …

Then what does that say about the system we have designed?

A System Designed to Competently Hurt Many

By now you’ve no doubt heard, read, and possibly even uttered the above facts and figures yourself. I think we all have our opinions about the veracity of these numbers, but I don’t think any of us would argue with the sentiment. The U.S. healthcare system comprises the most competent, compassionate, well-meaning, and caring professionals on this planet—who harm, maim, and kill countless people every year.

What a discomforting paradox.

Equity: The Overlooked Quality Domain

Many years back, the Institute of Medicine (IOM) published a list of six “domains” of healthcare quality. You’ve no doubt stumbled across the IOM’s Safe … Timely … Effective … Efficient … Equitable … Patient-Centered mnemonic recipe—STEEEP—for high-quality care.¹ In fact, it’s hard to read a journal, attend a medical presentation, or open a local newspaper without finding reference to these domains. It’s all the rage to talk about wrong-site surgery (safe), access to care (timely), comparative-effectiveness research (effective), lean concepts (efficient), and individualized medicine (patient-centered). However, the sixth domain often seems to get the Jan Brady treatment—minimized, marginalized, and oft-forgotten.

The IOM defines equitable care as that which “does not vary in quality because of personal characteristics such as gender, ethnicity, geographic location, and socioeconomic status.”1 To be sure, there is some hum at the national level about issues of equity, especially around healthcare coverage for all. And this is important. However, what appears lost in the rant surrounding the inherent inequities in our tiered health insurance system is that we have blantant inequalities baked into the everyday machinery of our hospitals. And they affect all, regardless of skin color, gender, or insurance status.

Think for a moment about your hospital. Are the type, level, and access to care equal at all times? Does the level of care change when the streetlights come on? How about on weekends and holidays? Do your operating rooms run on Saturdays and Sundays? Can patients get chemotherapy on the weekends? Does your hospital alter its nursing staff ratios after hours? Can you get an ultrasound at midnight? How about a urology or neurosurgery consult at 2 a.m.? How about getting interventional radiology to place an IVC filter on a holiday?

Now scratch a bit closer to home. Does your hospitalist group downstaff on weekends and holidays, even though the volumes probably warrant more coverage? Are your night providers part of your group, or are they moonlighters? Do your after-hours providers cross-cover and admit a reasonable number of patients, or are they frequently overwhelmed? Do they cover patients or admit for services that they don’t typically care for during the day (e.g. ICU, neurosurgical, subspecialty cardiology or oncology patients)? For the intensely ill patients admitted to U.S. hospitals today, should the type and availability of care differ when it’s delivered at 3 p.m. or 3 a.m., Sunday or Monday?

Disregarding the macro-inequities in our societal approach to healthcare, can we even ensure equitable care within our own hospital walls 24 hours a day, seven days a week?

The Answer: An Unfortunate “No”

For the record, I hate working nights, abhor working weekends, and resent working holidays. But the thing I’d hate even more than working nights, weekends, and holidays would be being a patient admitted during a night, weekend, or holiday. To understand why, I have to look no further than my hospital parking lot. During bankers’ hours, I can barely find a parking spot on the top floor of our multilevel parking structure.

Fast-forward to Saturday, and I have my pick of empty football fields’ worth of spots on all floors. Ditto Sundays, nights, and holidays.

Why is it that nationally, a collectively near-trillion-dollar hospital enterprise finds it acceptable to effectively shutter itself for a quarter to a third of the week? Especially when doing so seems to counter their primary mission of providing safe, timely, effective, efficient, equitable, and patient-centered care.

The Weekend Effect

There are, of course, economic and operational reasons to downshift during off hours—some hospitals don’t have the elective procedures to run operating rooms seven days a week, and very few patients want to have their elective colonoscopy at 11 p.m. or their chemotherapy during Thanksgiving dinner. However, in most cases, the reasons for doing so center on hospital staff and physician satisfaction. Most us of just don’t like working off hours. As a result, studies have shown significantly less access to such high-level care as coronary angiography and percutaneous coronary intervention on weekends.^2,3

And the effects of this “weekend effect” can be devastating.

A recent paper in the New England Journal of Medicine reported that for every 1,000 patients admitted with a myocardial infarction on a weekend, nine more would die than a comparable group admitted during the week.⁴ Their offense? Having the misfortune to get ill on a Saturday morning. The authors concluded that this higher mortality was secondary to a lower rate of invasive cardiac procedures, presumably because they were less available. And the weekend effect isn’t just limited to coronary care. Poorer outcomes, including higher mortality rates, have been reported for weekend admissions to the neonatal ICU and adult ICU, as well as admission for epiglottitis, ruptured abdominal aortic aneurysms, and pulmonary embolism.^5,6,7

So let’s connect the dots: A system designed with inequal access to lifesaving therapies and appropriate staffing results in worse outcomes, more harm, more deaths.

To be clear, 98,000 people don’t die every year because of my disdain for working nights and weekends. This is a much deeper problem that hinges on many unsatisfactory systems working unsatisfactorily in tandem (e.g. see the other five IOM domains of quality care). Furthermore, I don’t mean to suggest that hospitalists necessarily have a lot of say in cardiac catheterization schedules. Yet we do control our own systems of care—how many patients we admit and cover during a shift, how strongly we advocate for timely testing and consultation, how we staff weekends and cover patients at night.

And, more and more, we are in a position to enhance the care delivery systems of the hospital and its providers that surround us. With that comes a responsibility to ensure that these systems are highly functioning and equitable, regardless of the time of day, day of the week.

If we are going to fundamentally enhance the quality of care, then we have to design safer systems of care. It will take time and resources to alter many of our bruised systems of care, but we can begin by at least ensuring equity in how we deliver care at our own institutions. That is, unless we are comfortable with a system perfectly designed to harm. 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.

References

1. Institute of Medicine (IOM). Crossing the Quality Chasm: A New Health System for the 21st Century. Washington, D.C.: National Academy Press; 2001.
2. Bell CM, Redelmeier DA. Waiting for urgent procedures on the weekend among emergently hospitalized patients. Am J Med. 2004:117(3):175-181.
3. Magid DJ, Wang Y, Herrin J, et al. Relationship between time of day, day of week, timeliness of reperfusion, and in-hospital mortality for patients with acute ST-segment elevation myocardial infarction. JAMA. 2005;294(7):803-812.
4. Kostis WJ, Demissie K, Marcella SW, Shao YH, Wilson AC, Moreyra AE. Weekend versus weekday admission and mortality from myocardial infarction. N Eng J Med. 2007;356 (11):1099-1109.
5. Hendry RA. The weekend—a dangerous time to be born? Br J Obstet Gynaecol. 1981;88(12):1200-1203.
6. Barnett MJ, Kaboli PJ, Sirio CA, Rosenthal GE. Day of the week of intensive care admission and patient outcomes: a multisite regional evaluation. Med Care. 2002;40(6):530-539.
7. Bell CM, Redelmeier DA. Mortality among patients admitted to hospitals on weekends as compared with weekdays. N Eng J Med. 2001;345(9):663-668.

Bryn Nelson in the October issue of The Hospitalist (see “A Taxing Future for HM?,” p. 16) incorrectly states that Blue Cross Blue Shield of North Carolina’s refund to customers was a result of an overcharge. In point of fact, the refund is a result of a one-time opportunity due to the changes brought about by the health reform law. The new rating and grandfathering rules in the Patient Protection and Affordable Care Act create a one-time circumstance enabling these refunds.

The funds come from active life reserves, which are portions of the premium set aside in the early years of a policy to pay future claims and keep rates stable as customers’ medical expenses rise during the life of the policy. However, policies purchased or substantially modified after March 23, 2010, will end in 2014 under the new healthcare reform law, which is when the new products under health reform will be introduced. Therefore, the reserves held for these products will cover a much shorter period of time, allowing for these funds to be released.

Lew Borman,

media relations,

Blue Cross Blue Shield of North Carolina

Bryn Nelson in the October issue of The Hospitalist (see “A Taxing Future for HM?,” p. 16) incorrectly states that Blue Cross Blue Shield of North Carolina’s refund to customers was a result of an overcharge. In point of fact, the refund is a result of a one-time opportunity due to the changes brought about by the health reform law. The new rating and grandfathering rules in the Patient Protection and Affordable Care Act create a one-time circumstance enabling these refunds.

The funds come from active life reserves, which are portions of the premium set aside in the early years of a policy to pay future claims and keep rates stable as customers’ medical expenses rise during the life of the policy. However, policies purchased or substantially modified after March 23, 2010, will end in 2014 under the new healthcare reform law, which is when the new products under health reform will be introduced. Therefore, the reserves held for these products will cover a much shorter period of time, allowing for these funds to be released.

Lew Borman,

media relations,

Blue Cross Blue Shield of North Carolina

Bryn Nelson in the October issue of The Hospitalist (see “A Taxing Future for HM?,” p. 16) incorrectly states that Blue Cross Blue Shield of North Carolina’s refund to customers was a result of an overcharge. In point of fact, the refund is a result of a one-time opportunity due to the changes brought about by the health reform law. The new rating and grandfathering rules in the Patient Protection and Affordable Care Act create a one-time circumstance enabling these refunds.

The funds come from active life reserves, which are portions of the premium set aside in the early years of a policy to pay future claims and keep rates stable as customers’ medical expenses rise during the life of the policy. However, policies purchased or substantially modified after March 23, 2010, will end in 2014 under the new healthcare reform law, which is when the new products under health reform will be introduced. Therefore, the reserves held for these products will cover a much shorter period of time, allowing for these funds to be released.

Lew Borman,

media relations,

Blue Cross Blue Shield of North Carolina

In a single year, one health system saved itself more than $2 million on orthopedic, cardiology, and cardiovascular surgery procedures. Another hospital saved Medicare an estimated $750,000. Supply costs dropped, scores on quality metrics rose, and bonus payments were distributed to participating doctors.

A runaway success? Not so fast.

Encouraging, if early, results from Medicare’s Acute Care Episode (ACE) Demonstration might have strengthened the case for bundling payments around episodes of care as an effective way to rein in spiraling healthcare costs and transition from a volume-based to a value-based payment system. But broad skepticism persists over the wisdom of binding together the fates of hospitals and doctors, and critics are far from ready to drop their argument that bundling will be unworkable across wider, less-well-defined swaths of healthcare.

The current bundling and gain-sharing duo differs only superficially from the despised capitation model of the 1990s, argues Adam Singer, MD, CEO of North Hollywood, Calif.-based IPC: The Hospitalist Company. “It’s capitation in a different dress, except that instead of over a patient population, it’s done over an individual patient’s case,” he says.

Not so, says Lisa Kettering, MD, SFHM, vice president of medical affairs and CMO at Exempla St. Joseph Hospital in Denver.

“I’ve been around in medicine long enough to have been around when there was capitation,” she says. “I think the current bundling project is a vast improvement and I think it’s a very different animal from old capitation … and pivots absolutely critically on the physician involvement at the heart of quality, at the heart of decision-making. That’s never happened before.”

Amid the swirling expectations and apprehensions, what has the ACE demo taught us so far about bundling, and what does it mean for the future of hospital medicine? In essence, bundling lumps Medicare Part A and Part B reimbursements into a single payment aimed at encouraging hospitals and doctors to work together to improve efficiency, maintain high-quality care, and reduce overall expenses. Hospitals participating in the ACE Demonstration provide a roughly 5% discount to Medicare for a specific list of diagnosis-related groups (DRGs), and the Centers for Medicare & Medicaid Services (CMS) passes on half of the savings to beneficiaries who use participating hospitals for the covered procedures.

After submitting their claims, the hospitals receive a bundled Medicare payment, from which they pay doctors 100% of their Part B fees. As an incentive, some providers are eligible for bonus payments in the form of gain-sharing. CMS rules preclude any payments for referrals, cap all payments at 25% of the physician fee schedule, and mandate that any payment be based on reductions in patient care costs due to ACE activities. But participating hospitals are otherwise free to devise their own formulas and specific quality metrics that doctors must meet to gain the bonus.

SHM repeatedly has signaled its support for exploring bundling as a way to better align financial incentives among providers and reward them for quality and efficiency instead of quantity. The 10,000-member society strongly supports further testing of payment bundling methodologies prior to a national rollout, however, and has called for the integral involvement of hospitalists in developing and implementing bundling projects.

With its main focus on cardiologists, orthopedic surgeons, and cardiovascular surgeons, the ACE Demonstration has had little direct impact on hospitalists’ jobs or bank accounts—so far. That could change with an expanded pilot mandated by healthcare reform legislation. Slated to begin by Jan. 1, 2013, the project will redefine covered episodes of care to include all medical services administered three days before a hospital admission through 30 days after discharge.

CMS hasn’t yet decided which procedures will be covered, but officials say they’ve learned from past experience to begin with well-defined episodes of care. “Back in the ’90s, we did a bundled demonstration for bypass procedures and also for cataract procedures,” says Cynthia Mason, project manager with the CMS Medicare Demonstrations Group. “What we learned from that is obviously it’s easier both for Medicare, as well as for the providers, to predict utilization when you have a more standardized package of services. You also need a variety and large number of services in order to give you opportunities for looking at efficiencies and improvements in the system.”

Upfront Investment, Immediate Savings, Improved Quality

Early opinions have been mostly positive among the ACE participants. Hillcrest Medical Center in Tulsa, Okla., was first out of the gate in May 2009. Over the project’s first year, Hillcrest CEO Steve Dobbs estimates that the 490-bed hospital has saved CMS about $750,000; half of that sum has been passed along to patients. The hospital itself has spent about $550,000 in marketing, start-up costs, corporate support, and paying third-party claims. But recent investments have led to double-digit gains in patient volume (24% in cardiology and cardiovascular surgery, and a whopping 37% in orthopedics), margins in orthopedics are up, and direct negotiations between participating doctors and national vendors have netted additional savings. As a reward for help with cost-cutting, Hillcrest recently passed along two gain-sharing checks totaling $130,000 to be split among six independent orthopedists.

“What’s actually driving this program is the supply cost savings from all of our national partners,” Dobbs says. A big question is whether the negotiated savings—and hence the gain-sharing—could be maintained over a greatly expanded pilot project. “If this goes nationwide and everybody’s in it, do you get the same benefit? I don’t know the answer to that right now,” he says.

Dobbs is careful to point out that success is not measured by patient volume and supply costs alone. Hillcrest’s gain-sharing plan stipulates that physicians must reach the 90% threshold for a range of quality metrics. For one previously problematic category—stopping antibiotics 24 hours post-surgery—Dobbs says both the orthopedics and cardiovascular surgery departments have dramatically increased their compliance rates.

Baptist Health System in San Antonio, which began its own demonstration in June 2009, has reported savings of $2.2 million for its 1,275-bed, four-campus health system. So far, the roughly 20 hospitalists employed by IPC: The Hospitalist Company who work within the Baptist Health System have not directly participated in the project. But Felix Aguirre, MD, FHM, IPC’s vice president of medical affairs in San Antonio, says the demonstration has had a definite impact on efficiency.

Dr. Aguirre

“Since the demonstration project has come up, it seems like everybody is obeying the evidence-based guidelines now,” says Dr. Aguirre, a member of SHM’s Public Policy Committee and Team Hospitalist. “So it’s not keeping the hip replacement patient in for five days, it’s what the guidelines say: three days.”

Some kinks still need to be worked out. Baptist has had trouble with double payments and other claims-related issues, Dr. Aguirre says. Hillcrest’s Dobbs complains that he has heard virtually no feedback from CMS. Medicare’s Mason says officials have been “very pleased” with the project’s progress so far, but concedes that a delay in updating a claims processing system has pushed back the launch at two other demonstration sites until Nov. 1.

At one of those sites, 361-bed Exempla St. Joseph Hospital, the three-year demonstration will encompass only cardiology and cardiovascular surgery. Dr. Kettering, a former SHM board member who serves as executive sponsor and director of St. Joseph Hospital’s ACE demo, says the shared-savings program will be limited to cardiovascular surgery for the first year to ensure the system is running smoothly. In the second or third year, however, hospitalists who care for eligible patients could theoretically benefit from a similar gain-sharing agreement, if they meet certain agreed-upon, evidence-based metrics. In that circumstance, she says, hospitalists would begin to learn the ropes and become directly involved in quality outcomes. Extending the model beyond ACE, their primary role could expand dramatically to that of learning how to operate bundling across the continuum of care.

The eventual bundling experiences at all five demonstration sites will likely be positive, Dr. Aguirre says, given that they were carefully chosen to maximize the likelihood of success. “Where the rubber will hit the road is, how do you translate where you’re obviously going to be successful at five sites to implementing it across maybe a thousand sites and making it successful?” he asks.

I think the current bundling project is a vast improvement and I think it’s a very different animal from old capitation … and pivots absolutely critically on the physician involvement at the heart of quality, at the heart of decision-making. That’s never happened before.—Lisa Kettering, MD, vice president of medical affairs, CMO, Exempla St. Joseph Hospital, Denver, former SHM board member

All Eggs in One Basket?

One thing is certain: For bundling to expand, it will have to convince some fierce critics of its staying power. IPC’s Dr. Singer says so much emphasis has been placed on bundling that it has drowned out any discussion of other alternatives. “It seems like we as a society are hell-bent on putting this in as the method of payment, but I don’t really see all the elements that really would promote a higher-quality product that would reduce cost, which is what it should be about,” he says.

If not bundling, what? For some observers, payment-reform options follow a continuum arcing away from the fee-for-service system, though not everyone agrees on just how widely each might—or should—depart from the status quo. Some healthcare leaders, for example, contend that it would be easiest to simply devise new DRG categories for hospitalists or primary-care physicians (PCPs) to replace the existing fee-for-service CPT codes. “It’s a very simple way of aligning the doctor and the hospital without combining the doctor and the hospital into one entity, which is what bundling does,” Dr. Singer says.

Even some bundling advocates say the solution might ease some anxiety over who controls the purse strings, though such a system would need to account for critical-access hospitals, which currently don’t use the DRG system at all. Alternatively, some analysts see broadened gain-sharing rules as a good way to align incentives toward more efficient care, regardless of whether the incentive system accompanies bundling.

Although still in their formative stages, accountable-care organizations (ACOs) and patient-centered medical homes (PCMHs)—and the implicit bundling of medical services across patient populations—are being advanced as longer-term reforms. Even then, analysts argue over whether such models will be sufficiently free from a fee-for-service foundation. Despite the vigorous debate, most observers agree that Medicare officials are keen to offload more of the risk, whether onto physicians or onto hospitals. “They’re saying, ‘Here’s the dollar. You administer it. And if you end up in the negative, you do, but if it’s in the positive, you get a share of everything,’ ” Dr. Aguirre says.

HM: Front and Center

Hospitalists might be uniquely well positioned to bring more efficiency and value, as well as help hospitals manage that risk. With bundling, though, the big question is how they’ll be paid for their services amid the demands of multiple providers. “I’ve heard it described as a big potential food fight,” says Kirk Mathews, CEO of St. Louis-based Inpatient Management Inc. and a member of SHM’s Workforce Summit Committee.

In the scenario relayed to him by fearful hospitalists, a hospital administrator is seated at the table with pie in hand, with the various providers clamoring for a slice. “Everyone will be sitting there saying, ‘Here’s why we deserve this percent of the bundled payment,’” Mathews says. “Whether that’s an accurate portrayal or not, that’s the fear.”

Taken a step further, the scenario envisions hospitalists struggling to hold their own at the table against high-powered and higher-paid specialists. Some of the ACE Demonstration sites, however, have used physician-hospital organizations, or PHOs, to help decentralize the decision-making and ensure that stakeholders are represented. Similarly, if patient referrals to hospitalists from other providers drop—as they did for some of the ACE Demonstration bundles at Baptist and Hillcrest—could hospitalists lose their bargaining power through an erosion of recouped professional fees?

If bundling expands, Hillcrest’s CEO says hospitalists are instead likely to assume a more central role (see “Six Pieces of Bundling-Related Advice for Hospitalists,” right). “If we truly go to bundled payments on everything,” Dobbs says, “then I think everybody’s got to be at the table and contributing, and especially the hospitalist, because the medical DRGs, that’s going to be where the hospitalists drive the equation, and that’s going to be a huge part of this.”

As SHM’s CEO Larry Wellikson, MD, SFHM, wrote in The Hospitalist last year (see “Bundling Bedlam,” July 2009, p. 46), the bundling of Medicare Part A dollars that subsidize HM with Part B physicians’ payments might actually pave the way for a more professional discussion of the value that hospitalists deliver. With bundling, he wrote, “the need for subsidies or support could diminish or vanish.”

Guterman

But that doesn’t resolve the issue of how to fairly size each bundle. Stuart Guterman, vice president of the Washington, D.C.-based Common-wealth Fund’s Program on Payment and System Reform, says one lesson from the capitation scheme of the ’90s is that an overemphasis on cost savings can lead to payments that are frequently insufficient to cover the costs of appropriate care.

“So there’s got to be more collaboration on what an appropriate amount is, and that’s a very important feature,” Guterman says. “Clearly, if you don’t pay enough, it doesn’t bode well for the success of any kind of payment approach. If you pay too much, it means you’re wasting money.”

The size and complexity of healthcare networks will influence how those bundle-related payments are negotiated. And in this case, several analysts say bigger isn’t necessarily better. “My own view is that it’s easier for a handful of hospitalists and a few community doctors in the hospital to come to an agreement on how they’re going to work within a bundle,” says Robert Berenson, MD, a senior fellow in the Urban Institute’s Health Policy Center and vice chair of the Medicare Payment Advisory Commission (MedPAC).

Dr. Berenson

“My experience is that in rural communities, there’s a greater alliance of interests between the doctors and the hospitals, whereas in big urban areas they’re often competing with each other. So I don’t see that as the problem, frankly. I think this is probably better designed for smaller places where there’s already reasonably good relationships.”

L. Scott Sussman, MD, a hospitalist at Mt. Ascutney Hospital and Health Center in Windsor, Vt., agrees that bundling likely wouldn’t negatively affect the day-to-day operations of the 25-bed critical-access hospital. Almost all admitted patients have PCPs in the affiliated Mt. Ascutney Physicians Practice, aiding communication during hospitalizations and care transitions. Dr. Sussman thinks bundling fits well with the mission of hospitalists to provide quality care and help smooth their patients’ transition back to community providers. “From the reading that I’ve done on bundling, it does seem to me that if implemented properly, it really could achieve cost savings while maintaining quality care,” he says.

Nevertheless, he has plenty of questions and concerns. Bundling would be more complicated, he concedes, if most admissions were referred from private-practice physicians in the community. And because Mt. Ascutney is a critical-access hospital, patients who develop complications or require a higher level of care are transferred to a tertiary-care facility—in this case, a 22-mile drive over the state line to Dartmouth-Hitchcock Medical Center in Lebanon, N.H. “How would the payment be divided up at that point?” he asks.

To make bundling work, healthcare leaders will clearly need to blaze a trail through uncharted territory.

But if the goal is getting more from the trillions spent annually on healthcare, advocates like Guterman say it provides an important step toward a better-functioning system.

Among hospitalists, at least some observers are betting that bundling will ultimately find its way. “I think bundled payments are here to stay,” Dr. Aguirre says. “I think our goal now is to see how we can modify it or create it so it can have the best impact for us and we can have the best impact for it.” TH

Bryn Nelson is a freelance medical writer based in Seattle.

In a single year, one health system saved itself more than $2 million on orthopedic, cardiology, and cardiovascular surgery procedures. Another hospital saved Medicare an estimated $750,000. Supply costs dropped, scores on quality metrics rose, and bonus payments were distributed to participating doctors.

A runaway success? Not so fast.

Encouraging, if early, results from Medicare’s Acute Care Episode (ACE) Demonstration might have strengthened the case for bundling payments around episodes of care as an effective way to rein in spiraling healthcare costs and transition from a volume-based to a value-based payment system. But broad skepticism persists over the wisdom of binding together the fates of hospitals and doctors, and critics are far from ready to drop their argument that bundling will be unworkable across wider, less-well-defined swaths of healthcare.

The current bundling and gain-sharing duo differs only superficially from the despised capitation model of the 1990s, argues Adam Singer, MD, CEO of North Hollywood, Calif.-based IPC: The Hospitalist Company. “It’s capitation in a different dress, except that instead of over a patient population, it’s done over an individual patient’s case,” he says.

Not so, says Lisa Kettering, MD, SFHM, vice president of medical affairs and CMO at Exempla St. Joseph Hospital in Denver.

“I’ve been around in medicine long enough to have been around when there was capitation,” she says. “I think the current bundling project is a vast improvement and I think it’s a very different animal from old capitation … and pivots absolutely critically on the physician involvement at the heart of quality, at the heart of decision-making. That’s never happened before.”

Amid the swirling expectations and apprehensions, what has the ACE demo taught us so far about bundling, and what does it mean for the future of hospital medicine? In essence, bundling lumps Medicare Part A and Part B reimbursements into a single payment aimed at encouraging hospitals and doctors to work together to improve efficiency, maintain high-quality care, and reduce overall expenses. Hospitals participating in the ACE Demonstration provide a roughly 5% discount to Medicare for a specific list of diagnosis-related groups (DRGs), and the Centers for Medicare & Medicaid Services (CMS) passes on half of the savings to beneficiaries who use participating hospitals for the covered procedures.

After submitting their claims, the hospitals receive a bundled Medicare payment, from which they pay doctors 100% of their Part B fees. As an incentive, some providers are eligible for bonus payments in the form of gain-sharing. CMS rules preclude any payments for referrals, cap all payments at 25% of the physician fee schedule, and mandate that any payment be based on reductions in patient care costs due to ACE activities. But participating hospitals are otherwise free to devise their own formulas and specific quality metrics that doctors must meet to gain the bonus.

SHM repeatedly has signaled its support for exploring bundling as a way to better align financial incentives among providers and reward them for quality and efficiency instead of quantity. The 10,000-member society strongly supports further testing of payment bundling methodologies prior to a national rollout, however, and has called for the integral involvement of hospitalists in developing and implementing bundling projects.

With its main focus on cardiologists, orthopedic surgeons, and cardiovascular surgeons, the ACE Demonstration has had little direct impact on hospitalists’ jobs or bank accounts—so far. That could change with an expanded pilot mandated by healthcare reform legislation. Slated to begin by Jan. 1, 2013, the project will redefine covered episodes of care to include all medical services administered three days before a hospital admission through 30 days after discharge.

CMS hasn’t yet decided which procedures will be covered, but officials say they’ve learned from past experience to begin with well-defined episodes of care. “Back in the ’90s, we did a bundled demonstration for bypass procedures and also for cataract procedures,” says Cynthia Mason, project manager with the CMS Medicare Demonstrations Group. “What we learned from that is obviously it’s easier both for Medicare, as well as for the providers, to predict utilization when you have a more standardized package of services. You also need a variety and large number of services in order to give you opportunities for looking at efficiencies and improvements in the system.”

Upfront Investment, Immediate Savings, Improved Quality

Early opinions have been mostly positive among the ACE participants. Hillcrest Medical Center in Tulsa, Okla., was first out of the gate in May 2009. Over the project’s first year, Hillcrest CEO Steve Dobbs estimates that the 490-bed hospital has saved CMS about $750,000; half of that sum has been passed along to patients. The hospital itself has spent about $550,000 in marketing, start-up costs, corporate support, and paying third-party claims. But recent investments have led to double-digit gains in patient volume (24% in cardiology and cardiovascular surgery, and a whopping 37% in orthopedics), margins in orthopedics are up, and direct negotiations between participating doctors and national vendors have netted additional savings. As a reward for help with cost-cutting, Hillcrest recently passed along two gain-sharing checks totaling $130,000 to be split among six independent orthopedists.

“What’s actually driving this program is the supply cost savings from all of our national partners,” Dobbs says. A big question is whether the negotiated savings—and hence the gain-sharing—could be maintained over a greatly expanded pilot project. “If this goes nationwide and everybody’s in it, do you get the same benefit? I don’t know the answer to that right now,” he says.

Dobbs is careful to point out that success is not measured by patient volume and supply costs alone. Hillcrest’s gain-sharing plan stipulates that physicians must reach the 90% threshold for a range of quality metrics. For one previously problematic category—stopping antibiotics 24 hours post-surgery—Dobbs says both the orthopedics and cardiovascular surgery departments have dramatically increased their compliance rates.

Baptist Health System in San Antonio, which began its own demonstration in June 2009, has reported savings of $2.2 million for its 1,275-bed, four-campus health system. So far, the roughly 20 hospitalists employed by IPC: The Hospitalist Company who work within the Baptist Health System have not directly participated in the project. But Felix Aguirre, MD, FHM, IPC’s vice president of medical affairs in San Antonio, says the demonstration has had a definite impact on efficiency.

Dr. Aguirre

“Since the demonstration project has come up, it seems like everybody is obeying the evidence-based guidelines now,” says Dr. Aguirre, a member of SHM’s Public Policy Committee and Team Hospitalist. “So it’s not keeping the hip replacement patient in for five days, it’s what the guidelines say: three days.”

Some kinks still need to be worked out. Baptist has had trouble with double payments and other claims-related issues, Dr. Aguirre says. Hillcrest’s Dobbs complains that he has heard virtually no feedback from CMS. Medicare’s Mason says officials have been “very pleased” with the project’s progress so far, but concedes that a delay in updating a claims processing system has pushed back the launch at two other demonstration sites until Nov. 1.

At one of those sites, 361-bed Exempla St. Joseph Hospital, the three-year demonstration will encompass only cardiology and cardiovascular surgery. Dr. Kettering, a former SHM board member who serves as executive sponsor and director of St. Joseph Hospital’s ACE demo, says the shared-savings program will be limited to cardiovascular surgery for the first year to ensure the system is running smoothly. In the second or third year, however, hospitalists who care for eligible patients could theoretically benefit from a similar gain-sharing agreement, if they meet certain agreed-upon, evidence-based metrics. In that circumstance, she says, hospitalists would begin to learn the ropes and become directly involved in quality outcomes. Extending the model beyond ACE, their primary role could expand dramatically to that of learning how to operate bundling across the continuum of care.

The eventual bundling experiences at all five demonstration sites will likely be positive, Dr. Aguirre says, given that they were carefully chosen to maximize the likelihood of success. “Where the rubber will hit the road is, how do you translate where you’re obviously going to be successful at five sites to implementing it across maybe a thousand sites and making it successful?” he asks.

I think the current bundling project is a vast improvement and I think it’s a very different animal from old capitation … and pivots absolutely critically on the physician involvement at the heart of quality, at the heart of decision-making. That’s never happened before.—Lisa Kettering, MD, vice president of medical affairs, CMO, Exempla St. Joseph Hospital, Denver, former SHM board member

All Eggs in One Basket?

One thing is certain: For bundling to expand, it will have to convince some fierce critics of its staying power. IPC’s Dr. Singer says so much emphasis has been placed on bundling that it has drowned out any discussion of other alternatives. “It seems like we as a society are hell-bent on putting this in as the method of payment, but I don’t really see all the elements that really would promote a higher-quality product that would reduce cost, which is what it should be about,” he says.

If not bundling, what? For some observers, payment-reform options follow a continuum arcing away from the fee-for-service system, though not everyone agrees on just how widely each might—or should—depart from the status quo. Some healthcare leaders, for example, contend that it would be easiest to simply devise new DRG categories for hospitalists or primary-care physicians (PCPs) to replace the existing fee-for-service CPT codes. “It’s a very simple way of aligning the doctor and the hospital without combining the doctor and the hospital into one entity, which is what bundling does,” Dr. Singer says.

Even some bundling advocates say the solution might ease some anxiety over who controls the purse strings, though such a system would need to account for critical-access hospitals, which currently don’t use the DRG system at all. Alternatively, some analysts see broadened gain-sharing rules as a good way to align incentives toward more efficient care, regardless of whether the incentive system accompanies bundling.

Although still in their formative stages, accountable-care organizations (ACOs) and patient-centered medical homes (PCMHs)—and the implicit bundling of medical services across patient populations—are being advanced as longer-term reforms. Even then, analysts argue over whether such models will be sufficiently free from a fee-for-service foundation. Despite the vigorous debate, most observers agree that Medicare officials are keen to offload more of the risk, whether onto physicians or onto hospitals. “They’re saying, ‘Here’s the dollar. You administer it. And if you end up in the negative, you do, but if it’s in the positive, you get a share of everything,’ ” Dr. Aguirre says.

HM: Front and Center

Hospitalists might be uniquely well positioned to bring more efficiency and value, as well as help hospitals manage that risk. With bundling, though, the big question is how they’ll be paid for their services amid the demands of multiple providers. “I’ve heard it described as a big potential food fight,” says Kirk Mathews, CEO of St. Louis-based Inpatient Management Inc. and a member of SHM’s Workforce Summit Committee.

In the scenario relayed to him by fearful hospitalists, a hospital administrator is seated at the table with pie in hand, with the various providers clamoring for a slice. “Everyone will be sitting there saying, ‘Here’s why we deserve this percent of the bundled payment,’” Mathews says. “Whether that’s an accurate portrayal or not, that’s the fear.”

Taken a step further, the scenario envisions hospitalists struggling to hold their own at the table against high-powered and higher-paid specialists. Some of the ACE Demonstration sites, however, have used physician-hospital organizations, or PHOs, to help decentralize the decision-making and ensure that stakeholders are represented. Similarly, if patient referrals to hospitalists from other providers drop—as they did for some of the ACE Demonstration bundles at Baptist and Hillcrest—could hospitalists lose their bargaining power through an erosion of recouped professional fees?

If bundling expands, Hillcrest’s CEO says hospitalists are instead likely to assume a more central role (see “Six Pieces of Bundling-Related Advice for Hospitalists,” right). “If we truly go to bundled payments on everything,” Dobbs says, “then I think everybody’s got to be at the table and contributing, and especially the hospitalist, because the medical DRGs, that’s going to be where the hospitalists drive the equation, and that’s going to be a huge part of this.”

As SHM’s CEO Larry Wellikson, MD, SFHM, wrote in The Hospitalist last year (see “Bundling Bedlam,” July 2009, p. 46), the bundling of Medicare Part A dollars that subsidize HM with Part B physicians’ payments might actually pave the way for a more professional discussion of the value that hospitalists deliver. With bundling, he wrote, “the need for subsidies or support could diminish or vanish.”

Guterman

But that doesn’t resolve the issue of how to fairly size each bundle. Stuart Guterman, vice president of the Washington, D.C.-based Common-wealth Fund’s Program on Payment and System Reform, says one lesson from the capitation scheme of the ’90s is that an overemphasis on cost savings can lead to payments that are frequently insufficient to cover the costs of appropriate care.

“So there’s got to be more collaboration on what an appropriate amount is, and that’s a very important feature,” Guterman says. “Clearly, if you don’t pay enough, it doesn’t bode well for the success of any kind of payment approach. If you pay too much, it means you’re wasting money.”

The size and complexity of healthcare networks will influence how those bundle-related payments are negotiated. And in this case, several analysts say bigger isn’t necessarily better. “My own view is that it’s easier for a handful of hospitalists and a few community doctors in the hospital to come to an agreement on how they’re going to work within a bundle,” says Robert Berenson, MD, a senior fellow in the Urban Institute’s Health Policy Center and vice chair of the Medicare Payment Advisory Commission (MedPAC).

Dr. Berenson

“My experience is that in rural communities, there’s a greater alliance of interests between the doctors and the hospitals, whereas in big urban areas they’re often competing with each other. So I don’t see that as the problem, frankly. I think this is probably better designed for smaller places where there’s already reasonably good relationships.”

L. Scott Sussman, MD, a hospitalist at Mt. Ascutney Hospital and Health Center in Windsor, Vt., agrees that bundling likely wouldn’t negatively affect the day-to-day operations of the 25-bed critical-access hospital. Almost all admitted patients have PCPs in the affiliated Mt. Ascutney Physicians Practice, aiding communication during hospitalizations and care transitions. Dr. Sussman thinks bundling fits well with the mission of hospitalists to provide quality care and help smooth their patients’ transition back to community providers. “From the reading that I’ve done on bundling, it does seem to me that if implemented properly, it really could achieve cost savings while maintaining quality care,” he says.

Nevertheless, he has plenty of questions and concerns. Bundling would be more complicated, he concedes, if most admissions were referred from private-practice physicians in the community. And because Mt. Ascutney is a critical-access hospital, patients who develop complications or require a higher level of care are transferred to a tertiary-care facility—in this case, a 22-mile drive over the state line to Dartmouth-Hitchcock Medical Center in Lebanon, N.H. “How would the payment be divided up at that point?” he asks.

To make bundling work, healthcare leaders will clearly need to blaze a trail through uncharted territory.

But if the goal is getting more from the trillions spent annually on healthcare, advocates like Guterman say it provides an important step toward a better-functioning system.

Among hospitalists, at least some observers are betting that bundling will ultimately find its way. “I think bundled payments are here to stay,” Dr. Aguirre says. “I think our goal now is to see how we can modify it or create it so it can have the best impact for us and we can have the best impact for it.” TH

Bryn Nelson is a freelance medical writer based in Seattle.

In a single year, one health system saved itself more than $2 million on orthopedic, cardiology, and cardiovascular surgery procedures. Another hospital saved Medicare an estimated $750,000. Supply costs dropped, scores on quality metrics rose, and bonus payments were distributed to participating doctors.

A runaway success? Not so fast.

Encouraging, if early, results from Medicare’s Acute Care Episode (ACE) Demonstration might have strengthened the case for bundling payments around episodes of care as an effective way to rein in spiraling healthcare costs and transition from a volume-based to a value-based payment system. But broad skepticism persists over the wisdom of binding together the fates of hospitals and doctors, and critics are far from ready to drop their argument that bundling will be unworkable across wider, less-well-defined swaths of healthcare.

The current bundling and gain-sharing duo differs only superficially from the despised capitation model of the 1990s, argues Adam Singer, MD, CEO of North Hollywood, Calif.-based IPC: The Hospitalist Company. “It’s capitation in a different dress, except that instead of over a patient population, it’s done over an individual patient’s case,” he says.

Not so, says Lisa Kettering, MD, SFHM, vice president of medical affairs and CMO at Exempla St. Joseph Hospital in Denver.

“I’ve been around in medicine long enough to have been around when there was capitation,” she says. “I think the current bundling project is a vast improvement and I think it’s a very different animal from old capitation … and pivots absolutely critically on the physician involvement at the heart of quality, at the heart of decision-making. That’s never happened before.”

Amid the swirling expectations and apprehensions, what has the ACE demo taught us so far about bundling, and what does it mean for the future of hospital medicine? In essence, bundling lumps Medicare Part A and Part B reimbursements into a single payment aimed at encouraging hospitals and doctors to work together to improve efficiency, maintain high-quality care, and reduce overall expenses. Hospitals participating in the ACE Demonstration provide a roughly 5% discount to Medicare for a specific list of diagnosis-related groups (DRGs), and the Centers for Medicare & Medicaid Services (CMS) passes on half of the savings to beneficiaries who use participating hospitals for the covered procedures.

After submitting their claims, the hospitals receive a bundled Medicare payment, from which they pay doctors 100% of their Part B fees. As an incentive, some providers are eligible for bonus payments in the form of gain-sharing. CMS rules preclude any payments for referrals, cap all payments at 25% of the physician fee schedule, and mandate that any payment be based on reductions in patient care costs due to ACE activities. But participating hospitals are otherwise free to devise their own formulas and specific quality metrics that doctors must meet to gain the bonus.

SHM repeatedly has signaled its support for exploring bundling as a way to better align financial incentives among providers and reward them for quality and efficiency instead of quantity. The 10,000-member society strongly supports further testing of payment bundling methodologies prior to a national rollout, however, and has called for the integral involvement of hospitalists in developing and implementing bundling projects.

With its main focus on cardiologists, orthopedic surgeons, and cardiovascular surgeons, the ACE Demonstration has had little direct impact on hospitalists’ jobs or bank accounts—so far. That could change with an expanded pilot mandated by healthcare reform legislation. Slated to begin by Jan. 1, 2013, the project will redefine covered episodes of care to include all medical services administered three days before a hospital admission through 30 days after discharge.

CMS hasn’t yet decided which procedures will be covered, but officials say they’ve learned from past experience to begin with well-defined episodes of care. “Back in the ’90s, we did a bundled demonstration for bypass procedures and also for cataract procedures,” says Cynthia Mason, project manager with the CMS Medicare Demonstrations Group. “What we learned from that is obviously it’s easier both for Medicare, as well as for the providers, to predict utilization when you have a more standardized package of services. You also need a variety and large number of services in order to give you opportunities for looking at efficiencies and improvements in the system.”

Upfront Investment, Immediate Savings, Improved Quality

Early opinions have been mostly positive among the ACE participants. Hillcrest Medical Center in Tulsa, Okla., was first out of the gate in May 2009. Over the project’s first year, Hillcrest CEO Steve Dobbs estimates that the 490-bed hospital has saved CMS about $750,000; half of that sum has been passed along to patients. The hospital itself has spent about $550,000 in marketing, start-up costs, corporate support, and paying third-party claims. But recent investments have led to double-digit gains in patient volume (24% in cardiology and cardiovascular surgery, and a whopping 37% in orthopedics), margins in orthopedics are up, and direct negotiations between participating doctors and national vendors have netted additional savings. As a reward for help with cost-cutting, Hillcrest recently passed along two gain-sharing checks totaling $130,000 to be split among six independent orthopedists.

“What’s actually driving this program is the supply cost savings from all of our national partners,” Dobbs says. A big question is whether the negotiated savings—and hence the gain-sharing—could be maintained over a greatly expanded pilot project. “If this goes nationwide and everybody’s in it, do you get the same benefit? I don’t know the answer to that right now,” he says.

Dobbs is careful to point out that success is not measured by patient volume and supply costs alone. Hillcrest’s gain-sharing plan stipulates that physicians must reach the 90% threshold for a range of quality metrics. For one previously problematic category—stopping antibiotics 24 hours post-surgery—Dobbs says both the orthopedics and cardiovascular surgery departments have dramatically increased their compliance rates.

Baptist Health System in San Antonio, which began its own demonstration in June 2009, has reported savings of $2.2 million for its 1,275-bed, four-campus health system. So far, the roughly 20 hospitalists employed by IPC: The Hospitalist Company who work within the Baptist Health System have not directly participated in the project. But Felix Aguirre, MD, FHM, IPC’s vice president of medical affairs in San Antonio, says the demonstration has had a definite impact on efficiency.

Dr. Aguirre

“Since the demonstration project has come up, it seems like everybody is obeying the evidence-based guidelines now,” says Dr. Aguirre, a member of SHM’s Public Policy Committee and Team Hospitalist. “So it’s not keeping the hip replacement patient in for five days, it’s what the guidelines say: three days.”

Some kinks still need to be worked out. Baptist has had trouble with double payments and other claims-related issues, Dr. Aguirre says. Hillcrest’s Dobbs complains that he has heard virtually no feedback from CMS. Medicare’s Mason says officials have been “very pleased” with the project’s progress so far, but concedes that a delay in updating a claims processing system has pushed back the launch at two other demonstration sites until Nov. 1.

At one of those sites, 361-bed Exempla St. Joseph Hospital, the three-year demonstration will encompass only cardiology and cardiovascular surgery. Dr. Kettering, a former SHM board member who serves as executive sponsor and director of St. Joseph Hospital’s ACE demo, says the shared-savings program will be limited to cardiovascular surgery for the first year to ensure the system is running smoothly. In the second or third year, however, hospitalists who care for eligible patients could theoretically benefit from a similar gain-sharing agreement, if they meet certain agreed-upon, evidence-based metrics. In that circumstance, she says, hospitalists would begin to learn the ropes and become directly involved in quality outcomes. Extending the model beyond ACE, their primary role could expand dramatically to that of learning how to operate bundling across the continuum of care.

The eventual bundling experiences at all five demonstration sites will likely be positive, Dr. Aguirre says, given that they were carefully chosen to maximize the likelihood of success. “Where the rubber will hit the road is, how do you translate where you’re obviously going to be successful at five sites to implementing it across maybe a thousand sites and making it successful?” he asks.

I think the current bundling project is a vast improvement and I think it’s a very different animal from old capitation … and pivots absolutely critically on the physician involvement at the heart of quality, at the heart of decision-making. That’s never happened before.—Lisa Kettering, MD, vice president of medical affairs, CMO, Exempla St. Joseph Hospital, Denver, former SHM board member

All Eggs in One Basket?

One thing is certain: For bundling to expand, it will have to convince some fierce critics of its staying power. IPC’s Dr. Singer says so much emphasis has been placed on bundling that it has drowned out any discussion of other alternatives. “It seems like we as a society are hell-bent on putting this in as the method of payment, but I don’t really see all the elements that really would promote a higher-quality product that would reduce cost, which is what it should be about,” he says.

If not bundling, what? For some observers, payment-reform options follow a continuum arcing away from the fee-for-service system, though not everyone agrees on just how widely each might—or should—depart from the status quo. Some healthcare leaders, for example, contend that it would be easiest to simply devise new DRG categories for hospitalists or primary-care physicians (PCPs) to replace the existing fee-for-service CPT codes. “It’s a very simple way of aligning the doctor and the hospital without combining the doctor and the hospital into one entity, which is what bundling does,” Dr. Singer says.

Even some bundling advocates say the solution might ease some anxiety over who controls the purse strings, though such a system would need to account for critical-access hospitals, which currently don’t use the DRG system at all. Alternatively, some analysts see broadened gain-sharing rules as a good way to align incentives toward more efficient care, regardless of whether the incentive system accompanies bundling.

Although still in their formative stages, accountable-care organizations (ACOs) and patient-centered medical homes (PCMHs)—and the implicit bundling of medical services across patient populations—are being advanced as longer-term reforms. Even then, analysts argue over whether such models will be sufficiently free from a fee-for-service foundation. Despite the vigorous debate, most observers agree that Medicare officials are keen to offload more of the risk, whether onto physicians or onto hospitals. “They’re saying, ‘Here’s the dollar. You administer it. And if you end up in the negative, you do, but if it’s in the positive, you get a share of everything,’ ” Dr. Aguirre says.

HM: Front and Center

Hospitalists might be uniquely well positioned to bring more efficiency and value, as well as help hospitals manage that risk. With bundling, though, the big question is how they’ll be paid for their services amid the demands of multiple providers. “I’ve heard it described as a big potential food fight,” says Kirk Mathews, CEO of St. Louis-based Inpatient Management Inc. and a member of SHM’s Workforce Summit Committee.

In the scenario relayed to him by fearful hospitalists, a hospital administrator is seated at the table with pie in hand, with the various providers clamoring for a slice. “Everyone will be sitting there saying, ‘Here’s why we deserve this percent of the bundled payment,’” Mathews says. “Whether that’s an accurate portrayal or not, that’s the fear.”

Taken a step further, the scenario envisions hospitalists struggling to hold their own at the table against high-powered and higher-paid specialists. Some of the ACE Demonstration sites, however, have used physician-hospital organizations, or PHOs, to help decentralize the decision-making and ensure that stakeholders are represented. Similarly, if patient referrals to hospitalists from other providers drop—as they did for some of the ACE Demonstration bundles at Baptist and Hillcrest—could hospitalists lose their bargaining power through an erosion of recouped professional fees?

If bundling expands, Hillcrest’s CEO says hospitalists are instead likely to assume a more central role (see “Six Pieces of Bundling-Related Advice for Hospitalists,” right). “If we truly go to bundled payments on everything,” Dobbs says, “then I think everybody’s got to be at the table and contributing, and especially the hospitalist, because the medical DRGs, that’s going to be where the hospitalists drive the equation, and that’s going to be a huge part of this.”

As SHM’s CEO Larry Wellikson, MD, SFHM, wrote in The Hospitalist last year (see “Bundling Bedlam,” July 2009, p. 46), the bundling of Medicare Part A dollars that subsidize HM with Part B physicians’ payments might actually pave the way for a more professional discussion of the value that hospitalists deliver. With bundling, he wrote, “the need for subsidies or support could diminish or vanish.”

Guterman

But that doesn’t resolve the issue of how to fairly size each bundle. Stuart Guterman, vice president of the Washington, D.C.-based Common-wealth Fund’s Program on Payment and System Reform, says one lesson from the capitation scheme of the ’90s is that an overemphasis on cost savings can lead to payments that are frequently insufficient to cover the costs of appropriate care.

“So there’s got to be more collaboration on what an appropriate amount is, and that’s a very important feature,” Guterman says. “Clearly, if you don’t pay enough, it doesn’t bode well for the success of any kind of payment approach. If you pay too much, it means you’re wasting money.”

The size and complexity of healthcare networks will influence how those bundle-related payments are negotiated. And in this case, several analysts say bigger isn’t necessarily better. “My own view is that it’s easier for a handful of hospitalists and a few community doctors in the hospital to come to an agreement on how they’re going to work within a bundle,” says Robert Berenson, MD, a senior fellow in the Urban Institute’s Health Policy Center and vice chair of the Medicare Payment Advisory Commission (MedPAC).

Dr. Berenson

“My experience is that in rural communities, there’s a greater alliance of interests between the doctors and the hospitals, whereas in big urban areas they’re often competing with each other. So I don’t see that as the problem, frankly. I think this is probably better designed for smaller places where there’s already reasonably good relationships.”

L. Scott Sussman, MD, a hospitalist at Mt. Ascutney Hospital and Health Center in Windsor, Vt., agrees that bundling likely wouldn’t negatively affect the day-to-day operations of the 25-bed critical-access hospital. Almost all admitted patients have PCPs in the affiliated Mt. Ascutney Physicians Practice, aiding communication during hospitalizations and care transitions. Dr. Sussman thinks bundling fits well with the mission of hospitalists to provide quality care and help smooth their patients’ transition back to community providers. “From the reading that I’ve done on bundling, it does seem to me that if implemented properly, it really could achieve cost savings while maintaining quality care,” he says.

Nevertheless, he has plenty of questions and concerns. Bundling would be more complicated, he concedes, if most admissions were referred from private-practice physicians in the community. And because Mt. Ascutney is a critical-access hospital, patients who develop complications or require a higher level of care are transferred to a tertiary-care facility—in this case, a 22-mile drive over the state line to Dartmouth-Hitchcock Medical Center in Lebanon, N.H. “How would the payment be divided up at that point?” he asks.

To make bundling work, healthcare leaders will clearly need to blaze a trail through uncharted territory.

But if the goal is getting more from the trillions spent annually on healthcare, advocates like Guterman say it provides an important step toward a better-functioning system.

Among hospitalists, at least some observers are betting that bundling will ultimately find its way. “I think bundled payments are here to stay,” Dr. Aguirre says. “I think our goal now is to see how we can modify it or create it so it can have the best impact for us and we can have the best impact for it.” TH

Bryn Nelson is a freelance medical writer based in Seattle.

When Congress returns for a likely lame-duck session after the midterm elections, the biggest battle might be fought over whether to extend the 2001 and 2003 tax cuts to everyone or only to those earning less than $200,000 annually ($250,000 for families). And depending on the makeup of the 112th Congress, which will be seated in January, Republicans might try to make good on a campaign pledge to repeal all or most of the healthcare reform legislation.

The expected flashpoints are being teased endlessly with media sound bites featuring phrases that most of us love to hate: higher taxes, spiraling medical bills, soaring insurance premiums. Insurance companies already are blaming a spike in premiums on the healthcare legislation, claiming that new provisions and mandates are forcing them to further hike their rates.

Closer to home, the high-profile frays could put hospitalists in the awkward position of supporting political positions that sock them in the wallet. After all, doctors are workers and healthcare consumers, too. So what impact could higher taxes and higher insurance premiums really have? Let’s start with health insurance.

Insurance Cost Increases

Signed into law in March, the Affordable Care Act includes tax credits for small businesses to help defray the costs of health insurance coverage. But in 2013, it also raises the threshold for medical expense deductions for most taxpayers, to 10% from 7.5% of adjusted gross income. In other words, families can claim tax deductions only after having spent 10% or more of their adjusted gross income on medical bills. For families with hefty medical bills, that 2.5% difference could translate into a significant shortfall.

CMS was able to negotiate with insurers to achieve a slight drop in Medicare Advantage premiums, but many individual states have had less luck in preventing rate increases from private insurers who blame their higher premiums on new mandates. The Wall Street Journal has documented rate increases of 18% in states like Wisconsin and North Carolina—about 9% of which insurance company officials pinned on the new law.¹ Such increases are hardly inevitable, however. The Obama administration’s White House blog, for instance, has cited the example of North Carolina Blue Cross and Blue Shield, which announced Sept. 20 that it will provide $156 million in refunds to more than 215,000 customers after state regulators found an overcharge that should be reversed due to new rules in the reform law.² WellPoint will similarly refund $20 million to its health insurance customers in Colorado.²

The requested premium increases and identified overcharges have contributed to plenty of finger-pointing among insurers, state regulators, and the Obama administration, which has assailed insurers for using the law as a convenient excuse to raise rates. Highlighting the unease of many consumers, however, is the verdict that the proposed increases—if approved—would hit small businesses and individuals hardest.

According to the State of Hospital Medicine: 2010 Report Based on 2009 Data, released in September by SHM and the Medical Group Management Association, participating hospitalist groups have a median of 10 physician full-time equivalents. Roughly 25% of respondents are in physician-owned groups, while 14% are in a management services organization (MSO) or physician practice management company (PPMC). Smaller HM groups wouldn’t be alone in feeling the pinch, but they might need to consider some serious comparison-shopping to avoid costly premium increases.

Cherilyn Murer, president and CEO of Joliet, Ill.-based Murer Consultants Inc., has worked with healthcare systems and providers in 42 states, but even her company has not been immune to having to contend with rising premiums. “Our managing partner just renegotiated our health benefits [premiums] that were supposed to have gone up 30% by our previous carrier,” Murer says. “Through protracted negotiations and diligence, he was able to find a plan that did not increase our costs, and retained pretty much the same benefits.”

For at least the next three to five years, Murer says, niche firms will need to be diligent about shopping around and managing their expenses in a volatile insurance marketplace. Healthcare reform, she says, is certainly not a panacea for reining in costs, but “just the beginning.”

Concerns over healthcare costs, in fact, could be among the factors driving what Robert Zipper, MD, FHM, regional chief medical officer for Tacoma, Wash.-based Sound Physicians, sees as continuing consolidation among hospitalist groups. “By that, I mean that either groups are swallowed up by the hospital in which they work or they become part of a regional or national company,” he says. Sound Physicians, with about 400 hospitalists in seven states, offers health insurance policies that don’t vary by state, easing its negotiations.

Eyes on the Bottom Line

What about the dreaded “T” word? Dr. Zipper says he hasn’t heard that many concerns about the potential tax increase just yet. “I think it’s not an issue to hospitalists in a broad sense yet,” he says, “but if you look at the salary trajectory and where things have been over the past 10 years, it’s pretty easy to predict that it will be an issue for single-income [households] where the hospitalist is the sole breadwinner.”

The 2010 State of Hospital Medicine report, which surveyed 4,211 nonacademic hospitalists from 443 groups, found a median annual income of $215,000. Calculating trends from past income surveys is difficult due to very different respondent populations, but many hospitalists are clearly near or above the $200,000 threshold for individuals and near the $250,000 threshold for families already, even before considering spousal income. The survey, for example, found median salaries of about $235,700 in the 13 states that make up the Southern region.

Even if higher-earning hospitalists are subjected to a higher tax rate next year—if the current rates expire, a climb of 4.6 percentage points, to 39.6% from 35%—not all of them are necessarily opposed to it. Political polling on the issue isn’t broken down by specific professions, but a number of blogs have pointed to a Quinnipiac University poll conducted back in March that suggested nearly two-thirds of upper-income Americans were prepared to sacrifice some of their take-home pay to help reduce the deficit. In that poll (www.quinnipiac.edu/x1295.xml?ReleaseID=1438), some 64% of respondents earning more than $250,000 agreed that raising income taxes on themselves and other households making more than $250,000 should be a main part of any government approach to the deficit.

If taxes and insurance premiums are more immediate concerns, some HM observers are eyeing longer trends that could impact the pre-tax pay of the profession. Most hospitalists still earn far less than their specialist counterparts, of course, but increasing demand for hospitalist services has helped fuel a rise in median salaries. Last year, some observers predicted that after an impressive run, annual pay would plateau or even fall, given the current economic uncertainty, tightening profit margins, and assessment that many hospitals run HM programs at a loss.³ And in the current RVU-driven system, the “What have you done for me lately?” mentality can indeed make it difficult for hospitalists to demonstrate a solid return on the investment.

The State of Hospital Medicine report suggests that respondent HM groups have been subsidized by an average of $111,486 per physician FTE (median is $98,253), with the highest numbers in hospital-owned practices. But many experts see a window of a few years in which new healthcare delivery and payment experiments will be trotted out, whether modeled on a bundled system, accountable-care organization (ACO), or other vehicle. Under these models, payment incentives to physicians—and to hospitalists especially—could be fundamentally restructured to better reflect their true contributions as the emphasis on quality and efficiency increases.

Within the next three years, Murer says, hospitalists need to continue to infiltrate inpatient medical services, demonstrate their worth, and show the cost efficiencies that arise from their profession. “I think they’ve got a window of three years to really decide how much of that [inpatient physician] market they will retain,” she says.

Despite the current volatility, both Murer and Dr. Zipper agree that hospitalists are well positioned to take advantage of the coming changes in the healthcare delivery system. But to seize the opportunity, hospitalists must clearly demonstrate the necessity of their services in the emerging models of care and claim an early seat at the table where decisions will be made about how the pot of money is dispersed. Doing so could help resolve one of the most important financial considerations of all: job security. TH

Bryn Nelson is a freelance medical writer based in Seattle.

References

1. Adamy J. Health insurers plan hikes. Wall Street Journal website. Available at: http://online.wsj.com/article/SB10001424052748703720004575478200948908976.html. Accessed Sept. 21, 2010.
2. Cutter S. Look you in the eye. The White House website. Available at: www.whitehouse.gov/blog/2010/09/23/look-you-eye. Accessed Sept. 27, 2010.
3. How will the economy affect hospitalist salaries? MedPage Today website. Available at: www.kevinmd .com/blog/2009/03/how-will-economy-affect-hospitalist-2.html. Accessed Sept. 27, 2010.

When Congress returns for a likely lame-duck session after the midterm elections, the biggest battle might be fought over whether to extend the 2001 and 2003 tax cuts to everyone or only to those earning less than $200,000 annually ($250,000 for families). And depending on the makeup of the 112th Congress, which will be seated in January, Republicans might try to make good on a campaign pledge to repeal all or most of the healthcare reform legislation.

The expected flashpoints are being teased endlessly with media sound bites featuring phrases that most of us love to hate: higher taxes, spiraling medical bills, soaring insurance premiums. Insurance companies already are blaming a spike in premiums on the healthcare legislation, claiming that new provisions and mandates are forcing them to further hike their rates.

Closer to home, the high-profile frays could put hospitalists in the awkward position of supporting political positions that sock them in the wallet. After all, doctors are workers and healthcare consumers, too. So what impact could higher taxes and higher insurance premiums really have? Let’s start with health insurance.

Insurance Cost Increases

Signed into law in March, the Affordable Care Act includes tax credits for small businesses to help defray the costs of health insurance coverage. But in 2013, it also raises the threshold for medical expense deductions for most taxpayers, to 10% from 7.5% of adjusted gross income. In other words, families can claim tax deductions only after having spent 10% or more of their adjusted gross income on medical bills. For families with hefty medical bills, that 2.5% difference could translate into a significant shortfall.

CMS was able to negotiate with insurers to achieve a slight drop in Medicare Advantage premiums, but many individual states have had less luck in preventing rate increases from private insurers who blame their higher premiums on new mandates. The Wall Street Journal has documented rate increases of 18% in states like Wisconsin and North Carolina—about 9% of which insurance company officials pinned on the new law.¹ Such increases are hardly inevitable, however. The Obama administration’s White House blog, for instance, has cited the example of North Carolina Blue Cross and Blue Shield, which announced Sept. 20 that it will provide $156 million in refunds to more than 215,000 customers after state regulators found an overcharge that should be reversed due to new rules in the reform law.² WellPoint will similarly refund $20 million to its health insurance customers in Colorado.²

The requested premium increases and identified overcharges have contributed to plenty of finger-pointing among insurers, state regulators, and the Obama administration, which has assailed insurers for using the law as a convenient excuse to raise rates. Highlighting the unease of many consumers, however, is the verdict that the proposed increases—if approved—would hit small businesses and individuals hardest.

According to the State of Hospital Medicine: 2010 Report Based on 2009 Data, released in September by SHM and the Medical Group Management Association, participating hospitalist groups have a median of 10 physician full-time equivalents. Roughly 25% of respondents are in physician-owned groups, while 14% are in a management services organization (MSO) or physician practice management company (PPMC). Smaller HM groups wouldn’t be alone in feeling the pinch, but they might need to consider some serious comparison-shopping to avoid costly premium increases.

Cherilyn Murer, president and CEO of Joliet, Ill.-based Murer Consultants Inc., has worked with healthcare systems and providers in 42 states, but even her company has not been immune to having to contend with rising premiums. “Our managing partner just renegotiated our health benefits [premiums] that were supposed to have gone up 30% by our previous carrier,” Murer says. “Through protracted negotiations and diligence, he was able to find a plan that did not increase our costs, and retained pretty much the same benefits.”

For at least the next three to five years, Murer says, niche firms will need to be diligent about shopping around and managing their expenses in a volatile insurance marketplace. Healthcare reform, she says, is certainly not a panacea for reining in costs, but “just the beginning.”

Concerns over healthcare costs, in fact, could be among the factors driving what Robert Zipper, MD, FHM, regional chief medical officer for Tacoma, Wash.-based Sound Physicians, sees as continuing consolidation among hospitalist groups. “By that, I mean that either groups are swallowed up by the hospital in which they work or they become part of a regional or national company,” he says. Sound Physicians, with about 400 hospitalists in seven states, offers health insurance policies that don’t vary by state, easing its negotiations.

Eyes on the Bottom Line

What about the dreaded “T” word? Dr. Zipper says he hasn’t heard that many concerns about the potential tax increase just yet. “I think it’s not an issue to hospitalists in a broad sense yet,” he says, “but if you look at the salary trajectory and where things have been over the past 10 years, it’s pretty easy to predict that it will be an issue for single-income [households] where the hospitalist is the sole breadwinner.”

The 2010 State of Hospital Medicine report, which surveyed 4,211 nonacademic hospitalists from 443 groups, found a median annual income of $215,000. Calculating trends from past income surveys is difficult due to very different respondent populations, but many hospitalists are clearly near or above the $200,000 threshold for individuals and near the $250,000 threshold for families already, even before considering spousal income. The survey, for example, found median salaries of about $235,700 in the 13 states that make up the Southern region.

Even if higher-earning hospitalists are subjected to a higher tax rate next year—if the current rates expire, a climb of 4.6 percentage points, to 39.6% from 35%—not all of them are necessarily opposed to it. Political polling on the issue isn’t broken down by specific professions, but a number of blogs have pointed to a Quinnipiac University poll conducted back in March that suggested nearly two-thirds of upper-income Americans were prepared to sacrifice some of their take-home pay to help reduce the deficit. In that poll (www.quinnipiac.edu/x1295.xml?ReleaseID=1438), some 64% of respondents earning more than $250,000 agreed that raising income taxes on themselves and other households making more than $250,000 should be a main part of any government approach to the deficit.

If taxes and insurance premiums are more immediate concerns, some HM observers are eyeing longer trends that could impact the pre-tax pay of the profession. Most hospitalists still earn far less than their specialist counterparts, of course, but increasing demand for hospitalist services has helped fuel a rise in median salaries. Last year, some observers predicted that after an impressive run, annual pay would plateau or even fall, given the current economic uncertainty, tightening profit margins, and assessment that many hospitals run HM programs at a loss.³ And in the current RVU-driven system, the “What have you done for me lately?” mentality can indeed make it difficult for hospitalists to demonstrate a solid return on the investment.

The State of Hospital Medicine report suggests that respondent HM groups have been subsidized by an average of $111,486 per physician FTE (median is $98,253), with the highest numbers in hospital-owned practices. But many experts see a window of a few years in which new healthcare delivery and payment experiments will be trotted out, whether modeled on a bundled system, accountable-care organization (ACO), or other vehicle. Under these models, payment incentives to physicians—and to hospitalists especially—could be fundamentally restructured to better reflect their true contributions as the emphasis on quality and efficiency increases.

Within the next three years, Murer says, hospitalists need to continue to infiltrate inpatient medical services, demonstrate their worth, and show the cost efficiencies that arise from their profession. “I think they’ve got a window of three years to really decide how much of that [inpatient physician] market they will retain,” she says.

Despite the current volatility, both Murer and Dr. Zipper agree that hospitalists are well positioned to take advantage of the coming changes in the healthcare delivery system. But to seize the opportunity, hospitalists must clearly demonstrate the necessity of their services in the emerging models of care and claim an early seat at the table where decisions will be made about how the pot of money is dispersed. Doing so could help resolve one of the most important financial considerations of all: job security. TH

Bryn Nelson is a freelance medical writer based in Seattle.

References

1. Adamy J. Health insurers plan hikes. Wall Street Journal website. Available at: http://online.wsj.com/article/SB10001424052748703720004575478200948908976.html. Accessed Sept. 21, 2010.
2. Cutter S. Look you in the eye. The White House website. Available at: www.whitehouse.gov/blog/2010/09/23/look-you-eye. Accessed Sept. 27, 2010.
3. How will the economy affect hospitalist salaries? MedPage Today website. Available at: www.kevinmd .com/blog/2009/03/how-will-economy-affect-hospitalist-2.html. Accessed Sept. 27, 2010.

When Congress returns for a likely lame-duck session after the midterm elections, the biggest battle might be fought over whether to extend the 2001 and 2003 tax cuts to everyone or only to those earning less than $200,000 annually ($250,000 for families). And depending on the makeup of the 112th Congress, which will be seated in January, Republicans might try to make good on a campaign pledge to repeal all or most of the healthcare reform legislation.

The expected flashpoints are being teased endlessly with media sound bites featuring phrases that most of us love to hate: higher taxes, spiraling medical bills, soaring insurance premiums. Insurance companies already are blaming a spike in premiums on the healthcare legislation, claiming that new provisions and mandates are forcing them to further hike their rates.

Closer to home, the high-profile frays could put hospitalists in the awkward position of supporting political positions that sock them in the wallet. After all, doctors are workers and healthcare consumers, too. So what impact could higher taxes and higher insurance premiums really have? Let’s start with health insurance.

Insurance Cost Increases

Signed into law in March, the Affordable Care Act includes tax credits for small businesses to help defray the costs of health insurance coverage. But in 2013, it also raises the threshold for medical expense deductions for most taxpayers, to 10% from 7.5% of adjusted gross income. In other words, families can claim tax deductions only after having spent 10% or more of their adjusted gross income on medical bills. For families with hefty medical bills, that 2.5% difference could translate into a significant shortfall.

CMS was able to negotiate with insurers to achieve a slight drop in Medicare Advantage premiums, but many individual states have had less luck in preventing rate increases from private insurers who blame their higher premiums on new mandates. The Wall Street Journal has documented rate increases of 18% in states like Wisconsin and North Carolina—about 9% of which insurance company officials pinned on the new law.¹ Such increases are hardly inevitable, however. The Obama administration’s White House blog, for instance, has cited the example of North Carolina Blue Cross and Blue Shield, which announced Sept. 20 that it will provide $156 million in refunds to more than 215,000 customers after state regulators found an overcharge that should be reversed due to new rules in the reform law.² WellPoint will similarly refund $20 million to its health insurance customers in Colorado.²

The requested premium increases and identified overcharges have contributed to plenty of finger-pointing among insurers, state regulators, and the Obama administration, which has assailed insurers for using the law as a convenient excuse to raise rates. Highlighting the unease of many consumers, however, is the verdict that the proposed increases—if approved—would hit small businesses and individuals hardest.

According to the State of Hospital Medicine: 2010 Report Based on 2009 Data, released in September by SHM and the Medical Group Management Association, participating hospitalist groups have a median of 10 physician full-time equivalents. Roughly 25% of respondents are in physician-owned groups, while 14% are in a management services organization (MSO) or physician practice management company (PPMC). Smaller HM groups wouldn’t be alone in feeling the pinch, but they might need to consider some serious comparison-shopping to avoid costly premium increases.

Cherilyn Murer, president and CEO of Joliet, Ill.-based Murer Consultants Inc., has worked with healthcare systems and providers in 42 states, but even her company has not been immune to having to contend with rising premiums. “Our managing partner just renegotiated our health benefits [premiums] that were supposed to have gone up 30% by our previous carrier,” Murer says. “Through protracted negotiations and diligence, he was able to find a plan that did not increase our costs, and retained pretty much the same benefits.”

For at least the next three to five years, Murer says, niche firms will need to be diligent about shopping around and managing their expenses in a volatile insurance marketplace. Healthcare reform, she says, is certainly not a panacea for reining in costs, but “just the beginning.”

Concerns over healthcare costs, in fact, could be among the factors driving what Robert Zipper, MD, FHM, regional chief medical officer for Tacoma, Wash.-based Sound Physicians, sees as continuing consolidation among hospitalist groups. “By that, I mean that either groups are swallowed up by the hospital in which they work or they become part of a regional or national company,” he says. Sound Physicians, with about 400 hospitalists in seven states, offers health insurance policies that don’t vary by state, easing its negotiations.

Eyes on the Bottom Line

What about the dreaded “T” word? Dr. Zipper says he hasn’t heard that many concerns about the potential tax increase just yet. “I think it’s not an issue to hospitalists in a broad sense yet,” he says, “but if you look at the salary trajectory and where things have been over the past 10 years, it’s pretty easy to predict that it will be an issue for single-income [households] where the hospitalist is the sole breadwinner.”

The 2010 State of Hospital Medicine report, which surveyed 4,211 nonacademic hospitalists from 443 groups, found a median annual income of $215,000. Calculating trends from past income surveys is difficult due to very different respondent populations, but many hospitalists are clearly near or above the $200,000 threshold for individuals and near the $250,000 threshold for families already, even before considering spousal income. The survey, for example, found median salaries of about $235,700 in the 13 states that make up the Southern region.

Even if higher-earning hospitalists are subjected to a higher tax rate next year—if the current rates expire, a climb of 4.6 percentage points, to 39.6% from 35%—not all of them are necessarily opposed to it. Political polling on the issue isn’t broken down by specific professions, but a number of blogs have pointed to a Quinnipiac University poll conducted back in March that suggested nearly two-thirds of upper-income Americans were prepared to sacrifice some of their take-home pay to help reduce the deficit. In that poll (www.quinnipiac.edu/x1295.xml?ReleaseID=1438), some 64% of respondents earning more than $250,000 agreed that raising income taxes on themselves and other households making more than $250,000 should be a main part of any government approach to the deficit.

If taxes and insurance premiums are more immediate concerns, some HM observers are eyeing longer trends that could impact the pre-tax pay of the profession. Most hospitalists still earn far less than their specialist counterparts, of course, but increasing demand for hospitalist services has helped fuel a rise in median salaries. Last year, some observers predicted that after an impressive run, annual pay would plateau or even fall, given the current economic uncertainty, tightening profit margins, and assessment that many hospitals run HM programs at a loss.³ And in the current RVU-driven system, the “What have you done for me lately?” mentality can indeed make it difficult for hospitalists to demonstrate a solid return on the investment.

The State of Hospital Medicine report suggests that respondent HM groups have been subsidized by an average of $111,486 per physician FTE (median is $98,253), with the highest numbers in hospital-owned practices. But many experts see a window of a few years in which new healthcare delivery and payment experiments will be trotted out, whether modeled on a bundled system, accountable-care organization (ACO), or other vehicle. Under these models, payment incentives to physicians—and to hospitalists especially—could be fundamentally restructured to better reflect their true contributions as the emphasis on quality and efficiency increases.

Within the next three years, Murer says, hospitalists need to continue to infiltrate inpatient medical services, demonstrate their worth, and show the cost efficiencies that arise from their profession. “I think they’ve got a window of three years to really decide how much of that [inpatient physician] market they will retain,” she says.

Despite the current volatility, both Murer and Dr. Zipper agree that hospitalists are well positioned to take advantage of the coming changes in the healthcare delivery system. But to seize the opportunity, hospitalists must clearly demonstrate the necessity of their services in the emerging models of care and claim an early seat at the table where decisions will be made about how the pot of money is dispersed. Doing so could help resolve one of the most important financial considerations of all: job security. TH

Bryn Nelson is a freelance medical writer based in Seattle.

References

1. Adamy J. Health insurers plan hikes. Wall Street Journal website. Available at: http://online.wsj.com/article/SB10001424052748703720004575478200948908976.html. Accessed Sept. 21, 2010.
2. Cutter S. Look you in the eye. The White House website. Available at: www.whitehouse.gov/blog/2010/09/23/look-you-eye. Accessed Sept. 27, 2010.
3. How will the economy affect hospitalist salaries? MedPage Today website. Available at: www.kevinmd .com/blog/2009/03/how-will-economy-affect-hospitalist-2.html. Accessed Sept. 27, 2010.

Now that I have your attention, I hope no one thinks the “40 patients per day” suggestion is in any way SHM current policy. But it is becoming increasingly clear that demands for the hospitalist workforce and demands on ongoing accountability for performance will require a redefinition of the role the hospitalist should have in patient care.

This isn’t unique to HM. In many ways, the patient-centered medical home (PCMH) and accountable-care organizations (ACOs) will in their own ways redefine the physician’s role at many steps along the healthcare continuum. But, as usual, HM might very well be at the leading edge.

Scope of Practice

There just aren’t enough qualified hospitalists to do the work, let alone all of the things coming our way with an ever-expanding scope of practice. Sure, hospitalists will always have a central role in managing the acute care of most medical illnesses. We already manage more inpatient heart-failure patients and more chest pain than cardiologists; more seizures, strokes, and dementia than neurologists; and more diabetes than endocrinologists. In many hospitals, we have replaced PCPs in managing acutely ill patients on medical floors.

But in recent years, hospitalists have played an increasing role in comanaging orthopedic and other surgical patients, and are playing a larger role in the care of patients formerly managed solely by subspecialists. As neurologists have left the building, hospitalists have had to expand our management of patients with acute neurologic problems. And as the critical-care shortage expands, hospitalists are playing a greater role in our nation’s ICUs.

Forward-thinking hospitals are redefining the roles of ED physicians in an era of hospitalists. Patients who present with a temperature of 104, a BP of 90/60, and a pulmonary infiltrate get a 60-second evaluation in the ED and are quickly admitted upstairs to the hospitalists. No need for two to three hours of an ED workup for a patient everyone knows is coming into the house. More and more EDs are routinely using hospitalists as in-house consultants on difficult patient decisions.

As ACOs become commonplace and as hospitals become responsible for the gaps post-discharge, look for some HM groups to be asked to manage the subacute patient experience, those critical first post-hospital visits in the 30 days after hospitalization. PCPs and medical homes will have their own capacity issues and difficulties in managing these fragile patients just out of the hospital.

Add to this all the time hospitalists need to spend each day in developing and implementing performance improvement, and in creating and participating in the new hospital team, it is no wonder that a limited HM workforce is being stretched beyond its capacity.

Workforce Issues

In many ways, this is a blessing for an individual hospitalist, especially one with a track record of competency and skill. This is at least part of the reason that HM was one of only five medical specialties in which incomes increased in 2009, and why hospitals everywhere are looking for strategies to attract and retain the best talent.

While this trend might bode well for the individual hospitalist looking for career flexibility, the ever-enlarging specialty of HM cannot easily fill all the needs described above, even with a large influx of medical students or residents in internal medicine, family medicine, and pediatrics, or even with recruitment of additional nonphysician providers. The work is growing too fast and the people just aren’t available.

Job Description

It is time to rethink the job description for the physician hospitalists. How do we want to deploy the $100-plus-per-hour hospitalist, who is in short supply, to get the most out of this limited resource?

If we step back a minute and start to list all the roles hospitalists have played in patient care, we might see ways to involve existing health professionals, and we might also see a need to add some new players, to alter the current hierarchy and authority. If we keep the focus on always providing the best care for the patient and to only ask each member of the team to play roles consistent with their training and competencies, then we can come out the other side of all this in better shape than we are in now.

Hospitalists today are asked to take a detailed history, do a complete physical examination, review any old records, speak to the referring physicians, talk to the doctor and possibly the nurse in the ED, meet with the nurse on the floor, make an initial diagnosis, order initial and subsequent tests to confirm or deny each specific diagnosis, order initial therapies (pharmaceutical and other), adjust therapy as the tests clarify or muddy the diagnostic approach, order additional tests to make sure the therapies are helpful and not toxic, record all of these ideas, directions, assumptions, and guesses in the medical record, generate a bill to collect payment for care rendered, meet with the patient and possibly the family to educate them about the potential disease states and each therapy ordered, assess the home (or nonhospital) situation, and make plans and arrangements for discharge, round on the patient at least once daily to redo and revise many of these steps as the course of the disease and new information warrants, produce instructions at discharge to include a summary of the hospital course, new therapies, future testing at a level for the patient and their family, and also for the future physicians in compliance with the requirements for billing and in compliance with hospital regulations and the community standards, make sure your care elements are being documented for performance evaluations and to satisfy whatever alphabet soup is looking at measurement and accountability, and along the way figure out what information any consultants, comanagers, other hospitalists, nurses, etc. might need to know, and create a venue or process to communicate the information. And I am sure there are more roles I have left out.

The point is, do we really need an MD to do all of these things? Is it time to create a process, a trusted team, and a new way to deliver the best care and deploy our limited resources more economically and effectively?

What are the unique roles and skill sets that physician hospitalists can bring to their patients’ care? And, more important, what are the current roles that would be better handed off to another member of the team?

The hospitalist should be the integrator of information, who then works with the entire team to set a direction and plan for diagnosis and therapy. Most everything else could be delegated to someone else.

But that presupposes a trust in the competencies of the rest of the team. Do I believe the history and physical already performed in the ED, by the nurse, by the NPP, or by another physician, or do I need to repeat this again? Do I trust the pharmacist to select the correct agent and know how to monitor its effectiveness and potential toxicity, and to be prepared to transition to outpatient therapy? Do I trust that the nurse (and every nurse on every shift) will be able educate the patient about their disease and hospital course and to provide accurate and timely information about the patient? And on and on.

Some EDs right now have a new person, the scribe, who sees the patient side by side with the physician, transcribing the orders, writing the notes, and interfacing with the hospital’s electronic health record (EHR). Does this free up the ED physician to see more patients? Does this lead to better care? Does this lead to better payment collection or fewer liability suits?

And this is just replacing one element of the doctors’ job. Think how existing healthcare professionals and new ones on the horizon can change the workforce.

The point is, the role and the need for the unique skill set of the well-tuned hospitalist have grown too broad for us to continue with business as usual. It is time to systematically look at the tasks that need to be accomplished for each acutely ill patient and to evaluate the entire healthcare team available, their competencies and their skill sets, and to set a “new paradigm” for their deployment.

This will require some documentation of each professional’s competence and a trust that they can deliver on a daily basis. In this new world, the hospitalist moves from playing lead trumpet to being the conductor of the orchestra, to being the coxswain for a crew team, or the quarterback of a multiskilled team.

In this world, the hospitalist could oversee 40 patients a day in a very different role than occurs today. The team would be empowered by viewing the “hospitalist’s patients” as all of our patients, and the patients would benefit from an accountable team focused directly on them.

This is a world not taught in residency, but one that the future clamors for. There is not an easy path from today to the future, but as in many things in the last decade or so, I trust that the best of HM is up to the task of playing a leading role in designing and implementing the future of healthcare.

SHM will continue to do its part to help you at every step along the way. TH

Dr. Wellikson is CEO of SHM.

Now that I have your attention, I hope no one thinks the “40 patients per day” suggestion is in any way SHM current policy. But it is becoming increasingly clear that demands for the hospitalist workforce and demands on ongoing accountability for performance will require a redefinition of the role the hospitalist should have in patient care.

This isn’t unique to HM. In many ways, the patient-centered medical home (PCMH) and accountable-care organizations (ACOs) will in their own ways redefine the physician’s role at many steps along the healthcare continuum. But, as usual, HM might very well be at the leading edge.

Scope of Practice

There just aren’t enough qualified hospitalists to do the work, let alone all of the things coming our way with an ever-expanding scope of practice. Sure, hospitalists will always have a central role in managing the acute care of most medical illnesses. We already manage more inpatient heart-failure patients and more chest pain than cardiologists; more seizures, strokes, and dementia than neurologists; and more diabetes than endocrinologists. In many hospitals, we have replaced PCPs in managing acutely ill patients on medical floors.

But in recent years, hospitalists have played an increasing role in comanaging orthopedic and other surgical patients, and are playing a larger role in the care of patients formerly managed solely by subspecialists. As neurologists have left the building, hospitalists have had to expand our management of patients with acute neurologic problems. And as the critical-care shortage expands, hospitalists are playing a greater role in our nation’s ICUs.

Forward-thinking hospitals are redefining the roles of ED physicians in an era of hospitalists. Patients who present with a temperature of 104, a BP of 90/60, and a pulmonary infiltrate get a 60-second evaluation in the ED and are quickly admitted upstairs to the hospitalists. No need for two to three hours of an ED workup for a patient everyone knows is coming into the house. More and more EDs are routinely using hospitalists as in-house consultants on difficult patient decisions.

As ACOs become commonplace and as hospitals become responsible for the gaps post-discharge, look for some HM groups to be asked to manage the subacute patient experience, those critical first post-hospital visits in the 30 days after hospitalization. PCPs and medical homes will have their own capacity issues and difficulties in managing these fragile patients just out of the hospital.

Add to this all the time hospitalists need to spend each day in developing and implementing performance improvement, and in creating and participating in the new hospital team, it is no wonder that a limited HM workforce is being stretched beyond its capacity.

Workforce Issues

In many ways, this is a blessing for an individual hospitalist, especially one with a track record of competency and skill. This is at least part of the reason that HM was one of only five medical specialties in which incomes increased in 2009, and why hospitals everywhere are looking for strategies to attract and retain the best talent.

While this trend might bode well for the individual hospitalist looking for career flexibility, the ever-enlarging specialty of HM cannot easily fill all the needs described above, even with a large influx of medical students or residents in internal medicine, family medicine, and pediatrics, or even with recruitment of additional nonphysician providers. The work is growing too fast and the people just aren’t available.

Job Description

It is time to rethink the job description for the physician hospitalists. How do we want to deploy the $100-plus-per-hour hospitalist, who is in short supply, to get the most out of this limited resource?

If we step back a minute and start to list all the roles hospitalists have played in patient care, we might see ways to involve existing health professionals, and we might also see a need to add some new players, to alter the current hierarchy and authority. If we keep the focus on always providing the best care for the patient and to only ask each member of the team to play roles consistent with their training and competencies, then we can come out the other side of all this in better shape than we are in now.

Hospitalists today are asked to take a detailed history, do a complete physical examination, review any old records, speak to the referring physicians, talk to the doctor and possibly the nurse in the ED, meet with the nurse on the floor, make an initial diagnosis, order initial and subsequent tests to confirm or deny each specific diagnosis, order initial therapies (pharmaceutical and other), adjust therapy as the tests clarify or muddy the diagnostic approach, order additional tests to make sure the therapies are helpful and not toxic, record all of these ideas, directions, assumptions, and guesses in the medical record, generate a bill to collect payment for care rendered, meet with the patient and possibly the family to educate them about the potential disease states and each therapy ordered, assess the home (or nonhospital) situation, and make plans and arrangements for discharge, round on the patient at least once daily to redo and revise many of these steps as the course of the disease and new information warrants, produce instructions at discharge to include a summary of the hospital course, new therapies, future testing at a level for the patient and their family, and also for the future physicians in compliance with the requirements for billing and in compliance with hospital regulations and the community standards, make sure your care elements are being documented for performance evaluations and to satisfy whatever alphabet soup is looking at measurement and accountability, and along the way figure out what information any consultants, comanagers, other hospitalists, nurses, etc. might need to know, and create a venue or process to communicate the information. And I am sure there are more roles I have left out.

The point is, do we really need an MD to do all of these things? Is it time to create a process, a trusted team, and a new way to deliver the best care and deploy our limited resources more economically and effectively?

What are the unique roles and skill sets that physician hospitalists can bring to their patients’ care? And, more important, what are the current roles that would be better handed off to another member of the team?

The hospitalist should be the integrator of information, who then works with the entire team to set a direction and plan for diagnosis and therapy. Most everything else could be delegated to someone else.

But that presupposes a trust in the competencies of the rest of the team. Do I believe the history and physical already performed in the ED, by the nurse, by the NPP, or by another physician, or do I need to repeat this again? Do I trust the pharmacist to select the correct agent and know how to monitor its effectiveness and potential toxicity, and to be prepared to transition to outpatient therapy? Do I trust that the nurse (and every nurse on every shift) will be able educate the patient about their disease and hospital course and to provide accurate and timely information about the patient? And on and on.

Some EDs right now have a new person, the scribe, who sees the patient side by side with the physician, transcribing the orders, writing the notes, and interfacing with the hospital’s electronic health record (EHR). Does this free up the ED physician to see more patients? Does this lead to better care? Does this lead to better payment collection or fewer liability suits?

And this is just replacing one element of the doctors’ job. Think how existing healthcare professionals and new ones on the horizon can change the workforce.

The point is, the role and the need for the unique skill set of the well-tuned hospitalist have grown too broad for us to continue with business as usual. It is time to systematically look at the tasks that need to be accomplished for each acutely ill patient and to evaluate the entire healthcare team available, their competencies and their skill sets, and to set a “new paradigm” for their deployment.

This will require some documentation of each professional’s competence and a trust that they can deliver on a daily basis. In this new world, the hospitalist moves from playing lead trumpet to being the conductor of the orchestra, to being the coxswain for a crew team, or the quarterback of a multiskilled team.

In this world, the hospitalist could oversee 40 patients a day in a very different role than occurs today. The team would be empowered by viewing the “hospitalist’s patients” as all of our patients, and the patients would benefit from an accountable team focused directly on them.

This is a world not taught in residency, but one that the future clamors for. There is not an easy path from today to the future, but as in many things in the last decade or so, I trust that the best of HM is up to the task of playing a leading role in designing and implementing the future of healthcare.

SHM will continue to do its part to help you at every step along the way. TH

Dr. Wellikson is CEO of SHM.

Now that I have your attention, I hope no one thinks the “40 patients per day” suggestion is in any way SHM current policy. But it is becoming increasingly clear that demands for the hospitalist workforce and demands on ongoing accountability for performance will require a redefinition of the role the hospitalist should have in patient care.

This isn’t unique to HM. In many ways, the patient-centered medical home (PCMH) and accountable-care organizations (ACOs) will in their own ways redefine the physician’s role at many steps along the healthcare continuum. But, as usual, HM might very well be at the leading edge.

Scope of Practice

There just aren’t enough qualified hospitalists to do the work, let alone all of the things coming our way with an ever-expanding scope of practice. Sure, hospitalists will always have a central role in managing the acute care of most medical illnesses. We already manage more inpatient heart-failure patients and more chest pain than cardiologists; more seizures, strokes, and dementia than neurologists; and more diabetes than endocrinologists. In many hospitals, we have replaced PCPs in managing acutely ill patients on medical floors.

But in recent years, hospitalists have played an increasing role in comanaging orthopedic and other surgical patients, and are playing a larger role in the care of patients formerly managed solely by subspecialists. As neurologists have left the building, hospitalists have had to expand our management of patients with acute neurologic problems. And as the critical-care shortage expands, hospitalists are playing a greater role in our nation’s ICUs.

Forward-thinking hospitals are redefining the roles of ED physicians in an era of hospitalists. Patients who present with a temperature of 104, a BP of 90/60, and a pulmonary infiltrate get a 60-second evaluation in the ED and are quickly admitted upstairs to the hospitalists. No need for two to three hours of an ED workup for a patient everyone knows is coming into the house. More and more EDs are routinely using hospitalists as in-house consultants on difficult patient decisions.

As ACOs become commonplace and as hospitals become responsible for the gaps post-discharge, look for some HM groups to be asked to manage the subacute patient experience, those critical first post-hospital visits in the 30 days after hospitalization. PCPs and medical homes will have their own capacity issues and difficulties in managing these fragile patients just out of the hospital.

Add to this all the time hospitalists need to spend each day in developing and implementing performance improvement, and in creating and participating in the new hospital team, it is no wonder that a limited HM workforce is being stretched beyond its capacity.

Workforce Issues

In many ways, this is a blessing for an individual hospitalist, especially one with a track record of competency and skill. This is at least part of the reason that HM was one of only five medical specialties in which incomes increased in 2009, and why hospitals everywhere are looking for strategies to attract and retain the best talent.

While this trend might bode well for the individual hospitalist looking for career flexibility, the ever-enlarging specialty of HM cannot easily fill all the needs described above, even with a large influx of medical students or residents in internal medicine, family medicine, and pediatrics, or even with recruitment of additional nonphysician providers. The work is growing too fast and the people just aren’t available.

Job Description

It is time to rethink the job description for the physician hospitalists. How do we want to deploy the $100-plus-per-hour hospitalist, who is in short supply, to get the most out of this limited resource?

If we step back a minute and start to list all the roles hospitalists have played in patient care, we might see ways to involve existing health professionals, and we might also see a need to add some new players, to alter the current hierarchy and authority. If we keep the focus on always providing the best care for the patient and to only ask each member of the team to play roles consistent with their training and competencies, then we can come out the other side of all this in better shape than we are in now.

Hospitalists today are asked to take a detailed history, do a complete physical examination, review any old records, speak to the referring physicians, talk to the doctor and possibly the nurse in the ED, meet with the nurse on the floor, make an initial diagnosis, order initial and subsequent tests to confirm or deny each specific diagnosis, order initial therapies (pharmaceutical and other), adjust therapy as the tests clarify or muddy the diagnostic approach, order additional tests to make sure the therapies are helpful and not toxic, record all of these ideas, directions, assumptions, and guesses in the medical record, generate a bill to collect payment for care rendered, meet with the patient and possibly the family to educate them about the potential disease states and each therapy ordered, assess the home (or nonhospital) situation, and make plans and arrangements for discharge, round on the patient at least once daily to redo and revise many of these steps as the course of the disease and new information warrants, produce instructions at discharge to include a summary of the hospital course, new therapies, future testing at a level for the patient and their family, and also for the future physicians in compliance with the requirements for billing and in compliance with hospital regulations and the community standards, make sure your care elements are being documented for performance evaluations and to satisfy whatever alphabet soup is looking at measurement and accountability, and along the way figure out what information any consultants, comanagers, other hospitalists, nurses, etc. might need to know, and create a venue or process to communicate the information. And I am sure there are more roles I have left out.

The point is, do we really need an MD to do all of these things? Is it time to create a process, a trusted team, and a new way to deliver the best care and deploy our limited resources more economically and effectively?

What are the unique roles and skill sets that physician hospitalists can bring to their patients’ care? And, more important, what are the current roles that would be better handed off to another member of the team?

The hospitalist should be the integrator of information, who then works with the entire team to set a direction and plan for diagnosis and therapy. Most everything else could be delegated to someone else.

But that presupposes a trust in the competencies of the rest of the team. Do I believe the history and physical already performed in the ED, by the nurse, by the NPP, or by another physician, or do I need to repeat this again? Do I trust the pharmacist to select the correct agent and know how to monitor its effectiveness and potential toxicity, and to be prepared to transition to outpatient therapy? Do I trust that the nurse (and every nurse on every shift) will be able educate the patient about their disease and hospital course and to provide accurate and timely information about the patient? And on and on.

Some EDs right now have a new person, the scribe, who sees the patient side by side with the physician, transcribing the orders, writing the notes, and interfacing with the hospital’s electronic health record (EHR). Does this free up the ED physician to see more patients? Does this lead to better care? Does this lead to better payment collection or fewer liability suits?

And this is just replacing one element of the doctors’ job. Think how existing healthcare professionals and new ones on the horizon can change the workforce.

The point is, the role and the need for the unique skill set of the well-tuned hospitalist have grown too broad for us to continue with business as usual. It is time to systematically look at the tasks that need to be accomplished for each acutely ill patient and to evaluate the entire healthcare team available, their competencies and their skill sets, and to set a “new paradigm” for their deployment.

This will require some documentation of each professional’s competence and a trust that they can deliver on a daily basis. In this new world, the hospitalist moves from playing lead trumpet to being the conductor of the orchestra, to being the coxswain for a crew team, or the quarterback of a multiskilled team.

In this world, the hospitalist could oversee 40 patients a day in a very different role than occurs today. The team would be empowered by viewing the “hospitalist’s patients” as all of our patients, and the patients would benefit from an accountable team focused directly on them.

This is a world not taught in residency, but one that the future clamors for. There is not an easy path from today to the future, but as in many things in the last decade or so, I trust that the best of HM is up to the task of playing a leading role in designing and implementing the future of healthcare.

SHM will continue to do its part to help you at every step along the way. TH

Dr. Wellikson is CEO of SHM.

Hillcrest Medical Center in Tulsa, Okla., went live with its ACE Demonstration on May 1, 2009. Over the next 15 months, scores on several quality metrics soared, supply costs plunged, patient volumes shot up, and the hospital saved Medicare $750,000 on 37 diagnosis-related groups (DRGs).

So what’s the problem?

For one thing, handling the bundled payment system required “massive” computer conversions, says Hillcrest CEO Steve Dobbs, and cash payments from CMS were significantly delayed, in part due to glitches over how discharges were handled. And then there was the confusion over processing supplemental Medicare plans.

Hillcrest’s first-year experience with bundled payments for orthopedics, cardiology, and cardiovascular surgery provides an illuminating window into what other hospitals might encounter as the concept of bundling expands beyond the first few pilot sites.

Because Hillcrest didn’t have a way to pay physician claims, it hired a third-party vendor, Texas-based Trailblazer, to manage them. Then Hillcrest set up two LLCs—one for orthopedics and one for cardiology—to receive the bundled payments. CMS required the hospital to establish a quality committee, finance committee, and board within each LLC, and report quarterly about the program. But Dobbs says the hospital has received no written feedback from CMS or any indications of how the ACE Demonstration has worked at two other sites that also started last year.

Through “trial by error,” the hospital has had to learn many of its lessons on its own, he says, explaining that “you just had to go make some mistakes and try something.” For example, the hospital began posting the Medicare rate for each of the demonstration’s 37 DRGs on its website after frequent updates to the rates led to widespread confusion among area physicians. Hillcrest also learned that it needed to set up a dedicated toll-free call center for people to get information about the program.

There have been triumphs, too. Scores on such metrics as antibiotics administered one hour prior to surgical start and antibiotics stopped 24 hours post-surgery have climbed significantly, perhaps by linking them to gainsharing incentives. When one heart valve vendor “wouldn’t play,” Dobbs says, the hospital switched to another, less expensive vendor. By involving its open-heart surgeons in scrutinizing supplies, the hospital saved 10% of the cost of sterile packs in the operating room.

Hillcrest’s orthopedic surgeons—an independent group—also combed through instruments and drugs to look for savings. For their efforts, the six orthopedists netted a combined $130,000 in incentive checks. For the hospital’s own cardiologists and cardiovascular surgeons, the bonus money went back into the practice.

Early in the demonstration project, Dobbs says, hospitalists saw a dip in the number of cases they were getting pulled in on. “Early on they called me and said, ‘What’s up, because we’re not getting as many referrals from orthopedics?’” Dobbs says. “I think it’s leveled out over time, and they really haven’t seen that big of a change.”

The hospital also is reaping the rewards of recent investments, including a new heart hospital, heavy investment in cardiology, and a three-year-old orthopedics unit. In the first year of its demonstration, the hospital saw a 24% gain in its cardiology and cardiovascular surgery volume, and a whopping 37% gain in orthopedics volume.

One facet of the project that has been less fruitful is the Medicare discount given to patients who have their orthopedic or cardiology procedure done at Hillcrest. “People are saying it’s nice to have, but that’s not why they chose the program, especially in cardiology,” Dobbs says. “You don’t have a heart attack and tell the ambulance driver, ‘Oh, by the way, I want to get my incentive check.’ ”

Hillcrest Medical Center in Tulsa, Okla., went live with its ACE Demonstration on May 1, 2009. Over the next 15 months, scores on several quality metrics soared, supply costs plunged, patient volumes shot up, and the hospital saved Medicare $750,000 on 37 diagnosis-related groups (DRGs).

So what’s the problem?

For one thing, handling the bundled payment system required “massive” computer conversions, says Hillcrest CEO Steve Dobbs, and cash payments from CMS were significantly delayed, in part due to glitches over how discharges were handled. And then there was the confusion over processing supplemental Medicare plans.

Hillcrest’s first-year experience with bundled payments for orthopedics, cardiology, and cardiovascular surgery provides an illuminating window into what other hospitals might encounter as the concept of bundling expands beyond the first few pilot sites.

Because Hillcrest didn’t have a way to pay physician claims, it hired a third-party vendor, Texas-based Trailblazer, to manage them. Then Hillcrest set up two LLCs—one for orthopedics and one for cardiology—to receive the bundled payments. CMS required the hospital to establish a quality committee, finance committee, and board within each LLC, and report quarterly about the program. But Dobbs says the hospital has received no written feedback from CMS or any indications of how the ACE Demonstration has worked at two other sites that also started last year.

Through “trial by error,” the hospital has had to learn many of its lessons on its own, he says, explaining that “you just had to go make some mistakes and try something.” For example, the hospital began posting the Medicare rate for each of the demonstration’s 37 DRGs on its website after frequent updates to the rates led to widespread confusion among area physicians. Hillcrest also learned that it needed to set up a dedicated toll-free call center for people to get information about the program.

There have been triumphs, too. Scores on such metrics as antibiotics administered one hour prior to surgical start and antibiotics stopped 24 hours post-surgery have climbed significantly, perhaps by linking them to gainsharing incentives. When one heart valve vendor “wouldn’t play,” Dobbs says, the hospital switched to another, less expensive vendor. By involving its open-heart surgeons in scrutinizing supplies, the hospital saved 10% of the cost of sterile packs in the operating room.

Hillcrest’s orthopedic surgeons—an independent group—also combed through instruments and drugs to look for savings. For their efforts, the six orthopedists netted a combined $130,000 in incentive checks. For the hospital’s own cardiologists and cardiovascular surgeons, the bonus money went back into the practice.

Early in the demonstration project, Dobbs says, hospitalists saw a dip in the number of cases they were getting pulled in on. “Early on they called me and said, ‘What’s up, because we’re not getting as many referrals from orthopedics?’” Dobbs says. “I think it’s leveled out over time, and they really haven’t seen that big of a change.”

The hospital also is reaping the rewards of recent investments, including a new heart hospital, heavy investment in cardiology, and a three-year-old orthopedics unit. In the first year of its demonstration, the hospital saw a 24% gain in its cardiology and cardiovascular surgery volume, and a whopping 37% gain in orthopedics volume.

One facet of the project that has been less fruitful is the Medicare discount given to patients who have their orthopedic or cardiology procedure done at Hillcrest. “People are saying it’s nice to have, but that’s not why they chose the program, especially in cardiology,” Dobbs says. “You don’t have a heart attack and tell the ambulance driver, ‘Oh, by the way, I want to get my incentive check.’ ”

Hillcrest Medical Center in Tulsa, Okla., went live with its ACE Demonstration on May 1, 2009. Over the next 15 months, scores on several quality metrics soared, supply costs plunged, patient volumes shot up, and the hospital saved Medicare $750,000 on 37 diagnosis-related groups (DRGs).

So what’s the problem?

For one thing, handling the bundled payment system required “massive” computer conversions, says Hillcrest CEO Steve Dobbs, and cash payments from CMS were significantly delayed, in part due to glitches over how discharges were handled. And then there was the confusion over processing supplemental Medicare plans.

Hillcrest’s first-year experience with bundled payments for orthopedics, cardiology, and cardiovascular surgery provides an illuminating window into what other hospitals might encounter as the concept of bundling expands beyond the first few pilot sites.

Because Hillcrest didn’t have a way to pay physician claims, it hired a third-party vendor, Texas-based Trailblazer, to manage them. Then Hillcrest set up two LLCs—one for orthopedics and one for cardiology—to receive the bundled payments. CMS required the hospital to establish a quality committee, finance committee, and board within each LLC, and report quarterly about the program. But Dobbs says the hospital has received no written feedback from CMS or any indications of how the ACE Demonstration has worked at two other sites that also started last year.

Through “trial by error,” the hospital has had to learn many of its lessons on its own, he says, explaining that “you just had to go make some mistakes and try something.” For example, the hospital began posting the Medicare rate for each of the demonstration’s 37 DRGs on its website after frequent updates to the rates led to widespread confusion among area physicians. Hillcrest also learned that it needed to set up a dedicated toll-free call center for people to get information about the program.

There have been triumphs, too. Scores on such metrics as antibiotics administered one hour prior to surgical start and antibiotics stopped 24 hours post-surgery have climbed significantly, perhaps by linking them to gainsharing incentives. When one heart valve vendor “wouldn’t play,” Dobbs says, the hospital switched to another, less expensive vendor. By involving its open-heart surgeons in scrutinizing supplies, the hospital saved 10% of the cost of sterile packs in the operating room.

Hillcrest’s orthopedic surgeons—an independent group—also combed through instruments and drugs to look for savings. For their efforts, the six orthopedists netted a combined $130,000 in incentive checks. For the hospital’s own cardiologists and cardiovascular surgeons, the bonus money went back into the practice.

Early in the demonstration project, Dobbs says, hospitalists saw a dip in the number of cases they were getting pulled in on. “Early on they called me and said, ‘What’s up, because we’re not getting as many referrals from orthopedics?’” Dobbs says. “I think it’s leveled out over time, and they really haven’t seen that big of a change.”

The hospital also is reaping the rewards of recent investments, including a new heart hospital, heavy investment in cardiology, and a three-year-old orthopedics unit. In the first year of its demonstration, the hospital saw a 24% gain in its cardiology and cardiovascular surgery volume, and a whopping 37% gain in orthopedics volume.

One facet of the project that has been less fruitful is the Medicare discount given to patients who have their orthopedic or cardiology procedure done at Hillcrest. “People are saying it’s nice to have, but that’s not why they chose the program, especially in cardiology,” Dobbs says. “You don’t have a heart attack and tell the ambulance driver, ‘Oh, by the way, I want to get my incentive check.’ ”

They have grown up in an era of reality television and hyperbolic politics. They prefer news alerts and fantasy football on their handhelds to daily newspapers and leather-bound novels. They text, they text, they text.

The generation known as millennials—those who were born in the years 1982 to 1995—is a breed unto itself. Millennials have grown up in the information age, are adept with new technologies, and have been trained under the umbrella of duty-hour guidelines that protect both the patient and the physician.

So when you hire a millennial for your hospitalist group, you’d better be clear about your expectations. “Millennials are looking for jobs that provide flexibility—time with family, time with friends, time to do other things,” says Troy Ahlstrom, MD, FHM, CFO of Traverse City-based Hospitalists of Northern Michigan and a member of SHM’s Practice Analysis committee. “There is nothing wrong with that, except that the baby boomers look at millennials and say, ‘Gosh, you slugs don’t want to work.’ ”

Dr. Ahlstrom says the influx of millennials into HM in recent years has had a significant impact on group administration—namely, an increase in use of 24/7 on-site coverage. The State of Hospital Medicine: 2010 Report Based on 2009 Data shows 68% of hospitalist groups provide on-site coverage at night. SHM’s 2007-2008 survey data showed only 53% of HM groups provided on-site coverage at night; the 2005-2006 figure was 51%. (Although the 2010 report includes a small percentage of truly academic hospitalist groups and, therefore, probably pushes the on-site coverage a little higher than in past years, Dr. Ahlstrom says he expects the trend toward on-site coverage at night to continue in the near future.)

“Baby boomers are perfectly fine with the idea of working more. They grew up working those horrifically long shifts, 36 hours straight,” Dr. Ahlstrom says. “The millennials would rather have clearly defined shifts, with nocturnists around to work the nights. Or maybe they get to be the nocturnist and work the nights. That’s the trend with younger physicians: They are more interested in seeing that split, where the days and nights are clearly set off.”

Then again, not all physicians, young or old, are against the idea of working long hours. And plenty of well-seasoned physicians are more than happy to have a nocturnist around, “but not if it’s going to cost them a lot of money or productivity,” Dr. Ahlstrom says.

They have grown up in an era of reality television and hyperbolic politics. They prefer news alerts and fantasy football on their handhelds to daily newspapers and leather-bound novels. They text, they text, they text.

The generation known as millennials—those who were born in the years 1982 to 1995—is a breed unto itself. Millennials have grown up in the information age, are adept with new technologies, and have been trained under the umbrella of duty-hour guidelines that protect both the patient and the physician.

So when you hire a millennial for your hospitalist group, you’d better be clear about your expectations. “Millennials are looking for jobs that provide flexibility—time with family, time with friends, time to do other things,” says Troy Ahlstrom, MD, FHM, CFO of Traverse City-based Hospitalists of Northern Michigan and a member of SHM’s Practice Analysis committee. “There is nothing wrong with that, except that the baby boomers look at millennials and say, ‘Gosh, you slugs don’t want to work.’ ”

Dr. Ahlstrom says the influx of millennials into HM in recent years has had a significant impact on group administration—namely, an increase in use of 24/7 on-site coverage. The State of Hospital Medicine: 2010 Report Based on 2009 Data shows 68% of hospitalist groups provide on-site coverage at night. SHM’s 2007-2008 survey data showed only 53% of HM groups provided on-site coverage at night; the 2005-2006 figure was 51%. (Although the 2010 report includes a small percentage of truly academic hospitalist groups and, therefore, probably pushes the on-site coverage a little higher than in past years, Dr. Ahlstrom says he expects the trend toward on-site coverage at night to continue in the near future.)

“Baby boomers are perfectly fine with the idea of working more. They grew up working those horrifically long shifts, 36 hours straight,” Dr. Ahlstrom says. “The millennials would rather have clearly defined shifts, with nocturnists around to work the nights. Or maybe they get to be the nocturnist and work the nights. That’s the trend with younger physicians: They are more interested in seeing that split, where the days and nights are clearly set off.”

Then again, not all physicians, young or old, are against the idea of working long hours. And plenty of well-seasoned physicians are more than happy to have a nocturnist around, “but not if it’s going to cost them a lot of money or productivity,” Dr. Ahlstrom says.

They have grown up in an era of reality television and hyperbolic politics. They prefer news alerts and fantasy football on their handhelds to daily newspapers and leather-bound novels. They text, they text, they text.

The generation known as millennials—those who were born in the years 1982 to 1995—is a breed unto itself. Millennials have grown up in the information age, are adept with new technologies, and have been trained under the umbrella of duty-hour guidelines that protect both the patient and the physician.

So when you hire a millennial for your hospitalist group, you’d better be clear about your expectations. “Millennials are looking for jobs that provide flexibility—time with family, time with friends, time to do other things,” says Troy Ahlstrom, MD, FHM, CFO of Traverse City-based Hospitalists of Northern Michigan and a member of SHM’s Practice Analysis committee. “There is nothing wrong with that, except that the baby boomers look at millennials and say, ‘Gosh, you slugs don’t want to work.’ ”

Dr. Ahlstrom says the influx of millennials into HM in recent years has had a significant impact on group administration—namely, an increase in use of 24/7 on-site coverage. The State of Hospital Medicine: 2010 Report Based on 2009 Data shows 68% of hospitalist groups provide on-site coverage at night. SHM’s 2007-2008 survey data showed only 53% of HM groups provided on-site coverage at night; the 2005-2006 figure was 51%. (Although the 2010 report includes a small percentage of truly academic hospitalist groups and, therefore, probably pushes the on-site coverage a little higher than in past years, Dr. Ahlstrom says he expects the trend toward on-site coverage at night to continue in the near future.)

“Baby boomers are perfectly fine with the idea of working more. They grew up working those horrifically long shifts, 36 hours straight,” Dr. Ahlstrom says. “The millennials would rather have clearly defined shifts, with nocturnists around to work the nights. Or maybe they get to be the nocturnist and work the nights. That’s the trend with younger physicians: They are more interested in seeing that split, where the days and nights are clearly set off.”

Then again, not all physicians, young or old, are against the idea of working long hours. And plenty of well-seasoned physicians are more than happy to have a nocturnist around, “but not if it’s going to cost them a lot of money or productivity,” Dr. Ahlstrom says.