Providers are pleased that CMS is delaying enforcement of new guidelines governing Medicare reimbursements for short-term hospital stays, but they insist the new rule is flawed and say they will continue to oppose it.
CMS's decision late Friday to delay full implementation of a new rule that reforms Medicare reimbursement for short-term hospital admissions is drawing cautious praise from providers and their allies in Washington, D.C.
In the announcement, officials at the Centers for Medicare & Medicaid Services stated that they are extending the so-called two-midnight rule's "probe and educate" transition period to the end of the federal fiscal year on Sept. 30. Full enforcement of the policy had been slated to begin in April.
"Hopefully, the two-midnights [rule] delay is a recognition that we do need to go back to the table… and seniors will know what their costs are going to be," said Lori Prater, legislative counsel to U.S. Rep. Jim Gerlach, a Pennsylvania Republican who has been pushing for delay and revision of the new rule since December.
Under the rule, which CMS issued in August 2013, hospitals that admit patients for less than two nights will receive reimbursement at Medicare B outpatient rates. The rule states that hospital admissions shorter than two midnights in length are "generally inappropriate for payment under Medicare Part A, regardless of the hours the patient came to the hospital or whether the patient used a bed."
For most services, Medicare B reimburses providers at 80 percent of the Medicare A rate. Friday's announcement from CMS is the third time since October that full implementation of the two-midnight rule has been delayed.
See Also: Two-Midnight Rule Creates Financial Hurdles, Perverse Incentives
CMS officials have said the rule is needed to clarify admission guidelines and address a recent spike in Medicare patients being admitted to hospitals for brief observation stays. Objections from hospitals and doctors have included unease over the financial impact of the rule on patients, who face higher copays, and concern that the rule will penalize efficient treatment of patients in less than two nights.
Prater says Gerlach introduced a bill in December that sought to force CMS to delay the full rollout of the two-midnight rule until the beginning of the next federal fiscal year in October. "That was really the main part of the bill," Prater said of the legislation, which had 85 co-sponsors when CMS embraced the delay on Friday. "It gave hospitals an opportunity to come in and make their case with their representatives."
In a prepared statement issued Monday, the American Hospital Association sounded a guardedly optimistic tone on the latest two midnight rule delay.
"We are pleased that CMS has extended its enforcement moratorium on the two-midnight policy for an additional six months, as the AHA has urged," said Rick Pollack, the group's executive vice president.
"This action clearly recognizes that there are still many unanswered questions about the policy. At the same time, we continue to urge CMS to fix the critical flaws of the underlying policy by immediately engaging stakeholders to find a workable solution that addresses the reasonable and necessary inpatient-level services currently provided by hospitals to Medicare beneficiaries that are not expected to span two midnights."
Ardis Dee Hoven, MD, president of the American Medical Association, says the physician group is urging CMS to revise or scrap the rule over the next six months.
"The AMA has been actively involved in issues surrounding hospital observation care and strongly opposes the two-midnight policy due to serious concerns about potential increased documentation burdens for physicians and financial liabilities for patients," she said in a prepared statement Monday.
"We recognize that these issues are causing tremendous difficulties for physicians and patients, and we will continue to work with stakeholders to pursue workable solutions during the additional time afforded by the delay issued by CMS."
During the newly extended transition period, short-term hospital admissions will be reviewed under the new rule's guidelines, but reimbursements will not change. "Medicare Administrative Contractors (MACs) will continue to select claims for review with dates of admission between March 31, 2014 and September 30, 2014," Friday's CMS announcement states, adding, "Generally, Recovery Auditors and other Medicare review contractors will not conduct post-payment patient status reviews of inpatient hospital claims with dates of admission on or after October 1, 2013, through October 1, 2014."
CMS officials did not return a request for comment.
Officials at Wake Forest Baptist Medical Center in North Carolina said delaying implementation of the two midnights rule is a positive development but only the first step in process necessary to fix or drop the new guidelines. The 885-bed teaching hospital in Winston-Salem is among four healthcare providers that have appealed CMS's plan to reduce Medicare reimbursements by 0.2 percent to help pay the agency's costs linked to implementing the two-midnight rule.
"We appreciate CMS's announcement delaying the enforcement of the two midnight rule until October 1, 2014," said Joanne Ruhland, WFBMC's vice president of government relations. "However, the rule is still CMS policy, which we will continue to oppose through the legislative and judicial process."
It's more than convenience: An integrated retail pharmacy provides hospitals with opportunities to boost patient satisfaction and lower readmission rates while producing modest revenue.
U.S. hospitals have offered on-campus retail pharmacies for years, but the drive to achieve improvements across the continuum of care is prompting a surge in new facilities and reinvention of existing on-site drug stores.
"A retail pharmacy based on-campus and operated by the hospital provides an integrated continuum of care for one of the most critical steps in the health care transitions process," said Christine Collins, director of pharmacy at Lifespan, which includes Rhode Island Hospital, The Miriam Hospital and Bradley Hospital in Rhode Island. "Research has shown that over half of medication errors occur during transitions in care."
Lifespan plans to have two on-campus retail pharmacies open at its Providence hospitals by the end of the year. The health system opened its first retail pharmacy at Rhode Island Hospital in May 2013 and a second site is set to open at The Miriam in the fall.
"By having our own pharmacy, we can provide integrated care," Collins said. "Our pharmacists have full electronic access to the patients' hospital record, including inpatient medications, lab and microbiology results, physician's notes and pharmacy interventions. It is also very collaborative. We can consult with the patient's physicians, nurses and other health professionals before the patient even leaves the hospital. And it's patient-centered. We can deliver the medications right to the patient's bedside before they are discharged. This is not only a convenience, but it also provides a major safety enhancement by ensuring that the patient actually fills their prescription."
She said there are several barriers that can stand between a patient and filling a prescription such as transportation and insurance denials. "We are able to work through these issues while the patient is still with us, greatly minimizing the risk of non-adherence and the subsequent health issues that go along with that such as readmissions," Collins said. "This helps us provide a continuum of care for our patients even beyond discharge."
Lower Readmissions
Douglas Scheckelhoff, VP of the office of practice management at the American Society of Health-System Pharmacists, says hospital officials are focusing on medication as one of the keys to adapting to the changing health care industry landscape. "One of their strategies to lower readmissions is medication," he said, noting hospitals are creating "discharge prescription programs" through their retail pharmacies. "It's a very practical way to make sure the transition to the home is successful."
While the percentage of hospitals that have on-campus retail pharmacies has held steady over the past decade at about 25 percent, Scheckelhoff said ASHP is now asking hospitals about how many pharmacies they have at their facilities. "I think the larger hospital systems are opening more [pharmacy] locations," he said.
When hospitals weigh the business side of opening a retail pharmacy, they should be mindful of economies of scale and the potential for a relatively low rate of prescription re-fill orders, Scheckelhoff said.
According to the ASHP hospital survey data, about 70 percent of hospitals with 600 or more beds have at least one on-campus retail pharmacy. But very few hospitals with 200 or fewer beds have retail pharmacies. "They just don't have the volume of prescriptions," Scheckelhoff said.
Convenience Cuts Two Ways
Convenience is a major factor in a patient's decision to re-fill a prescription, which poses a business challenge to some hospital retail pharmacies. "They may choose to have re-fills done closer to home," he said. "It may not be convenient for them to go back to a medical center."
St. Anthony's Medical Center in St. Louis has two retail pharmacies located in medical office buildings on the nonprofit hospital's campus. The 767-bed facility acquired one of the pharmacies in 2000 and opened a new site in 2012.
"Customer service is the Number One reason we put in the new one," said Dan Johnson, the hospital's director of pharmacy services. "These pharmacies meet the special needs of our patients."
Johnson said St. Anthony's retail pharmacies, which are staffed by the hospital, benefit patients through the teamwork between pharmacists and physicians. He cited as an example wound patients with compromised mobility, who can can have their medications delivered to their doctors' offices. Also, hospital pharmacies can stock products that are often not available at other commercial pharmacies.
Low Margins, But a Better Patient Experience
The pharmacy director said the retail sites are a modest contributor to St. Anthony's bottom line, for now. "It is not a significant revenue producer for the hospital, but it is a revenue producer," he said. "Our margin is relatively low, but we can build our margin up 10 percent over time."
Palomar Medical Center, a 288-bed nonprofit hospital in Escondido, CA, opened a retail pharmacy with attached Starbucks in the fall. The pharmacy, Sav-on, is a partnership with Albertsons, a retail company based in Spokane, WA.
"Palomar Health has had a long-standing relationship with Albertsons in the community, so it was a natural fit to bring our partners into our facility," CAO Gerald Bracht said. "Starbucks and the Sav-on by Albertsons retail store and pharmacy bring added comfort and convenience to our patients, visitors and staff. It's a win-win situation for everyone."
Bracht said Albertsons leases space for the stores in the hospital's lobby, but added "the partnership goes well beyond a tenant agreement."
"The staff of the retail stores share the same commitment to ideal patient care and strive to improve the experience of anyone who comes into the hospital doors," he said. "That could mean delivering flowers to a patient, purchasing a gift for a loved one, stirring up your favorite cup of coffee or picking up prescriptions as a patient is heading home."
New Hampshire has only one health insurer participating in its federal exchange marketplace, but state lawmakers and regulators are optimistic that other payers will join the market in 2015.
Anthem's standing as the sole insurer in New Hampshire's federal exchange marketplace has created a painful experience for some hospitals and patients, but relief is on the horizon, state lawmakers and regulators say.
NH Rep. Thomas Sherman, MD (D)
"I think it's going to self-correct in a year, which is a long time for patients and providers to wait, but it's the law," said Thomas Sherman, MD, a gastroenterologist and Rye Democrat who was elected to the state House of Representatives in 2012.
See Also: Frozen Out of HIX, NH Hospitals Feel Burned
Sherman says Anthem Blue Cross Blue Shield of NH appears to have complied with state and federal law when it crafted Anthem Pathway, the only health insurance exchange product in the Granite state approved to enroll patients in 2014. The Anthem Pathway network includes 16 of the state's 26 acute care hospitals.
Anthem officials have cited the need to contain premium increases for individual policies—estimated as high as 40 percent—as the driving force behind the company's decision to design a narrow network.
"The ACA was designed with the fundamental premise that the public would not tolerate public funding of health care," said Sherman, who practices at Exeter Hospital, which is in Anthem Pathway's network. "You can't really punish people for following the rules."
"I absolutely get the devastating effect of a narrow network on patients and providers," he said. "But a knee-jerk reaction to pass legislation may not solve the problem."
'The Spirit of the Law'
Top executives at several of the hospitals excluded from Anthem Pathway are chafing under a provision of the law that allows exchange health plans to require patients to travel as far as 90 miles for services.
Charles White,
COO, Upper Connecticut Valley Hospital
"I don't think people should be bullied into driving an hour to get their health care," said Peter Wright, president and CEO of Valley Regional Hospital in Claremont, NH. "They created a product that maximized the value to their investors. Anthem didn't follow the spirit of the law."
Wright said being left out of Anthem Pathway poses significant transportation hardships for patients in Claremont, which is among the most disadvantaged communities in the state. "We have to make a choice of what's more important: maximizing an insurance company's profits or providing access to affordable health care to the residents of New Hampshire who need it," he said.
Charles White, COO of Upper Connecticut Valley Hospital in Colebrook, NH, said he suspects Anthem avoided economically challenged communities when it designed its narrow network. "The most disadvantaged hospitals were red-lined out of the network," he said, noting UCVH would have accepted Anthem Pathway's relatively low reimbursement rates because the hospital relies on commercially insured patients to remain economically viable. "We would have taken the product even though it would have hurt us financially."
Chris Dugan, communications director for Anthem Blue Cross Blue Shield of NH, flatly denied the company had written off any providers. "This is certainly not the case," he said. "More than 90 percent of our customers will continue to use Anthem's broad network, which includes all of the state's hospitals. Importantly, we also anticipate that many of the individual members purchasing an exchange product in 2014 will have previously been uninsured. That means that all New Hampshire hospitals should benefit from a reduction in the amount of uncompensated or charity care"
Dugan said Anthem expects to continue doing business with all of the hospitals in New Hampshire through other products. "The fact that a hospital or provider was not chosen for this network is not at all a reflection of Anthem's relationship with that provider," he said. "Anthem views all of its contracted providers as high quality and is pleased to continue to partner with them on the vast majority of our business for small and large groups, senior, and grandfathered plans."
Single-Player Marketplace
While acknowledging that a more competitive marketplace is desirable, state Deputy Insurance commissioner Alex Feldvebel said the federal exchange's modest beginning in New Hampshire is in line with regulators' expectations.
"It wasn't too surprising that in Year One there was only one player," he said of Anthem Pathway, adding, "it wasn't surprising that Anthem was the only player."
Feldvebel said Anthem held about 90 percent of the individual health plan policies in the state before this year. "It's typical in a state with a small population that one or two players constitute the whole market (for individual policies)," he said. "There aren't enough lives out there to sustain more than one or two players."
The state Insurance Department thoroughly vetted Anthem Pathway to make sure the narrow network followed state and federal law, Feldvebel said. "Our role was to review the filings," he said. "And we did that, and the adequacy standards were met."
State Sen. Nancy Stiles, (R-Hampton), said Anthem had several advantages over potential competitors when New Hampshire was launching its health insurance exchange, including a longstanding and broad presence in the state. "They were familiar with the process," she said.
Stiles, who has taken a leading healthcare reform role in the Republican-controlled Senate, said she also wasn't surprised when Anthem emerged as the only company offering a health insurance exchange product in 2014. "The single player in the market was pretty much set up from the beginning," she said. "We are getting to a point where we can move forward."
Boosting the Marketplace
Stiles, Feldvebel, and Sherman are all optimistic that New Hampshire can expand the range of options available to individuals who purchase a health insurance exchange plan beginning next year.
"I'm very hopeful," Feldvebel said. "The real solution to this issue isn't to have nationalization of Anthem; it's to increase competition in the marketplace."
The deputy insurance commissioner noted that Harvard Pilgrim Health Care has been approved to join the exchange marketplace in 2015 and Minuteman Health Inc. is seeking regulatory approval. He said Minuteman could be a valuable addition because it is a nonprofit organization intent on following a co-op model. "They have a lot of work to do, but we're hopeful they can get up and running, and get in the market in 2015."
With a key procedural deadline looming over the Statehouse, Stiles said she is hoping lawmakers can craft legislation that will encourage more players to enter the exchange marketplace soon. "Conversations are going well," she said. "If it's going to happen, it has to happen before the end of March. … There are still opportunities. I am forever the optimist."
Sherman said there are three managed care organizations serving Medicaid patients through the state Department of Health and Human Services and at least one of them is considering offering a health insurance exchange plan. "Their forte is to provide comprehensive care at low cost," he said.
When it comes to reaching a political deal between the Democratic House and the Republican Senate to advance health care reform efforts in the Granite State, Sherman has adopted a watchful-waiting approach, particularly on the highly contested issue of expanding Medicaid in the state.
"I have co-sponsored bills with them on other issues, but on (Medicaid expansion), they are going to disagree with me," he said of Republicans in the Senate. "We still have hope for compromise on these things, and I want to keep that hope alive."
New Hampshire hospital leaders are crying foul over being squeezed out of the single health insurance exchange plan available in the state. Anthem says offering a 'select network of providers' will offset premium increases.
The stage has been set for a clash over the issue in the Granite State, where Anthem Blue Cross Blue Shield of New Hampshire is the only insurer offering a plan—Anthem Pathway—on the health insurance exchange. Nine of the New Hampshire's 26 acute-care hospitals have been excluded from the network and Concord Hospital has declined to join over Anthem Pathway's relatively low reimbursement rates.
"Anthem [pays] providers at pretty much Medicare rates," said Scott Sloane, vice president of finance at Concord Hospital. "Over the long term, it's a really bad idea." Concord Hospital, based in the state's capital, is a non-profit regional medical center with 295 licensed beds.
While top officials at the out-of-network hospitals are concerned about the long-term financial effects of Anthem's narrow network, they are nearly apoplectic over the implications for two key goals of the PPACA reform effort: improving access to healthcare services and boosting population health.
'Swimming Against the Tide'
"It's not a money issue for me," said Maria Ryan, CEO of Cottage Hospital, a 25-bed critical access hospital in Woodsville serving 26 New Hampshire and Vermont towns. "It's making sure [the patients] stay healthy. I'm swimming against the tide now when it comes to making sure they are compliant and making their appointments."
She fears Anthem Pathway patients using population health programs, such as one for diabetes education, will stop if they have to drive as far as 90 miles for services at one of Anthem's in-network hospitals. "Transportation is a big issue for them," she said of Cottage Hospital's patients.
"I have to look at the overall health of our community," Ryan said. "We are hearing loud and clear from the patients, who are heartbroken over having to leave their primary care doctors."
'A Select Network of Providers'
An Anthem official says the insurer is living up to the spirit and letter of the healthcare reform law.
"A major goal of the ACA was to provide more affordable healthcare, " said Chris Dugan, Anthem's NH communications director. "While all other carriers in New Hampshire are sitting on the sidelines, Anthem Blue Cross and Blue Shield in New Hampshire is proud to be part of an effort to provide coverage for many who have not previously had insurance. We are offering this select network of providers to offset premium increases that would otherwise be necessary in 2014."
Dugan says attaining that affordability goal posed a challenge in building the Pathway network. "Independent studies performed by both the New Hampshire Department of Insurance and the Society of Actuaries predicted that the average increase, driven primarily by higher claims of the previously uninsured and those covered through existing high-risk pools, could be significant, [by] as much as 30 to 40 percent," he said.
A 'Huge Financial Burden' for Hospitals
Cottage Hospital's Ryan and leaders at several of the nine other out-of-network hospitals in New Hampshire say that requiring Anthem Pathway patients to travel long distances for healthcare services will hurt many.
Charles White, COO of non-profit Upper Connecticut Valley Hospital in Colebrook, NH, says Anthem's narrow network could have a devastating impact on residents in the hospital's 850-square-mile service area, which is the largest in the state. With just 16 beds, the critical access facility is the smallest hospital in the state.
"We're a very fragile economic and medically served area," White said, noting that the region has the worst health outcomes in the state, no public transportation, and a relatively high number of patients suffering from costly chronic diseases. "This network hurts those patients who don't have the financial means to stay healthy."
Charles White,
COO Upper Connecticut Valley Hospital
UCVH was one of five out-of-network hospitals contacted for this report and the only one where officials said they are committed to continuing to treat local patients if they are in the Anthem Pathway network. "Our mission is to provide healthcare to the patients we serve," he said. "If we have to find a way to lower fees or provide free care, we will."
White says denying local care to patients in communities served by UCVH could have dire consequences. A few years ago the hospital had considered dropping chemotherapy because there was another facility within 90 miles offering the service.
But the reaction from the community was shocking, White said, with some patients saying they had no way to get to the other facility and others reluctant to impose "a huge financial burden" on loved ones to drive them to appointments.
He summed up the reaction in chilling terms: "They told us, 'We're going to choose to die instead.'"
Anthem Pathway a 'Comprehensive Provider Network'
Anthem's Dugan says it was necessary for Anthem to narrow the Pathway network to hold the line on premium increases. "Without the use of the new network, all individual exchange members would have seen much higher premiums than they will now see."
Anthem's exchange network in New Hampshire includes the vast majority of physicians in the state and is well within regulatory bounds, he said. "Pathway is a comprehensive provider network that meets or exceeds New Hampshire's network adequacy requirements."
Alvin Felgar,
CEO, Frisbie Hospital
Despite leaving out 10 hospitals in the state, Dugan says Anthem was able to include 78 percent of primary care physicians; 87 percent of specialists, allied and other professional providers; and 87 percent of ambulatory surgery providers.
Raising the PPACA alarm
Alvin Felgar, president and CEO of Frisbie Hospital in Rochester, NH has been one of the most vocal critics of Anthem Pathway, pressing the state legislature to force Anthem to broaden its network, and seeking to energize the community into action with a billboard, an open letter on the hospital's website, and an opinion piece published in the New Hampshire Business Review.
"We have real and practical concerns about the impact of the Affordable Care Act," Felgar wrote in the open letter. "Our hospital is not part of the process. We are on the outside looking in, and it is entirely possible this new law will serve as a wedge between our doctors and our patients."
In addition to the transportation challenge many of his patients face, Felgar said in an interview with HealthLeaders Media that compelling Anthem Pathway patients to change doctors poses another access obstacle. "It's a daunting process for people, especially people who have multiple health problems," he said of finding a new physician. "It's not a simple process."
Not long ago, I attended a meeting on the future of primary care. Most of the physicians in the room knew one another, so the discussion, while serious, remained relaxed. Toward the end of the hour, one of the physicians who had been mostly silent cleared his throat and raised his hand to speak. The other physicians smiled in acknowledgment as their colleague stood up. "Nurse practitioners," he said. "Maybe we need more nurse practitioners in primary care." Smiles faded, faces froze and the room fell silent. An outraged doctor, the color in his face rising, stood to bellow at his impertinent colleague.
Often, when the government wants you to do something, it makes you pay if you don't. That would seem to be the case with Obamacare, which penalizes companies for not providing health care. But in that penalty, there could be a paradoxical result: dropping health coverage could save companies a lot of money. Once new health insurance exchanges are up and running in October, companies with 50 or more full-time employees will face a choice: Provide affordable care to all full-time employees, or pay a penalty. But that penalty is only $2,000 a person, excluding the first 30 employees. With an employer's contribution to family health coverage now averaging $11,429 a year, taking that penalty would seem to yield big savings.
At a Capitol Hill hearing Tuesday, journalist Steven Brill, who examined the issue of the high cost of health care in a much quoted March 2013 Time magazine article, told Senate Finance Committee members that President Barack Obama's health care law will do very little to lower prices for consumers. Joined by a panel of health policy experts at the hearing to explore ways to make health pricing more transparent, Brill said that while he views efforts to disseminate prices for health services to consumers favorably, he believes that increasing transparency has its limits. "[Transparency] starts the conversation about prices that we didn't have in the debate over Obamacare. It's only a start," Brill said.
The region's leading provider of human organs for transplantation has staked its reputation on finding innovative ways to increase organ availability and shaving precious seconds in delivery. But Mid-America is also a nonprofit charitable organization that acts increasingly like a for-profit enterprise, selling body parts for financial gain and harboring potential conflicts of interest—while exempted from most federal and state taxes. It invests millions of dollars in for-profit ventures and supplies human bone and tissue to firms in which it maintains an ownership stake and leadership role.
According to an Association of American Colleges report, U.S. specialties will reach a shortage of 91,500 doctors by 2020. The AAMC predicts Americans will need an estimated 45,000 primary care physicians and 46,000 surgeons and medical specialists.
"It's certainly the worse [shortage] that we'll have seen in the last 30 years," says AAMC chief advocacy officer Atul Grover.
"For the first time since the 1930s, our number [of physicians] per capita will start to drop in the next couple of years. That's less doctors per person, but at the same time, since they are aging and have more chronic illnesses, each person is going to need more healthcare and not less healthcare. That's a pretty bad situation," he says.
There are currently 709,700 physicians (in all specialties) for a demand of 723,400 physicians, with an existing shortage of 13,700. By comparison, in 2020, there will be 759,800 physicians (in all specialties) for a demand of 851,300 physicians, essentially a shortage of 91,500 too few doctors, according to the report.
One third of all physicians will be turning in their white coat and stethoscope for retirement, states the report, but the supply of doctors will only increase by 7%, according to the U.S. Department of Health and Human Services.
With a tug and war between supply and demand, the predicted shortage of doctors will leave many Americans without any, or with insufficient, care. The most affected areas will likely to be rural regions and inner-city areas, according to the report. Because physicians are not evenly distributed across the country per capita, there are likely to be gaps in provider services in less-recruitable parts of the country, such as rural and inner-city areas.
Crunching the numbers
The shortage of 91,500 is a higher estimate than other studies have previously reported. The AAMC report is based on data from the Center for Workforce, which includes utilization of medical care, as well as census projections of the U.S. population. Researchers factored in physician retirement rates, increases in doctors from various specialties and regions, and healthcare insurance expansion.
With healthcare reform, 32 million more Americans will have access to medical insurance and 36 million to Medicare, the report says.
"As more people get insured, they are going to seek out the care they probably should have been getting all along but haven't been able to necessarily access. That's why those numbers look worse in the next 10 years than we previously had estimated," Grover says.
Perhaps more significantly, the demand is increasing because of the growing population of seniors, estimated to grow by 37%, according to the Census Bureau.
"The overall reason for the physician shortage has [less] to do with reform; it has more to do with the aging U.S. population," Grover says. "As we get this silver tsunami of baby boomers coming at us over the next 10 years or so, what you're going to see is their need for healthcare is going to be much higher on a per-capita basis than younger adults."
Older persons often require more specialty care, especially as the chances of cancer increases with age. In addition, there are more treatment options available to older Americans to prolong their lives, thus requiring more care.
Possible solutions
With this dark forecast of numbers of too few physicians to care for too many people, how should health leaders adapt? AAMC offers the following solutions:
1. Increased federal support of residency programs through Medicare, the primary source of graduate medical education funding. Since the Balanced Budget Act passed in 1997, teaching hospitals are restricted to a capped number of resident physicians they can claim under Medicare reimbursement. Teaching hospitals therefore accept more residents to accommodate community needs beyond that maximum limit, totaling 7,000 residents of which teaching hospitals pay for out of pocket, according to Grover.
2. Medicare support for 15% more residency training (about 15,000 residency slots). Seven thousand new medical school students are expected to graduate every year, states the report. Additional subsidized graduate medical education could add on 4,000 more physicians every year.
3. More effective use of healthcare providers to include advance practice nurses and physician assistants and team-based approaches, such as the medical home model.
"We're going to have to figure out how to be more efficient in the way we deliver care, how to use other healthcare professionals to the top of their licensed skill sets, and also figure out how to get more physicians out there into communities by training more," Grover says.
Even with 91,500 too few physicians in the forecast, there's still time to meet the growing need for medical care, according to Grover.
"You have to remember it takes about seven years to train a physician. What we're talking about is in the next year or two, we really need to start expanding those residency training programs to take in those larger medical school classes," Grover says. "It has to start in the next year or two."
We learned the principles of economics in our youthful days at the lemonade stand; for every cup of lemonade we sold, we earned more money.
The State of Hospital Medicine: 2010 Report Based on 2009 Data explains that, supplemented with incentives, hospitalists perform more work and earn higher compensation even if they start with a lower fixed base salary.
"I think what the survey did—that interpretation—it confirms human nature. You have someone who is being incentivized more, they will produce more," says William "Tex" Landis, MD, FHM, chair of Society of Hospital Medicine (SHM)'s practice analysis committee. "If you have a need to have more productivity in your program, that might be a way to accomplish that," he adds.
Link between compensation and productivity
As the first joint survey between the Medical Group Management Association and SHM, this report combines MGMA's data analysis tools with SHM's active membership to provide compensation and productivity information from hospital medicine groups and individual hospitalists.
Researchers surveyed 443 hospital medicine groups that represent 4,211 hospitalists. They found that the median compensation is $215,000 for internal medicine hospitalists, higher than in previous years by SHM's data.
Interestingly, the survey showed that the lower the base salary, the higher the productivity hospitalists performed because of bonus incentives. Adult hospitalists whose fixed base salary is 50% or less of their compensation reported the highest median work of 5,407 work relative value units (wRVUs). Those whose base salary is part of of their compensation (51-70%) performed a lower median of 4,591 wRVUs. Those whose base salary is 71-90% of their compensation performed a median of 3,859 wRVUs. And those whose base salary made up almost all of their overall compensation (91-100%) only performed a median of 3,571 wRVUs.
Wary of the numbers
However, survey researchers caution that surveys should not be interpreted like scripture. The national median wRVUs is 4,107, with hospitalists' productivity ranging on both ends of the spectrum, some more, some less.
Researchers also caution that every program is different. Although the survey can provide benchmarks, it's not the letter of the law. Compensation and productivity may differ depending on the number of hospitalists, patient volume, location, and other variables.
John Nelson, MD, FACP, FHM, of the SHM practice analysis committee says in the survey, "Remember that this data does not reflect the position of SHM or MGMA regarding the right, optimal, or appropriate standards for hospitals practice."
When asked if there is one best model, Landis says, "I don't think you can say there's one best compensation method. It's not one size fits all. Different programs have to look at their situation, their local situation, and what they're trying to accomplish with their program."
Another thing to keep in mind is that this year's report excludes academic hospitalists from the data. As a replacement for SHM's biannual report of hospitalist data, the current report only focuses on nonacademic hospitalists, whereas previous editions of SHM surveys include both populations.
"We had very little participation of our academic members in this report, as it should be," said Landis. However, MGMA and SHM plan to release another survey that focuses on academic hospitalists, according to Landis. "We'll have another report upcoming in six months from now that'll have even more data and allows [us] to have even better information for our academic colleagues," he says.
Finally, Landis said, "Not all of the value of hospitalists to a health system is in productivity." A lot of the value that hospitalists provide isn't simply wRVUs, but the work that they do, such as process improvements that aren't always measured in productivity metrics, he said. For example, lowering the number of complications from blood stream infections doesn't show up as an RVU but is extremely valuable.
"The purpose for putting a lot of work into this [report] is to help patients," said Landis. "That's what it's all about. We can't sustain a situation where providers are being overpaid, compensated for work that is not valued or not being done, but we also can't have the other situation either, where they are underpaid and underappreciated. We need to get hospitalist programs the right size for productivity and compensation," he says.
Karen M. Cheung is associate editor at HCPro, Inc., contributing writer for HealthLeaders Media, and blogger for www.MedicalStaffLeader.com. She can be contacted atkcheung@hcpro.com.
