Hospitalist Medicine Funded By Expanded Hospital Pot

Hospitalist medicine is far and away the fastest growing field of medicine. Finding it's origins in the late 1990's it has grown into it's own with recognized journals, tracks of training and it's own "white paper".  Why?  Simple.  Money, Money, Money. Hospitalist medicine has gained a bigger part of the total pie, by expanding that fixed pie called Medicare part B.

Much has been said about that fixed pot of money called Medicare part B. The Relative Value System (RVU) that has been in place for years assigns a value to each and every encounter between patient and doctor. Whether it be gallbladder bloodless surgery, a two minute office visit with the nurse, or the radiologist charge for reading your CT scan. Medicare says it is all worth an exact value. That value is determined by the RVU committee. And the total pot of money for ALL physician payments comes from a politically determined dollar value in that Medicare part B system, for which our senior citizens pay their premiums.

Since 1992, the system, originally intended to better equalize payments between primary care cognitive services and procedural/imaging/surgical services, has had the exact opposite effect. While the value of some primary care codes, mostly cognitive in nature have increased to a small degree, and the value of procedural codes have also decreased to some degree, the magnitude of difference is still striking.

The average screening colonoscopy takes 13.5 minutes to do. In 1992 that colonoscopy was "worth" 8.48 RVU's. A level 3 (the most common) office visit by a primary care physician was worth 1.0 RVU's. An average level 3 office visit will take 15 minutes, if you are lucky.

Common sense says the payment structure was ridiculously skewed toward procedural medicine and medicare felt it was worth more than 700% in terms of training, time and effort.  Fast forward to 2007. A colonoscopy, which is probably much easier today (given advances in technology/fiber optic imaging) is now worth 5.56 RVU's. A level 3 office visit in 2007 is worth 1.66 RVU's.

There in lies the problem. 15 years after the fact, the system which was supposed to more fairly equalize the payment structure has yet to fairly reimburse time for cognition. In 2007 a colonoscopy pays 4 times more, instead of 8 times more. So what's holding the system down?

In response to decreasing reimbursement rates for procedures/imaging/surgeries, the volume of these services exploded. Not only to stay "revenue neutral" in a decreasing reimbursement scheme, but also the explosion in technology in the last 15 years has increased immensely the number of new procedural codes that are billable.

So what you have are MORE procedures being performed on the declining reimbursement of that procedure, AND more NEW procedures being "invented", each eating their piece of the pie.

So instead of a level 3 clinic visit being worth 4 or 5 RVU's, more in par with the time based requirement of its colonoscopy, it is worth 1.66, because increasing the value to 4 RVU's would mean decreasing the value of ALL other procedural codes, by a striking amount. And that will never happen, because the committee of folks who determine that RVU value are made up of multiple specialty societies, most of whom survive and thrive on procedures. So primary care continues to suffer.

The limit on the pot is determined by Congress and exacerbated by flawed logic. The sustainable growth rate (SGR) is a huge problem and flawed by nature. You can find endless articles about this. These end result is this: If you limit the value of reimbursement, more service will be done to recuperate that loss, which in turn feeds that hungry circle. More volume for less pay. The game is in trying to keep your volume up at a higher rate than the decreasing rate or reimbursement. People doing procedures can do this. Time is on there side.

We see that all the time in a commodity business. Things get cheaper. Competition forces prices down and companies are expected to increase their volume (ie market share), at the expense of revenue. It's called scale. If you can increase units sold faster than the decrease in price, you win. If not you lose. Built into this model is decreased costs to produce that unit, which is inherently missing from medicine. You have fixed revenue, with increasing costs, not decreased.

Welcome to primary care.

While the value of the RVU code has increased (barely) since 1992, the fixed pot has hardly kept pace with practice costs which are expanding at a rate consistent with market forces. Reimbursement on the other hand has stalled in that fixed pot of money determined by Congress, in the spirit of socialist medicine.

The result? Outpatient clinical primary care is leaving in droves. Medical students, with $200,000 in debt are voting with their wallets, choosing gastroenterology with it's $200 13.5 minute colonscopies, or cardiology, with its unlimited access to procedures (echo, ekg, cath, stress test, pacers, ICD's and on and on). And there is no relief in site. In fact, Congress is proposing dropping ALL physician payments, across the board by 35% plus in the next 5 years. Primary care, which has the tightest margins to start with , is getting decimated. Procedural medicine has a built in buffer, but given time, the current system will shut them down too.

So how has medicine changed the game for itself?

It has a side pot to that that fixed and declining pot of money called Medicare part B. Hospitalist medicine has in effect, expanded its pot in a win-win proposition.  It is a well published and known fact that a 24 hour shift model hospitalist program at maximum hospitalist efficiency could never survive on it's own reimbursement from the third payer system (medicare/medicaid/BCBS/HMO). The well documented number to maximize efficiency and cost savings in a hospitalist program is about 15 encounters per day by a hospitalist physician. In an 8 hour day, that is around 30 minutes per encounter.

After excluding overhead (coordinators, billing services, all insurances, etc) the current reimbursement levels would never allow a hospitalist program to survive on collections alone. There in enters the hospitals. The ones with sound administrations who understand more clearly the value of a financial reimbursement model are part of a win-win model. Lowers costs, decreased length of stay, happier staff, happier patients, happier community docs (on average for all). Win-win-win-win-win.

It would not be possible to provide in house 24 hour care for hospitals without their subsidy. The hospitalist salaries  have been climbing quickly in the last 5 years. The same cannot be said for office based internal medicine/family practice/pediatrics. There is a reason hospitalist medicine is the fastest growing field in medicine and the reason is money. It will always be about money. Every job is based on a compensation model. Nobody works for free, unless by choice.

Market forces at its best. Supply and demand. The demand for hospitalist services is exploding, bringing quickly rising reimbursements which must be subsidized by hospitals, as medicare has failed to do so. And as resident physicians chose hospitalist medicine because of the money, office based practice will slide deeper down the path of extinction. Why? Money. The roots lie in the flawed reimbursement system ingrained in the medicare system, and exacerbated by all subsequent 3rd party systems, which use the medicare system as their excuse for decreasing their own reimbursements, while continuing their unrelenting rise in premiums which have outpaced inflation for years.

Primary care must change the system, or get out. Hospitalist medicine is expanding its pot, a kind of side pot per say. It is amazing to me, as a hospitalist, that you have the incredible costs savings to the health care system that 24 hour access to primary care within the confines of a hospital can bring. Yet our government elect sit by in park watching outpatient primary care die. Proven cost savings are disappearing.

Forever.

I commend capitalism for figuring it out. In the entrepreneurial spirit of medicine, it is a major success story in market forces and why I am a firm believer in allowing the market figure it out. At the expense of outpatient primary care? Yes. But not the cause of the decline. If outpatient primary care paid a wage comparable to the specialties available to medical students, hospitalist medicine would have never thrived in the way that it is.

If only outpatient primary care could find a friend, somebody to subsidize their care, somebody who understands the value of their service.

Oh wait, that SHOULD be Medicare. Why they aren't is beyond me.

For more information on hospitalist support, visit

• Hospitalist subsidy and support payments update for 2011, based on 2010 data.

LINK TO E/M POCKET REFERENCE CARD POST EM Pocket Reference Cards Using Marshfield Clinic Point Audit One Hospital:  (Admit/Consult) One Side, Follow-Up On Other Side $10.00 One Clinic:  (New/Consult) One Side, Established On Other Side $10.00 Two Hospital Cards $16.00 Two Clinic Cards $16.00 One Hospital Card + One Clinic Card $16.00 Two Hospital Cards + Two Clinic Cards $29.00 Click image for high definition view