John Nelson, MD, FACP

Editor’s note: This is the second of a two-part series addressing issues at large HM groups.

Last month (“The Bigger They Are…,” May 2009, p. 58), I discussed the difficulty large HM groups (more than 20 full-time equivalent hospitalists) face in trying to ensure that nurses and other staff always know which hospitalist is attending a patient daily, as well as issues raised by the common practice of separating admitter and rounder shifts. This month, I want to address patient distribution and economic issues faced by large groups.

Patient Census

Large and small groups often work diligently to ensure all rounding doctors start the day with a nearly identical patient load. Such “load leveling” might take only a few minutes in groups of two or three rounding doctors, but it may take up to an hour a day if there are eight to 10 rounding doctors. Think about what this costs a large group. If a group has eight rounders spending the first 30 minutes of each day distributing patients, the practice is devoting 1,460 hours annually to this function. Those 1,460 hours equate to 0.7 FTE, and if each FTE costs the practice $220,000 annually in salary and benefits, then the practice is spending $154,000 per year to distribute patients each morning.

Is that the best way to use $154,000?

An alternative is to establish a system that allows the evening and night admitters to know in advance which rounding doctor will assume each patient’s care the next morning. The night/evening admitters would then write “admit to Dr. Satriani” for the first new admission, and “admit to Dr. Johnson” for the second, and so on. The hospital would never list evening/night admitters as a patient’s attending on the chart or in the computer. And each rounding doctor could arrive in the morning to find a list of new patients from overnight, eliminating the need for a meeting of all rounding doctors just to distribute the patients. There may be other reasons to meet each morning, such as case management rounds, but eliminating the need to spend time distributing patients will make the meetings shorter and get everyone out to the floors to see patients more quickly.

There are two simple ways the evening/night admitters can know how to assign new patients to the rounding doctors for the next morning. If the group wants to have each rounding doctor start with a nearly identical patient load, then the rounding doctors could indicate their load at the end of each day and the evening/night admitters would follow an algorithm of assigning the first admissions to the doctor who finished the prior day with a lighter load. The other option is for evening/night admitters to assign new patients through the night according to a fixed protocol, which wouldn’t vary based on the current patient load of each rounder. Of course, this will mean daily patient load could vary significantly from one rounder to the next, but over any long period, the workloads will tend to even out.

Elusive Economy of Scale

Hospitalists and hospital executives tend to have a different view of the benefits of practice growth to require more hospitalist FTEs. The hospitalists themselves often are convinced that when the group has more doctors, there will be more scheduling flexibility for each individual doctor, and perhaps each doctor will have to work fewer weekends. Sadly, neither is true to any significant degree in most practices. Some aspects of scheduling are easier when there are more doctors. For example, it usually is easier to find someone to fill in for an unexpected absence in larger groups. However, each doctor’s schedule usually doesn’t get much better or more flexible.

Hospital executives, or whoever is responsible for coming up with funding to support the practice, often look at a larger practice as one that can take advantage of economies of scale. For example, executives may project that when the practice is larger, the hospital’s contribution to the practice on a per-FTE or per-encounter basis will become smaller. But just like the elusive scheduling benefit of larger groups, few practices realize any economies of scale. The vast majority of the costs in most programs are provider labor costs, which scale with program volume. So in most cases, the larger a practice becomes, the larger the overall hospital financial support will be on a roughly linear basis.

More often than not, night-shift work does become more cost-effective as practices grow. For example, an in-house night shift for a practice of eight FTEs might generate $200 to $400 in collected professional fee revenue each night, leaving the hospital to pay the remaining $700 to $900 each night. (These numbers are for illustration and aren’t intended to represent benchmarks or realistic targets for any practice.) But as the practice grows to support 20 FTE hospitalists in total, nights get busier. The night doctor might average three or four admissions per night in an eight-FTE practice but could average 10 or more in a 20-FTE practice. Those 10 admissions might generate around $1,200 in professional fee revenue, leaving the hospital to contribute only a small fraction (about $200 per night) of the cost of each night shift. So night shifts typically require diminishing dollars of hospital support as the practice grows.

Unfortunately, any economy of scale for night-shift coverage usually is offset by inefficiencies and costs that larger practices incur—and small practices often don’t—such as a significant amount of management infrastructure, professional administration, dedicated physician leader time, and an information technology infrastructure. These resources often are necessary to manage the complexity of a large practice, but every practice should challenge itself to demonstrate that these things actually improve the practice’s efficiency and performance enough to justify the money spent on them.

Triage Pager

The larger the practice, the more likely there have been attempts to implement a triage pager system in which all new admissions and consults are routed to one pager (the triage, or “hot,” pager), which is held by one hospitalist at a time. In large practices, the “triage hospitalist” is usually so busy answering pages that they can do little else. And in many cases, ED doctors may describe a new admission to the triage hospitalist in detail only to have the triage hospitalist pass the information along to a colleague who will actually see the patient. This is an inefficient chain of communication, and I think most groups could do away with the triage pager. I described this issue in detail in my December 2008 column (“Technological Advance or Workplace Setback,” p. 69).

Unit-Based Assignment

Large hospitalist groups work in large hospitals and end up doing a lot of inefficient walking between nursing units during the day. They may have patients on 10 or more nursing units and end up spending only a little time on each unit, which probably diminishes the “constant availability” that most see as key to the hospitalist model. So many groups decide to have each hospitalist cover only a small number of nursing units. This really has become a hot topic in the past couple of years, and I discussed it in detail in my September 2007 column (“Unit-Based Hospitalist Practice,” p. 84).

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. He also is part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Editor’s note: This is the second of a two-part series addressing issues at large HM groups.

Last month (“The Bigger They Are…,” May 2009, p. 58), I discussed the difficulty large HM groups (more than 20 full-time equivalent hospitalists) face in trying to ensure that nurses and other staff always know which hospitalist is attending a patient daily, as well as issues raised by the common practice of separating admitter and rounder shifts. This month, I want to address patient distribution and economic issues faced by large groups.

Patient Census

Large and small groups often work diligently to ensure all rounding doctors start the day with a nearly identical patient load. Such “load leveling” might take only a few minutes in groups of two or three rounding doctors, but it may take up to an hour a day if there are eight to 10 rounding doctors. Think about what this costs a large group. If a group has eight rounders spending the first 30 minutes of each day distributing patients, the practice is devoting 1,460 hours annually to this function. Those 1,460 hours equate to 0.7 FTE, and if each FTE costs the practice $220,000 annually in salary and benefits, then the practice is spending $154,000 per year to distribute patients each morning.

Is that the best way to use $154,000?

An alternative is to establish a system that allows the evening and night admitters to know in advance which rounding doctor will assume each patient’s care the next morning. The night/evening admitters would then write “admit to Dr. Satriani” for the first new admission, and “admit to Dr. Johnson” for the second, and so on. The hospital would never list evening/night admitters as a patient’s attending on the chart or in the computer. And each rounding doctor could arrive in the morning to find a list of new patients from overnight, eliminating the need for a meeting of all rounding doctors just to distribute the patients. There may be other reasons to meet each morning, such as case management rounds, but eliminating the need to spend time distributing patients will make the meetings shorter and get everyone out to the floors to see patients more quickly.

There are two simple ways the evening/night admitters can know how to assign new patients to the rounding doctors for the next morning. If the group wants to have each rounding doctor start with a nearly identical patient load, then the rounding doctors could indicate their load at the end of each day and the evening/night admitters would follow an algorithm of assigning the first admissions to the doctor who finished the prior day with a lighter load. The other option is for evening/night admitters to assign new patients through the night according to a fixed protocol, which wouldn’t vary based on the current patient load of each rounder. Of course, this will mean daily patient load could vary significantly from one rounder to the next, but over any long period, the workloads will tend to even out.

Elusive Economy of Scale

Hospitalists and hospital executives tend to have a different view of the benefits of practice growth to require more hospitalist FTEs. The hospitalists themselves often are convinced that when the group has more doctors, there will be more scheduling flexibility for each individual doctor, and perhaps each doctor will have to work fewer weekends. Sadly, neither is true to any significant degree in most practices. Some aspects of scheduling are easier when there are more doctors. For example, it usually is easier to find someone to fill in for an unexpected absence in larger groups. However, each doctor’s schedule usually doesn’t get much better or more flexible.

Hospital executives, or whoever is responsible for coming up with funding to support the practice, often look at a larger practice as one that can take advantage of economies of scale. For example, executives may project that when the practice is larger, the hospital’s contribution to the practice on a per-FTE or per-encounter basis will become smaller. But just like the elusive scheduling benefit of larger groups, few practices realize any economies of scale. The vast majority of the costs in most programs are provider labor costs, which scale with program volume. So in most cases, the larger a practice becomes, the larger the overall hospital financial support will be on a roughly linear basis.

More often than not, night-shift work does become more cost-effective as practices grow. For example, an in-house night shift for a practice of eight FTEs might generate $200 to $400 in collected professional fee revenue each night, leaving the hospital to pay the remaining $700 to $900 each night. (These numbers are for illustration and aren’t intended to represent benchmarks or realistic targets for any practice.) But as the practice grows to support 20 FTE hospitalists in total, nights get busier. The night doctor might average three or four admissions per night in an eight-FTE practice but could average 10 or more in a 20-FTE practice. Those 10 admissions might generate around $1,200 in professional fee revenue, leaving the hospital to contribute only a small fraction (about $200 per night) of the cost of each night shift. So night shifts typically require diminishing dollars of hospital support as the practice grows.

Unfortunately, any economy of scale for night-shift coverage usually is offset by inefficiencies and costs that larger practices incur—and small practices often don’t—such as a significant amount of management infrastructure, professional administration, dedicated physician leader time, and an information technology infrastructure. These resources often are necessary to manage the complexity of a large practice, but every practice should challenge itself to demonstrate that these things actually improve the practice’s efficiency and performance enough to justify the money spent on them.

Triage Pager

The larger the practice, the more likely there have been attempts to implement a triage pager system in which all new admissions and consults are routed to one pager (the triage, or “hot,” pager), which is held by one hospitalist at a time. In large practices, the “triage hospitalist” is usually so busy answering pages that they can do little else. And in many cases, ED doctors may describe a new admission to the triage hospitalist in detail only to have the triage hospitalist pass the information along to a colleague who will actually see the patient. This is an inefficient chain of communication, and I think most groups could do away with the triage pager. I described this issue in detail in my December 2008 column (“Technological Advance or Workplace Setback,” p. 69).

Unit-Based Assignment

Large hospitalist groups work in large hospitals and end up doing a lot of inefficient walking between nursing units during the day. They may have patients on 10 or more nursing units and end up spending only a little time on each unit, which probably diminishes the “constant availability” that most see as key to the hospitalist model. So many groups decide to have each hospitalist cover only a small number of nursing units. This really has become a hot topic in the past couple of years, and I discussed it in detail in my September 2007 column (“Unit-Based Hospitalist Practice,” p. 84).

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. He also is part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

Editor’s note: This is the second of a two-part series addressing issues at large HM groups.

Last month (“The Bigger They Are…,” May 2009, p. 58), I discussed the difficulty large HM groups (more than 20 full-time equivalent hospitalists) face in trying to ensure that nurses and other staff always know which hospitalist is attending a patient daily, as well as issues raised by the common practice of separating admitter and rounder shifts. This month, I want to address patient distribution and economic issues faced by large groups.

Patient Census

Large and small groups often work diligently to ensure all rounding doctors start the day with a nearly identical patient load. Such “load leveling” might take only a few minutes in groups of two or three rounding doctors, but it may take up to an hour a day if there are eight to 10 rounding doctors. Think about what this costs a large group. If a group has eight rounders spending the first 30 minutes of each day distributing patients, the practice is devoting 1,460 hours annually to this function. Those 1,460 hours equate to 0.7 FTE, and if each FTE costs the practice $220,000 annually in salary and benefits, then the practice is spending $154,000 per year to distribute patients each morning.

Is that the best way to use $154,000?

An alternative is to establish a system that allows the evening and night admitters to know in advance which rounding doctor will assume each patient’s care the next morning. The night/evening admitters would then write “admit to Dr. Satriani” for the first new admission, and “admit to Dr. Johnson” for the second, and so on. The hospital would never list evening/night admitters as a patient’s attending on the chart or in the computer. And each rounding doctor could arrive in the morning to find a list of new patients from overnight, eliminating the need for a meeting of all rounding doctors just to distribute the patients. There may be other reasons to meet each morning, such as case management rounds, but eliminating the need to spend time distributing patients will make the meetings shorter and get everyone out to the floors to see patients more quickly.

There are two simple ways the evening/night admitters can know how to assign new patients to the rounding doctors for the next morning. If the group wants to have each rounding doctor start with a nearly identical patient load, then the rounding doctors could indicate their load at the end of each day and the evening/night admitters would follow an algorithm of assigning the first admissions to the doctor who finished the prior day with a lighter load. The other option is for evening/night admitters to assign new patients through the night according to a fixed protocol, which wouldn’t vary based on the current patient load of each rounder. Of course, this will mean daily patient load could vary significantly from one rounder to the next, but over any long period, the workloads will tend to even out.

Elusive Economy of Scale

Hospitalists and hospital executives tend to have a different view of the benefits of practice growth to require more hospitalist FTEs. The hospitalists themselves often are convinced that when the group has more doctors, there will be more scheduling flexibility for each individual doctor, and perhaps each doctor will have to work fewer weekends. Sadly, neither is true to any significant degree in most practices. Some aspects of scheduling are easier when there are more doctors. For example, it usually is easier to find someone to fill in for an unexpected absence in larger groups. However, each doctor’s schedule usually doesn’t get much better or more flexible.

Hospital executives, or whoever is responsible for coming up with funding to support the practice, often look at a larger practice as one that can take advantage of economies of scale. For example, executives may project that when the practice is larger, the hospital’s contribution to the practice on a per-FTE or per-encounter basis will become smaller. But just like the elusive scheduling benefit of larger groups, few practices realize any economies of scale. The vast majority of the costs in most programs are provider labor costs, which scale with program volume. So in most cases, the larger a practice becomes, the larger the overall hospital financial support will be on a roughly linear basis.

More often than not, night-shift work does become more cost-effective as practices grow. For example, an in-house night shift for a practice of eight FTEs might generate $200 to $400 in collected professional fee revenue each night, leaving the hospital to pay the remaining $700 to $900 each night. (These numbers are for illustration and aren’t intended to represent benchmarks or realistic targets for any practice.) But as the practice grows to support 20 FTE hospitalists in total, nights get busier. The night doctor might average three or four admissions per night in an eight-FTE practice but could average 10 or more in a 20-FTE practice. Those 10 admissions might generate around $1,200 in professional fee revenue, leaving the hospital to contribute only a small fraction (about $200 per night) of the cost of each night shift. So night shifts typically require diminishing dollars of hospital support as the practice grows.

Unfortunately, any economy of scale for night-shift coverage usually is offset by inefficiencies and costs that larger practices incur—and small practices often don’t—such as a significant amount of management infrastructure, professional administration, dedicated physician leader time, and an information technology infrastructure. These resources often are necessary to manage the complexity of a large practice, but every practice should challenge itself to demonstrate that these things actually improve the practice’s efficiency and performance enough to justify the money spent on them.

Triage Pager

The larger the practice, the more likely there have been attempts to implement a triage pager system in which all new admissions and consults are routed to one pager (the triage, or “hot,” pager), which is held by one hospitalist at a time. In large practices, the “triage hospitalist” is usually so busy answering pages that they can do little else. And in many cases, ED doctors may describe a new admission to the triage hospitalist in detail only to have the triage hospitalist pass the information along to a colleague who will actually see the patient. This is an inefficient chain of communication, and I think most groups could do away with the triage pager. I described this issue in detail in my December 2008 column (“Technological Advance or Workplace Setback,” p. 69).

Unit-Based Assignment

Large hospitalist groups work in large hospitals and end up doing a lot of inefficient walking between nursing units during the day. They may have patients on 10 or more nursing units and end up spending only a little time on each unit, which probably diminishes the “constant availability” that most see as key to the hospitalist model. So many groups decide to have each hospitalist cover only a small number of nursing units. This really has become a hot topic in the past couple of years, and I discussed it in detail in my September 2007 column (“Unit-Based Hospitalist Practice,” p. 84).

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. He also is part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official position of SHM.

I always wear a sport coat and tie when I’m speaking, but I thought I knew the orthopedic psyche well enough to know they would be very casually dressed for their conference on a warm Saturday this past fall. I was stunned to see about 40 of the 60 orthopods in attendance wearing jackets and ties—a very dapper bunch. While I misjudged their fashion sense, I’m still confident I’ll fit in wearing a bow tie (borrowed, since I don’t own one) to a neurology conference or a Mickey Mouse tie to a pediatric conference.

I had been invited to speak at the Washington State Orthopedic Association last fall. (Maybe they spell it “orthopædics,” but that seems a little pretentious to me.) They wanted to hear about the latest trends in how orthopods and hospitalists collaborate in the care of patients, and how this interaction might evolve.

Attending or Consultants?

I told them that, in my experience, determining the best doctor to serve as attending for certain types of patients generates a wide range of sometimes passionately held opinions among hospitalists. In my consulting work with practices around the country, I’ve come across some hospitalists who are insistent that they should never serve as attending for patients whose primary reason for admission is:

• Hip fracture due to osteoporosis and fall from ground level;
• Nonoperative low-speed or low-impact trauma, such as pelvic fracture; and
• Limb infection with potential for compartment syndrome.

Interestingly, I’ve found that hospitalists almost universally admit patients with osteoporotic vertebral compression fractures, even if they strongly believe that they shouldn’t admit patients with pelvic fractures.

My own experience leads me to believe that hospitalists in most settings should plan to serve as attending for all of these patient types, if they aren’t already. For example, a hip fracture is essentially a marker for a sick and frail person with complex medical needs. While it is the marquee event of the hospital stay, surgical repair of the fracture is just one of many important things that need to happen before discharge. Most of these patients need attention for medical comorbidities—such as a urinary infection or decompensated heart failure—which often are the proximate cause of the fracture. The patient might need a discussion of medical directives, which usually is an area in which orthopods usually don’t excel (and I’m being kind to the orthopods).

Let me be clear: Reasonable people can conclude hospitalists should not serve as attending for the diagnoses listed above. SHM does not have a position on this, and I’m not speaking for all hospitalists. But don’t you think hospitalists opposed to admitting these types of patients will find themselves in a small and shrinking minority? It seems to me that the pressure to serve as attending for these patients is similar to surviving a riptide: You shouldn’t try to swim directly against the riptide toward shore, and instead should swim across it or even go with the flow.

Popular Term, No Universal Definition

I went on to talk with the orthopods about the concept of partnering with hospitalists to co-manage patients. Orthopods and hospital executives usually are enthusiastic supporters of the co-management idea, and hospitalists usually are supportive, though sometimes with a little less excitement than the others. In public, all three parties usually express confidence that co-management will be good for patient outcomes and have other benefits, such as improved efficiency. But in private, orthopods sometimes let on that their support of the idea is largely based on their belief that it relieves them of tedious paperwork and late-night phone calls.

A hospital CEO might not know the details of the co-management model, so the CEO’s public support of it often boils down to an analysis along the lines of “Isn’t co-management just a euphemism for hospitalists doing more of the scut work to keep the hospital’s money-making specialists—like orthopods—happy?” Even hospitalists themselves sometimes express public support for the idea, but privately are thinking, “These guys want me to do what?”

My view is that co-management is a broad term and can mean very different things from one institution to the next. The term “co-management” has a connotation of something new and progressive, and might help steer conversations about who does what in a more positive direction than the old vocabulary of who is dumping on whom—you know, the traditional role for the doctors in each specialty.

A terrific entry in “Debates in Hospital Medicine” that runs periodically in the Journal of Hospital Medicine offers two points of view. In the September/October 2008 issue of JHM, Christopher Whinney, MD, and Frank Michota, MD, of Cleveland Clinic took the stance in favor of co-management, and Eric Siegal, MD, SHM’s Public Policy Committee chair (and formerly in private and corporate hospitalist practice), raised concerns about co-management.1 The articles review what little—and in my view inconclusive—research exists on this topic but provide some thoughtful advice and opinions.

Issues to Address

As I have written in the past, I’m convinced hospitalists’ scope of practice will broaden and grow to include patients we don’t commonly admit today.2 But we will need to think carefully about how to mitigate the potential problems created by changes in how doctors divide responsibility for who does what. In the case of hospitalists serving as admitters and attending for hip fracture patients, I have concerns, such as:

• Will there be delays in going to the operating room or confusion regarding which orthopedist is responsible for the patient?
• Will the orthopedist be less available to talk with the patient and family post-op?
• How long before the orthopedist stops making post-op visits?
• Who decides about transfusion and manages post-op and discharge pain control, wound care, and rehab?
• Who gets the nighttime call regarding a laxative or sleeping pill?
• Who handles discharge paperwork?

Your list of concerns probably differs from mine, but you should take the time to write down the issues that concern you any time duties and responsibilities shift from one specialty to another. Keep that list handy the next time you talk with another specialty about co-management or other new ways of dividing the work to ensure good outcomes for patients, doctors (including hospitalists), and the healthcare system as a whole. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospital practice management consulting firm. He is part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official SHM position.

References

1. Whinney C, Michota F, and Siegal EM. Surgical comanagement: a natural evolution of hospitalist practice. Just because you can, doesn’t mean that you should: A call for the rational application of hospitalist comanagement. J Hosp Med. 2008;3(5); 394-402.

2. Nelson J. Hip fractures to head bleeds: The hospitalist’s ever-changing scope of practice. The Hospitalist. 2006; 10(9);77.

I always wear a sport coat and tie when I’m speaking, but I thought I knew the orthopedic psyche well enough to know they would be very casually dressed for their conference on a warm Saturday this past fall. I was stunned to see about 40 of the 60 orthopods in attendance wearing jackets and ties—a very dapper bunch. While I misjudged their fashion sense, I’m still confident I’ll fit in wearing a bow tie (borrowed, since I don’t own one) to a neurology conference or a Mickey Mouse tie to a pediatric conference.

I had been invited to speak at the Washington State Orthopedic Association last fall. (Maybe they spell it “orthopædics,” but that seems a little pretentious to me.) They wanted to hear about the latest trends in how orthopods and hospitalists collaborate in the care of patients, and how this interaction might evolve.

Attending or Consultants?

I told them that, in my experience, determining the best doctor to serve as attending for certain types of patients generates a wide range of sometimes passionately held opinions among hospitalists. In my consulting work with practices around the country, I’ve come across some hospitalists who are insistent that they should never serve as attending for patients whose primary reason for admission is:

• Hip fracture due to osteoporosis and fall from ground level;
• Nonoperative low-speed or low-impact trauma, such as pelvic fracture; and
• Limb infection with potential for compartment syndrome.

Interestingly, I’ve found that hospitalists almost universally admit patients with osteoporotic vertebral compression fractures, even if they strongly believe that they shouldn’t admit patients with pelvic fractures.

My own experience leads me to believe that hospitalists in most settings should plan to serve as attending for all of these patient types, if they aren’t already. For example, a hip fracture is essentially a marker for a sick and frail person with complex medical needs. While it is the marquee event of the hospital stay, surgical repair of the fracture is just one of many important things that need to happen before discharge. Most of these patients need attention for medical comorbidities—such as a urinary infection or decompensated heart failure—which often are the proximate cause of the fracture. The patient might need a discussion of medical directives, which usually is an area in which orthopods usually don’t excel (and I’m being kind to the orthopods).

Let me be clear: Reasonable people can conclude hospitalists should not serve as attending for the diagnoses listed above. SHM does not have a position on this, and I’m not speaking for all hospitalists. But don’t you think hospitalists opposed to admitting these types of patients will find themselves in a small and shrinking minority? It seems to me that the pressure to serve as attending for these patients is similar to surviving a riptide: You shouldn’t try to swim directly against the riptide toward shore, and instead should swim across it or even go with the flow.

Popular Term, No Universal Definition

I went on to talk with the orthopods about the concept of partnering with hospitalists to co-manage patients. Orthopods and hospital executives usually are enthusiastic supporters of the co-management idea, and hospitalists usually are supportive, though sometimes with a little less excitement than the others. In public, all three parties usually express confidence that co-management will be good for patient outcomes and have other benefits, such as improved efficiency. But in private, orthopods sometimes let on that their support of the idea is largely based on their belief that it relieves them of tedious paperwork and late-night phone calls.

A hospital CEO might not know the details of the co-management model, so the CEO’s public support of it often boils down to an analysis along the lines of “Isn’t co-management just a euphemism for hospitalists doing more of the scut work to keep the hospital’s money-making specialists—like orthopods—happy?” Even hospitalists themselves sometimes express public support for the idea, but privately are thinking, “These guys want me to do what?”

My view is that co-management is a broad term and can mean very different things from one institution to the next. The term “co-management” has a connotation of something new and progressive, and might help steer conversations about who does what in a more positive direction than the old vocabulary of who is dumping on whom—you know, the traditional role for the doctors in each specialty.

A terrific entry in “Debates in Hospital Medicine” that runs periodically in the Journal of Hospital Medicine offers two points of view. In the September/October 2008 issue of JHM, Christopher Whinney, MD, and Frank Michota, MD, of Cleveland Clinic took the stance in favor of co-management, and Eric Siegal, MD, SHM’s Public Policy Committee chair (and formerly in private and corporate hospitalist practice), raised concerns about co-management.1 The articles review what little—and in my view inconclusive—research exists on this topic but provide some thoughtful advice and opinions.

Issues to Address

As I have written in the past, I’m convinced hospitalists’ scope of practice will broaden and grow to include patients we don’t commonly admit today.2 But we will need to think carefully about how to mitigate the potential problems created by changes in how doctors divide responsibility for who does what. In the case of hospitalists serving as admitters and attending for hip fracture patients, I have concerns, such as:

• Will there be delays in going to the operating room or confusion regarding which orthopedist is responsible for the patient?
• Will the orthopedist be less available to talk with the patient and family post-op?
• How long before the orthopedist stops making post-op visits?
• Who decides about transfusion and manages post-op and discharge pain control, wound care, and rehab?
• Who gets the nighttime call regarding a laxative or sleeping pill?
• Who handles discharge paperwork?

Your list of concerns probably differs from mine, but you should take the time to write down the issues that concern you any time duties and responsibilities shift from one specialty to another. Keep that list handy the next time you talk with another specialty about co-management or other new ways of dividing the work to ensure good outcomes for patients, doctors (including hospitalists), and the healthcare system as a whole. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospital practice management consulting firm. He is part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official SHM position.

References

1. Whinney C, Michota F, and Siegal EM. Surgical comanagement: a natural evolution of hospitalist practice. Just because you can, doesn’t mean that you should: A call for the rational application of hospitalist comanagement. J Hosp Med. 2008;3(5); 394-402.

2. Nelson J. Hip fractures to head bleeds: The hospitalist’s ever-changing scope of practice. The Hospitalist. 2006; 10(9);77.

I always wear a sport coat and tie when I’m speaking, but I thought I knew the orthopedic psyche well enough to know they would be very casually dressed for their conference on a warm Saturday this past fall. I was stunned to see about 40 of the 60 orthopods in attendance wearing jackets and ties—a very dapper bunch. While I misjudged their fashion sense, I’m still confident I’ll fit in wearing a bow tie (borrowed, since I don’t own one) to a neurology conference or a Mickey Mouse tie to a pediatric conference.

I had been invited to speak at the Washington State Orthopedic Association last fall. (Maybe they spell it “orthopædics,” but that seems a little pretentious to me.) They wanted to hear about the latest trends in how orthopods and hospitalists collaborate in the care of patients, and how this interaction might evolve.

Attending or Consultants?

I told them that, in my experience, determining the best doctor to serve as attending for certain types of patients generates a wide range of sometimes passionately held opinions among hospitalists. In my consulting work with practices around the country, I’ve come across some hospitalists who are insistent that they should never serve as attending for patients whose primary reason for admission is:

• Hip fracture due to osteoporosis and fall from ground level;
• Nonoperative low-speed or low-impact trauma, such as pelvic fracture; and
• Limb infection with potential for compartment syndrome.

Interestingly, I’ve found that hospitalists almost universally admit patients with osteoporotic vertebral compression fractures, even if they strongly believe that they shouldn’t admit patients with pelvic fractures.

My own experience leads me to believe that hospitalists in most settings should plan to serve as attending for all of these patient types, if they aren’t already. For example, a hip fracture is essentially a marker for a sick and frail person with complex medical needs. While it is the marquee event of the hospital stay, surgical repair of the fracture is just one of many important things that need to happen before discharge. Most of these patients need attention for medical comorbidities—such as a urinary infection or decompensated heart failure—which often are the proximate cause of the fracture. The patient might need a discussion of medical directives, which usually is an area in which orthopods usually don’t excel (and I’m being kind to the orthopods).

Let me be clear: Reasonable people can conclude hospitalists should not serve as attending for the diagnoses listed above. SHM does not have a position on this, and I’m not speaking for all hospitalists. But don’t you think hospitalists opposed to admitting these types of patients will find themselves in a small and shrinking minority? It seems to me that the pressure to serve as attending for these patients is similar to surviving a riptide: You shouldn’t try to swim directly against the riptide toward shore, and instead should swim across it or even go with the flow.

Popular Term, No Universal Definition

I went on to talk with the orthopods about the concept of partnering with hospitalists to co-manage patients. Orthopods and hospital executives usually are enthusiastic supporters of the co-management idea, and hospitalists usually are supportive, though sometimes with a little less excitement than the others. In public, all three parties usually express confidence that co-management will be good for patient outcomes and have other benefits, such as improved efficiency. But in private, orthopods sometimes let on that their support of the idea is largely based on their belief that it relieves them of tedious paperwork and late-night phone calls.

A hospital CEO might not know the details of the co-management model, so the CEO’s public support of it often boils down to an analysis along the lines of “Isn’t co-management just a euphemism for hospitalists doing more of the scut work to keep the hospital’s money-making specialists—like orthopods—happy?” Even hospitalists themselves sometimes express public support for the idea, but privately are thinking, “These guys want me to do what?”

My view is that co-management is a broad term and can mean very different things from one institution to the next. The term “co-management” has a connotation of something new and progressive, and might help steer conversations about who does what in a more positive direction than the old vocabulary of who is dumping on whom—you know, the traditional role for the doctors in each specialty.

A terrific entry in “Debates in Hospital Medicine” that runs periodically in the Journal of Hospital Medicine offers two points of view. In the September/October 2008 issue of JHM, Christopher Whinney, MD, and Frank Michota, MD, of Cleveland Clinic took the stance in favor of co-management, and Eric Siegal, MD, SHM’s Public Policy Committee chair (and formerly in private and corporate hospitalist practice), raised concerns about co-management.1 The articles review what little—and in my view inconclusive—research exists on this topic but provide some thoughtful advice and opinions.

Issues to Address

As I have written in the past, I’m convinced hospitalists’ scope of practice will broaden and grow to include patients we don’t commonly admit today.2 But we will need to think carefully about how to mitigate the potential problems created by changes in how doctors divide responsibility for who does what. In the case of hospitalists serving as admitters and attending for hip fracture patients, I have concerns, such as:

• Will there be delays in going to the operating room or confusion regarding which orthopedist is responsible for the patient?
• Will the orthopedist be less available to talk with the patient and family post-op?
• How long before the orthopedist stops making post-op visits?
• Who decides about transfusion and manages post-op and discharge pain control, wound care, and rehab?
• Who gets the nighttime call regarding a laxative or sleeping pill?
• Who handles discharge paperwork?

Your list of concerns probably differs from mine, but you should take the time to write down the issues that concern you any time duties and responsibilities shift from one specialty to another. Keep that list handy the next time you talk with another specialty about co-management or other new ways of dividing the work to ensure good outcomes for patients, doctors (including hospitalists), and the healthcare system as a whole. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is co-founder and past president of SHM. He is a principal in Nelson/Flores Associates, a national hospital practice management consulting firm. He is part of the faculty for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. This column represents his views and is not intended to reflect an official SHM position.

References

1. Whinney C, Michota F, and Siegal EM. Surgical comanagement: a natural evolution of hospitalist practice. Just because you can, doesn’t mean that you should: A call for the rational application of hospitalist comanagement. J Hosp Med. 2008;3(5); 394-402.

2. Nelson J. Hip fractures to head bleeds: The hospitalist’s ever-changing scope of practice. The Hospitalist. 2006; 10(9);77.

I became a hospitalist in the 1980s, in the same year CDs outsold vinyl records for the first time. During the next eight to 10 years, I watched and participated in the growth of hospitalist practices around the country. But, by the late 1990s, a new phenomenon had begun to appear occasionally: failed hospitalist practices. I became interested in the relatively few practices that started up only to fail and dissolve. I wanted to know why they had failed and what happens at a hospital that loses its hospitalist practice?

It is worth remembering that the whole idea of hospitalist practice was more controversial in the late 1990s than it is today. Many doctors saw the concept as an invention of managed care, with the sole aim of reducing costs. When a practice collapsed, some doctors at the institution were usually delighted because, as far as they were concerned, this proved that hospitalist practice was a bad idea. Yet, to the dismay of these critics, the failure of a practice was reliably followed by an intense—sometimes even frenzied—effort to create a new and improved hospitalist practice. In fact, I’m not aware of any institution in which a hospitalist practice failed and a new one didn’t replace it. I suspect such places exist, but they’re not common.

Creating a replacement hospitalist practice is usually stressful and expensive, so of course it’s better to get it right the first time. To that end, I think every institution should be aware of the most common reasons practices fail and should work to avoid these problems. What follows are the issues I’ve seen come up regularly. While they may not cause the failure of a whole practice, they are likely to result in physician dissatisfaction and/or increased turnover.

1) Failure to appreciate rapid growth in volume in a new practice: Unquestionably, this is the most common mistake made by new hospitalist practices. Patient volume often grows dramatically—even within the first weeks a new practice is in operation. Some institutions mistakenly plan on growth rates similar to those experienced in other types of practices. When growth proves much more rapid, the first few hospitalists in the practice can become worn out and might even quit. This has led to the collapse of some practices. There are two ways to guard against this problem. One is to continue recruiting (even with no clear need for additional staff), anticipating the length of time it can take to recruit new hospitalists. In other words, most practices should never stop recruiting.

The other, less desirable but sometimes unavoidable strategy is to have the practice start with a limited scope of work that increases as new hospitalists are added to the group. For example, the practice might accept only unassigned medical admissions from the emergency department (ED) at the outset; once a predetermined number of hospitalists has joined the group, it is ready to start accepting referrals from primary care doctors and other sources.

2) Hospitalists who have an employee mentality, rather than that of a practice owner: Hospitalist practices tend to attract doctors who simply want to see patients, leaving the management of the practice and its financial health to others. This tendency may be exacerbated in practices that compensate hospitalists in a way that is not connected to the overall financial health of the practice (e.g., a straight salary).

Unfortunately, this situation can create a culture in which a hospitalist feels that the only job that is important is to see the next patient. These hospitalists may be reluctant to participate in efforts to ensure the financial health of the practice. Examples: 1) They may not be attentive to optimal documentation and coding, and the practice may lose significant billing revenue; 2) They may not want to accept new referrals or encourage growth in the practice; or 3) They may be too quick to add doctors to the group, with the aim of working fewer hours.

Even if the doctors are employees of a hospital or other large entity, make every effort to encourage them to think of themselves as owners of their practice. One way to create this environment is to have a tight connection between the economic health of the practice and the hospitalists’ income (e.g., production-based incentive compensation). This should lead to greater autonomy in decision-making, as well as hospitalist satisfaction.

3) Poor leadership: Many hospitalist practices start with doctors who have no prior hospitalist experience. This may result in physician leaders poorly suited for their roles. For a practice that is uncertain whether it has an appropriate medical director among the initial doctors it has hired, it might be a good idea to wait a year or two to select the leader. An interim leadership model can be implemented, taking advantage of physician leaders in the hospital, perhaps including the vice president for medical affairs, respected primary care physicians, or emergency physicians. Establishing a hospitalist oversight committee that is made up of leaders among the medical staff can also provide guidance for the new program until there is an effective hospitalist leader in place.

4) Excessive or inappropriate hospitalist overhead: This can take two forms. First, excessive overhead results from securing too much office space and/or staff support. Because the majority of a hospitalist’s work is done on the hospital wards, it is usually sufficient for a hospitalist group to share a single office with enough seating and workstations, including computers, for one-third to one-half of the total number of doctors in the group. For example, a 12-hospitalist group might share an office with four to six workstations. A small group—six or fewer doctors—might function effectively with a single clerical assistant supporting the hospitalists and some other department at the same time.

Second, inappropriate overhead may occur in multispecialty groups that charge hospitalists the same overhead paid by office physicians. This high overhead rate—more than 50%—may leave insufficient funds to pay the hospitalists a competitive salary. Thus, it is important for the group to assess hospitalists’ overhead based on what they actually consume. In general, this should include the cost of billing and collections, malpractice insurance, and modest clerical support. The hospitalist collections should not ordinarily go to support office-based expenses such as support staff and building/equipment expenses.

5) Initial tolerance of inappropriate expectations of hospitalists: To gain support from the medical staff in the early stages of a program, hospitalists sometimes overcommit, assuming responsibility for the scut work that no one wants to perform. This is not a sustainable model. Eventually, it will be hard to tell physicians that they must take back responsibility for something the hospitalists have been doing. This is likely to lead to unhappiness for everyone involved.

One common example of this problem is when hospitalists assume responsibility for tuck-in admissions—those in which the hospitalist admits a physician’s patient overnight and then transfers the patient back to that physician the next day. Another example involves hospitalists who assist with paperwork on patients they did not care for; for example, the hospitalist is expected to do a discharge summary for a heart surgeon, even though the hospitalist wasn’t involved in that particular patient’s care.

The best strategy to use in avoiding this pitfall is to identify the most important services for hospitalists to provide, keeping the list relatively small initially (e.g., admit unassigned emergency medical patients, accept referrals from primary care physicians, and perform consults from other doctors). Other services, such as co-management of some surgical admissions, can be added as hospitalist staffing allows and after hospitalists have had an opportunity to participate in deciding which services are the most appropriate to add.

6) Excessive workload, leading to hospitalist dissatisfaction: A variety of factors can lead to excessive hospitalist workloads or patient volumes. The most common reason (mentioned above) is referral volume that grows faster than staff can be added. In other cases, hospitalists can make the mistake of scheduling each doctor to work relatively few annual days or shifts; this practice results in a high workload for each day worked, even though the annual patient volume may not be excessive.

Hospitalists, like other professionals, seek balance in their jobs. The biggest threat to this goal is an excessive workload, which can hinder a hospitalist’s ability to devote adequate attention to ensuring the satisfaction of the patient and the referring physician. It also limits the hospitalist’s ability to assume non-clinical responsibilities like protocol development and hospital committees. Some data suggest that, at some point, an increasing patient load begins to result in an increased length of stay. And, over time, it is likely to result in poor job satisfaction, burnout, and turnover among physicians in the group.

7) Insufficient financial support: SHM survey data from 2006 show that, in addition to collected professional fees, 97% of hospitalist practices receive financial support and/or services in kind. This money usually comes from the hospital in which the hospitalists work. The few practices that don’t receive such support usually have some combination of the following factors:

• Hospitalists who work only weekday hours;
• Hospitalists who are not responsible for emergency, unassigned patients; and
• A hospital with an excellent payer mix.

Practices that accept all the unassigned medical admissions from the ED and keep a doctor in the hospital 24 hours a day for seven days a week usually have professional fee collections that fall far short of the amount needed to pay competitive salaries. They usually need financial support from a source such as their hospital to supplement their fee collections. Without it, they must maintain high patient volumes to collect professional fee revenue that is adequate to pay reasonable salaries and benefits to the doctors. These practices are at risk of poor performance or collapse.

To Succeed, Avoid Failure

So why go to the trouble of starting over when you can get it right the first time? Setting clear and realistic expectations from the beginning gives any hospitalist practice a better chance of succeeding. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is a co-founder and past-president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. This column represents his views and is not intended to reflect an official position of SHM.

I became a hospitalist in the 1980s, in the same year CDs outsold vinyl records for the first time. During the next eight to 10 years, I watched and participated in the growth of hospitalist practices around the country. But, by the late 1990s, a new phenomenon had begun to appear occasionally: failed hospitalist practices. I became interested in the relatively few practices that started up only to fail and dissolve. I wanted to know why they had failed and what happens at a hospital that loses its hospitalist practice?

It is worth remembering that the whole idea of hospitalist practice was more controversial in the late 1990s than it is today. Many doctors saw the concept as an invention of managed care, with the sole aim of reducing costs. When a practice collapsed, some doctors at the institution were usually delighted because, as far as they were concerned, this proved that hospitalist practice was a bad idea. Yet, to the dismay of these critics, the failure of a practice was reliably followed by an intense—sometimes even frenzied—effort to create a new and improved hospitalist practice. In fact, I’m not aware of any institution in which a hospitalist practice failed and a new one didn’t replace it. I suspect such places exist, but they’re not common.

Creating a replacement hospitalist practice is usually stressful and expensive, so of course it’s better to get it right the first time. To that end, I think every institution should be aware of the most common reasons practices fail and should work to avoid these problems. What follows are the issues I’ve seen come up regularly. While they may not cause the failure of a whole practice, they are likely to result in physician dissatisfaction and/or increased turnover.

1) Failure to appreciate rapid growth in volume in a new practice: Unquestionably, this is the most common mistake made by new hospitalist practices. Patient volume often grows dramatically—even within the first weeks a new practice is in operation. Some institutions mistakenly plan on growth rates similar to those experienced in other types of practices. When growth proves much more rapid, the first few hospitalists in the practice can become worn out and might even quit. This has led to the collapse of some practices. There are two ways to guard against this problem. One is to continue recruiting (even with no clear need for additional staff), anticipating the length of time it can take to recruit new hospitalists. In other words, most practices should never stop recruiting.

The other, less desirable but sometimes unavoidable strategy is to have the practice start with a limited scope of work that increases as new hospitalists are added to the group. For example, the practice might accept only unassigned medical admissions from the emergency department (ED) at the outset; once a predetermined number of hospitalists has joined the group, it is ready to start accepting referrals from primary care doctors and other sources.

2) Hospitalists who have an employee mentality, rather than that of a practice owner: Hospitalist practices tend to attract doctors who simply want to see patients, leaving the management of the practice and its financial health to others. This tendency may be exacerbated in practices that compensate hospitalists in a way that is not connected to the overall financial health of the practice (e.g., a straight salary).

Unfortunately, this situation can create a culture in which a hospitalist feels that the only job that is important is to see the next patient. These hospitalists may be reluctant to participate in efforts to ensure the financial health of the practice. Examples: 1) They may not be attentive to optimal documentation and coding, and the practice may lose significant billing revenue; 2) They may not want to accept new referrals or encourage growth in the practice; or 3) They may be too quick to add doctors to the group, with the aim of working fewer hours.

Even if the doctors are employees of a hospital or other large entity, make every effort to encourage them to think of themselves as owners of their practice. One way to create this environment is to have a tight connection between the economic health of the practice and the hospitalists’ income (e.g., production-based incentive compensation). This should lead to greater autonomy in decision-making, as well as hospitalist satisfaction.

3) Poor leadership: Many hospitalist practices start with doctors who have no prior hospitalist experience. This may result in physician leaders poorly suited for their roles. For a practice that is uncertain whether it has an appropriate medical director among the initial doctors it has hired, it might be a good idea to wait a year or two to select the leader. An interim leadership model can be implemented, taking advantage of physician leaders in the hospital, perhaps including the vice president for medical affairs, respected primary care physicians, or emergency physicians. Establishing a hospitalist oversight committee that is made up of leaders among the medical staff can also provide guidance for the new program until there is an effective hospitalist leader in place.

4) Excessive or inappropriate hospitalist overhead: This can take two forms. First, excessive overhead results from securing too much office space and/or staff support. Because the majority of a hospitalist’s work is done on the hospital wards, it is usually sufficient for a hospitalist group to share a single office with enough seating and workstations, including computers, for one-third to one-half of the total number of doctors in the group. For example, a 12-hospitalist group might share an office with four to six workstations. A small group—six or fewer doctors—might function effectively with a single clerical assistant supporting the hospitalists and some other department at the same time.

Second, inappropriate overhead may occur in multispecialty groups that charge hospitalists the same overhead paid by office physicians. This high overhead rate—more than 50%—may leave insufficient funds to pay the hospitalists a competitive salary. Thus, it is important for the group to assess hospitalists’ overhead based on what they actually consume. In general, this should include the cost of billing and collections, malpractice insurance, and modest clerical support. The hospitalist collections should not ordinarily go to support office-based expenses such as support staff and building/equipment expenses.

5) Initial tolerance of inappropriate expectations of hospitalists: To gain support from the medical staff in the early stages of a program, hospitalists sometimes overcommit, assuming responsibility for the scut work that no one wants to perform. This is not a sustainable model. Eventually, it will be hard to tell physicians that they must take back responsibility for something the hospitalists have been doing. This is likely to lead to unhappiness for everyone involved.

One common example of this problem is when hospitalists assume responsibility for tuck-in admissions—those in which the hospitalist admits a physician’s patient overnight and then transfers the patient back to that physician the next day. Another example involves hospitalists who assist with paperwork on patients they did not care for; for example, the hospitalist is expected to do a discharge summary for a heart surgeon, even though the hospitalist wasn’t involved in that particular patient’s care.

The best strategy to use in avoiding this pitfall is to identify the most important services for hospitalists to provide, keeping the list relatively small initially (e.g., admit unassigned emergency medical patients, accept referrals from primary care physicians, and perform consults from other doctors). Other services, such as co-management of some surgical admissions, can be added as hospitalist staffing allows and after hospitalists have had an opportunity to participate in deciding which services are the most appropriate to add.

6) Excessive workload, leading to hospitalist dissatisfaction: A variety of factors can lead to excessive hospitalist workloads or patient volumes. The most common reason (mentioned above) is referral volume that grows faster than staff can be added. In other cases, hospitalists can make the mistake of scheduling each doctor to work relatively few annual days or shifts; this practice results in a high workload for each day worked, even though the annual patient volume may not be excessive.

Hospitalists, like other professionals, seek balance in their jobs. The biggest threat to this goal is an excessive workload, which can hinder a hospitalist’s ability to devote adequate attention to ensuring the satisfaction of the patient and the referring physician. It also limits the hospitalist’s ability to assume non-clinical responsibilities like protocol development and hospital committees. Some data suggest that, at some point, an increasing patient load begins to result in an increased length of stay. And, over time, it is likely to result in poor job satisfaction, burnout, and turnover among physicians in the group.

7) Insufficient financial support: SHM survey data from 2006 show that, in addition to collected professional fees, 97% of hospitalist practices receive financial support and/or services in kind. This money usually comes from the hospital in which the hospitalists work. The few practices that don’t receive such support usually have some combination of the following factors:

• Hospitalists who work only weekday hours;
• Hospitalists who are not responsible for emergency, unassigned patients; and
• A hospital with an excellent payer mix.

Practices that accept all the unassigned medical admissions from the ED and keep a doctor in the hospital 24 hours a day for seven days a week usually have professional fee collections that fall far short of the amount needed to pay competitive salaries. They usually need financial support from a source such as their hospital to supplement their fee collections. Without it, they must maintain high patient volumes to collect professional fee revenue that is adequate to pay reasonable salaries and benefits to the doctors. These practices are at risk of poor performance or collapse.

To Succeed, Avoid Failure

So why go to the trouble of starting over when you can get it right the first time? Setting clear and realistic expectations from the beginning gives any hospitalist practice a better chance of succeeding. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is a co-founder and past-president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. This column represents his views and is not intended to reflect an official position of SHM.

I became a hospitalist in the 1980s, in the same year CDs outsold vinyl records for the first time. During the next eight to 10 years, I watched and participated in the growth of hospitalist practices around the country. But, by the late 1990s, a new phenomenon had begun to appear occasionally: failed hospitalist practices. I became interested in the relatively few practices that started up only to fail and dissolve. I wanted to know why they had failed and what happens at a hospital that loses its hospitalist practice?

It is worth remembering that the whole idea of hospitalist practice was more controversial in the late 1990s than it is today. Many doctors saw the concept as an invention of managed care, with the sole aim of reducing costs. When a practice collapsed, some doctors at the institution were usually delighted because, as far as they were concerned, this proved that hospitalist practice was a bad idea. Yet, to the dismay of these critics, the failure of a practice was reliably followed by an intense—sometimes even frenzied—effort to create a new and improved hospitalist practice. In fact, I’m not aware of any institution in which a hospitalist practice failed and a new one didn’t replace it. I suspect such places exist, but they’re not common.

Creating a replacement hospitalist practice is usually stressful and expensive, so of course it’s better to get it right the first time. To that end, I think every institution should be aware of the most common reasons practices fail and should work to avoid these problems. What follows are the issues I’ve seen come up regularly. While they may not cause the failure of a whole practice, they are likely to result in physician dissatisfaction and/or increased turnover.

1) Failure to appreciate rapid growth in volume in a new practice: Unquestionably, this is the most common mistake made by new hospitalist practices. Patient volume often grows dramatically—even within the first weeks a new practice is in operation. Some institutions mistakenly plan on growth rates similar to those experienced in other types of practices. When growth proves much more rapid, the first few hospitalists in the practice can become worn out and might even quit. This has led to the collapse of some practices. There are two ways to guard against this problem. One is to continue recruiting (even with no clear need for additional staff), anticipating the length of time it can take to recruit new hospitalists. In other words, most practices should never stop recruiting.

The other, less desirable but sometimes unavoidable strategy is to have the practice start with a limited scope of work that increases as new hospitalists are added to the group. For example, the practice might accept only unassigned medical admissions from the emergency department (ED) at the outset; once a predetermined number of hospitalists has joined the group, it is ready to start accepting referrals from primary care doctors and other sources.

2) Hospitalists who have an employee mentality, rather than that of a practice owner: Hospitalist practices tend to attract doctors who simply want to see patients, leaving the management of the practice and its financial health to others. This tendency may be exacerbated in practices that compensate hospitalists in a way that is not connected to the overall financial health of the practice (e.g., a straight salary).

Unfortunately, this situation can create a culture in which a hospitalist feels that the only job that is important is to see the next patient. These hospitalists may be reluctant to participate in efforts to ensure the financial health of the practice. Examples: 1) They may not be attentive to optimal documentation and coding, and the practice may lose significant billing revenue; 2) They may not want to accept new referrals or encourage growth in the practice; or 3) They may be too quick to add doctors to the group, with the aim of working fewer hours.

Even if the doctors are employees of a hospital or other large entity, make every effort to encourage them to think of themselves as owners of their practice. One way to create this environment is to have a tight connection between the economic health of the practice and the hospitalists’ income (e.g., production-based incentive compensation). This should lead to greater autonomy in decision-making, as well as hospitalist satisfaction.

3) Poor leadership: Many hospitalist practices start with doctors who have no prior hospitalist experience. This may result in physician leaders poorly suited for their roles. For a practice that is uncertain whether it has an appropriate medical director among the initial doctors it has hired, it might be a good idea to wait a year or two to select the leader. An interim leadership model can be implemented, taking advantage of physician leaders in the hospital, perhaps including the vice president for medical affairs, respected primary care physicians, or emergency physicians. Establishing a hospitalist oversight committee that is made up of leaders among the medical staff can also provide guidance for the new program until there is an effective hospitalist leader in place.

4) Excessive or inappropriate hospitalist overhead: This can take two forms. First, excessive overhead results from securing too much office space and/or staff support. Because the majority of a hospitalist’s work is done on the hospital wards, it is usually sufficient for a hospitalist group to share a single office with enough seating and workstations, including computers, for one-third to one-half of the total number of doctors in the group. For example, a 12-hospitalist group might share an office with four to six workstations. A small group—six or fewer doctors—might function effectively with a single clerical assistant supporting the hospitalists and some other department at the same time.

Second, inappropriate overhead may occur in multispecialty groups that charge hospitalists the same overhead paid by office physicians. This high overhead rate—more than 50%—may leave insufficient funds to pay the hospitalists a competitive salary. Thus, it is important for the group to assess hospitalists’ overhead based on what they actually consume. In general, this should include the cost of billing and collections, malpractice insurance, and modest clerical support. The hospitalist collections should not ordinarily go to support office-based expenses such as support staff and building/equipment expenses.

5) Initial tolerance of inappropriate expectations of hospitalists: To gain support from the medical staff in the early stages of a program, hospitalists sometimes overcommit, assuming responsibility for the scut work that no one wants to perform. This is not a sustainable model. Eventually, it will be hard to tell physicians that they must take back responsibility for something the hospitalists have been doing. This is likely to lead to unhappiness for everyone involved.

One common example of this problem is when hospitalists assume responsibility for tuck-in admissions—those in which the hospitalist admits a physician’s patient overnight and then transfers the patient back to that physician the next day. Another example involves hospitalists who assist with paperwork on patients they did not care for; for example, the hospitalist is expected to do a discharge summary for a heart surgeon, even though the hospitalist wasn’t involved in that particular patient’s care.

The best strategy to use in avoiding this pitfall is to identify the most important services for hospitalists to provide, keeping the list relatively small initially (e.g., admit unassigned emergency medical patients, accept referrals from primary care physicians, and perform consults from other doctors). Other services, such as co-management of some surgical admissions, can be added as hospitalist staffing allows and after hospitalists have had an opportunity to participate in deciding which services are the most appropriate to add.

6) Excessive workload, leading to hospitalist dissatisfaction: A variety of factors can lead to excessive hospitalist workloads or patient volumes. The most common reason (mentioned above) is referral volume that grows faster than staff can be added. In other cases, hospitalists can make the mistake of scheduling each doctor to work relatively few annual days or shifts; this practice results in a high workload for each day worked, even though the annual patient volume may not be excessive.

Hospitalists, like other professionals, seek balance in their jobs. The biggest threat to this goal is an excessive workload, which can hinder a hospitalist’s ability to devote adequate attention to ensuring the satisfaction of the patient and the referring physician. It also limits the hospitalist’s ability to assume non-clinical responsibilities like protocol development and hospital committees. Some data suggest that, at some point, an increasing patient load begins to result in an increased length of stay. And, over time, it is likely to result in poor job satisfaction, burnout, and turnover among physicians in the group.

7) Insufficient financial support: SHM survey data from 2006 show that, in addition to collected professional fees, 97% of hospitalist practices receive financial support and/or services in kind. This money usually comes from the hospital in which the hospitalists work. The few practices that don’t receive such support usually have some combination of the following factors:

• Hospitalists who work only weekday hours;
• Hospitalists who are not responsible for emergency, unassigned patients; and
• A hospital with an excellent payer mix.

Practices that accept all the unassigned medical admissions from the ED and keep a doctor in the hospital 24 hours a day for seven days a week usually have professional fee collections that fall far short of the amount needed to pay competitive salaries. They usually need financial support from a source such as their hospital to supplement their fee collections. Without it, they must maintain high patient volumes to collect professional fee revenue that is adequate to pay reasonable salaries and benefits to the doctors. These practices are at risk of poor performance or collapse.

To Succeed, Avoid Failure

So why go to the trouble of starting over when you can get it right the first time? Setting clear and realistic expectations from the beginning gives any hospitalist practice a better chance of succeeding. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is a co-founder and past-president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. This column represents his views and is not intended to reflect an official position of SHM.

Several times a week, I hear from doctors or administrators who want to discuss solutions to the latest crises occurring in their practices. There are three contractual issues that come up regularly in these conversations. One is how to handle the contractual provision for vacation time, and I addressed that in last month’s column.

This month, I’ll discuss the other two issues: payment for malpractice “tail coverage” and the inclusion of a non-compete clause in hospitalist employment contracts.

Malpractice Tail Coverage

Not long ago, I got a call from the worried administrator of a growing and successful hospitalist practice. She described a crisis that had started when a doctor decided to leave the practice to pursue fellowship training. The doctor was happy with the practice and enjoyed the time he had spent as part of it. Yet his departure had set off a wave of threatened resignations that risked the collapse of the practice.

It turns out that the doctors’ employment contract specified that the employer would pay malpractice tail coverage for any doctor who left the practice before completing two years of employment. After the two-year anniversary, the doctor would have to pay for tail coverage. Most doctors in this young practice were nearing their two-year anniversary, and they began to worry about having to assume this responsibility.

I spoke with one such doctor. The physician was happy with the practice and had not spent time thinking about leaving until faced with the issue of tail coverage. Like many hospitalists, she tended to think of her commitment to the practice more in terms of dating than as a marriage. She wanted to keep her options open to pursue other work in the future and thought there might be some chance she would move if she experienced a major life change like marriage. So—like several of her colleagues—she thought about leaving the practice ahead of the two-year anniversary, thus avoiding committing to paying tail coverage that could be as much as $25,000 per year, depending on how long she stayed with the practice. To her, assuming the risk of paying the tail coverage felt like punishment for staying in the practice for longer than two years rather than a reward for her loyalty.

Ultimately, the hospitalists and the multispecialty group that they were part of negotiated for the practice to pay the tail coverage regardless of the duration of a departing doctor’s employment with the group. The group paid for this in part by paying beginning hospitalists a lower salary; in a sense, the doctors were still paying a portion out of their own pockets, but it seemed less painful this way.

It is reasonably common in any specialty for a group to assume the risk of paying tail coverage if one of its doctors leaves the practice within the first two or three years because a doctor who decides to leave that quickly often does so after concluding that the practice is not as it was described during the recruiting process. But a doctor who departs later than that is more likely to do so because she has simply decided to pursue other options, and it seems reasonable that she should pay the expenses related to her departure. This is a reasonable approach, but there are several issues that might cause a practice to approach the issue differently for hospitalists than for other doctors.

1. Hospitalist practice is likely to have a somewhat higher turnover in staffing than other physician groups for several reasons that I won’t enumerate here. So, like the woman in the anecdote above, everyone should acknowledge that the fact that a hospitalist is willing to stay longer than two or three years does not mean he or she will stay for a career. With this in mind, payment of tail coverage may be a bigger issue for hospitalists and may require a different approach than for other specialties, though whether the practice or the hospitalist should pay for it is still up for debate.
2. Nationally, about half of hospitalists are employed by the hospital in which they work, and—in this case—malpractice insurance is usually provided by the employing hospital. Many or most hospitals have decided it is in their interest to pay for tail coverage for a departing doctor regardless of his duration of service. If a doctor were to decide not to buy tail coverage himself, then the hospital might become the deep-pocket target of a malpractice suit, instead of the doctor. For this reason, many hospitals have decided to go ahead and pay for the coverage instead of facing the risk that the doctor won’t buy it.
3. Some hospitalists (most commonly those employed by hospitals) have an occurrence malpractice policy that doesn’t require tail coverage. Claims-made policies, which do require tail coverage, are much more common overall, but it is worth thinking about whether an occurrence policy might be better in your situation. If you’re unfamiliar with the differences between these policies, a good discussion can be found at www.physiciansnews.com/business/405.html, or just put “claims made + occurrence” in a search engine and you will find some good explanations.

The right approach to this issue will vary from one place to the next. In the current environment, with more hospitalist positions than there are doctors to fill them, many practices may need to agree to pay tail coverage for departing doctors.

Non-Compete Clauses

Non-compete clauses are common in physician contracts. They generally specify that a doctor who leaves a practice may not practice the same specialty of medicine within a defined geographic region for a specified period of time. The rationale for their inclusion in any specialty of medicine is complex but can be illustrated by an example that I watched play out while I was a resident.

With much fanfare, the hospital where I did my residency training in the 1980s recruited its first cardiac transplant surgeon, then bought new equipment and hired new staff to support the program. After about two years, the surgeon decided to move his practice to a hospital about 30 miles away, and the teaching hospital had made a big investment in a transplant program that it could no longer operate. Even if the hospital could have found a new transplant surgeon quickly, the original surgeon had developed relationships and referral sources from around the state, and most of these referrals would follow him to his new hospital.

I was only a resident and don’t know anything about why the doctor left or whether his contract had a non-compete provision. But it was clear to me that the hospital had made a big investment building the program around him and would now need to start over, working to recapture the referral relationships the departing doctor had taken with him. The hospital would have been smart to have a non-compete clause in place that would prohibit the surgeon from practicing in its market. It wouldn’t be fair to prevent the surgeon from leaving or practicing transplant surgery elsewhere, but it seems reasonable for the hospital to require that he not practice in a place that would be geographically close enough to interfere with its referrals.

There are better sources for the overall rationale of non-competes than this column, but some of the principal reasons they’re written into contracts include:

• To prevent a doctor from developing referral relationships—with the help of the employer practice—and then taking them across town to a competing group;
• To prevent a departing doctor from taking trade secrets about the way business is conducted—or future business plans—and using that information to benefit a competing practice; and
• To provide a means to reduce the chance that a practice incurs the expense of recruiting and getting the doctor established in practice, only to have the doctor quickly “jump ship” to a competing practice.

In most, but not all, cases, it is hard to argue that hospitalists can redirect referral sources or steal trade secrets when they leave a practice. Accordingly, these issues are rarely a good reason to include a non-compete.

Including a non-compete simply to prevent a doctor from jumping ship to a new practice has always struck me as the least legitimate reason; your practice should keep doctors from leaving because they like it there rather than because of a contractual provision that makes it difficult to switch to a different practice in the area. And including a non-compete clause comes at a cost of potentially scaring off the people you are trying to recruit, which could mean that it is hurting the practice more than helping it.

I’m not suggesting that non-competes have no place in hospitalist practice; they may be important and appropriate in some situations. But each hospitalist practice should take the time to think critically about whether to include one or not. Simply including it because it is common practice in other physician contracts may do more harm than good.

If you are a hospitalist and are considering signing a contract that includes a non-compete, don’t let this column lead you to believe that the practice is trying to treat you unfairly. But it is reasonable for you to ask the group representative why they see it as necessary. You might get lucky and find that they’re willing to delete or shorten it.

Conclusion

When it comes to hospitalist contracts, no one formula can apply to all practices or to all physicians. Careful analysis of the contract by both parties, however, along with a few well-thought-out questions, might prevent future problems. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is a co-founder and past-president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. This column represents his views and is not intended to reflect an official position of SHM.

Several times a week, I hear from doctors or administrators who want to discuss solutions to the latest crises occurring in their practices. There are three contractual issues that come up regularly in these conversations. One is how to handle the contractual provision for vacation time, and I addressed that in last month’s column.

This month, I’ll discuss the other two issues: payment for malpractice “tail coverage” and the inclusion of a non-compete clause in hospitalist employment contracts.

Malpractice Tail Coverage

Not long ago, I got a call from the worried administrator of a growing and successful hospitalist practice. She described a crisis that had started when a doctor decided to leave the practice to pursue fellowship training. The doctor was happy with the practice and enjoyed the time he had spent as part of it. Yet his departure had set off a wave of threatened resignations that risked the collapse of the practice.

It turns out that the doctors’ employment contract specified that the employer would pay malpractice tail coverage for any doctor who left the practice before completing two years of employment. After the two-year anniversary, the doctor would have to pay for tail coverage. Most doctors in this young practice were nearing their two-year anniversary, and they began to worry about having to assume this responsibility.

I spoke with one such doctor. The physician was happy with the practice and had not spent time thinking about leaving until faced with the issue of tail coverage. Like many hospitalists, she tended to think of her commitment to the practice more in terms of dating than as a marriage. She wanted to keep her options open to pursue other work in the future and thought there might be some chance she would move if she experienced a major life change like marriage. So—like several of her colleagues—she thought about leaving the practice ahead of the two-year anniversary, thus avoiding committing to paying tail coverage that could be as much as $25,000 per year, depending on how long she stayed with the practice. To her, assuming the risk of paying the tail coverage felt like punishment for staying in the practice for longer than two years rather than a reward for her loyalty.

Ultimately, the hospitalists and the multispecialty group that they were part of negotiated for the practice to pay the tail coverage regardless of the duration of a departing doctor’s employment with the group. The group paid for this in part by paying beginning hospitalists a lower salary; in a sense, the doctors were still paying a portion out of their own pockets, but it seemed less painful this way.

It is reasonably common in any specialty for a group to assume the risk of paying tail coverage if one of its doctors leaves the practice within the first two or three years because a doctor who decides to leave that quickly often does so after concluding that the practice is not as it was described during the recruiting process. But a doctor who departs later than that is more likely to do so because she has simply decided to pursue other options, and it seems reasonable that she should pay the expenses related to her departure. This is a reasonable approach, but there are several issues that might cause a practice to approach the issue differently for hospitalists than for other doctors.

1. Hospitalist practice is likely to have a somewhat higher turnover in staffing than other physician groups for several reasons that I won’t enumerate here. So, like the woman in the anecdote above, everyone should acknowledge that the fact that a hospitalist is willing to stay longer than two or three years does not mean he or she will stay for a career. With this in mind, payment of tail coverage may be a bigger issue for hospitalists and may require a different approach than for other specialties, though whether the practice or the hospitalist should pay for it is still up for debate.
2. Nationally, about half of hospitalists are employed by the hospital in which they work, and—in this case—malpractice insurance is usually provided by the employing hospital. Many or most hospitals have decided it is in their interest to pay for tail coverage for a departing doctor regardless of his duration of service. If a doctor were to decide not to buy tail coverage himself, then the hospital might become the deep-pocket target of a malpractice suit, instead of the doctor. For this reason, many hospitals have decided to go ahead and pay for the coverage instead of facing the risk that the doctor won’t buy it.
3. Some hospitalists (most commonly those employed by hospitals) have an occurrence malpractice policy that doesn’t require tail coverage. Claims-made policies, which do require tail coverage, are much more common overall, but it is worth thinking about whether an occurrence policy might be better in your situation. If you’re unfamiliar with the differences between these policies, a good discussion can be found at www.physiciansnews.com/business/405.html, or just put “claims made + occurrence” in a search engine and you will find some good explanations.

The right approach to this issue will vary from one place to the next. In the current environment, with more hospitalist positions than there are doctors to fill them, many practices may need to agree to pay tail coverage for departing doctors.

Non-Compete Clauses

Non-compete clauses are common in physician contracts. They generally specify that a doctor who leaves a practice may not practice the same specialty of medicine within a defined geographic region for a specified period of time. The rationale for their inclusion in any specialty of medicine is complex but can be illustrated by an example that I watched play out while I was a resident.

With much fanfare, the hospital where I did my residency training in the 1980s recruited its first cardiac transplant surgeon, then bought new equipment and hired new staff to support the program. After about two years, the surgeon decided to move his practice to a hospital about 30 miles away, and the teaching hospital had made a big investment in a transplant program that it could no longer operate. Even if the hospital could have found a new transplant surgeon quickly, the original surgeon had developed relationships and referral sources from around the state, and most of these referrals would follow him to his new hospital.

I was only a resident and don’t know anything about why the doctor left or whether his contract had a non-compete provision. But it was clear to me that the hospital had made a big investment building the program around him and would now need to start over, working to recapture the referral relationships the departing doctor had taken with him. The hospital would have been smart to have a non-compete clause in place that would prohibit the surgeon from practicing in its market. It wouldn’t be fair to prevent the surgeon from leaving or practicing transplant surgery elsewhere, but it seems reasonable for the hospital to require that he not practice in a place that would be geographically close enough to interfere with its referrals.

There are better sources for the overall rationale of non-competes than this column, but some of the principal reasons they’re written into contracts include:

• To prevent a doctor from developing referral relationships—with the help of the employer practice—and then taking them across town to a competing group;
• To prevent a departing doctor from taking trade secrets about the way business is conducted—or future business plans—and using that information to benefit a competing practice; and
• To provide a means to reduce the chance that a practice incurs the expense of recruiting and getting the doctor established in practice, only to have the doctor quickly “jump ship” to a competing practice.

In most, but not all, cases, it is hard to argue that hospitalists can redirect referral sources or steal trade secrets when they leave a practice. Accordingly, these issues are rarely a good reason to include a non-compete.

Including a non-compete simply to prevent a doctor from jumping ship to a new practice has always struck me as the least legitimate reason; your practice should keep doctors from leaving because they like it there rather than because of a contractual provision that makes it difficult to switch to a different practice in the area. And including a non-compete clause comes at a cost of potentially scaring off the people you are trying to recruit, which could mean that it is hurting the practice more than helping it.

I’m not suggesting that non-competes have no place in hospitalist practice; they may be important and appropriate in some situations. But each hospitalist practice should take the time to think critically about whether to include one or not. Simply including it because it is common practice in other physician contracts may do more harm than good.

If you are a hospitalist and are considering signing a contract that includes a non-compete, don’t let this column lead you to believe that the practice is trying to treat you unfairly. But it is reasonable for you to ask the group representative why they see it as necessary. You might get lucky and find that they’re willing to delete or shorten it.

Conclusion

When it comes to hospitalist contracts, no one formula can apply to all practices or to all physicians. Careful analysis of the contract by both parties, however, along with a few well-thought-out questions, might prevent future problems. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is a co-founder and past-president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. This column represents his views and is not intended to reflect an official position of SHM.

Several times a week, I hear from doctors or administrators who want to discuss solutions to the latest crises occurring in their practices. There are three contractual issues that come up regularly in these conversations. One is how to handle the contractual provision for vacation time, and I addressed that in last month’s column.

This month, I’ll discuss the other two issues: payment for malpractice “tail coverage” and the inclusion of a non-compete clause in hospitalist employment contracts.

Malpractice Tail Coverage

Not long ago, I got a call from the worried administrator of a growing and successful hospitalist practice. She described a crisis that had started when a doctor decided to leave the practice to pursue fellowship training. The doctor was happy with the practice and enjoyed the time he had spent as part of it. Yet his departure had set off a wave of threatened resignations that risked the collapse of the practice.

It turns out that the doctors’ employment contract specified that the employer would pay malpractice tail coverage for any doctor who left the practice before completing two years of employment. After the two-year anniversary, the doctor would have to pay for tail coverage. Most doctors in this young practice were nearing their two-year anniversary, and they began to worry about having to assume this responsibility.

I spoke with one such doctor. The physician was happy with the practice and had not spent time thinking about leaving until faced with the issue of tail coverage. Like many hospitalists, she tended to think of her commitment to the practice more in terms of dating than as a marriage. She wanted to keep her options open to pursue other work in the future and thought there might be some chance she would move if she experienced a major life change like marriage. So—like several of her colleagues—she thought about leaving the practice ahead of the two-year anniversary, thus avoiding committing to paying tail coverage that could be as much as $25,000 per year, depending on how long she stayed with the practice. To her, assuming the risk of paying the tail coverage felt like punishment for staying in the practice for longer than two years rather than a reward for her loyalty.

Ultimately, the hospitalists and the multispecialty group that they were part of negotiated for the practice to pay the tail coverage regardless of the duration of a departing doctor’s employment with the group. The group paid for this in part by paying beginning hospitalists a lower salary; in a sense, the doctors were still paying a portion out of their own pockets, but it seemed less painful this way.

It is reasonably common in any specialty for a group to assume the risk of paying tail coverage if one of its doctors leaves the practice within the first two or three years because a doctor who decides to leave that quickly often does so after concluding that the practice is not as it was described during the recruiting process. But a doctor who departs later than that is more likely to do so because she has simply decided to pursue other options, and it seems reasonable that she should pay the expenses related to her departure. This is a reasonable approach, but there are several issues that might cause a practice to approach the issue differently for hospitalists than for other doctors.

1. Hospitalist practice is likely to have a somewhat higher turnover in staffing than other physician groups for several reasons that I won’t enumerate here. So, like the woman in the anecdote above, everyone should acknowledge that the fact that a hospitalist is willing to stay longer than two or three years does not mean he or she will stay for a career. With this in mind, payment of tail coverage may be a bigger issue for hospitalists and may require a different approach than for other specialties, though whether the practice or the hospitalist should pay for it is still up for debate.
2. Nationally, about half of hospitalists are employed by the hospital in which they work, and—in this case—malpractice insurance is usually provided by the employing hospital. Many or most hospitals have decided it is in their interest to pay for tail coverage for a departing doctor regardless of his duration of service. If a doctor were to decide not to buy tail coverage himself, then the hospital might become the deep-pocket target of a malpractice suit, instead of the doctor. For this reason, many hospitals have decided to go ahead and pay for the coverage instead of facing the risk that the doctor won’t buy it.
3. Some hospitalists (most commonly those employed by hospitals) have an occurrence malpractice policy that doesn’t require tail coverage. Claims-made policies, which do require tail coverage, are much more common overall, but it is worth thinking about whether an occurrence policy might be better in your situation. If you’re unfamiliar with the differences between these policies, a good discussion can be found at www.physiciansnews.com/business/405.html, or just put “claims made + occurrence” in a search engine and you will find some good explanations.

The right approach to this issue will vary from one place to the next. In the current environment, with more hospitalist positions than there are doctors to fill them, many practices may need to agree to pay tail coverage for departing doctors.

Non-Compete Clauses

Non-compete clauses are common in physician contracts. They generally specify that a doctor who leaves a practice may not practice the same specialty of medicine within a defined geographic region for a specified period of time. The rationale for their inclusion in any specialty of medicine is complex but can be illustrated by an example that I watched play out while I was a resident.

With much fanfare, the hospital where I did my residency training in the 1980s recruited its first cardiac transplant surgeon, then bought new equipment and hired new staff to support the program. After about two years, the surgeon decided to move his practice to a hospital about 30 miles away, and the teaching hospital had made a big investment in a transplant program that it could no longer operate. Even if the hospital could have found a new transplant surgeon quickly, the original surgeon had developed relationships and referral sources from around the state, and most of these referrals would follow him to his new hospital.

I was only a resident and don’t know anything about why the doctor left or whether his contract had a non-compete provision. But it was clear to me that the hospital had made a big investment building the program around him and would now need to start over, working to recapture the referral relationships the departing doctor had taken with him. The hospital would have been smart to have a non-compete clause in place that would prohibit the surgeon from practicing in its market. It wouldn’t be fair to prevent the surgeon from leaving or practicing transplant surgery elsewhere, but it seems reasonable for the hospital to require that he not practice in a place that would be geographically close enough to interfere with its referrals.

There are better sources for the overall rationale of non-competes than this column, but some of the principal reasons they’re written into contracts include:

• To prevent a doctor from developing referral relationships—with the help of the employer practice—and then taking them across town to a competing group;
• To prevent a departing doctor from taking trade secrets about the way business is conducted—or future business plans—and using that information to benefit a competing practice; and
• To provide a means to reduce the chance that a practice incurs the expense of recruiting and getting the doctor established in practice, only to have the doctor quickly “jump ship” to a competing practice.

In most, but not all, cases, it is hard to argue that hospitalists can redirect referral sources or steal trade secrets when they leave a practice. Accordingly, these issues are rarely a good reason to include a non-compete.

Including a non-compete simply to prevent a doctor from jumping ship to a new practice has always struck me as the least legitimate reason; your practice should keep doctors from leaving because they like it there rather than because of a contractual provision that makes it difficult to switch to a different practice in the area. And including a non-compete clause comes at a cost of potentially scaring off the people you are trying to recruit, which could mean that it is hurting the practice more than helping it.

I’m not suggesting that non-competes have no place in hospitalist practice; they may be important and appropriate in some situations. But each hospitalist practice should take the time to think critically about whether to include one or not. Simply including it because it is common practice in other physician contracts may do more harm than good.

If you are a hospitalist and are considering signing a contract that includes a non-compete, don’t let this column lead you to believe that the practice is trying to treat you unfairly. But it is reasonable for you to ask the group representative why they see it as necessary. You might get lucky and find that they’re willing to delete or shorten it.

Conclusion

When it comes to hospitalist contracts, no one formula can apply to all practices or to all physicians. Careful analysis of the contract by both parties, however, along with a few well-thought-out questions, might prevent future problems. TH

Dr. Nelson has been a practicing hospitalist since 1988 and is a co-founder and past-president of SHM. He is a principal in Nelson/Flores Associates, a national hospitalist practice management consulting firm. This column represents his views and is not intended to reflect an official position of SHM.