You Can’t Pay Hospitalists By The RVU

Every year about this time, hospitalists begin their contract negotiation with hospitals for the upcoming fiscal year. I’ve been on both sides of the negotiation table over the past 20 years. As with any negotiation, to be really successful, one party needs to not only know what the other party really wants but they need to know what it is they, themselves, really want. All too often, because we know neither what the other side wants nor what it is that we really want, we fall back on negotiating about money. The problem is that money is often not the most important thing that either side values.

What the hospital really wants:

1. A positive financial margin at the end of the year. This is what the Board of Trustees really cares about and you can improve the margin in two ways: increase your revenue or decrease your expenses. But sometimes spending a little more on one expense item/department can greatly reduce the expense of another item/department. This becomes very difficult because large hospitals are often administratively compartmentalized and each compartment is held individually accountable for its financial bottom line and often for the hospital to make money overall, one compartment has to lose money. If the hospitalist is trying to see as many patients as possible and pump out as much in billings, then this may or may not be in alignment with the hospital margin. By paying a little more for the hospitalist, the hospital can often save more money if the extra amount of time that the hospitalist can now spend on the patient translates into a shorter stay and less expensive testing.
2. Higher patient satisfaction. This is one of the publicly reported measures that hospitals are judged and compared to each other on the Medicare Hospital Compare website. If the hospitalist is primarily motivated by patient volume, what the patient thinks about the hospitalist (or the hospital) becomes relatively unimportant. RVUs are a quantity contest, not a popularity contest.
3. Shorter length of stay. A shorter length of stay results in a more positive financial margin. If you can get a patient out of the hospital one day earlier, then that patient doesn’t consume expensive hospital resources (medications, lab tests, nursing time, meals, etc.) and, more importantly, you can get another paying patient in that room quicker. If the hospitalist’s goal is to maximize RVUs, then it can be paradoxically better for that hospitalist to keep the patient in the hospital one more day because that extra day in the hospital will involve relatively little time on the hospitalist’s part thus resulting in earning low-effort RVUs.
4. Lower readmission rates. The hospital is penalized if 30-day readmission rates are excessively high. The hospitalist is rewarded if the 30-day readmission rate is high: it not only means more RVUs, but you can copy most of your previous history and physical exam making the admission quick with more low-effort RVUs. One of the key drivers in whether a patient gets readmitted shortly after discharge is the amount of time and effort spent in the discharge process. If the hospitalist has the time it takes to personally speak with the patient’s primary care physician, do a careful medication reconciliation, and ensure that all post-hospital tests and appointments are scheduled, that patient is less likely to be readmitted. The problem is that the hospitalist is going to get paid the same amount in RVUs whether or not they go to all of that extra effort to ensure a good discharge.
5. Patients being discharged from the hospital earlier in the day. From the hospital’s perspective, an earlier discharge hour means that another patient can fill that bed earlier from either the ER or the OR and so patients don’t have to wait as long in the post-op recovery room or in the ER to get a bed. From the hospitalist’s standpoint, getting those patients out earlier in the day means that he/she will have to work a lot more intensely early in the morning and if paid by the RVU, you end up with the same amount of money in your pocket whether you discharge that patient at 10:00 AM or 4:00 PM and it is a lot easier to take your time and get the patient out at 4:00.
6. Higher case mix index. The higher the case mix index (a measure of the severity of disease of the patient), the more the hospital gets paid. The case mix index also affects the publicly reported mortality index  (mortality rate adjusted for case mix index). So, the hospital wants a higher case mix index and the only way to do this for non-surgical admissions is for the physician to document all of the little co-mobidities that the patient had on admission (such as hypomagnesemia, malnutrition, etc.). When paid by the RVU, the hospitalist is not motivated to go to the extra effort to document all of these co-morbidities because he/she is going to be paid the same and ferreting out all of these (often obscure and unimportant) findings takes extra time and effort.
7. Patients moved out the ER to the floor rapidly. The hospital has to report the amount of time the patient spends in the ER waiting for a bed and needs to keep that number as low as possible to avoid public embarrassment. Furthermore, the quicker the hospital can get that patient out of the ER, the sooner another patient can be placed into that ER room. To do this, the hospitalist needs to see the patient and write orders on the patient so that the patient can move from the ER to the nursing unit. The hospitalist who is paid by the RVU could not care less how quickly the patient gets out of the ED since they get paid the same, regardless.
8. Avoidance of unnecessary expensive tests and treatments. For the hospital, fewer tests on inpatients equates to a higher financial margin. The hospitalist paid by the RVU could not care less.
9. Lower mortality index. Neither the hospital nor the hospitalist wants to have one of their patients die. But patients are going to die, regardless. Most of the patients who die in our hospital are “DNR-CC” or “DNR-CCA”, meaning that they are anticipated to die and have elected to not be resuscitated when their heart and lungs stop working. There are two ways to lower your mortality index: (1) increase your case mix index by documenting all of the obscure co-morbidities or (2) get the patient to die somewhere other than in your hospital, most commonly at an inpatient hospice facility. For most of these patients, dying at home is neither practical nor desired by the family. If a DNR patient dies in your hospital, it is included in the hospital’s mortality rate but if that same patient dies at a separate inpatient hospice, the death doesn’t count against the hospital’s mortality rate. Once again, the mortality index is publicly reported on the Medicare Hospital Compare website. For the hospitalist paid by the RVU, arranging the transfer of a dying patient to a hospice facility takes a lot of work and it is easier to just care for that patient in the hospital until they die; plus, the hospitalist can bill for a few more days of inpatient care.
10. Avoidance of complications. Healthcare associated infections and surgical complications are publicly reported on the Medicare Hospital Compare website so the hospital wants to keep the numbers down. Even more importantly, hospital complications are costly and can lower the hospital’s financial margin. For the hospitalist, the RVU pays the same, with or without complications. In fact, if a patient has a complication, the hospitalist can bill a higher level of service thus generating more RVUs.
11. A sufficient number of doctors to provide care to the patients at any given time. The hospital wants to optimize patient throughput whereas the hospitalist paid by the RVU wants to optimize patient volume. There comes a point, however, where too high of patient volume results in reduced patient throughput. For more explanation, see the post on The Starling Curve of Physician Productivity.

What the hospitalist really wants:

1. To feel that they are valued as professionals. The hospitalist invested 11 years of post-high school education to become a hospitalist and they want to be recognized for that effort. What the hospital often thinks it needs is a warm body with the initials M.D. or D.O. One advantage that our hospital has in the local market is that all of our hospitalists get an OSU faculty appointment, even if it is an unpaid appointment. Being able to say that you are an Assistant Professor at the Ohio State University is enormously valued.
2. Adequate work-life balance. Physicians of the baby boomer generation went into medicine with the expectation that they were going to work very long hours and have very few days off. Most hospitalists are in the millennial generation and trained in an era of ACGME-legislated duty hour limits and emphasis on life outside of work. Baby boomer doctors have no problem carrying their pagers 24-hours a day and being called on their days off work. Millennial doctors want to turn their pagers off when they leave the hospital and not turn them on again until their next shift.
3. To have sufficient time during the day to do their job well. Physicians are professionals and they want to take pride in a job done thorough and a job done well. To do that, they have to have enough time that they don’t have to cut corners in patient care. Insufficient time to do one’s job leads to burn-out.
4. A reasonable salary. Notice that I didn’t say the highest salary. Most hospitalists are not choosing a job because it pays the best but because it is the best place for them to work. In fact, if a hospitalist is choosing a job purely based on salary, you probably don’t want that hospitalist in your hospital. A hospital with a terrible “churn and burn” environment with excessive hospitalist work loads and high turnover will have to pay more to attract a hospitalist than a hospital where the hospitalists feel valued and treated as professionals.
5. To heal patients’ disease and suffering. Lets face it, college students who decide to go to medical school are intelligent… really intelligent. And to get into medical school, they’ve got to be hard working… really hard working. They are going to spend 4 years racking up $180,000 in medical school debt then get paid a little more than minimum wage as a resident for 3 years. With their intelligence and work ethic, they could have gone into engineering or IT and made more money over the course of a lifetime than a doctor. The reason that they went into medicine in the first place was a desire to heal and help.
6. A collegial work environment. Most hospitalists want to work in a team of like-minded physicians and they want to work with people who they know will back them up if they have a family emergency or they get sick. They want to know that when they have 3 patients crashing at the same time, that one of their partners is going to come over to help out without being asked. They also want to work with consultants who are going to partner with them in the care of their patients.

There isn’t a lot of overlap between these two lists. So, what we usually do is fall back on things that we can understand and easily quantitate, like the number of patients a hospitalists sees per day, the number of shifts per year, salary, and RVUs (Relative Value Units) billed. But by doing this, neither side really gets what they want and both sides end up being less satisfied than they could be. What is the solution? I have some ideas and I’ll outline them in the next post.

March 4, 2017