How to Calculate How Much Revenue Your Hospitalist Generates: Part 2 

In part one of this article, we were talking about the misconception that hospitalists are just a cost center for a hospital, rather than a revenue-generating program. When you start to look at the metrics they impact, like length of stay, then it’s easier to understand the true value they bring, and why you should invest in keeping your hospitalists happy, with a fair workload, to avoid hospitalist burnout.  

Last time, we talked about how hospitalists bring down length of stay. So, we know that hospitalists bring more financial value to their institution beyond the charges for their professional services. We’ve looked at length of stay and how it can be impacted by hospitalists, and how that can impact your bottom line. Today we’re going to talk about CMI – Case Mix Index. 

The CMI is the average diagnosis-related group (DRG) relative weight for that hospital. So, when the hospital is caring for sicker patients with a “higher” DRG, then the CMI for the hospital will go up. This will have an impact on the revenue for the hospital as the CMI acts in effect as a multiplier for all of the DRGs for the patients in the hospital. This is why your hospital has a CDI program (Clinical Documentation Initiative). 

By having a CDI program to help providers improve their documentation, the documentation more accurately reflects the acuity of the patients’ illnesses, and thus the CMI goes up and hospital reimbursement goes up. This is why you’ll frequently find queries asking you to better document the acuity of the heart failure or the renal failure for your patient. By doing a better job on documentation, the hospital will generate more revenue across the board.   

This is another part of why hospitalists are so important to the financial health of organizations. When it was all private doctors managing their patients, the hospital had very little influence on their documentation, and thus the hospital’s revenue. By having hospitalists in their employ (or under contract), the hospital is more able to influence the hospitalists to provide better documentation that more accurately reflects the severity of the patients’ illnesses, and thus improves revenue. 

Limiting Provider Turnover 

Another way that your hospitalist program can provide value to the hospital is by keeping expenses down. We’re not going to talk about seeing more patients with fewer providers – I think that road leads to destruction of programs. Instead, we’re going to talk about limiting provider turnover. 

As we’ve progressed through the pandemic, we’ve all seen more and more stories about burnout in health care. How people are giving up healthcare for less stressful professions. This is only natural in the face of a global pandemic that has already claimed the lives of more than 880,000 people in this country alone. But burnout among hospitalists has been an issue for some time, even before the pandemic. And it’s very costly. 

The average cost to bring on a new hospitalist is likely much higher than you expect. In a great analysis of the literature regarding these costs, Dr. David A. Frenz, MD found that bringing on a new hospitalist may cost your group more than $300,000! Where do these costs come from?  Recruitment costs are high, including advertising, booths at conferences, professional recruiter fees, and interviews. After this, there can be specific costs such as loan forgiveness, relocation, signing bonus, and more.  hen the providers need to be onboarded – credentialing, payer enrollment, education (EHR, coding, etc…). He cites a total cost to train, credential, market and onboard a physician is $200,000 to $300,000. And then there’s the lost revenue. 

While it’s difficult to tell with hospitalists, in the ED, new providers take up to nine months to get their revenue production equal to the prior provider, generating only 87% of prior revenue until then. Given hospitalist charges, this is another $40,000 or so in lost revenue. When you add it all up, losing a provider and bringing a new one on board is very costly. 

One of the best ways you can save your program (and your hospital) money is to avoid hospitalist turnover. Do the best you can to avoid burnout and keep your providers happy and healthy. It will more than pay for itself in the long run. Make sure you have adequate staff and make sure the workloads for your providers are fair and manageable.   

One of the ways to make sure that your providers’ workloads are fair is in your patient assignment process. Today, most hospitals create their daily rounding lists manually, which takes a lot of time – and leads to a lot of complaints.  

When you do it in an automated fashion, through software like our Assign software, it makes many of these functions automatic. No one feels like someone is playing favorites and giving them all the “bad” patients. Or that they always get a heavier workload than their colleagues.  Or that they are just getting patient loads that are too high. By assigning patients according to workload, maintaining long-term continuity of care (it’s always easier to treat someone you know from prior admissions), and having an impartial system to distribute patients, you can help all your providers feel better and reduce burnout. This is good for your providers, but also great for your program and your hospital. 

Final Thoughts 

As a practicing hospitalist myself (I may or may not be writing this while on a quick break wearing my scrubs), I know how easy it is for hospitals to overlook the benefits that hospitalists bring. And I know how easy it is to forget that hospitalists have a tangible financial impact on your hospital’s revenue, especially when you understand their impact on measures like length of stay, the case mix index, and the cost of turnover. That’s why it’s so critical for hospitals to ensure that hospitalists have the tools they need to do their job, especially for a critical area like the patient assignment process, which can be automated to ensure that your patients get better care and your hospitalists have fair workloads.  

In fact, take a look at what some of the doctors over at Northwell’s South Shore Hospital had to say about this very issue and why they’ve been able to improve continuity of care and so much more.  

The Hidden Costs of Manual Patient Assignment eBook

Creating patients lists manually comes at a cost – for your staff and your patients. In this eBook, we’ll learn about how it costs your hospital medicine teams revenue, causes burnout, impacts patient safety; and how to solve these challenges.

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