Physicians are the cost drivers
Toolbox
Published: February 16, 2008
Rep. McFaun's proposal to "apply some strong fiscal controls" by creating fixed hospital budgets requires response. Hospitals are brick and mortar facilities staffed by people who are providing services. The "hospital" does not provide any service. Service, treatment and care are provided by people using their knowledge and skill to deliver services, treatment and care. It is the people who work in the hospital who are responsible for the quality of the service, treatment and care they provide with ultimate accountability with the CEO and board of directors.
However, service, treatment or care is only provided when prescribed by a physician. With the exception of professional nursing care, there is not an X-ray taken, an aspirin pill administered, or a patient moved out of the ICU without a physician's order. If a physician chooses to order six X-rays, there is no one to question the propriety of such a decision; if the physician orders an intravenous medication when an oral medication would be just as effective, there is no one counseling him to consider the safer and less costly alternative; if a physician keeps the patient in the hospital for days beyond the patient's acute medical need, there is no one to remind him that for each day his patient remains in the hospital, the patient's risk for an iatrogenic event increases by 6 percent. Beyond the fixed costs of running a hospital, the cost of care is, in large part, in the hands of the physicians.
If the cost of care is higher than the revenue received for that care, the hospital loses money. Having a fixed budget when 80 percent of the costs of care are the result of the practice habits of physicians will inevitably result in lay-offs, and delays in purchasing equipment or supplies.
Rep. McFaun is correct when he states that the hospital is the high-cost venue of the entire health care industry. But it is also the highest-risk venue, both in clinical and financial terms. If Rep. McFaun really wants to reduce hospital costs, there are several approaches to consider:
1) Level the reimbursement field. Right now, if a physician orders an intervention that is not considered medically appropriate to the patient's immediate acute care needs (e.g. patient admitted with heart failure, but the physician orders a bone scan), the hospital is at risk for non-payment. But the physician who prescribed that intervention will get paid regardless.
2) Start publishing information on how physicians practice. Evidence-based medicine, that is, medical practice based on the most current research, can reduce clinical costs if physicians prescribe interventions in keeping with the research.
3) Similarly, show the income (reimbursement) and expense (costs) for physicians so that the community can see the difference in costs among physicians in treating similarly diagnosed hospitalized patients. It certainly would be refreshing to see precisely where and why hospitals lose money.
4) Employ acute care medical specialists (hospitalists and intensivists) to care for the hospitalized patient and make sure that they are compensated based on their record of high quality and safety. Unlike many of their community-based family practitioners, internal medicine certified colleagues working full-time in the hospital have gained the experience and expertise needed to care for the acutely ill patient.
5) Hire more nurses. In the myopic view of the bureaucrats, getting rid of professional staff nurses is a money saver. However, it is also a foot-shot. Studies have repeatedly shown that the more nurses present on the patient units, the lower the mortality rates, the infection rates, the fall rates, and the error rates. All of which increase costs. In the end, high quality costs less.
Health care reform is a complex issue and the hospital industry an entrenched culture resistant to any major change. Hospital executives and boards of directors are loathe to restrict admitting privileges to any community physician for fear of drying up the referral stream of patients, which is, after all, essential for the hospital's survival. The hospital is only a structure housing the resources needed to care for the seriously ill patient. It is the people, primarily the physicians, who drive costs and influence the quality.
STEFANI DANIELS
Clarendon
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