And the Last Shall Be First (Part 3 of 3)

Wesley Curry , MD, FACEP

President and CEO

Published August 14, 2012

Which Hospital-Based Physician Specialty Will Wield The Mightiest Pen In The Future?

In my last two blogs I examined how the dynamic behind bundled payments will create a vacuum to be filled by those with the most leverage. The leverage wielded by any physician specialty group will be determined not only by its ability to generate the most revenue and to save the most money, but also by the size of its integrated group. And as CMS puts greater emphasis on hospital-acquired infections and readmission rates, I believe we will see the hospitalist emerge as the hospital-based physician specialty that holds the most leverage within the hospital in the new healthcare environment.

In the past, hospitalists have been on the lower end of average compensation for all hospital-based physicians, but that can be expected to change significantly in the future. Although they are a relatively new specialty compared to their colleagues, the growing leverage of the hospital medicine physician within the hospital may soon overshadow that of the other, more-established hospital-based physicians. Their importance to the financial performance of the hospital continues to become more apparent with new compensation methods being promoted by both commercial and public payers.

The saying, “No margin, no mission,” neatly summarizes this point. It will be the physicians who save or generate money who will have the clout within the hospital environment in the future.

The hospitalist’s ability to do both will become more apparent as fee for service policies are abandoned in favor of fee for value. Currently, hospitalists often cannot generate sufficient revenue by billing through the current fee for service methodology because they frequently serve uninsured or underinsured patients where collections are insufficient. For this reason, they have been perceived to require financial subsidies, and hospitals have historically shifted revenue from other hospital revenue/departments to supplement their compensation at market rates due to insufficient collections. But when all fees are pooled and apportioned according to services provided, hospitalists, like other hospital-based specialists, will be paid according to the work they do. Their inability to collect directly from insurance companies on a fee for service basis will be almost irrelevant.

Therefore we should expect that the hospitalists, now seen as requiring a subsidy, may likely become the hospital-based physician specialist with the best value proposition and mightiest pen in the future. When bundled payments are widely implemented, today’s shortfall of up to $130,000 will be no longer treated on the books as a subsidy by the risk-bearing entity. Hospitalists will and rightfully so be compensated based on the value they provide across the Acute Care Continuum, and the last recognized hospital based physician specialty will be first in terms of leverage in the hospital within the new paradigm of healthcare.

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