A Deeper Dive into Hospital Medicine Group Finances
It is really interesting to ponder where the dollars come from to fund higher hospitalist compensation if the financial support provided per FTE hasn’t increased. Perhaps hospitalists are generating more encounters, work relative value units (wRVUs), or professional fee collections?
Median professional fee collections were $213,000 this year, up from $151,000 in the prior survey two years ago. This increase could, in theory, fully fund the higher hospitalist compensation without the need for an increase in other sources of revenue.
So why are collections up? It could be because hospitalists are coding the average visit at a higher level: 2.02 wRVUs per encounter this year compared to 1.97 in 2014 and 1.91 in 2012. The survey can’t help distinguish whether this increase is because we’re seeing more complex patients or whether we’re improving our documentation to catch up with the complexity of the patients we’ve been seeing all along. I suspect it is both.
The increase in wRVUs per encounter, however, is offset by a continued downward trend in numbers of encounters: 1,684 this year compared to 1,850 in 2014 and 2,078 in 2012. The total wRVUs generated per hospitalist in a year stayed about the same at 4,247 compared to 4,298 in 2014.
The best explanation for why total collections are up would be that payor rates have increased. But Medicare, which accounts for about 60%–65% of the payor mix for most hospital medicine groups, hasn’t increased rates enough to explain this, and I’m not aware of other payor classes that have increased significantly. Another explanation could be that hospital medicine groups are simply doing a better job with billing and collections and other revenue-cycle management activities, resulting in increased revenue.
I guess it shouldn’t be surprising that some of the survey results don’t seem internally consistent. The data come from two different surveys, the response rate for each question varies, and other issues mean the survey just can’t provide that level of precision. We also need to keep in mind that analyses like I’ve provided here are only very rough explanations. But I think they’re still valuable to think about even if they don’t provide definitive answers. TH
Reference
- 2016 State of Hospital Medicine Report. Society of Hospital Medicine website. Accessed August 9, 2016.
Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at [email protected].