Hospitalists and Squeezed Balloons

By  |  August 3, 2011 |  15 

I began thinking about – and yes, advocating for – the concept of hospitalists in the mid-1990s, when I became convinced that having separate inpatient and outpatient physicians would improve the quality, safety, and efficiency of healthcare. A study in today’s Annals of Internal Medicine reports that, while hospitalists did cut hospital lengths of stay and costs (consistent with the prior literature), these savings were eaten up by increased 30-day post-discharge costs, driven largely by higher rates of readmission.

While the study has its limitations, overall I though it was well done, credible, and a bit disheartening. But my core belief about the value of hospitalists endures. If hospitalists are squeezing balloons when it comes to the cost of care, I think we need bigger balloons, not fewer hospitalists.

Under Medicare’s Diagnosis-Related Groups (DRG) reimbursement system, under which hospitals receive a fixed hospital payment for a given diagnosis, hospitals are highly motivated to shorten lengths of stay and decrease inpatient costs. Increasingly, they are also under pressure (via public reporting, accreditation standards, and some early payment changes) to improve quality, safety, the patient’s experience, and (in teaching hospitals), the training of housestaff and students. In all of these areas, hospitalists have made powerful contributions, which is why hospitals have been so enthusiastic about welcoming them and willing to support them politically and economically.

Moreover, hospitalists have stepped up to fill a variety of other needs that go well beyond value improvement: caring for patients who can no longer be handled by residents because of duty-hour limits, managing patients who lack primary care physicians, co-managing surgical and other non-medical patients, and leading quality, safety, and IT initiatives. In addition, after the early pushback (which I have the scars to remind me of), many primary care doctors have embraced the hospitalist idea and are unlikely to return to the chaotic, underpaid, and overstressed world in which they were responsible for their patients across the inpatient-outpatient divide.

Today’s Annals study involved nearly 60,000 Medicare fee-for-service patients who were admitted to 454 U.S. hospitals between 2001 and 2006. It found that while hospitalist care was associated with significantly shorter hospital lengths of stay and modestly lower hospital charges, the savings were consumed by higher 30-day post-discharge costs. Compared with patients cared for in the hospital by their own primary physicians, those cared for by hospitalists were less likely to see their PCPs in follow-up (but more likely to see other physicians), more likely to be discharged to a nursing home, and more likely to return to the ED and be readmitted over the next month. The authors, Yong-Fang Kuo and James Goodwin of the University of Texas’s Galveston branch, performed a variety of sophisticated statistical analyses that adjusted for all the relevant variables and tested whether small changes in assumptions would influence the results. They found that the increased readmission rate was not a very robust finding (it was no longer statistically higher under certain new assumptions), but the rest of their results didn’t waver.

Like the Annals editorialists, Lena Chen and Sanjay Saint of the University of Michigan, I find myself unable to dispute the main findings. The sample size is huge, the definitions and assumptions are reasonable, and the analysis is strong. The limitations are there and acknowledged: the study covered a period 5-10 years ago, the patients are limited to those in the Medicare fee-for-service system (it would be great to see a similar study coming out of a large integrated and capitated system like Kaiser Permanente, which would take it on the chin if all its hospitalists were doing was cost-shifting but hasn’t wavered from its wholesale embrace of the hospitalist model), the definition of hospitalists was based on inpatient volume alone, and there is no information about how programs were organized or about subgroups that might have had better (or worse) results. But these are mostly quibbles – I am willing to take the results at face value.

Explaining them is harder. Were patients simply discharged “sicker and quicker,” and thus more likely to return to the hospital? I doubt it. As Chen and Saint point out, despite an intuitive link between short lengths of stay and higher readmission rates, several studies that have looked for such a connection have come up empty.

More likely, the findings represent the cumulative effects of influences on all the players. Hospitalists – highly motivated to cut hospital days – were more likely to send patients to skilled nursing facilities when they were ready to leave and less able to hook the patients back up with their primary care doctors at the time of discharge. Primary care docs who were uninvolved in the hospitalization may have been less comfortable that they understood the ins-and-outs of the hospital stay and more likely to favor readmission for the post-discharge patient who wasn’t doing well. Patients may have believed that, since their PCP didn’t see them in the hospital, the best thing for them to do if they were wobbly was to return to the ED or the hospital.

Each of these explanations shares a common thread: while the hospitalists did what they were supposed to do in the hospital, and PCPs probably did the same once the patients resurfaced in their office, nobody – neither of these physicians nor the systems of care in which they practiced – stepped forward to fill the black hole after hospital discharge. This should not be surprising, since during the study years there was precisely no incentive for anyone to do so.

The last patient in the study was discharged in 2006. The first serious mention of bundling (a fixed payment for an episode of illnesses, including hospital and post-discharge care) in policy circles came in 2008, a year before the influential NEJM study by Jencks, Williams and Coleman reported that one in five Medicare patients was readmitted in a month, thus catalyzing efforts to penalize hospitals for excess readmissions. For a Medicare fee-for-service patient hospitalized in 2001-06, the “care continuum” was a nice phrase, and just that.

Today’s study tells us that hospitalists have done their jobs well, but the job has been defined too narrowly. As hospitals’ lenses widen to include a larger slice of the care continuum (probably not full capitation but at least a substantial period of time after discharge, coupled with readmission penalties and other maneuvers to put skin in the post-discharge game), their willingness to help support their hospitalist programs will be predicated on the latter’s prove ability to improve quality, safety, patient experience, and efficiency over that entire period, not just the hospital stay. Hospitalists have already begun to dive into this work, leading efforts to create electronic discharge summaries, post-discharge clinics, protocols to follow up on test results, and a variety of other strategies to prevent rehospitalizations and to improve handoffs.

But ensuring safe and efficient post-hospital care is not one-handed clapping. Outpatient systems need to change so that primary care physicians can make themselves available for rapid post-discharge appointments, create after-hours capacity to see patients during the dicey post-discharge period, and share in hospitals’ – and hospitalists’ – accountability for excess readmissions.

The hospitalist field is here to stay, and today’s study doesn’t change that fact. I remain confident that good hospitalist programs, working with their partners in the outpatient setting, can successfully reduce overall costs of care, while improving quality and safety. I’m betting that a repeat of today’s study performed in few years will demonstrate that hospitalists add value across the continuum, not just within the walls of the hospital. These new findings increase the pressure on the hospitalist field to make it demonstrably so, which is as it should be.


  1. Brad F August 3, 2011 at 10:58 am - Reply

    The post hoc rationalizations are endless, and the subgroup analyses could generate a second paper easily. I think about Medicaid, the dual eligibles; like you mentioned, outcomes in known IDS’s etc.

    Additionally, imagine an analysis that rather than charges, looked at true costs. Conversely, perhaps with CMS cuts approaching for SNFs or subspecialty care–the same charges saved or spent would rejigger, and the same glass as half empty conclusion would now be half full (“hospitalist care saves $300 at 30 days and also had more subspecialty f/u scheduled–a good thing”).

    I viewed study in equal light though. Well done, and I do believe we must be realistic. Primary care, soup to nuts, has its advantages, and we need a humble outlook. As much as we add, we detract, and even with more HIT, phone calls, coaching, etc., HM will not make it fully whole. I think FP and ambi IM has a right to call the model out–at least on where the approach has its shortcomings (HM hobbyists, poor organization, etc.–all, NOT easily fixable for years to come).

    Finally, I would also exercise caution and augment Sanjay’s otherwise well done commentary. Falling back on “bundling” as answer is easy. However, we are years away from constructing a valid model on the IM side–and it is a bit too “emperors new clothes” for my take. It may be the solution, but that solution is not at hand. We are stuck with the model we have, not the idealized version we want. Structuring a bundle that works with multiple DRGs, appropriate attribution, QI embeddment and reward is more than a monumental task.

    More transparency of data–Medicare Advantage and commercial payers come to mind, and would help this effort by unlocking their mainframes. Readers of the blog should know, that is a gummed up zone, and we could learn a lot more, and may be heartened, if we knew what was going on on that side of the fence. Yet we wait.

    Thanks for good post Bob


  2. Wagamama August 4, 2011 at 10:56 pm - Reply

    At last! The tide is turning and not a moment too soon. This methodological tour-de-force demonstrates nicely what most specialists already knew: that hospitalists, unencumbered by medical knowledge, simply shift the economic burden just beyond the front door of the hospital. It make a lot of intuitive sense: if your only skill is filling out discharge paperwork, you should not be surprised to find that your efforts have resulted in these rather damning odds ratios:

    “Patients cared for by hospitalists were less likely to be discharged to home (odds ratio, 0.82 [95% CI, 0.78 to 0.86]) and were more likely to have emergency department visits (odds ratio, 1.18 [CI, 1.12 to 1.24]) and readmissions (odds ratio, 1.08 [CI, 1.02 to 1.14]) after discharge.”

    Why would I want a hospitalist caring for me if I’m less likely to go home, and more likely to end up back in the hospital? Sounds like a lose-lose doesn’t it?

    • KMG September 6, 2011 at 4:20 am - Reply

      Let me guess….u r a Primary Care Physician. I’m guessing Family Medicine. Where’s the severity of illness / functionality comparison amongst others. To judge Hospital Medicine completely on this Study wreaks of jealousy and inferiority issues.

  3. SAK August 4, 2011 at 11:28 pm - Reply

    Post discharge appointments and follow up calls are definitely what we need to prevent re-admissions…but I don’t know if the study took into consideration patients who did not have a primary, who then have difficulty getting into seeing someone soon post dc.

    Also, with funds being cut to in home supportive services, most patients find coming back to the ER a short-cut to get whatever they want!

    Too much is being expected of hospitalists these days! If you keep a patient on service too long, you are not aggressive enough, if you discharge the patient too soon, you were too hasty! Whereas more infrastructure/support is needed to support the hospitalist’s work! – more aggressive nurses to make those appointments with primary prior to discharge etc etc

  4. Bob Wachter August 6, 2011 at 6:30 pm - Reply

    The following is a comment from “The Happy Hospitalist” (sorry, the blog’s comment function remains glitchy; I know some people haven’t been able to post comments. Please email me if you’d like and I’ll post them. The good news is that we’ll be switching platforms to a far more stable one in the next two weeks, which should fix the problem.) Anyway, here’s the comment:

    I can’t wrap my mind around the idea that hospitalists would transfer a patient to a nursing home more often than a pcp other than because they need it. If a patient has no medical needs and is too weak to go home, they need nursing care, not hospital care. There is no medical indication to keep them in the hospital until they are strong enough to go home. I have no ulterior motive to transfer a patient to SNF other than they need it before safely transitioning to their home environment. In fact, nursing homes will not get paid for a SNF admission if they don’t meet criteria. That says to me that hospitalists are appropriately transferring these patients. Now, why are they being transferred more often than PCP patients? Two possibilities. Number one, hospitalist patients are weaker than PCP patients or two (which wasn’t evaluated in the study) or PCPs are not transferring patients who qualify. Now, if PCP patients qualify but are doing just fine at home, then perhaps the qualification for SNF needs to be more restrictive to prevent hospitalists from providing what Medicare defines as medically necessary. If the SNF transfer isn’t medically necessary, then the nursing home won’t get paid, and we know that’s not going to be the case.

  5. AD August 7, 2011 at 6:07 pm - Reply

    As one of the few remaining “hybrids” I would like to submit some observations.

    I submit that the data submitted by Kuo and Goodwin though dated may in fact underestimate increased costs of hospitalist care in the hospital and post hospital environment.

    A cost not discussed is the subsidy that the hospital incurs for each hospitalist. This figure $131,00+/hospitalist or $1.7m/ on average for a hospital medical group (The Hospitalist July 2011).

    It is estimated that there are 30,000 practicing hospitalists.

    If these are correct figures the excess cost of the hospital movement to the healthcare economy is approaching $4 billion. Unless the hospitalist movement displays considerable return in quality and safety it will be considered a poor return on healthcare investment.

    The statements above are not intended to be anindictment of the movement but rather a call to action.

    The hospitalist movement must redefine itself

    1) Define clearly the qualifications and competencies of a hospitalist. A variant of the hospitalist model has existed for years in countries of the British Commonwealth. They were calked Medical Consultants. Their training as detailed by the National Health Service is longer and more rigorous than that demanded of the Hospitalists in this country.

    2) Create a process of accreditation for hospitalist medicine programs. Most programs are community hospital based few have rules or metrics to evaluate their performance. Poorly functioning entities contribute to negative results.

    3) The traditional primary care physician is a relic of the past and the hospitalist movement must develop models for post hospital care. Discharging a sick patient to the care of an ambulatory care physician with no skills or stomach for the ill recently hospitalized patient is a recipe for disaster. No matter how smooth the transition care of the recently hospitalized patient requires some hospital skills which are rapidly degraded when away from that environment.

    4) The department of hospital medicine must be an equal with the other departments of the medical staff. Assigning it as a stepchild to other specialties leads to abuse and burn out of hospitalists. Too often they are given little professional respect and assigned the role of employed house staff by specialists and administrators. This factor alone skews statistics as costs better assigned to medical proceduralists are placed on the hospitalist account.

    5) Hospitalists must connect more closely with the primary care physician. The sign off and hand off is even more critical on discharge.

    6) Payment for shift work leads to, a lack of ownership of the finished product and the hospitalist must have some skin in the game for good financial outcomes.

    • music website September 15, 2011 at 11:30 pm - Reply

      That says to me that hospitalists are appropriately transferring these patients. Now, why are they being transferred more often than PCP patients? Two possibilities. Number one, hospitalist patients are weaker than PCP patients or two (which wasn’t evaluated in the study) or PCPs are not transferring patients who qualify. Now, if PCP patients qualify but are doing just fine at home, then perhaps the qualification for SNF needs to be more restrictive to prevent hospitalists from providing what Medicare defines as medically necessary. If the SNF transfer isn’t medically necessary, then the nursing home won’t get paid, and we know that’s not going to be the case

  6. John Finch August 8, 2011 at 12:33 am - Reply

    Perhaps the study has some merit, but shouldn’t be taken as gospel until it is done prospectively. My guess is the cost difference is minimal. I believe the built-in follow-up with the PCP has certain advantages many of the hospitalist patients do not, and will not, enjoy (at least until we figure out how to get everyone follow-up visits).

    As for the cost of hospitalists based on the supplement, I find the argument a little unrealistic. Now that hospital systems are buying up the primary care offices, and enticing them with payments of 170% of Medicare, and then expecting them to see more & more clinic patients, I challenge anyone to try to switch back to the old system. Are the primary care physicians going to want to be on call & accept uninsured patients for a pittance? Not to mention going back to driving to-and-from the hospital more frequently! What is a hospital going to do if all of the primary care doctors give up their hospital privileges were hospitalists not available? Once out of the hospital setting for a period of time, inpatient skills are lost.

    I haven’t read the full article yet, unfortunately, but I wonder about the difference in average years of experience between hospitalists and primary care docs? That may be an important factor as well.

    The cost saving/shifting is important, but not as important, in my experience, as the benefit hospitalists provide to the other physicians. There are many happy surgeons, orthopods, ER docs, etc., that enjoy having a built-in backstop for all of the “medical management” of complicated patients that they either want to turf, or just don’t feel comfortable doing.

  7. Menoalittle August 8, 2011 at 3:44 am - Reply


    Another excellent summary. The hospitalists I know are paid by the hospital. Do you know any who are not? Often, they are advised by their employers or it is implied and “taught” to maximize the profits of the hospital, or “else”.

    Being on a fixed salary, they act like interns and play the turf game, especially when a patient is being discharged. For the hospitalist to locate the PCP, to make a phone call to the PCP, and to fax the key records in a timely manner to the PCP takes much time (if done right), that the hospitalist does not want to provide.

    Thus, there is a shorter los with lousy handoffs to the PCPs and indeed, more LTAC and SNF transfers enabling profits for the non-profits.

    And do not forget that there has got to be a run-up of costs after discharge from the trumpeted heartbreak of errors from antiquated pen-and-paper records as reported here:

    Best regards,


  8. Brian Clay, MD August 8, 2011 at 4:18 am - Reply

    I will take issue with a minor aspect of AD’s comment:

    To declare that the hospitalist movement has incurred an “excess cost” of 4 billion dollars begs the question: excess compared to what?

    The previous baseline rarely exists anymore, as your self-description as “one of the few remaining ‘hybrids'” would attest. Since hospitalized medical patients require physicians (or other providers) to care for them, and everyone else has left the building.

    Please don’t misinterpret: I am not saying that hospitalists are now a “fixed cost” of the hospital’s business model. However, I disagree that the payment per hospitalist constitutes a subsidy; instead, the hospital is basically purchasing the services of the hospitalists to care for their patients in the hospital.

    It is not the fault of hospitalists that inpatient non-procedural care is reimbursed at such a low rate that hospitalists may not be able to “pay for themselves” (even before taking into account charges vs. actual collections). If CMS had defined the RVUs for our commonly used E&M codes in a more balanced fashion compared to those granted to procedural codes, the need for a given hospitalist’s subsidy might just disappear.

    That said, I wholeheartedly agree that we hospitalists should strive to maximize our impact on quality and safety, and that we should also move to set ourselves apart within internal medicine. For myself, I will be renewing my Internal Medicine certification with a Recognition in Focused Practice in Hospital Medicine in 2012.

  9. Janmar Delicana August 16, 2011 at 11:50 am - Reply

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  10. Medical Director Jobs September 23, 2011 at 8:04 pm - Reply

    Hospitalists are always very educated and proud to be a part of the medical field. Great article!

  11. Rebecca Lubitz September 24, 2011 at 3:09 am - Reply

    Regarding the finding that patients cared for by hospitalists have higher readmission rates: I agree that we need better post discharge planning and communicaiton with PCPs. I am a new family doc in Canada where our “hospitalist” service is actually run by family medicine trained docs who work full time in hospital (“medicine” is a different service, sometimes speciality based, and sometimes focused on more complex care). I trained partially in a community where family docs followed their patients into the hospital and also in a community where there were full time hospitalists. I can see benefits and challenges for both. In Ontario here, family docs who do not follow their patients into hospital are paid to do a “supporitve care” visit where they simply go in to the hospital and say hi, review the chart, and get a sense of the discharge issues. This could involve speaking with the full time hospitalist, but it does not have to. It is not a large amount that is paid for these visits, and often these visits do not happen, but if supportive care visits were well paid (and you could clump them all into a Friday morning, for example), then that might really help with the discharge issues. We need to find creative ways to work together and respect each others’ unique contributions to caring for our patients.

  12. Bob Wachter September 24, 2011 at 8:26 am - Reply

    Thanks, Rebecca. Steve Pantilat and I suggested that this kind of visit by primary care doctors be encouraged and paid for in a 2002 article…

    …which got absolutely no traction. In the states, this still goes by the demeaning name of the “social visit.” I think such contacts should be encouraged and compensated. I hadn’t been aware that there was a program to do so in Ontario.

    It would be good to study its impact — no one has done that yet — to see whether it is worth the cost in terms of improving continuity and the patient’s experience.

  13. Jay September 30, 2011 at 4:10 am - Reply

    The article & host’s response are provocative. I hope to retire from my traditional IM role into the hospitalist’s role. When I do, I plan to provide a discharge summary with a list of as many of the tests’ results as are available at the time of discharge as I can and a list of pending tests in need of followup. As well as a description of op findings culled from op notes. The PCP will then not be in the dark as I usually am when in receipt of a hospitalist’s content-free discharge summary. I do those summaries now in consideration of my colleagues who will be covering me or otherwise participating in thecae of my patients. Consultants appreciate being copied on them so they have more to work with on their own followup.

    Most hospitalist’s of my acquaintance came right out of residency and except for the pay scale the job is not much different from junior residency as I knew it back in the day. In our practice,we preferred to hire an IM who had some hospitalist experience when possible, as the extra experience made a better doc. Few are prepared for independent practice right out of training now. There is much more to learn and less time available to master enough of the art. It’s hard to fault hospitalist’s for not shedding the resident’s mentality. Your responsibility still ends at the end of shift or the hospital door. Rotating docs among inpatient and outpatient services might be good in the megagroups like Kaiser, Mayo, Cleveland, etc. Mayo may be doing that at least. Primary docs have little exposure to specialists if only in OP practice and lose out on the opportunity to learn from them day to day.

    Nice site here. Hope to be back.

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About the Author:

Robert M. Wachter, MD is Professor and Interim Chairman of the Department of Medicine at the University of California, San Francisco, where he holds the Lynne and Marc Benioff Endowed Chair in Hospital Medicine. He is also Chief of the Division of Hospital Medicine. He has published 250 articles and 6 books in the fields of quality, safety, and health policy. He coined the term hospitalist” in a 1996 New England Journal of Medicine article and is past-president of the Society of Hospital Medicine. He is generally considered the academic leader of the hospitalist movement, the fastest growing specialty in the history of modern medicine. He is also a national leader in the fields of patient safety and healthcare quality. He is editor of AHRQ WebM&M, a case-based patient safety journal on the Web, and AHRQ Patient Safety Network, the leading federal patient safety portal. Together, the sites receive nearly one million unique visits each year. He received one of the 2004 John M. Eisenberg Awards, the nation’s top honor in patient safety and quality. He has been selected as one of the 50 most influential physician-executives in the U.S. by Modern Healthcare magazine for the past eight years, the only academic physician to achieve this distinction; in 2015 he was #1 on the list. He is a former chair of the American Board of Internal Medicine, and has served on the healthcare advisory boards of several companies, including Google. His 2015 book, The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age, was a New York Times science bestseller.


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