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The ED Call Pay Crisis: Strategies for Fair, Equitable, and Sustainable Solutions Presented by: Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D. Michael.

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Presentation on theme: "The ED Call Pay Crisis: Strategies for Fair, Equitable, and Sustainable Solutions Presented by: Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D. Michael."— Presentation transcript:

1 The ED Call Pay Crisis: Strategies for Fair, Equitable, and Sustainable Solutions Presented by: Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D. Michael E. Hogue, M.D. June 4, 2009 To join conference call Dial-in: Participant code:

2 1 HMR, LLC ED Call Panel Solutions Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D. To join conference call Dial-in: Participant code:

3 2 Overview of Today’s Objectives q Define the problem with ED call panels q Understand the process to approach the issues with ED call panel solutions q Findings from interviews q Findings from research q Feasibility analysis and business plan q Possible recommendations for a fair and equitable solution q Call Pay Security Solution q The future To join conference call Dial-in: Participant code:

4 3 Stipend impact for on your bottom line q Year One:Three panels (GS, Ortho and NS) at $500/day $547,500 q Year Two:Six panels at $500/day $1,095,000 q Year Three:Fourteen panels at $500/day $2,555,000 q Year Four:Specialties Separate General Surgery, Orthopedics and Neurosurgery at $1,500 Cardiology, Urology, Pulm, Vascular Surgery, OB, G-I, IM/FP, ENT, Plastics at $800 Peds, Ophthalmology, Neurology and Cardiac Surgery at $500 $5,000,500 And escalating!! To join conference call Dial-in: Participant code:

5 4 The Driving Forces Behind the On-Call Crisis

6 5 Emergency Department (ED) Requirements q Ethically and by law... q Full panel of specialty physicians q Distinct from the emergency physicians who provide the first level of care in ED’s

7 6 Definition: Unassigned patients q “Patients who require on-site consultation or admission to the hospital and do not have a a prior relationship with a physician on the Medical Staff to assume their care” q Independent of patient funding q Cannot make payments to physicians to care for their own patients

8 7 Background Past: q Voluntary community service q Cost shifting possible q Referrals built practices q How fast can I get on the panel?

9 8 Scope of the Problem q National issue q You’re not alone! q Problem growing daily q Specialty-driven q Increased adversarial relationships between medical staff and hospital q No easy solution q Expensive to solve

10 9 Definition: ED On-Call Panel for Unassigned Patients Significant volume q For a 40,000 visit ED, it will represent over 2,000 inpatients per year Unassigned population: q 35-50% of the ED hospital admissions q 12-20% of the total hospital admissions are ED unassigned admissions If a trauma hospital- adds more volume and dynamics

11 10 Designing for the Future q The best solutions allow for better clinical integration and partnerships between the hospital and medical staff q Long term – learning how to work together with common goals and aligned incentives within a shared budget q Must be more efficient and effective

12 11 Multi-Step Process q Learn what the issues are q Learn what the burden is q Learn what the market is q Develop a forum for discussion q Develop an acceptable solution that is fair, equitable and financially sustainable q Manage the implementation well

13 12 The Needs of the Medical Staff

14 13 ED Call Panel/Medical Staff Analysis: Interviews q What have we learned?

15 14 Interviewing q What are the issues and dynamics? q How deep do they go? q Who is leading the cause? q What are their real issues?  Income?  Competency?  Manpower?  Greed?  Irritations with the hospital systems? q What can you do something about and what is impossible? q How urgent is it?

16 15 What we find from the Interviews q Special Rules to Get Off Call q No Longer Able to Cost Shift for Unfunded Patients q Desire to be Paid for Availability q Lifestyle Issues q ED Call Affecting Recruitment and Retention Potential

17 16 Research: q What do we learn? q Data is objective and revealing!

18 17 The Research Process: Opens the “Black Box” q Each study period unassigned chart audited for CPTs and ICD-9 professional codes q Code all care provided throughout the hospitalization q Unassigned volumes and payer mix identified by specialty q Expected rate of reimbursement by specialty q Service line analysis (average length of stay (ALOS) by diagnostic related group (DRG), $/DRG/Specialty, etc.) q Financial scenarios

19 18 Get the Right Data – Find Out What’s Happening at your Hospital Sample Hospital Reports

20 19 Analyze: Number of Panels Staffing by Panel Required Panels ED Call Burden By Specialty Quantify the volume by specialty RVUs by Specialty Current Payment System Expected Payment to Specialties

21 20 Hospital Statistics Overview (FY2008)

22 21 ED Unassigned Annualized Patient Categorization Breakdown Note:Patients may be seen in multiple locations, however this report shows the primary location of service for each specific patient. The ED unassigned admission volume is estimated based on an annualization of patients identified by hospital staff.

23 22 ED Unassigned Overall Averages Note:The ED unassigned admission volume is estimated based on an annualization of patients identified by hospital staff.

24 23 ED Unassigned Financial Class Group - Mix of Patients ED Referrals from Outlying CommunitiesED Patients from the Primary Service Area Only

25 24 Estimated Current ED Unassigned Annualized Professional Fee Practice Value for All Specialties Note:The estimated collection rate and current estimated practice value is calculated on estimates made by financial class based on historical trends. Actual results may vary depending on actual billing experience.

26 25 Monthly Average ED Unassigned Specialty Cases and RVUs Delivered

27 26 Monthly Average ED Unassigned Specialty Cases

28 27 Solution Strategies and Model Programs

29 28 Should Physicians Be Paid for ED Call? q Yes q Should be Fair, Equitable for the Medical Staff Panel Members q Should be Financially Sustainable for the Hospital

30 29 Sample Hospital Report – Develop a Business Plan q Get the facts! q Build a business plan for expected shortfall if payment guarantees are provided q Understand economic value of ED call to each specialty

31 30 ED On-Call Panel Options: q Remove irritants of call q Close the ED q Develop an IM hospitalist program q Develop Surgical Specialty hospitalist programs q Maintain bylaws mandatory on-call w/o pay q Regionalize care by specialty among local hospitals q Require a minimum number of call days before payment

32 31 ED On-Call Panel Options (cont’d): q Recruit more specialists q Pay stipends q Pay base stipend plus activation fee q Hire physician assistant first responders q Guarantee pay for work performed  All patients  Uninsured patients only  Uninsured patients outside of the immediate service area q Develop Co Management Agreements q Compensate for selected OP Follow Up items q Hybrid compensation model q Compensate with Tax Advantaged dollars

33 32 Options: Remove Irritants of Call q Make ED more efficient q Track throughput q Reduce constant ED calls q Open surgery for ED follow-up cases q Assist with $ for selected ED referrals q Cover unfunded patients q Allow easy re-admission of difficult patients q Manage discharge planning effectively

34 33 Options: Hospitalists q Dedicated inpatient physicians q Internal medicine/family practice q 55%-60% of ED unassigned admissions are medicine-related q Control utilization q Control referrals q Allows time to explore options q Must be properly staffed and designed to be extremely effective

35 34 HOSPITALIST DIRECTED PATIENT CARE Hospitalist Physician On-site Hospitalist Support Team (Case Manager, Care Coordinator/Clerical) On-site Medical Director Supportive Infrastructure Benchmarking for Best Practices Acute Patient Care

36 35 Options: Specialty Hospitalist Programs q Growing quickly as an option q If paying stipends, it may be more economical to hire full time surgical specialists and achieve dedicated service q Must develop a business plan to understand the costs and risks

37 36 Hospitalist Services Go Beyond IM! 1.Internal Medicine/FP 2.IM/Peds 3.Peds 4.OB 5.Ortho/Traumatology 6.General Surgeons 7.Intensivists for the Critical Care Patients

38 37 Options: Pay Stipends q Fixed costs q Difficult to determine proper payment q Stipends tend to go to the most vocal q Never stops escalating q What is the relative value of on-call time?

39 38 Options: Pay Stipends q Should there be tiers?  Everyone on call panel should receive the same base rate  Vary the activation fee based upon frequency, severity and FMV analysis q How do you determine the amounts?  With facts

40 39 One Sample Hospital Report Option: Base Fee Plus Activation Fee q Ortho, Neuro, OB and General Surgery $200 Base Fee + $XXX Activation Fee q Pulmonology, Vascular, Cardiology, Neurology and Plastic Surgery $200 Base Fee + $YYY Activation Fee q G-I, Opth, Peds, Psych, Urology, and ENT $200 Base Fee + $ZZZ Activation Fee

41 40 Option: NP/PA First Responder q First Line of Response q Covers ED Consults for Trauma, Neurosurgery, Cardiovascular and Orthopedic Surgery q Coordinates all care with the on-call specialist q Responsible from admission to discharge q Assign 4 Surgical NP FTE’s to cover 24/7 q Net Cost is Staffing Costs less Professional Fees collected.

42 41 Option: Pay for Productivity q Emergency on-call medical group q A separate professional corporation q Contracts with existing medical staff members

43 42 Contractual Relationships Hospital Billing Service Medical Corporation Contracting MD Indicates contracts Steering & Coding Committee

44 43 Sample Hospital Report Pro Forma Summary - Yearly Cost Estimates With Various Scenarios Note:Excludes those specialties with existing coverage agreements or exclusive franchises

45 44 Option: Compensate with Tax Advantaged Dollars Integrated Healthcare Strategies Michael E. Hogue, M.D. Call Pay Security Solution

46 45 Call Pay Program Integrated Healthcare Strategies developed a call pay program designed to meet the following goals: q Transition from a cash payment philosophy to the development and implementation of a retirement program opportunity q Generate immediate and long term savings q Control future escalation in call pay amount q Flexibility in implementation q Provide a competitive differentiation q Encourage long-term retention

47 46 Call Pay Dilemma – Systems q Cost of call is becoming a significant burden on hospital operating margins q Current structure unsustainable as costs are escalating yearly at unacceptable rates q Hospital systems face increasing call pay requests—slowly becoming the industry standard q Increasing strain on emergency departments—increasing number of uninsured patients

48 47 Call Dilemma – Physicians q Perception that “On-Call” problem for physicians is unreimbursed care q In reality, “On-Call” is a time issue q Historical attempts have been to solve this with monetary payment q Payment is made/taxed/spent—money is gone and the time issue is unchanged q Current call pay structure will never be enough to reimburse for excess time away from family

49 48 Additional Physician Issues q Call time adds increasing burden to physician work schedules q Call time limits physicians’ opportunity to maximize income  Reduces clinic time  Reduces elective cases  Increases exposure to uninsured patients and corresponding legal risk q Private practice physicians have difficult time sheltering money for retirement q Qualified plans inadequate to meet the needs of highly compensated physicians – increased exposure to market risk

50 49 Solution IHStrategies’ approach to solving the call pay issue is focused on answering three key questions: q How do we generate immediate savings for systems? q Can we offset physician time issues by addressing another critical issue? q How do we design a plan to more adequately reward physicians for time commitment?

51 50 Solution Need physicians’ time to cover call Hospital Issue Physician Issues Time away from clinic Time out of OR Time away from family Increased malpractice exposure Negative impact on practice COST OF RETIREMENT SAVING Time away from clinic Time out of OR Time away from family Increased malpractice exposure Negative impact on practice COST OF RETIREMENT SAVING

52 51 The Call Pay Security Solution Is a personal retirement program that combines a specially-designed indexed universal life insurance contract with a unique tax replacement strategy to provide a global solution to the challenges of developing long-term retirement income.

53 52 The Call Pay Security Solution Designed to function like a Roth IRA with a twist The Basics q Contributions made after tax q Account grows tax deferred q Distributions are tax free The Twist q No income limits for participation q No limit on contributions q Replaces income earning potential on lost taxes with a tax replacement loan “Dollar for Dollar, A Roth IRA may just be the best savings plan in America.” - Money Magazine, October 2008

54 53 The Call Pay Security Solution q Provided on an after-tax basis q Outside of IRS deferred compensation scrutiny q Immediately vested - fully portable q Provides a tax replacement loan to participant  Participant grossed-up annually for taxes by outside lender  Gross-up funded by a third party  Gross-up not reportable on 990  Organization pays annual financing cost on the tax gross-up q Utilizes a highly tax-efficient indexed universal life insurance product  Only vehicle that offers tax deferred earnings and tax-free distributions  Guaranteed issue ($1million - $2million) q Minimum annual guaranteed return q Tax free distributions reduces exposure to increasing tax rates q Assets protected from malpractice claims (in most states)

55 54 Call Pay Comparison System Physician System Outside Lender Outside Lender CURRENTPROPOSED $35,000 $25,000 + Interest $6,000 q 1099 of $35,000 q 40% 14,000 q Net of $21,000 q 1099 of $25,000 q 40% $10,000 q Net Contribution $15,000 q Gross Up Loan $6,000 q Net Investment $21,000

56 55 Expenses (1)Cost of insurance (2)Administrative fees INDEXED CONTRACT The Call Pay Security Solution At Retirement (1)Tax-free retirement income (2)Ultimately – tax-free insurance death benefit How It Works (1)Participants’ after-tax contribution (2)Tax cost replenishment loan (3)Earnings

57 56 Cost Comparison of Call Pay Options ASSUMPTIONS: Annual increase in call pay (if paid in cash): 3.0% Tax rate: 40% Total estimated savings of 32.6% over the 20-year period Current annual call pay obligation of $35,000, reduced to $25,000 in CPSS program Impact to System using CPSS scenario Impact to System if Call Pay is paid in cash annually Total Annual Cost to System Loan interest rate: 5.75% Carrier: Penn Mutual

58 57 The Call Pay Security Solution ASSUMPTIONS Tax rate of 40.0% Investment yield of 7% gross during accumulation phase for cash option Investment yield of 5.5% gross during distribution phase for cash option Investment yield of 7% for CPSS Annual call pay increase of 3% Income stream begins at age 71 The Call Pay Security Solution delivers a 38% increase in annual after-tax retirement income versus cash in a 25-year income stream Retirement Funding Comparison – 45 Years Old

59 58 S&P 500 Index versus Indexed Universal Life (IUL) S&P 34 year annualized return 6.59% IUL 34 Year annualized return 8.60%

60 59 The Call Pay Security Solution – Contract Details The probability of earning different index return levels during the last 20 years of monthly S&P 500 price returns assuming the 14% annual cap and 2% floor (12/07)

61 60 Summary Of System Benefit The Call Pay Security Solution provides systems with the following benefits: q Provides immediate savings of approximately 26% q Provides long term reduction in cost of approximately 33% q Individualizes call pay negotiations by specialty/section/facility q Eliminates the need for continuing negotiations for call pay q Provides a highly flexible plan that can be customized to the organization’s needs

62 61 Summary Of Physician Benefit The Call Pay Security Solution provides physicians with the following benefits: q Tax-leveraged wealth accumulation program q Immediately vested and portable q Not subject to corporate insolvency or risks of forfeiture q Secure investment vehicle  Asset protection  Minimum guaranteed return  Index based, no asset management

63 62 Negotiating with the Medical Staff

64 63 The Forum for Negotiations “The power is in the process” q Interview to learn perceptions of the medical staff q Research the ED unassigned data q Engage the leadership of the medical staff q Establish a small steering committee q Solutions only for the entire medical staff q Get sign-off from the medical executive committee q Implement with precision q Keep steering committee involved q Measure, monitor and manage

65 64 Common Solutions q ED Unassigned and Unfunded Only q ED Unassigned Patients q Base Stipend plus FFS Guarantee q IM Specialty Hospitalist Program q Additional Specialty Hospitalist Programs q Activation Fee q Tiered Stipends q Coverage Agreements q Fracture Clinic for Orthopedic follow up q Compensation with Tax Advantaged Dollars

66 65 The Future? q More specialties will be hospital-based q Estimate that 75% of hospital census will be managed by some form of hospitalists including:  Internal medicine hospitalists  Intensivists  OB  Pediatrics  Orthopaedic surgeons  General trauma surgeons

67 66 About Integrated Healthcare Strategies q A Human Resources consulting firm exclusively serving healthcare organizations q Organizations we work with:  Secular, religious, government-based and not-for-profit organizations q Clients include hundreds of:  Hospitals  Academic medical centers  Health networks  Nursing homes

68 67 About Integrated Healthcare Strategies, cont. q 5 integrated specialty practices:  Executive Total Compensation  MSA Executive Search  Physician Services  MSA HR Capital  Governance and Leadership Services q From these 5 practices, we’re able to assist clients in the areas of  Physician strategy and compensation, employee compensation, executive compensation, human capital solutions, labor relations, leadership transition planning, executive search, employee surveys, performance management and board governance solutions. q Founded in 1958 q Offices: Minneapolis, MN and Kansas City, MO q Website:

69 68 About Hospitalist Management Resources, LLC q Independent consulting company  We consult with Hospitalist Programs, Intensivist Programs and ED Call Panel Solutions  We do not staff or operate programs q More than 350 consultations in 11 years q Develop new programs and enhance existing programs into Fourth Generation Programs  Business plans, ROI strategies and clinical and financial benchmarks to validate Programs q Help hospitals evaluate and create ED Call Panel Solutions

70 69 About Hospitalist Management Resources, LLC, cont. q Founded April 1999 q Founders: Martin Buser and Roger Heroux, Ph.D. q Each bring 25+ years Healthcare experience q Offices: San Diego, CA and Colorado Springs, CO q Website: q Colorado Springs (719) q San Diego (858)

71 70 Questions?

72 71 Contact Us Michael E. Hogue, M.D Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D

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