Hospital Planning & Management V1-i1

IS A HOSPITAL A HOTEL WITH DOCTORS?

BIOMED WORLD GREEN HOSPITALS HAVCs BRANDWATCH BUILDING EFFICIENT HEALTHCARE INFRASTRUCTURE

Dear Dr. Desai

Critical Care – Medical Errors Evidence of medical errors due to deficient planning of systems equipment and insufficient data has existed in healthcare for a long time. More so now with hospitals and medical institutions using ROI as the deciding factor for planning and managing health centers, faced with the growing competition. The wary entry speed of Multinational Insurance Companies, due to the Government regulations, and whatever else forcing high Medical insurance premiums and difficult processes. This makes it mostly unaffordable to an average Indian citizen. Conservative figures rank this cause as the eighth leading cause of fatality in ICU / ICCU cases in developed countries.

Comparable data is unavailable in developing or underdeveloped countries, but with the Hospital infrastructure, equipment, trained healthcare specialized staff available this will be definitely on a much higher side with most cases being unreported by Institutions concerned with the media image of institutions / Healthcare specialists.

A ICU / ICCU patient on an average receives about178 different activities per day that rely on data monitoring, treatment processes and support systems where organizational factors, poor planning and processes create opportunities for error.

Poor maintenance and usage of refurbished ICU / ICCU equipment for low investment in critical areas by the Hospital Administration and Management is yet another factor leading to errors. The solution for this is integrating IT in all areas of the

hospital especially the ICU or ICCU. Reporting of errors, as to why, what and how to prevent the error in future is crucial in risk reduction happened.

Other basic requirements include standardized processes continued education of staff and physicians are an investment to be done by hospitals to reduce errors. The specialty of anesthesia has reduced its error rate by nearly seven fold using standardized guidelines, protocols and equipment, etc.

Errors in the health system cannot be eliminated completely, but everyone must make an attempt at minimizing errors. Hospitals initiative on fast reliable and extensive ICU / ICCU data availability for reference to the intensivist for all critically ill patients will definitely go a long way in reducing or even probably eliminating errors. Wide acceptance of Third Party A’s will also help Hospitals in increasing the overall cash inflow. We need to wait and hope that the management fiscal investment policy in IT infrastructure medical technology, equipment, data storage and accessibility for ICU / ICCU systems, processes and equipment.

This needs to change very fast with the competition heating up. We also need better Government guidelines and ensuring implementations of the same unlike the much-touted bio-waste management process governing from the supreme court which is yet to be implemented in the planned fashion as we are mostly aware.

Happy reading

Editor Banking & Finance Management

Don’t Panic How CFOs Are Facing the New Economic Reality Evaluating capital projects…accessing capital…using process improvement and technology to control costs and protect revenue. Top CFOs explain their strategies for success in the economic crisis.

At a Glance CFOs at hospitals throughout the country are implementing strategic initiatives that can help their organizations succeed in challenging times: • Revising strategic plans • Reassessing capital capacity • Leveraging IT to enhance revenue management The healthcare industry is recession-proof. At least, that’s been the theory. It doesn’t take a Ben Bernanke-like mind, however, to disprove the axiom. A simple Google search illustrates that the healthcare industry—and the hospital segment, in particular—is being negatively affected by the harsh realities of today’s economy.

In fact, the economy’s downturn has resulted in: • New York’s governor has unveiled a proposed budget that would cut the projected spending for hospitals, nursing homes, and other healthcare providers by more than $1 billion.

• A Chicago hospital, which lost $15 million in 2007, has been forced to hire an adviser to find a buyer. With the increasing credit crisis, the hospital would be forced to close its doors if it cannot find a buyer.

• A Hawaii-based hospital system has filed for bankruptcy after a lender failed to extend a loan for another month.

• A health system in Minnesota has planned to delay new building projects.

The struggling economy and accompanying credit crunch are being added to an already long list of challenges facing CFOs, including consumer-directed health care (CDHC), Medicare recovery audit contractors (RACs) audits, pay for performance, Medicare severity-adjusted diagnosis-related groups (MS-DRGs), and impending International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) coding.

The consequences? Hospitals are facing severe financial challenges, and those that were performing well now simply want to stay on course.

The strategies? Business Heads are seeking creative financing and forging new capital-access strategies. They also are seeking to enhance liquidity by containing costs and protecting revenue. Technology has a special role in these strategies. IT enables efforts to enhance efficiency and thereby control costs. Also, providers are turning to revenue cycle IT to protect revenue by getting a tighter grip on self-pay collections, denials, bad debt, and administrative

costs. IT also is a capital expense that must be assessed and funded like all others—a challenge as capital costs increase and availability continues to be tight. Many hope that the Government administration’s promised healthcare initiatives will bring them some much-needed capital to fund their needs.

Equal Opportunity Havoc Although some struggling hospitals are reeling from the economy’s upheaval, financial unrest is also affecting organizations that have been financially well managed. They are was not planning to spend so much time fighting the economic storm. Although some have faced unexpected capital challenges due to the credit crisis, this has diverted management’s attention away from both strategic planning and the ‘blocking and tackling.’ It has also changed the planning process for future projects. But a strong balance sheet will help them to weather this pressure.

The economic crisis has forced adjustments to deal with the situation. For example, a large hospital formally applied for bond ratings—something not done historically—since all of its outstanding debt had been insured and, therefore, carried a AAA rating. The cost of applying for bond ratings did not add incremental value; however, since the tightening of credit, a rating needed to be obtained to be able to even consider having reasonable success in the bond market.

The long-term relationships with their bankers and other financial institutions have helped them navigate the situation.

In addition to focusing on capital structure issues, The Hospital also has tightened up revenue cycle operations, concentrating specifically on denials prevention and management. The organization is planning on putting a new information system in place to improve its revenue cycle and reduce its cost to collect.

Another hospital is managing its own set of challenges related to the economy, it has identified three primary issues: • The equity meltdown, which is reducing capital availability • Recession-driven volume reductions that have been “challenging this year” and will be “worse next year” • A deteriorating payer mix driving an even greater reliance on health maintenance organizations and preferred provider organizations to bear the burden of the cost shift Each challenge requires a different strategy, from improving revenue cycle management to investing in service-line management to aggressive expense control.

Its revenue cycle improvement strategy has grown more important as the economy has declined. For example, the organization has an extensive process to deal with the uninsured patients who use its emergency department (ED) to get the data that will allow the hospital to characterize patients as charity-eligible or not. Another strategy that acknowledges the difficulty of point-of-service collections in the ED is to build partnerships with community health clinics and others. These groups can help deliver care in the correct setting.

The capital crunch has come at a difficult time as the organization is in the midst of an $800 million initiative to build two new patient care facilities to address capacity constraints, and program expansion. This project is at the “can’t stop” stage and the executive management team, however, has modified and/or postponed some capital expenditures not directly related to the expansion.

In addition, the health system has undertaken a series of initiatives that should help it more successfully cope with current challenges. On the revenue side of the balance sheet, the facility has focused on charge capture

medical care choices. No matter how much healthcare organizations help vigilant consumers with these decisions, though, hospitals need to deal with rising numbers of consumers who need care but simply do not have the financial resources to pay for it. A growing population of uninsured and underinsured heading to the ED with little or no ability to pay for their care is one of several alarming trends confronting hospitals nationwide.

Downstream, healthcare providers could be dealing with increases in bad debt. U.S. hospitals were unable to collect $34 billion in 2007 due to bad debt and charity care, according to the American Hospital Association’s 2008 Uncompensated Hospital Care Cost Fact Sheet. The situation is hitting hospitals hard. A Minnesota healthcare system, for example, wrote off more than $30 million in bad debt in 2007—with more than 80 percent of that bad debt originating from patients with health insurance.e There are other signs of the crisis. Many hospitals are seeing fewer paying patients, even as the number of uninsured patients continues to climb. Many patients are being forced to choose between basic necessities and medical care. When faced with such choices, “They wait,” says Ted Epperly, MD,

and collection processes, including medical necessity determination for denials prevention. The health system also has focused on laboratory charge capture and is upgrading its laboratory billing system. To focus management attention on the healthcare IT transformation, the health information management department reports to the CIO, and have a broadly used system wide electronic health record (EHR) system. Both dimensions allow for the intensive use of data to appropriately reflect patient acuity, which drives payments.

Current Challenges: Exacerbated Even though the fallout of a faltering economy is sapping Executive time and energy, they still need to contend with existing challenges. In some instances, the financial crisis is making it even more complicated to manage these issues.

For example, the financial crisis is adding more complexity as CFOs address CDHC. With CDHC, consumers are financially responsible for a larger portion of their care— providing them with the incentive or disincentive to spend money wisely. Decision-support tools and resources can aid in improving the consumer’s ability to make the right

president of the American Academy of Family Physicians.f The situation could get even worse: Average aggregate hospital margins could reach zero by 2013 if bad debt as a percentage of revenue grows at 10 percent per year, as some prognosticators predict.g Switching from Defense to Offense With the faltering economy, the growth of CDHC, and other challenges facing healthcare organizations, many CFOs realize it is time to more than simply respond. Thus, they are implementing strategic initiatives that can help their organizations succeed in challenging times.

Develop and implement revised strategic plans. Rob DeMichiei, CFO at the University of Pittsburgh Medical Center (UPMC), says, “I don’t know how President Obama will fund the existing system, much less the proposed changes.” He says UPMC is preparing for “a whole new level of government budget cuts, and providers are going to be front and center. Hospitals will have to minimize capital expenditures, new construction, and new technology and renovation.” He notes that UPMC will focus more tightly on ROI, with an emphasis on operating throughput

management, to get the most out of existing capabilities.

John Muir’s Swenson says revenue and expense management efforts are appropriate in any scenario. “The current crisis has simply accelerated our efforts,” he says.

At Baptist, Herde says cost pressures are getting lots of strategic planning attention. “This is the big five-year, planning-horizon issue,” Herde says. “We make decisions all the time about delivering care, whether concerning technology or personnel, or both. We don’t foresee the economic landscape improving in the future. The current healthcare delivery system in this country is not sustainable long term. Something has to happen.”

Reassess capital capacity. Financial leaders should update their organizations’ capital position analyses. An objective approach to measuring capital capacity evaluates the amount of debt outstanding, the cost of capital, and median ratios associated with a target credit rating.

Of all the effects of the financial paradigm shift, the drying up of credit markets has been the most severe so far. DeMichiei says the combined effect of spending in Iraq and the Wall Street bailout “further exposes the unworkable economics of health care.” He says, “Hospitals without strong balance sheets won’t be able to issue low-cost, tax-exempt bonds and use debt to fund expansion and investment.”

Recent evidence suggests that investment-grade (B+) providers may be paying nearly twice what they would have had to pay to issue debt just six or nine months ago.h And even the New York/New Jersey Port Authority, an AA-rated issuer, found no takers recently for $300 million in bonds, a large offering that was met with zero bids.i This sharply illustrates the challenges that even financially strong, not-for-profit bond issuers are having when they try to raise capital.

Leverage IT to enhance revenue management. Although Baptist Health’s Herde realized the healthcare system needed to replace its legacy system to accommodate ICD10 coding, he also recognized that the organization needed help to improve revenue management—and ultimately help its hospitals succeed, despite the pressing challenges of the current environment.

Herde and other providers are finding they need new systems that can improve the overall economics of care. With enterprise revenue management, healthcare organizations use software, services, and connectivity to reinvent the way they manage and collect revenue. John Muir’s Swenson believes in the power of combining clinical and revenue management systems as well. He says that connecting the organization’s existing EHR system with computerized provider order entry, which is coming in 2010, will help Muir achieve significant benefits in overall revenue

management.

UPMC’s DeMichiei believes there is still opportunity for gains in administrative efficiency. “We have successfully leveraged our enterprise applications (revenue cycle, supply chain, etc.), but I don’t think many others have had the same focus that we’ve had,” he says. “The industry needs to do a better job of integrating and leveraging enterprise systems. We’re trying to simplify things and become business advisers to our clinical partners [co-workers], but we can’t do this if we’re still ‘transactional,’ focused on highly detailed smalldollar work.”

The need for such transformations is reinforced by Stephen Mooney, formerly senior vice president of patient financial services at Tenet Healthcare Corporation and now president of Conifer Revenue Cycle Solutions, an operating subsidiary of Dallas-based Tenet. He says in today’s environment, “scale is going to be incredibly important. Health care has evolved to become more complicated and dynamically interconnected.” At Tenet, this requires an enterprise revenue management approach that incorporates more than 200,000 workflow rules, standardization of financial classes, chargemasters, and insurance plans. All this, Mooney believes, is necessary to cope with the “complex and different” financial environment facing healthcare organizations today.

Look for Opportunity Healthcare providers are facing a new frontier. Our formerly recession-proof industry, like the rest of the U.S. economy, is facing an unprecedented financial crisis.

At the same time, none of the other pressures facing healthcare CFOs and their organizations have diminished. But with challenge comes opportunity—and, as a result, healthcare leaders should resist the temptation to pull into their shells to ride out the storm. These times demand decisive, creative responses, and they may help financial leaders become even more influential.

Now, more than ever, CFOs need to apply strategies to enhance financial management efforts that are ultimately tied to their organizations’ overall success. In the words of UPMC’s Rob DeMichiei: “Finance will have to have more clout in this newly constrained financial environment.

No project or department is sacred. Everything must be scrutinized. Finance is critically positioned and will have to act as the information champion to drive these kinds of decisions.”

Credits and references

a. Hakim, D., “Paterson Proposes Austere Budget to Close Deficit,” The New York Times, Dec. 16, 2008. b. Yerak, B., and Jepsen, B., “Lincoln Park Hospital Seeks Buyer,” Chicago Tribune, Oct. 9, 2008. c. Abelson, R., “Disappearing Credit Forces Hospitals to Delay Improvements,” The New York Times, Oct. 15, 2008. d. Yee, C. M., “Credit Crunch Delays New U-Fairview Care Center,” Minneapolis Star Tribune, Dec. 17, 2008. e. Gunderson, D., “Hospitals Worry About Bad Debt,” Minnesota Public Radio, Nov. 11, 2008. f. Abelson, R., “Hospitals See Drop in Paying Patients,” The New York Times, Nov. 7, 2008. g. g. American Hospital Association Chart Book, 2008, and McKesson analysis. h. h. Sutliff, N., Personal Communication, McKesson Capital, i. Dec. 19, 2008. j. i. Brown, E., “Port Authority Can’t Find Buyer for Bonds,” k. The New York Observer, Dec. 3, 2008.

David Hammer is vice president, revenue cycle solutions, McKesson Provider Technologies, Fort Lauderdale, Fla., and a member of HFMA’s Florida Chapter (david.hammer@mckesson.com).

Accreditation Of Facilities A

By Dr. G M Bhatia

ccreditation is defined as “a professional recognition of facilities that provide high quality care” (CE Lewis, 1984). In the accreditation system the status of a healthcare institution is assessed against a set of well laid-out

standards.

The main difficulty, however, lies in setting out an acceptable set of standards. This problem has been encountered in many countries which have ventured to accredit their health care institutions. Even in the US where the concept of accreditation originated, the accreditation system took a long time to evolve and develop.

History of development of the accreditation system In the US the concept of accreditation began due to the pioneering work done by the American College of Surgeons which started a “Hospital Standardisation Programme” in 1918. The programme laid down minimal standards for the hospitals. Despite being voluntary in nature, most American hospitals saw the benefit of accepting it and by 1945 over 90% of the US hospitals had attained minimal standards as laid down in the programme.

With the advancement of investigative and curative services and with the introduction of the concept of comprehensive care it was felt that the laying down of minimal standards was no longer the right method of standardisation of hospitals. Such a system discouraged the hospitals to strive for higher standards as there were no such set standards.

Moreover, all the hospitals were clubbed in the same standard. The concept of minimal standards evolved into the concept of optimal achievable standards and a larger organisation Joint Commission on Accreditation of Hospitals (JCAH) was formed.

The Commission laid out progressive grades of standards and a hospital grading system was started. While maintaining minimal standards, a hospital was expected to achieve optimal standards and strive for progressively higher standards.

With further advancement of technology and with the introduction of minimal access surgeries and the concept of day-care surgery, it was found that treatment of many medical conditions no longer required large hospitals and could be carried out equally well in smaller set-ups. In order to cover all the healthcare facilities, the name of the Joint Commission on Accreditation of Hospitals (JCAH) was changed in 1987 to Joint Commission on Accreditation of Healthcare Organisations (JCAHO).

Though the participation in the Accreditation system of JCAHO is entirely voluntary, there is a significant element of covert compulsion. Not only the HMOs and insurance companies automatically accept treatments in JCAHOaccredited hospitals, but even the federally funded Medicare and Medicaid programmes (for the treatment of poor, disabled and elderly patients) consider such institutions as having automatically met the standards for participation in the programme. Further, if the healthcare organisations are not accredited with JCAHO, then they

have to follow the state regulatory processes and majority of the states allow hospitals exemption from their own regulatory process if they have obtained accreditation with JCAHO. Amongst the English speaking countries, Canada and Australia have well developed accreditation institutions.

The Canadian Commission on Hospital Accreditation was established in 1952 while Australia has an Accreditation Council.

UK has no well-defined accreditation institution since it has a National Health Service with accepted criteria for primary, secondary, tertiary and other healthcare facilities. China follows a similar system.

In general, accreditation institutions are well organised in those countries which provide healthcare delivery services largely through the medium of private institutions and where the health coverage by the insurance companies, whether state-owned or private, is a predominant feature.

Accreditation system is, therefore, one of the mechanisms to regulate private health sector.

Methods of Accreditation As there is no ideal model, different methods of accreditation are followed in different countries. Broadly speaking following criteria are considered :(A) Physical Standards based criteria: Standards regarding equipment, facilities, trained manpower, space etc. are considered as the sole criteria. These criteria are easy to recognise and evaluate.

(B) Performance-based criteria: Since the medical treatment is a complex process, treatment outcome can not be directly correlated to mere input of physical standards.

Outcomes assessment or performance evaluation is considered as a better criteria. Performance evaluation, however, generates controversies and is difficult to evaluate (C) Total Quality Assurance: In this, both the input and the out put are evaluated. TQA takes into account both the physical standards and the performance based criteria.

Aims of Accreditation Institutions of accreditation in every country must establish a set of clear goals and aims. The criteria of accreditation differ from country to country and even at different times in the same country depending on the availability of resources, manpower etc. but the aims are essentially similar. The accreditation programme primarily serves two aims :1. It provides assurance to the consumers that reasonably good quality of health care services are being provided.

2. It ensures optimum utilisation of healthcare resources by assessing the quality of care provided by these resources.

In order to achieve this the accreditation process, at least in the initial stages, must be evaluative and educative rather than inspectorial and judgmental.

Basic Features of Accreditation

A good accreditation programme must have following features: 1. It must be voluntary but there must be some covert element of compulsion for the institutions to join the accreditation programme. Accreditation must benefit the institution.

2. Realistic physical standards must be laid down which must be clearly defined.

3. Compliance must be measured by an impartial external peer review.

Accreditation in India 70 % of the healthcare services in India are provided by the private sector. However, despite this, all the attempts in the past to standardise and accredit these healthcare facilities have been monumental failures. In 1993, the efforts of the Indian Hospital Association to promote such accreditation system in Mumbai and Delhi failed to take off. Recently, commercial rating agencies like Crisil, ICRA and ISO have ventured to certify some hospitals. Since these are pure business rating agencies, their standard-specifications are largely superfluous and even contrary to the ultimate aim of accreditation which is prudent management of existing healthcare resources and progressive up-gradation of these resources.

In 2000, the central government in the Central Council of Health and Family Welfare proposed to the various states its desire to introduce Clinical Establishment Regulation Act (CERA) but the state governments agreed to have such acts only at the state levels. Since then many states have drafted their own acts.

This is more logical since different states have different situations and different levels of development. In Maharashtra the proposed act would be called Maharashtra Clinical Establishment Act. These acts lay down minimum standards and are not synonymous with accreditation. They lay down certain standards which act like the minimal hurdles to be overcome rather than guidelines for good practices. Accreditation system allows comparison of hospitals against a common average. Real problem, however, lies in defining the common average and herein lies the main reason for failure of the accreditation programmes in India.

Problems of accreditation in India In India, the private healthcare services have been provided largely through the medium of two different sets of institutions. Charity or trust-owned hospitals which receive various forms of financial concessions from the government apart from the financial assistance of the donors, and the unaided purely private nursing homes. The former, by virtue of their subsidised healthcare services have increased their reach and access to a large segment of the middle-class and rich population. However, subsidised and artificially depressed pricing means less incentive for the population to opt for medical insurance and more out-of-pocket paying population. More out-of-pocket paying population, in turn, further encouraged establishment of more charity institutions giving rise to the-chicken-and-the-egg situation.

As a result barely 3.5 million Indians out of a total population

of 1000 million are covered by personal medical insurance or Mediclaim. Since the primary aim of charity is to increase access rather than aspire for highest standards, there had been little compulsion for accreditation.

As the nursing homes had to compete against a subsidised environment, they were forced to cut corners and the whole healthcare system in India stabilised at a lower level of standards and quality. There was more emphasis on access rather than accreditation. There was no pressure from the insurance companies to improve as very few insured.

The situation has now drastically changed. Because of hyper-competition, the health care system is no longer service provider’s market. It is now buyer’s market. All the players now realise that they can not improve their existing reach and access without upgrading their standards. With the recent advancement of technology modern health care services, even if subsidised, can not be purchased with out-of-pocket expenses and more and more individuals are opting for medical insurance. There is, therefore, a right environment at present for accreditation.

In 2000, the Government of India had proposed formation of Assessment and Accreditation Council in the meeting of the Central Council of Health but the proposal did not materialise. Some private players like Indian Healthcare Federation have recently attempted to evolve such an institution. The formidable challenge is to identify acceptable common Indian health care standards that exist today in different areas of health activity and formulate upper and lower scores to the set standards. Blindly copying the JCAHO model would be nothing but an invitation to disaster as it would not facilitate efficient utilisation of existing healthcare resources and most of the stakeholders would be compelled to opt out of such an accreditation system.

It is a common experience that certain doctor-owned small nursing homes provide quality services at par with the so-called five star hospitals. Day-care eye surgeries using phako-techniques, arthroscopies and many types of endoscopic surgeries can be carried out efficiently and at a much lower cost by smaller set-ups. Such organisation must receive high ratings. Closed treatment of fractures and closed nailing can be effectively done in small nursing homes at a very low cost. Maternity homes and paediatric nursing homes with NICUs have been traditionally very popular in India because of round-the-clock availability of qualified consultants providing personalised services to the patients. Less physical structural space must not automatically mean lower quality.

Therefore, if the accreditation system were to succeed in India then apart from the ‘physical standards based criteria’ and ‘performance based criteria’, procedure related or function related criteria must also be incorporated in the evaluation process. Only then the accreditation process would succeed in its ultimate aim of efficient utilisation of existing resources with stimulus for progressive improvement of health care quality and resources.

(The author is a Consultant Orthopaedic Surgeon practising in Mumbai and is the Hon. Secretary of Association of Medical Consultants (AMC). The AMC was actively involved by the Maharashtra government in the process of drafting of the Maharashtra Clinical Establishment Act.)

Quality Initiatives Management Dr. A Garud, MS FRCS

Director, Clinical Audit, Ethics and Quality P.D.Hinduja National Hospital, Mahim, Mumbai

Introduction Our contemporary environment is characterized by two important elements—change and competition. The field of healthcare –both industry and the profession, is no exception. In fact, in few other fields of human endeavor do we come across such profound changes in the fundamental concepts such as we do in the delivery of healthcare. In spite of billions of dollars of money spent worldwide, most of the healthcare is seen to be (a) ineffective, (b) inefficient and (c) inadequate.

There is a crying need therefore, to bring about a paradigm shift in the quality of health care delivery and to monitor it and sustain it. The other element-- competition, gains importance from the industry viewpoint with increased involvement of corporations and institutions, both proprietary and not-for-profit, in this field.

It is obvious that those institutions, which are quality conscious and are committed to continuous quality improvement, will gain the highest consumer acceptance and will flourish at the expense of others. The ‘Quality Revolution’, as it is sometimes referred to, is nothing but putting the patient, at the heart of health care and wrapping the care around it, rather than the other way around. This realization, though long in coming, is firmly rooted now, at least in the western

world where ‘Quality ‘ has been a buzzword in the health care field for some time.

The Need for Continuous and Total Quality Improvement Apart from the genesis of the quality movement as described above, the need for it is perhaps dictated by diverse forces such as the disparity between demand and supply of resources and increasing consumer awareness. Indeed, consumer activism and rising litigation have led to transparency and accountability in the way health care is administered. Whether these factors have led to overall improvement in the standards is probably open to debate, but there is no doubt that consumer i.e. the patient, is benefited albeit at the expense of increased costs. It is also important to understand that quality improvement is not a ‘one time’ phenomenon, but a dynamic process, which needs to be continuous and sustained.

What is ‘Quality’?

Quality is different things to different people. It is rather like the story of the elephant and seven blind men. Similarly, it has different connotations in industry, commerce and in science. In the dictionary, quality is described variously as ‘ attribute, characteristic, feature, grade, value, worth etc. In industry, quality is defined as ‘ the ability to meet the needs (not greed) and reasonable demands of the consumer’. According to Crosby, quality is ‘conformance to requirements’.

(Zero defects). With reference to health care, I would like to define quality as a ‘level of excellence’ in achieving desired result.

There are several components of quality in the field of health care. They can be listed as follows:(after Maxwell 1984) a. Access to services b. Relevance to the need c. Effectiveness and safety d. Equity e. Social acceptability f. Efficiency and economy Most of these are self explanatory, but the importance of effectiveness and safety and a favorable cost/benefit ratio needs to be emphasized. The medical profession as whole does not seem to be fully aware of the potential hazards of hospitalization to the patient. According to the Institute of Medicine survey in the United States, as many as 98000 deaths are attributed annually to errors in medication, diagnosis or management in the U.S. alone. This may be the tip of an iceberg, the actual figures may even be higher.

It is imperative, therefore, that any quality improvement programme should address itself towards reduction of this tragic figure. Cost containment is another issue, which is assuming increasing importance as the cost of medical care keeps rising every year. The provision of high quality medical care at an affordable cost should be the aim of every institution and physician. Effective, safe, efficient and afford-

able care, then, leads to highest patient satisfaction.

Audit as a Tool for assuring Quality Clinical audit is perhaps the most important mechanism by which, quality of care can be assured to the patient. Conceptually, quality is not a new clinical activity—clinicians have, for many years, been reviewing and refining their techniques and treatment regimens in order to achieve better results. None of the major advances of the Twentieth century Medicine would have been possible without observing and assessing the results of various treatment schedules. However, the current interest in the field of audit is largely due to the impetus it received in the National Health Service in the U.K, where it is a part of a larger concept of ‘Clinical Governance’. According this concept, institutions are responsible for continuous improvement in patient care by creating conditions in which, excellence can flourish. If we were to pursue the goal of providing a high standard of patient care, we must know where we stand at present, and where we want to be, in order to achieve it. That is only possible if we undertake a periodic assessment of our performance, policy and procedure. This, then, is the essence of audit.

Definition of Audit According to the National Institute of Clinical Excellence (U.K.), clinical audit is a ‘quality improvement process that seeks to improve patient care and outcomes through systematic appraisal of care against explicit criteria and the implementation of change.’

It is important to note that the implementation of change has

been incorporated in the definition, which implies that it is action oriented as well as result oriented.

Basic components of audit Traditionally, the 3 basic components which form the framework for audit have been categorized as follows:1. Structure (what you need) 2. Process (what you do) 3. Outcome (what you achieve) Structure relates to the resources available and includes items such as human resources, material resources and organizational structure. It encompasses the ‘hardware’ of an organization and is concerned with issues such as space, staffing pattern and equipment and technology.

Process relates to efficiency and functions of the staff by assessing and evaluating diagnostic accuracy of various investigative procedures and laboratory results.

Outcome is a measure of what you achieve as an end result. This is perhaps the most important issue for the clinicians as it reflects directly on their performance. Almost any aspect of medical or surgical treatment can be the subject of outcome analysis, apart from a review of mortality and morbidity over a period of time. Performance indicator is an outcome measure, which is widely used as a tool for assessing the quality of care in an institution Monitoring and implementing change Data recording, retrieval and analysis form an important requisite for the audit process, which is facilitated to a great extent by the use of personal computers. Once the data are analyzed, it would be apparent what changes are required.

Those responsible for audit can recommend what these changes are, which need to be carried out by the concerned clinicians, health administrators and health planners. There may be several factors responsible for a poor performance.

They need to be identified and prioritized. Having decided what changes are to be made and by whom, a method is needed for making these changes and ensuring that they do occur. This brings us to the final stage of the audit i.e. monitoring change to see if improvements are being made and that they are sustainable. The cycle could then be repeated after a period of time to ensure continuous and ongoing verification.

Essential pre-requisites for Quality Improvement Every organization and institution should concern itself with providing quality care to its patients, but in order to that, it must ensure that it has the necessary infrastructure and trained personnel to undertake this responsibility. The importance of a leadership committed to excellence cannot be over-emphasized, because it is the committed leader, which leads to a committed workforce. This establishment of a ‘quality culture ‘is vital to the success of a quality initiative.

Continuing professional education is another important as-

pect of ensuring quality. Implementation of any idea or plan will necessarily require training in skills that are required for its success. Most quality conscious organizations have ongoing professional development programmes for their employees.

Accreditation is a process of assessment of an institution of the extent of its conformance to a set of standards these are determined by a group of peers in a particular specialty as a level of performance necessary to ensure quality. Although accreditation is only a public recognition of measurable level of excellence, the process itself improves performance by what is known as the ‘Hawthorne effect’.

The profession at the present times the members of the medical profession a certain time after qualification, say every 5 years, is debating revalidation by not surprisingly (!), hotly. Its relevance to improvement of care is arguable, but it would certainly reduce the number of errors due to lack of information or knowledge, which seems to be expanding exponentially.

Challenges for the future—from QC to CQI Evolution of the quality movement has seen a uniform progression from early days of quality control to the current concept of continuous quality improvement. It can be depicted thus:

Quality Control Quality Assurance Total Quality Control Total Quality Management Continuous Quality Improvement Thus, it would be apparent that pursuit of quality is not just a onetime exercise, but also a continuous process, a neverending quest for excellence. In years to come, it will have to be supplemented by creativity and innovative ideas that go beyond the current concepts of quality.

Conclusion Considering the present climate of increasing lack of confidence and even mistrust between the society and the medical profession, a change that is perceived as one leading to quality improvement and assurance, is always welcome.

Public trust and confidence can be restored and maintained by demonstrating that the profession is seriously pursuing its goal of improving patient care. Striving for excellence should be the aim of every clinician and institution entrusted with patient care, and quality improvement programmes will go a long way towards that aim.

BUILDING A HOSPITAL S

By Madhur Varma

ometimes we are so busy organizing and managing our hospital, we forget that it continues to exist because of the patient.

Yes, we do integrate the faceless, nameless patient in our planning, but we tend to think of the patient as an entity that utilizes our service - we see patients as numbers that bring in income. But do we invest enough time and effort to discover who our patients are and to think of him or her as a human being that also thinks and plans, has specific needs and expectations?

A good exercise in the right direction when planning anything connected to customers is to remember that we ourselves are customers at other stores and of other service providers. Let us analyze ourselves as customers. Write out a list of expectations: 8 Where do we, as potential users, look for a hospital/ doctor?

8 How can we decide from the many around?

8 Do we have time or desire to shop around for what suits us best?

8 Do we have a clear definition or vague idea of expectations?

8 Do we first make a few phone calls to check out the hospitals and doctors?

8 Do the answers we receive affect our decision?

8 Does the tone of voice, culture, or lack of culture, affect our decision?

8 Do we go physically checking around or sampling?

8 Do we ask people we know for their recommendations?

8 Do we expect to find something uniquely suited to our wants, tastes, style of life, and economic capability?

8 What happens when the hospital/doctor tries to force upon us something we do not want?

8 What happens when we do not receive attention?

8 What happens when the person serving us does not listen effectively?

8 Do we expect the hospital to treat us like royalty?

8 Do we expect them to thank us for patronizing their hospital?

8 If the people in the hospital are busy, are we ready to wait patiently for our turn even if no one has acknowledged our presence yet?

8 How do we react if we hear the Manager/employees indulging in personal jokes/ conversations while we wait?

8 Do we expect first-class efficiency, cleanliness, and order even in a small hospital?

8 Do we expect the staff to call us by our names?

8 Do we expect them to explain the procedure-the advantages and risks involved in it?

8 Was the service so good that we feel compelled to

mention it to others?

8 If we call the hospital/doctor with further questions, do we expect full attention/ service?

8 Do we expect to be recognized when we visit again?

8 Do we expect to see the same people there?

8 What do we think if we find totally new employees, a new Manager, and a new doctor?

8 Would we continue going there if this were the case?

8 If the hospital employees do not handle our complaint to our satisfaction, do we want top Management to do so?

8 What do we think when the top Management starts arguing with us?

8 What happens if the top management apologizes and resolves our complaint?

8 Do we accept lowering in the service standard?

Read, re-read, and edit your list.

Show it to others.

Discuss it with your managers and employees.

Use it to design a “Mystery Hospital” checklist.

Have some of your acquaintances (unknown to your staff) come to your hospital, sample your service, equipped with your checklist. Ask them to complete it based on their experience, or have unbiased professionals do it at regular intervals. You will know your hospital’s strengths and shortcomings from the customer’s perspective.

Survey your customers regularly. Make sure the patient feedback form is obviously displayed, and thank the customer for taking the time to fill it. Have employees encourage customers to fill in the questionnaire and leave it in a locked “drop-in box” very prominently displayed.

Open the drop box regularly, if possible during the peak of your customer flow time, by one of your senior administrative person, so that the clients see that their dropins are attended to seriously, and follow up on comments made, analyze them, draw a chart, correct and improve where needed. Keep a customer database. Follow-up with a thank-you note to the customer (and further information if needed).

Seeing your hospital from the customer’s perspective and encouraging your employees to do so will not only lay the course for a successful business, but guide in planning your company policies, procedures, and employee training. It will lead to shared objectives among patients, employees and ourselves.

Today’s patients want a say in the way a hospital is run.

Patients see a hospital as being there to provide for and ervice their needs.

The author is Assistant Administrator at Escorts Heart Institute and Research Center, Delhi

3

Durable Strategies for Physician Alignment

Today more than ever, choosing the right physician strategy is critical for hospitals.

At a Glance • Physician employment, professional services agreements (PSAs), and income guarantees are three effective compensation-based strategies hospitals can use to achieve physician-hospital alignment.

• In choosing one or a combination of these strategies, hospitals should assess the strategic, regulatory, and financial considerations associated with them.

• Each strategy raises different implementation concerns—for example, employment presents the issue of compensation, PSAs involve greater regulatory constraints, and income guarantees test the long-term loyalty of physicians.

Even before the current financial crisis, hospital and health system leaders were struggling to identify the best physician alignment strategy for their organizations.

The current financial crisis may have added some complexity to this effort, but it hasn’t diminished the need for such a strategy.

In many ways, the time is ripe for a closer working relationship between physicians and hospitals. Physicians may be more receptive to aligning with hospitals than they have been in the past (see sidebar below) . The current economic environment is likely to increase financial pressure on physicians, leading more to seek employment or other support from hospitals.

Physician Attitudes: A New Climate Changing physician attitudes are providing health systems and hospitals with new physician alignment options and increasing their need to use others. Not long ago, the specter of a hospital employing physicians would have been likely to trigger a major battle with the medical staff, complete with physician threats to move their referrals and admissions to other hospitals.

In the past several years, the climate has changed.

Physicians today are more willing to trade off independence for lifestyle, and an entrepreneurial mode for financial security. Many are seeking a work environment that will protect them from rampant malpractice costs and continued decreases in reimbursement. Uncertainty in the economy is likely to accelerate this trend.

It has become common to hear physicians say, “My practice is losing money.” What they mean is that they want their

draw to be higher than what the reimbursement and practice expense environment allows. Employment is one way out of this dilemma.

The financial squeeze has also reduced physician willingness to take the risks associated with adding physicians to their practices. Even where a physician group sees a market opportunity, the physicians may feel that they can’t afford to absorb the impact on their professional income while a new physician starts up with the group. So hospitals may have greater need than in the past to provide physicians with support to encourage their practice growth.

But losses on investments and from more uninsured patients will reduce resources available to hospitals for investing in physician strategies. Hospitals are also experiencing reduced volumes as patients postpone elective procedures, further depressing profitability. Already, increased borrowing costs may have made some strategies, such as physician-hospital joint ventures, less attractive than in the past (although these strategies have continued viability in some circumstances).

Three compensation-based physician alignment strategies, each with different costs and rewards, remain broadly attractive in the current environment and therefore merit special consideration: • Physician employment • Professional services agreements (PSAs), including medical directorships and on-call coverage • Income guarantees Judiciously combined, these three approaches to physician alignment can help to achieve strategic and operational goals, including: • Securing or growing a hospital’s primary care base or specialty medical staff • Responding to specific clinical market opportunities • Protecting services that make significant contributions to a high margin (e.g., ancillary services) • Meeting coverage requirements • Strengthening quality of care initiatives By understanding the strategic, regulatory, and compliance considerations associated with each approach, hospitals can begin to choose and combine these approaches to best achieve their goals.

Strategic Considerations When evaluating the strategic considerations involved with each of these compensation-based strategies, two points warrant special emphasis. First, all other things being equal, the more closely the alignment strategy integrates the physician group with the hospital or health system, the greater the benefits it will provide. Second, the success of the effort will be largely determined by the attitudes and influence of the physicians and groups involved or affected.

With these points in mind, employing physicians is perhaps the most appealing strategy because it provides the closest ties to the healthcare organization and is most likely to result in the desired physician behavior. Employment also has the potential to achieve the broadest range of goals—as long as it also meets financial and regulatory criteria and suits the physicians’ attitudes. Those are significant caveats, however, which is why physician employment is usually only one element of a physician alignment strategy.

Moreover, although physician employment may be a more viable alignment strategy than in the past, it’s not necessarily the right one for every hospital, or for every

may fade once the guarantee period (typically one to two years) is completed. Also, there is no way to guarantee referral patterns.

The decision whether to use income guarantees or physician employment is based partly on the philosophical outlook of the hospital or health system, and partly on the outlook of the physician practices. Income guarantees will fit best where new physicians wish to remain independent, or where existing physicians are happy to grow their practices without assuming the risks and without having to compete with employed physicians at the hospital.

Income guarantees also can be a good bridge strategy—for example, where the attitude toward physician employment is visibly changing but the option is not yet politically feasible.

A PSA is an effective strategy if the goal is to develop clinical programs in targeted service lines with physicians already on the medical staff.

Protecting ancillary revenue. Pressure on physician revenues is motivating many physician groups to develop their own ancillary services that compete with hospital services. When a hospital has ancillary services that contribute heavily to the

physician for that matter. Therefore, to determine the extent to which any or all of these three strategies would have the desired effect in bringing the hospital and physicians together, it is necessary to carefully assess each strategy in light of the hospital’s strategic and operational goals— particularly with respect to referral base and growth, ancillary revenue, on-call coverage, and quality of care (see exhibit) Referral base and growth. Employing physicians provides the most direct and strategically lowest-risk way to respond when the hospital has identified a need to grow its referral base or secure it from erosion, or when physician groups are not responding to growth opportunities in specific specialties. Employment offers the significant advantage that employed physicians can be required to use the employing hospital’s facilities, as long as the physicians and their patients have the option to go elsewhere when the alternative site holds the promise of better clinical care, especially for tertiary or quaternary services.

Some physicians, however, may be strongly opposed to being employed by the hospital. The market may not be ready, or powerful physician groups on the medical staff may object to the approach. In this situation, it may be more politic to provide incentives for groups to add physicians through income guarantees for new physicians (where community need can be demonstrated, as is discussed under the heading of “Regulatory Considerations”).

Providing an income guarantee for new physicians for a start-up or loyal practice can be a productive approach to increasing the supply of physicians. However, its impact

margin (e.g., endoscopy or radiation oncology), loss of that income is a significant threat.

Pursuing a joint venture with the physicians may preserve some of this revenue, but possibly less than half. A joint venture will generally receive lower payment for a service than the hospital, and that revenue must be split with the physicians.

Employing physicians, however, offers an effective way for a hospital to protect its essential ancillary services revenue, as the employed physicians would not develop ancillary services.

Some of the same benefits of employing physicians to prevent ancillary service competition also can be achieved by setting up extensive PSAs and income guarantees. The more physicians are perceived as connected to the hospital, the more a group of physicians will think twice before creating a competing ancillary service.

Moreover, when a hospital’s physician enterprise reaches a certain size, establishing an ancillary service in competition with the hospital will appear less appealing to voluntary medical staff members because they will be less confident of their ability to attract enough volume to sustain the ancillary service on their own. Moreover, by competing with the hospital’s service, and potentially losing referrals from hospital-employed physicians, the independent physician may put core professional services revenue at risk.

A hospital can be in a bind when trying to protect its ancillary services from competition developed by large specialty practices. These practices often have the scale to negotiate successfully with payers on their own, and

are also better positioned than other practices to develop ancillary services as an additional source of income. For these reasons, these practices are both the least likely to choose employment and the most likely to set themselves up in competition with the hospital. In this situation, a joint venture relationship, or even a comanagement agreement, with the physician practice may be the most attractive option.

Coverage. Traditionally, physicians have provided on-call coverage at no cost as part of their medical staff obligations.

As physicians have felt increasingly pressured to maximize their revenue-producing hours, they have become less inclined to provide free coverage.

All of the compensation-based physician alignment approaches can be used to address coverage issues.

Employed physicians can be required to provide coverage outside of office hours. Income guarantees can help build the number of physicians available to provide coverage, particularly if on-call coverage is made a condition of the guarantee. PSAs and directorship agreements are a relatively low-profile approach to rewarding physicians for their services to the hospital, including on-call coverage.

There also is a growing use of “ists” to provide inpatient coverage—hospitalists, intensivists, nocturnalists, and even laborists. These physicians can be employed, or can work under a PSA. The choice of which alignment approach to use in a coverage situation is often a function of which physicians are available in a given specialty and their preferences. Sometimes a contractual arrangement with a multispecialty group can provide coverage across a range of specialties, and the hospital can gain the full loyalty of the whole group.

Quality of care. Hospitals and health systems increasingly see a need to better manage quality of care, and to integrate physicians into this process. Physician employment provides the greatest opportunity to engage physicians, and therefore the best opportunity for integration of clinical guidelines into the medical practice.

When a large number of physicians are employed, a hospital is well-positioned to extend its inpatient care quality initiative into ambulatory care. It is more economical, as well as politically and operationally simpler, to implement an electronic medical record (EMR) system that extends to the offices of employed physicians than to independent members of the medical staff. With an EMR in place, clinical guidelines can be extended beyond inpatient care into ambulatory and office-based care.

PSAs, and to a lesser degree income guarantees, can provide some advantages in engaging physicians in a hospital’s quality-of-care initiatives. Income guarantees can make physicians more amenable to these initiatives by enhancing the relationship between the physicians and the hospitals. And a PSA that involves departmental leadership and teaching can secure physician participation in such initiatives by making involvement in the development and “enforcement” of clinical guidelines defined responsibilities of the position. Once physicians are adhering to guidelines in one context, they are likely to do so in other aspects of their practice—and influence their colleagues to do so as well.

Regulatory Considerations Meeting regulatory requirements for physician employment is a relatively simple matter. Regulations are a more significant challenge to PSAs, however, and income guarantees are still more difficult (see exhibit) . Key considerations in any case are community need and compensation fair market value (FMV).

Community need. In an income guarantee situation, it is necessary to demonstrate community need, because the goal of the guarantee is to bring a needed physician into that market. Sometimes, however, a hospital cannot demonstrate community need in a geographic area because of physicians affiliated with other hospitals. In such instances, if the hospital wants to target development in a particular specialty, employment or PSAs are viable options, because hospitals are not required to demonstrate community need with either of these approaches.

Compensation fair market value (FMV). All three alignment strategies require that compensation be made at FMV. With physician employment, regulatory concerns regarding compensation focus primarily on IRS concerns about private inurement, whereas with PSAs, there is more concern about a hospital appearing to be paying for referrals as prohibited

by Stark and Medicare antikickback provisions.

It is typically easier to meet FMV requirements in employment than in PSAs. Most important, whatever approach is used must comply with federal law dictating that compensation may under no circumstances provide incentives to induce additional referral volume.

Fair market compensation must be based on appropriate benchmark data for physicians in the same specialty or subspecialty and performing in the same role. It must be based on careful determination of service levels, whether for patient care and coverage or administrative, supervisory, and teaching activities.

Innovative approaches can be required to maintain regulatory compliance of financial arrangements while meeting physician expectations.

Financial Considerations With many hospitals experiencing losses on their investments and facing reduced payment, the financial implications of different physician alignment options come into sharper relief. However, these strategies are long-term commitments, and decisions about them should not be overly influenced by short-term financial issues.

Hospitals and health systems with stronger balance sheets will be able to take advantage of the current situation by pursuing strategies not available to their weaker competitors. In addition, physicians may be more interested in reaching agreements, possibly yielding more favorable terms for hospitals.

Employing physicians requires significant up-front investment. It may be necessary to acquire a physician’s existing practice, or to fund losses during the start-up of physicians who are new to practice. Infrastructure investments, such as billing systems, are required to properly manage practices. Investment in an EMR system is essential to get the maximum benefits from physician employment.

When physicians are employed, hospitals can negotiate with payers on their behalf, typically achieving somewhat better results than the physicians can get on their own. The hospital also handles malpractice insurance. Physicians often find that their overhead is a little higher, but more predictable than would be the case in private practice.

Many health systems and hospitals have found themselves losing money on the practices of employed physicians, sometimes as a result of offering the physicians a guaranteed salary. When compensation is properly structured, it is possible to control or avoid losses, but from a strategic viewpoint, avoiding all losses may not be desirable. In some instances, a loss on the professional service revenue of particular physician practices due to compensation may be more than offset by the value of having the physician as a reliable referral source and thus may net the best results for the hospital enterprise as a whole.

Income guarantees typically involve more limited financial exposure and are easier to manage. The risk is limited to the possibility that a new physician is unable to achieve the volumes needed to provide adequate compensation within the period of the guarantee. In such an instance, the practice could request an extension, leading to negotiations that could strengthen or weaken its alignment with the hospital.

PSAs can create significant financial risk if not managed carefully. The hospital not only must demonstrate to regulators that the medical directorships and other positions are providing concrete value, but also must give other physicians the assurance that these positions are not union no-show jobs. If that is not done, there can be a slippery slope to the point where all physicians start seeking compensation for every task that isn’t paid by an insurer.

Key Implementation Concerns Achieving success with any of these alignment strategies depends on careful implementation. What may appear to be small considerations can make all the difference in whether alignment goals are achieved. Each strategy raises its own

special implementation challenges, so they are addressed below for each strategy in turn.

Physician employment. When a hospital employs physicians, it bears all of the risks and burdens of the physician practices, ranging from practice overhead, to the need to motivate physicians, to coping with potential physician dissatisfaction. Of course, with the proper implementation, the hospital also receives all the strategic benefits.

In short, financial considerations are most critical in successful implementation of an employment program. The hospital should be careful not to overpay when acquiring the physician practices, because it may never be able to recover a high acquisition cost. It is also critical to bring the physician enterprise to the attention of payers during contract negotiations. Payment should reflect the superior integration and management of care in a hospital-owned physician enterprise, as long as the payers see evidence of progress toward delivering on these promises.

The compensation of employed physicians should be set at an FMV level. Within the range of FMV, compensation should recognize that physicians in private practice can increase their income by including ancillary services in their practices. In an employment model, this additional revenue stream is not available to the physicians because the hospital retains the ancillary volume.

Proper compensation design and attention to expenses helps to control losses. Straight salary compensation should be avoided because it buffers the physicians from every reality they would experience in private practice, and is practically a guarantee that the hospital will lose money because it does not align physician and hospital incentives. Compensation based on relative value units provides incentives for volume, but still shelters physicians from a wide range of factors affecting practice revenue and expenses and, ultimately, the practice’s bottom line.

Increasingly, physicians appreciate a practice setting that rewards them as if they were in private practice. Paying physicians, in whole or in part, on a net practice income basis provides this kind of incentive. Physicians still obtain

the financial benefits of improved payer contracts and lower malpractice costs.

In addition, as pay-for-performance trends influence the market, compensation mechanisms will need to become ever more sophisticated, using metrics pertaining to clinical outcomes, patient satisfaction, and adherence to clinical guidelines.

The integration made possible by an EMR can enable a hospital to optimize the benefits from employing physicians, improving its return on expenses. An EMR that extends into physicians’ offices should be implemented wherever there is a sufficiently large physician enterprise, to improve integration of care, extend the use of clinical guidelines, and increase the ability to monitor quality of care.

PSAs. The most significant concerns in implementing PSAs are regulatory constraints, and the need to control the slippery slope risks cited previously that could make PSAs an expanding part of the hospital budget. PSAs also must be managed carefully and consistently to avoid sparking physician discontent worse than that which they were being used to quell.

The greatest regulatory concern regarding PSAs is that they could be construed as payment for physician referrals. As a result, hospitals must be meticulous in conforming to FMV requirements. This concern can make it difficult for both the hospital and the physician to meet their goals for the arrangement. Hospitals want to put enough on the table to get the deal done, but not more than necessary, while physicians often push for high compensation relative to hours spent. Convincing physicians that your offer cannot be higher due to federal regulations can take a convincing written case and a light touch.

Techniques that can help hospitals successfully manage the risks of PSAs include benchmarking compensation for the physician specialties and roles involved and creating position descriptions that define the administrative, supervisory, and teaching activities to be provided. Level-ofeffort agreements and monitoring systems should be put in place.

Obtaining an external FMV opinion protects the hospital and

makes it easier to deal with physicians’ expectations. Once an arrangement is in place, it is essential that the hospital protect itself by keeping a consistent and accurate record of physician hours spent, logged as they occur.

Hospitals also should adopt a rationale to control undesired expansion of PSAs. For example, PSAs could be limited to situations in which there is community need or insufficient staff in a specialty to provide seven-day coverage. Some hospitals, as a matter of policy, have established a fixed annual budget for on-call coverage, and then asked key medical leaders to establish a fair allocation mechanism.

Income guarantees. When providing income guarantees to support an existing practice in bringing in a new practitioner, the demonstrated loyalty of the practice to the hospital is of paramount importance. It also is important to design the guarantee so that the new practitioner has an incentive to grow his or her practice. If total income protection is provided for the entire length of the guarantee, the physician will face an overnight transition from full protection to no income protection when the guarantee ends. Because the existing practice will be determining the new practitioner’s compensation once the guarantee is over, it is best to understand the practice’s compensation design to be sure that the structure of the income guarantee will transition smoothly into their compensation plan.

A Full-Spectrum Solution Every hospital faces a unique situation with regard to physician alignment, and there is no single optimal alignment strategy. Most hospitals will need to combine these three compensation-based strategies, as well as others, including joint ventures, to meet the full spectrum of their physician alignment needs. By understanding the strategic, financial, and regulatory benefits and burdens of each, a hospital can combine alignment strategies for maximum benefit.

Daniel M. Grauman is president and CEO of DGA Partners, Bala Cynwyd, Pa., and a member of HFMA’s Philadelphia Metropolitan Chapter (DGrauman@dgapartners.com) John M. Harris is a principal with DGA Partners, Bala Cynwyd, Pa., and a member of HFMA’s Philadelphia Metropolitan Chapter (JHarris@dgapartners.com)

by Tim Clark

A cardiologist wearing a cell phone can run the client-side midlet specifying that ECGConnect alert him to a number of heart conditions.

I

f the stethoscope symbolizes twentieth century medicine, IT could very well represent the twentyfirst. Computer technology has not only transformed how modern physicians practice medicine; it has changed the way we experience care.

From the moment a heart patient arrives at a hospital, he / she is wired to a computer. A telemetry system transmits her heartbeat to a nurse’s station before and after surgery.

A digital diary records every doctor’s order, diagnostic test, and meal during her stay. And when she rolls into the operating room, a surgical team and bevy of computers attend to her immediate needs.

A generation ago, physicians reviewed data from thousands of cardiology cases to determine whether the length of time spent in the sickbay after surgery affected survival rates.

They concluded that most heart patients could return home shortly after surgery. But cutting the traditional stay in half meant that doctors and patients were out of touch for a crucial part of the recovery.

Soon, the watchful eye of the heart surgeon will follow the patient home. In a dramatic breakthrough for ambulatory medicine, a practitioner can strap a heart monitor to a patient’s chest, attach it to a cell phone running a compatible software, and observe most vital signs from afar. This is done by combining wireless, medical, and Java midlets technologies to measure a patient’s heart rate and transmit it securely to a workstation located at a hospice in your community -- or a medical center halfway around the world.

Programming the Remote To begin an observation, a technician connects one end of a serial cable to the patient’s heart monitor and the other to a cell phone. He calibrates the device, and then launches the application on the phone.

graph the electrocardiogram to the cell phone display. code sample A Java based midlet, loaded on a compliant cell phone, samples electrocardiogram (ECG) data 40 times per second. The midlet matches the patient’s ECG with known patterns, looking for variations from the normal.

ECG data from the heart monitor is collected via the phone’s serial port. With the touch of the screen, the midlet graphs an up-to-the-moment electrocardiogram. At the same time, it delivers encrypted UDP data grams describing the ECG to a secure server for storage, analysis, and display. Any number of authorized workstations, enabled phones, smart pagers, or FAX machines can retrieve data from the server.

Practitioners can evaluate data moments after the observation begins. Every five seconds, the cell phone transmits information to the server. Heart surgeons rely on such timely data because many of their patients experience irregular heartbeats some 36-48 hours after surgery. For physicians specializing in diagnosing and treating arrhythmia, the device can monitor their patients continuously. For a cardiologist managing long-term care, the device can alert him if a coronary artery occludes or a drug aggravates a patient’s heart condition.

A cardiologist wearing a cell phone can run the client-side midlet specifying that ECG-Connect alert him to a number of heart conditions.

Only a Heartbeat Away Soon, emergency room physicians, nurses, and technicians will start evaluating many of his patients from the back of a speeding ambulance.

And the emergency room team need not be there for the ride. Emergency medicine requires the ambulatory services and hospice to exchange lots of vital information during the critical phase, and monitering the patient will provide a seamless connection between Emergency Medical Teams and emergency room physicians.

This can be achieved by attaching the monitoring device to the chest of his most critically ill patients.

This seamless connection will grow stronger as scientists explore ways to combine wireless, medical, and other technologies to measure oxygen saturation, blood pressure, and glucose concentration, for example.

Here is an example of the low-level canvas routines that

The revolution has begun.

Programming Notes