Practice Economics

Clinical question: What are the characteristics of a large cohort of patients under observation status?

Background: The use of observation hospital services has increased significantly. The Centers for Medicare and Medicaid Services (CMS) defines observation status as a “well-defined set of specific, clinically appropriate services,” usually lasting <24 hours and exceeding 48 hours in “only rare and exceptional cases.”

Study design: Retrospective descriptive study.

Setting: University of Wisconsin Hospital and Clinics, a 566-bed tertiary academic medical center.

Synopsis: A total of 43,853 hospitalizations were reviewed during the study period. Of those, 4578 (10.4%) were observation. The mean observation LOS was 33.3 hours, which included 16.5% of patients with LOS >48 hours. Although chest pain was the top observation diagnosis, 1141 distinct observation diagnosis codes were found.

These findings illustrate a significant disparity between the CMS definition for observation stay and the description of observation patients in this cohort, despite using CMS-endorsed InterQual criteria to determine status. While the cost per encounter for observation care was less than inpatient care, reimbursement was insufficient to cover those reduced costs. Ultimately, the net loss of revenue per observation encounter was $331, compared to a net gain in revenue per inpatient encounter of $2,163. This operating loss for hospitals is coupled with the fact that some of this cost is being transferred to patients.

Bottom line: Definitions and reimbursement models for observation status warrant continued research and discussion in the context of our evolving healthcare climate.

Citation: Sheehy AM, Graf B, Gangireddy S, et al. Hospitalized but not admitted: characteristics of patients with “observation status” at an academic medical center [published online ahead of print July 8, 2013]. JAMA Intern Med.

Clinical question: What are the characteristics of a large cohort of patients under observation status?

Background: The use of observation hospital services has increased significantly. The Centers for Medicare and Medicaid Services (CMS) defines observation status as a “well-defined set of specific, clinically appropriate services,” usually lasting <24 hours and exceeding 48 hours in “only rare and exceptional cases.”

Study design: Retrospective descriptive study.

Setting: University of Wisconsin Hospital and Clinics, a 566-bed tertiary academic medical center.

Synopsis: A total of 43,853 hospitalizations were reviewed during the study period. Of those, 4578 (10.4%) were observation. The mean observation LOS was 33.3 hours, which included 16.5% of patients with LOS >48 hours. Although chest pain was the top observation diagnosis, 1141 distinct observation diagnosis codes were found.

These findings illustrate a significant disparity between the CMS definition for observation stay and the description of observation patients in this cohort, despite using CMS-endorsed InterQual criteria to determine status. While the cost per encounter for observation care was less than inpatient care, reimbursement was insufficient to cover those reduced costs. Ultimately, the net loss of revenue per observation encounter was $331, compared to a net gain in revenue per inpatient encounter of $2,163. This operating loss for hospitals is coupled with the fact that some of this cost is being transferred to patients.

Bottom line: Definitions and reimbursement models for observation status warrant continued research and discussion in the context of our evolving healthcare climate.

Citation: Sheehy AM, Graf B, Gangireddy S, et al. Hospitalized but not admitted: characteristics of patients with “observation status” at an academic medical center [published online ahead of print July 8, 2013]. JAMA Intern Med.

Clinical question: What are the characteristics of a large cohort of patients under observation status?

Background: The use of observation hospital services has increased significantly. The Centers for Medicare and Medicaid Services (CMS) defines observation status as a “well-defined set of specific, clinically appropriate services,” usually lasting <24 hours and exceeding 48 hours in “only rare and exceptional cases.”

Study design: Retrospective descriptive study.

Setting: University of Wisconsin Hospital and Clinics, a 566-bed tertiary academic medical center.

Synopsis: A total of 43,853 hospitalizations were reviewed during the study period. Of those, 4578 (10.4%) were observation. The mean observation LOS was 33.3 hours, which included 16.5% of patients with LOS >48 hours. Although chest pain was the top observation diagnosis, 1141 distinct observation diagnosis codes were found.

These findings illustrate a significant disparity between the CMS definition for observation stay and the description of observation patients in this cohort, despite using CMS-endorsed InterQual criteria to determine status. While the cost per encounter for observation care was less than inpatient care, reimbursement was insufficient to cover those reduced costs. Ultimately, the net loss of revenue per observation encounter was $331, compared to a net gain in revenue per inpatient encounter of $2,163. This operating loss for hospitals is coupled with the fact that some of this cost is being transferred to patients.

Bottom line: Definitions and reimbursement models for observation status warrant continued research and discussion in the context of our evolving healthcare climate.

Citation: Sheehy AM, Graf B, Gangireddy S, et al. Hospitalized but not admitted: characteristics of patients with “observation status” at an academic medical center [published online ahead of print July 8, 2013]. JAMA Intern Med.

Clinical question: Do programs that systematically provide smoking cessation support to admitted patients improve smoking cessation rates?

Background: Hospitalization is a good setting for initiation of smoking cessation. It is well known that conventional behavioral and pharmacotherapy interventions are effective. Intensive behavioral intervention provided to willing hospitalized patients is known to be useful; however, there is no established systematic delivery of these interventions.

Study design: Open, cluster-randomized, controlled trial.

Setting: Acute medical wards in a large teaching hospital in the United Kingdom.

Synopsis: More than 1,000 patients admitted between October 2010 and August 2011 were eligible for the study, of which 264 were included in the intervention and 229 in the usual care group (determination of smoking status and non-obligatory offer of cessation support). All of those in intervention received advice to quit smoking, compared to only 46% in the usual care group. Four-week smoking cessation was achieved by 38% of patients from the intervention group, compared to 17% from the usual care group. Secondary outcomes (use of behavioral cessation support, pharmacotherapy, and referral to and use of the local stop smoking service) were all significantly higher in the intervention group compared to the usual care group (P<0.001 in all cases).

This study shows that simple measures, when systematically delivered, are effective in initiating smoking cessation.

Bottom line: In-hospital systematic delivery of smoking cessation strategies is effective.

Citation: Murray RL, Leonardi-Bee J, Marsh J, et al. Systematic identification and treatment of smokers by hospital based cessation practitioners in a secondary care setting: cluster randomised controlled trial. BMJ. 2013;347:f4004.

Clinical question: Do programs that systematically provide smoking cessation support to admitted patients improve smoking cessation rates?

Background: Hospitalization is a good setting for initiation of smoking cessation. It is well known that conventional behavioral and pharmacotherapy interventions are effective. Intensive behavioral intervention provided to willing hospitalized patients is known to be useful; however, there is no established systematic delivery of these interventions.

Study design: Open, cluster-randomized, controlled trial.

Setting: Acute medical wards in a large teaching hospital in the United Kingdom.

Synopsis: More than 1,000 patients admitted between October 2010 and August 2011 were eligible for the study, of which 264 were included in the intervention and 229 in the usual care group (determination of smoking status and non-obligatory offer of cessation support). All of those in intervention received advice to quit smoking, compared to only 46% in the usual care group. Four-week smoking cessation was achieved by 38% of patients from the intervention group, compared to 17% from the usual care group. Secondary outcomes (use of behavioral cessation support, pharmacotherapy, and referral to and use of the local stop smoking service) were all significantly higher in the intervention group compared to the usual care group (P<0.001 in all cases).

This study shows that simple measures, when systematically delivered, are effective in initiating smoking cessation.

Bottom line: In-hospital systematic delivery of smoking cessation strategies is effective.

Citation: Murray RL, Leonardi-Bee J, Marsh J, et al. Systematic identification and treatment of smokers by hospital based cessation practitioners in a secondary care setting: cluster randomised controlled trial. BMJ. 2013;347:f4004.

Clinical question: Do programs that systematically provide smoking cessation support to admitted patients improve smoking cessation rates?

Background: Hospitalization is a good setting for initiation of smoking cessation. It is well known that conventional behavioral and pharmacotherapy interventions are effective. Intensive behavioral intervention provided to willing hospitalized patients is known to be useful; however, there is no established systematic delivery of these interventions.

Study design: Open, cluster-randomized, controlled trial.

Setting: Acute medical wards in a large teaching hospital in the United Kingdom.

Synopsis: More than 1,000 patients admitted between October 2010 and August 2011 were eligible for the study, of which 264 were included in the intervention and 229 in the usual care group (determination of smoking status and non-obligatory offer of cessation support). All of those in intervention received advice to quit smoking, compared to only 46% in the usual care group. Four-week smoking cessation was achieved by 38% of patients from the intervention group, compared to 17% from the usual care group. Secondary outcomes (use of behavioral cessation support, pharmacotherapy, and referral to and use of the local stop smoking service) were all significantly higher in the intervention group compared to the usual care group (P<0.001 in all cases).

This study shows that simple measures, when systematically delivered, are effective in initiating smoking cessation.

Bottom line: In-hospital systematic delivery of smoking cessation strategies is effective.

Citation: Murray RL, Leonardi-Bee J, Marsh J, et al. Systematic identification and treatment of smokers by hospital based cessation practitioners in a secondary care setting: cluster randomised controlled trial. BMJ. 2013;347:f4004.

Clinical question: What are physicians’ attitudes toward addressing healthcare costs and which strategies do they most enthusiastically support?

Background: Physicians are expected to take a lead role in containing healthcare costs, especially in the face of healthcare reform; however, their attitudes regarding this role are unknown.

Study design: Cross-sectional survey.

Setting: U.S. physicians randomly selected from the AMA master file.

Synopsis: Among 2,556 physicians who responded to the survey (response rate: 65%), most believed stakeholders other than physicians (e.g., lawyers, hospitals, insurers, pharmaceutical manufacturers, and patients) have a “major responsibility” for reducing healthcare costs. Most physicians were likely to support such quality initiatives as enhancing continuity of care and promoting chronic disease care coordination. Physicians were also enthusiastic with regard to expanding the use of electronic health records.

The majority of physicians expressed agreement about their responsibility to address healthcare costs by adhering to clinical guidelines, limiting unnecessary testing, and focusing on the individual patient’s best interest. However, a majority expressed limited enthusiasm for strategies that involved cost cutting to physicians, such as eliminating fee-for-service payment models, reducing compensation for the highest paid specialties, and allowing Medicare payment cuts to doctors.

Of note, in the multivariate model, physicians receiving salary-based compensation were more likely to be enthusiastic about eliminating fee-for-service.

Bottom line: Physicians expressed considerable enthusiasm for addressing healthcare costs and are in general agreement but are not enthusiastic about changes that involve physician payment cuts.

Citation: Tilburt JC, Wynia MK, Sheeler RD, et al. Views of US physicians about controlling health care costs. JAMA. 2013;310:380-388.

Clinical question: What are physicians’ attitudes toward addressing healthcare costs and which strategies do they most enthusiastically support?

Background: Physicians are expected to take a lead role in containing healthcare costs, especially in the face of healthcare reform; however, their attitudes regarding this role are unknown.

Study design: Cross-sectional survey.

Setting: U.S. physicians randomly selected from the AMA master file.

Synopsis: Among 2,556 physicians who responded to the survey (response rate: 65%), most believed stakeholders other than physicians (e.g., lawyers, hospitals, insurers, pharmaceutical manufacturers, and patients) have a “major responsibility” for reducing healthcare costs. Most physicians were likely to support such quality initiatives as enhancing continuity of care and promoting chronic disease care coordination. Physicians were also enthusiastic with regard to expanding the use of electronic health records.

The majority of physicians expressed agreement about their responsibility to address healthcare costs by adhering to clinical guidelines, limiting unnecessary testing, and focusing on the individual patient’s best interest. However, a majority expressed limited enthusiasm for strategies that involved cost cutting to physicians, such as eliminating fee-for-service payment models, reducing compensation for the highest paid specialties, and allowing Medicare payment cuts to doctors.

Of note, in the multivariate model, physicians receiving salary-based compensation were more likely to be enthusiastic about eliminating fee-for-service.

Bottom line: Physicians expressed considerable enthusiasm for addressing healthcare costs and are in general agreement but are not enthusiastic about changes that involve physician payment cuts.

Citation: Tilburt JC, Wynia MK, Sheeler RD, et al. Views of US physicians about controlling health care costs. JAMA. 2013;310:380-388.

Clinical question: What are physicians’ attitudes toward addressing healthcare costs and which strategies do they most enthusiastically support?

Background: Physicians are expected to take a lead role in containing healthcare costs, especially in the face of healthcare reform; however, their attitudes regarding this role are unknown.

Study design: Cross-sectional survey.

Setting: U.S. physicians randomly selected from the AMA master file.

Synopsis: Among 2,556 physicians who responded to the survey (response rate: 65%), most believed stakeholders other than physicians (e.g., lawyers, hospitals, insurers, pharmaceutical manufacturers, and patients) have a “major responsibility” for reducing healthcare costs. Most physicians were likely to support such quality initiatives as enhancing continuity of care and promoting chronic disease care coordination. Physicians were also enthusiastic with regard to expanding the use of electronic health records.

The majority of physicians expressed agreement about their responsibility to address healthcare costs by adhering to clinical guidelines, limiting unnecessary testing, and focusing on the individual patient’s best interest. However, a majority expressed limited enthusiasm for strategies that involved cost cutting to physicians, such as eliminating fee-for-service payment models, reducing compensation for the highest paid specialties, and allowing Medicare payment cuts to doctors.

Of note, in the multivariate model, physicians receiving salary-based compensation were more likely to be enthusiastic about eliminating fee-for-service.

Bottom line: Physicians expressed considerable enthusiasm for addressing healthcare costs and are in general agreement but are not enthusiastic about changes that involve physician payment cuts.

Citation: Tilburt JC, Wynia MK, Sheeler RD, et al. Views of US physicians about controlling health care costs. JAMA. 2013;310:380-388.

Let’s call them multi-site, hospital medicine group leaders, or just multi-site HMG leaders. Once rare, they’re now becoming common, and among the many people now holding this job are:

• Dr. Doug Apple at Spectrum Health Medical Group in Grand Rapids, Mich;
• Dr. Tierza Stephan at Allina Health in Minneapolis, Minn.;
• Dr. Darren Thomas at St. John Health System in Tulsa, Okla.;
• Dr. Thomas McIlraith at Dignity Health in Sacremento, Calif.; and
• Dr. Rohit Uppal at Ohio Health in Columbus, Ohio.

The career path that led to their current position usually follows a standard pattern. They are a successful leader of a single-site hospitalist program when, through merger or acquisition, their hospital becomes part of a larger system. The executives responsible for this larger system—typically four to eight hospitals—realize that the HMGs serving each hospital in the system vary significantly in their cost, productivity, and performance on things like patient satisfaction and quality metrics. So they tap the leader of the largest (or best performing) HMG in the system to be system-wide hospitalist medical director. They nearly always choose an internal candidate rather than recruiting from outside, which brings some level of cohesion in operations and performance improvement.

Multi-Site Challenges

This is not an easy job. After all, it isn’t easy to serve as lead hospitalist for a single-site group, so it makes sense that the difficulties and challenges only increase when trying to manage groups at different locations.

The new multi-site HMG leader is busy from the first day on the job. The HMG at one site is short on staffing and needs help right away, patient satisfaction scores are poor at the next site, and so on. Although putting out these fires is important, the new leader also needs to think about how to accomplish a broader mission: ensuring greater cohesion across all groups.

I don’t think there is a secret recipe to ensure success in such a job. Prerequisites include the usual leadership skills, such as patience, good listening, and diplomacy (collectively, one’s EQ, or emotional quotient), along with lots of energy and decisive action. But there are a number of practical matters to address that can influence the level of success.

Cohesion vs. Independence

In most situations, a health system will benefit from some common operating principles across all the HMGs who serve its hospitals. For example, it usually makes sense for any portion of compensation tied to performance (e.g., a bonus) to be based on the same performance domains at all sites. For example, if metrics such as the observed-to-expected mortality ratio (O:E ratio) and patient satisfaction are important to the hospital system, then they should probably influence hospitalist compensation at every site. However, it might be reasonable to target a level of performance for any given domain higher at one site than at another.

Among the many things that should be the same across all sites are operational practices: charge capture, coding audits, performance reviews, dashboard elements and format, and credentialing for new hires. Other things, like individual hospitalist productivity, work schedule, and method and amount of compensation, should vary by site because of the unique attributes of the work at each place.

Fixed Locale vs. Rotations

The travel time between hospitals and the value of extensive experience in the details of how each particular hospital operates usually make it most practical for each individual hospitalist to work nearly all of the time at one hospital. But every doctor should be credentialed at every other hospital in the system so that he can cover a staffing shortage elsewhere.

And, hospitalists hired to work primarily at one of the small hospitals would probably benefit from working at the large referral hospital for the first few weeks of employment. This seems like a great way for them to become familiar with the people and operations at the big hospital, especially since they will be transferring patients there periodically.

Governance

Some mix of central control vs. local autonomy in decision making at each site is important for success. There aren’t any clear guidelines here, but providing the local doctors at each location with the ability to make their own decisions on things like work schedule will contribute to their sense of ownership of the practice. That feeling is valuable and supports good performance.

My bias is that each site in a practice could adopt the same “internal governance” guidelines, or rules by which they make decisions when unable to reach consensus (see “Play by the Rules,” December 2007, for sample guidelines.)

There should also be some form of “umbrella” governance structure in which the local site leaders meet regularly with the multi-site HMG leader.

Patient Transfers

One reason hospitals merge into a single system is the hope that they can more effectively meet the needs of all patients in the system’s hospitals. A typical configuration is several small hospitals, along with a single, large, referral center, to which patients are sent if the small hospital can’t meet their needs. The hope is that if all the hospitals are in the same system, the process of transfer can be smoother and more efficient.

A large portion—maybe even the majority—of all transfers in the system will be between a hospitalist at the small hospital and a partner hospitalist at the large hospital. Things will work best when the transferring and receiving hospitalists know something about the strengths and weaknesses of each other’s hospitals. And, you only know one another reasonably well from working together on committees or being on clinical service together at the same hospital, as well as social functions that include hospitalists from all sites.

Therefore, the multi-site HMG leader should think deliberately about how to ensure that the hospitalists interact with one another often, and not just when a transfer needs to take place.

A written agreement outlining the criteria for an appropriate transfer can be helpful. But such agreements cannot address all the situations that will arise, so good relationships between doctors at the different sites are invaluable and worth taking the time to cultivate.

Communication

Like the five people I mentioned above, anyone holding the position of multi-site HMG leader would benefit from talking with others in the same position. I’m working to arrange some forum for such communication, potentially including an in-person meeting at HM14 in Las Vegas in March (www.hospitalmedicine2014.org). If you are a health system-employed, multi-site HMG leader and want to be part of this conversation, I would love to hear from you.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

Let’s call them multi-site, hospital medicine group leaders, or just multi-site HMG leaders. Once rare, they’re now becoming common, and among the many people now holding this job are:

• Dr. Doug Apple at Spectrum Health Medical Group in Grand Rapids, Mich;
• Dr. Tierza Stephan at Allina Health in Minneapolis, Minn.;
• Dr. Darren Thomas at St. John Health System in Tulsa, Okla.;
• Dr. Thomas McIlraith at Dignity Health in Sacremento, Calif.; and
• Dr. Rohit Uppal at Ohio Health in Columbus, Ohio.

The career path that led to their current position usually follows a standard pattern. They are a successful leader of a single-site hospitalist program when, through merger or acquisition, their hospital becomes part of a larger system. The executives responsible for this larger system—typically four to eight hospitals—realize that the HMGs serving each hospital in the system vary significantly in their cost, productivity, and performance on things like patient satisfaction and quality metrics. So they tap the leader of the largest (or best performing) HMG in the system to be system-wide hospitalist medical director. They nearly always choose an internal candidate rather than recruiting from outside, which brings some level of cohesion in operations and performance improvement.

Multi-Site Challenges

This is not an easy job. After all, it isn’t easy to serve as lead hospitalist for a single-site group, so it makes sense that the difficulties and challenges only increase when trying to manage groups at different locations.

The new multi-site HMG leader is busy from the first day on the job. The HMG at one site is short on staffing and needs help right away, patient satisfaction scores are poor at the next site, and so on. Although putting out these fires is important, the new leader also needs to think about how to accomplish a broader mission: ensuring greater cohesion across all groups.

I don’t think there is a secret recipe to ensure success in such a job. Prerequisites include the usual leadership skills, such as patience, good listening, and diplomacy (collectively, one’s EQ, or emotional quotient), along with lots of energy and decisive action. But there are a number of practical matters to address that can influence the level of success.

Cohesion vs. Independence

In most situations, a health system will benefit from some common operating principles across all the HMGs who serve its hospitals. For example, it usually makes sense for any portion of compensation tied to performance (e.g., a bonus) to be based on the same performance domains at all sites. For example, if metrics such as the observed-to-expected mortality ratio (O:E ratio) and patient satisfaction are important to the hospital system, then they should probably influence hospitalist compensation at every site. However, it might be reasonable to target a level of performance for any given domain higher at one site than at another.

Among the many things that should be the same across all sites are operational practices: charge capture, coding audits, performance reviews, dashboard elements and format, and credentialing for new hires. Other things, like individual hospitalist productivity, work schedule, and method and amount of compensation, should vary by site because of the unique attributes of the work at each place.

Fixed Locale vs. Rotations

The travel time between hospitals and the value of extensive experience in the details of how each particular hospital operates usually make it most practical for each individual hospitalist to work nearly all of the time at one hospital. But every doctor should be credentialed at every other hospital in the system so that he can cover a staffing shortage elsewhere.

And, hospitalists hired to work primarily at one of the small hospitals would probably benefit from working at the large referral hospital for the first few weeks of employment. This seems like a great way for them to become familiar with the people and operations at the big hospital, especially since they will be transferring patients there periodically.

Governance

Some mix of central control vs. local autonomy in decision making at each site is important for success. There aren’t any clear guidelines here, but providing the local doctors at each location with the ability to make their own decisions on things like work schedule will contribute to their sense of ownership of the practice. That feeling is valuable and supports good performance.

My bias is that each site in a practice could adopt the same “internal governance” guidelines, or rules by which they make decisions when unable to reach consensus (see “Play by the Rules,” December 2007, for sample guidelines.)

There should also be some form of “umbrella” governance structure in which the local site leaders meet regularly with the multi-site HMG leader.

Patient Transfers

One reason hospitals merge into a single system is the hope that they can more effectively meet the needs of all patients in the system’s hospitals. A typical configuration is several small hospitals, along with a single, large, referral center, to which patients are sent if the small hospital can’t meet their needs. The hope is that if all the hospitals are in the same system, the process of transfer can be smoother and more efficient.

A large portion—maybe even the majority—of all transfers in the system will be between a hospitalist at the small hospital and a partner hospitalist at the large hospital. Things will work best when the transferring and receiving hospitalists know something about the strengths and weaknesses of each other’s hospitals. And, you only know one another reasonably well from working together on committees or being on clinical service together at the same hospital, as well as social functions that include hospitalists from all sites.

Therefore, the multi-site HMG leader should think deliberately about how to ensure that the hospitalists interact with one another often, and not just when a transfer needs to take place.

A written agreement outlining the criteria for an appropriate transfer can be helpful. But such agreements cannot address all the situations that will arise, so good relationships between doctors at the different sites are invaluable and worth taking the time to cultivate.

Communication

Like the five people I mentioned above, anyone holding the position of multi-site HMG leader would benefit from talking with others in the same position. I’m working to arrange some forum for such communication, potentially including an in-person meeting at HM14 in Las Vegas in March (www.hospitalmedicine2014.org). If you are a health system-employed, multi-site HMG leader and want to be part of this conversation, I would love to hear from you.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

Let’s call them multi-site, hospital medicine group leaders, or just multi-site HMG leaders. Once rare, they’re now becoming common, and among the many people now holding this job are:

• Dr. Doug Apple at Spectrum Health Medical Group in Grand Rapids, Mich;
• Dr. Tierza Stephan at Allina Health in Minneapolis, Minn.;
• Dr. Darren Thomas at St. John Health System in Tulsa, Okla.;
• Dr. Thomas McIlraith at Dignity Health in Sacremento, Calif.; and
• Dr. Rohit Uppal at Ohio Health in Columbus, Ohio.

The career path that led to their current position usually follows a standard pattern. They are a successful leader of a single-site hospitalist program when, through merger or acquisition, their hospital becomes part of a larger system. The executives responsible for this larger system—typically four to eight hospitals—realize that the HMGs serving each hospital in the system vary significantly in their cost, productivity, and performance on things like patient satisfaction and quality metrics. So they tap the leader of the largest (or best performing) HMG in the system to be system-wide hospitalist medical director. They nearly always choose an internal candidate rather than recruiting from outside, which brings some level of cohesion in operations and performance improvement.

Multi-Site Challenges

This is not an easy job. After all, it isn’t easy to serve as lead hospitalist for a single-site group, so it makes sense that the difficulties and challenges only increase when trying to manage groups at different locations.

The new multi-site HMG leader is busy from the first day on the job. The HMG at one site is short on staffing and needs help right away, patient satisfaction scores are poor at the next site, and so on. Although putting out these fires is important, the new leader also needs to think about how to accomplish a broader mission: ensuring greater cohesion across all groups.

I don’t think there is a secret recipe to ensure success in such a job. Prerequisites include the usual leadership skills, such as patience, good listening, and diplomacy (collectively, one’s EQ, or emotional quotient), along with lots of energy and decisive action. But there are a number of practical matters to address that can influence the level of success.

Cohesion vs. Independence

In most situations, a health system will benefit from some common operating principles across all the HMGs who serve its hospitals. For example, it usually makes sense for any portion of compensation tied to performance (e.g., a bonus) to be based on the same performance domains at all sites. For example, if metrics such as the observed-to-expected mortality ratio (O:E ratio) and patient satisfaction are important to the hospital system, then they should probably influence hospitalist compensation at every site. However, it might be reasonable to target a level of performance for any given domain higher at one site than at another.

Among the many things that should be the same across all sites are operational practices: charge capture, coding audits, performance reviews, dashboard elements and format, and credentialing for new hires. Other things, like individual hospitalist productivity, work schedule, and method and amount of compensation, should vary by site because of the unique attributes of the work at each place.

Fixed Locale vs. Rotations

The travel time between hospitals and the value of extensive experience in the details of how each particular hospital operates usually make it most practical for each individual hospitalist to work nearly all of the time at one hospital. But every doctor should be credentialed at every other hospital in the system so that he can cover a staffing shortage elsewhere.

And, hospitalists hired to work primarily at one of the small hospitals would probably benefit from working at the large referral hospital for the first few weeks of employment. This seems like a great way for them to become familiar with the people and operations at the big hospital, especially since they will be transferring patients there periodically.

Governance

Some mix of central control vs. local autonomy in decision making at each site is important for success. There aren’t any clear guidelines here, but providing the local doctors at each location with the ability to make their own decisions on things like work schedule will contribute to their sense of ownership of the practice. That feeling is valuable and supports good performance.

My bias is that each site in a practice could adopt the same “internal governance” guidelines, or rules by which they make decisions when unable to reach consensus (see “Play by the Rules,” December 2007, for sample guidelines.)

There should also be some form of “umbrella” governance structure in which the local site leaders meet regularly with the multi-site HMG leader.

Patient Transfers

One reason hospitals merge into a single system is the hope that they can more effectively meet the needs of all patients in the system’s hospitals. A typical configuration is several small hospitals, along with a single, large, referral center, to which patients are sent if the small hospital can’t meet their needs. The hope is that if all the hospitals are in the same system, the process of transfer can be smoother and more efficient.

A large portion—maybe even the majority—of all transfers in the system will be between a hospitalist at the small hospital and a partner hospitalist at the large hospital. Things will work best when the transferring and receiving hospitalists know something about the strengths and weaknesses of each other’s hospitals. And, you only know one another reasonably well from working together on committees or being on clinical service together at the same hospital, as well as social functions that include hospitalists from all sites.

Therefore, the multi-site HMG leader should think deliberately about how to ensure that the hospitalists interact with one another often, and not just when a transfer needs to take place.

A written agreement outlining the criteria for an appropriate transfer can be helpful. But such agreements cannot address all the situations that will arise, so good relationships between doctors at the different sites are invaluable and worth taking the time to cultivate.

Communication

Like the five people I mentioned above, anyone holding the position of multi-site HMG leader would benefit from talking with others in the same position. I’m working to arrange some forum for such communication, potentially including an in-person meeting at HM14 in Las Vegas in March (www.hospitalmedicine2014.org). If you are a health system-employed, multi-site HMG leader and want to be part of this conversation, I would love to hear from you.

Dr. Nelson has been a practicing hospitalist since 1988. He is co-founder and past president of SHM, and principal in Nelson Flores Hospital Medicine Consultants. He is co-director for SHM’s “Best Practices in Managing a Hospital Medicine Program” course. Write to him at john.nelson@nelsonflores.com.

Don Berwick, MD, former president and CEO of the Institute for Healthcare Improvement (IHI) and former administrator for the Centers for Medicare and Medicaid Services (CMS), recently consulted with the National Health Service (NHS) on how to devise and implement a safer and better healthcare system for England. His services were solicited due to a number of high-profile scandals involving neglect in hospitals. His team’s work resulted in a report entitled “A Promise to Learn – A Commitment to Act: Improving the Safety of Patients in England.”¹ The purpose of the consultative visit and resulting series of recommendations was to identify and recommend solutions to ailments and limitations in the current NHS.

Many of the “current state” ailments outlined in Dr. Berwick’s report would not sound terribly novel or unfamiliar to most U.S. healthcare systems. The report listed problems with:

• Systems-procedures-conditions-environments-constraints that lead people to make bad or incorrect decisions;
• Incorrect priorities;
• Not heeding warning signals about patient safety;
• Diffusion of responsibility;
• Lack of support for continuous improvement; and
• Fear, which is “toxic to both safety and improvement.”

Dr. Berwick and his team made a number of recommendations to reshape priorities and resources, enhance the safety of the system, and rebuild the confidence of its customers (e.g., patients and caregivers).

The consultant group’s core message was simple and inspiring:

“The NHS in England can become the safest healthcare system in the world. It will require unified will, optimism, investment, and change. Everyone can and should help. And, it will require a culture firmly rooted in continual improvement. Rules, standards, regulations, and enforcement have a place in the pursuit of quality, but they pale in potential compared to the power of pervasive and constant learning.”

To achieve improvement, Dr. Berwick’s team recommended 10 guiding principles. Similar to The 10 Commandments, they offer a way of thinking, acting, and living—to make the healthcare industry a better place. These healthcare 10 commandments include the following:

1. “The NHS should continually and forever reduce patient harm by embracing wholeheartedly an ethic of learning.” While we should all aspire to zero harm, the reality is that getting there will be a long and difficult goal, more than likely a goal of continual reduction. Defining harm is also more difficult than looking just at what meets the eye; because the qualitative “you know it when you see it” will likely never be embraced widely, we are left with quantitative and imperfect measures, such as hospital-acquired conditions (HACs) and patient safety indicators (PSIs). Despite the imperfection of current measures, the goal for continual reduction is laudable and necessary.
2. “All leaders concerned with NHS healthcare—political, regulatory, governance, executive, clinical, and advocacy—should place quality of care in general, and patient safety in particular, at the top of their priorities for investment, inquiry, improvement, regular reporting, encouragement, and support.” As with anything, leadership sets the vision, mission, and values of an organization or system. Leadership will have to commit to placing patient safety at the top of the priority list, without sacrificing other priorities.

1. “Patients and their caregivers should be present, powerful, and involved at all levels of healthcare organizations, from the wards to the boards of trusts.” This directive is certainly ideal, but, realistically, it will take a while to develop a level of comfort from both the patients and the providers, because both are much more used to operating in parallel, with intermittent intersections. Involving patients in all organizational decision-making, and including the boards of trustees, will be prerequisite to true patient-caregiver-centered care.
2. “Government, Health Education England, and NHS England should assure that sufficient staff are available to meet the NHS’ needs now and in the future. Healthcare organizations should ensure staff are present in appropriate numbers to provide safe care at all times and are well-supported." All healthcare organizations should be on a relentless pursuit to match workload and intensity to staffing, pursue work standardization and efficiency, and match work to human intellect. These are the founding tenets of Lean and Six Sigma and should be pursued for all disciplines, both clinical and non-clinical.
3. “Mastery of quality and patient-safety sciences and practices should be part of initial preparation and lifelong education of all healthcare professionals, including managers and executives.” The U.S. has made great strides in incorporating at least a basic curriculum of quality and safety for most healthcare professionals, but we need to move the current level of understanding to the next level. We need to ensure that all healthcare professionals have at least a basic understanding of the fundamental principles.
4. “The NHS should become a learning organization. Its leaders should create and support the capability for learning, and therefore change, at scale within the NHS.” Healthcare organizations should not just be willing to learn from individual and system opportunities; they should be eager to learn. Quality and safety missions should uniformly extend into educational and research missions in all organizations, to enhance learning opportunities and create best practice.
5. “Transparency should be complete, timely, and unequivocal. All data on quality and safety, whether assembled by government, organizations, or professional societies, should be shared in a timely fashion with all parties who want it, including, in accessible form, with the public.” Many healthcare organizations equate transparency with marketing, where they tout their fanciest technology or latest innovation. And many also subscribe to the theory “if you’re gonna go bare, you better be buff” and only widely disseminate those metrics that make them appear superior. We all need to be more transparent across the board, because going “bare” can actually stimulate improvements more quickly and reliably than they would otherwise occur. Organizational metrics really should not belong to the organization; they should belong to the patients who created the metrics. As such, full transparency of organizational performance (on all the domains of quality) should be an organizational and patient expectation.
6. “All organizations should seek out the patient and caregiver voice as an essential asset in monitoring the safety and quality of care.” Organizations should seek out patient-caregiver feedback and should be eager to learn from their words. Most other industries regularly and routinely seek out customer feedback to improve upon their products and services; some even pay customers for a chance to hear what they have to say. Too often, the theme from disgruntled patients is that no one is listening to them.
7. “Supervisory and regulatory systems should be simple and clear. They should avoid diffusion of responsibility. They should be respectful of the goodwill and sound intention of the vast majority of staff. All incentives should point in the same direction.”
8. U.S. regulatory agencies have an incredible amount of simplification to accomplish, along with a need to align incentives for the betterment of the patient. “We support responsive regulation of organizations, with a hierarchy of responses. Recourse to criminal sanctions should be extremely rare, and should function primarily as a deterrent to willful or reckless neglect or mistreatment.”

This commandment acknowledges the rarity of willful misconduct, by organizations and providers, and calls for a simplification of the governance needed for such rare events and situations.

In Sum As with The 10 Commandments, these guiding principles can help transform the way we in the healthcare industry think, act, and live—and put us on the road to making it a better place.

Reference

1. National Advisory Group on the Safety of Patients in England. A promise to learn a commitment to act: improving the safety of patients in England. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226703/Berwick_Report.pdf. Accessed September 21, 2013.

Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at scheured@musc.edu.

Don Berwick, MD, former president and CEO of the Institute for Healthcare Improvement (IHI) and former administrator for the Centers for Medicare and Medicaid Services (CMS), recently consulted with the National Health Service (NHS) on how to devise and implement a safer and better healthcare system for England. His services were solicited due to a number of high-profile scandals involving neglect in hospitals. His team’s work resulted in a report entitled “A Promise to Learn – A Commitment to Act: Improving the Safety of Patients in England.”¹ The purpose of the consultative visit and resulting series of recommendations was to identify and recommend solutions to ailments and limitations in the current NHS.

Many of the “current state” ailments outlined in Dr. Berwick’s report would not sound terribly novel or unfamiliar to most U.S. healthcare systems. The report listed problems with:

• Systems-procedures-conditions-environments-constraints that lead people to make bad or incorrect decisions;
• Incorrect priorities;
• Not heeding warning signals about patient safety;
• Diffusion of responsibility;
• Lack of support for continuous improvement; and
• Fear, which is “toxic to both safety and improvement.”

Dr. Berwick and his team made a number of recommendations to reshape priorities and resources, enhance the safety of the system, and rebuild the confidence of its customers (e.g., patients and caregivers).

The consultant group’s core message was simple and inspiring:

“The NHS in England can become the safest healthcare system in the world. It will require unified will, optimism, investment, and change. Everyone can and should help. And, it will require a culture firmly rooted in continual improvement. Rules, standards, regulations, and enforcement have a place in the pursuit of quality, but they pale in potential compared to the power of pervasive and constant learning.”

To achieve improvement, Dr. Berwick’s team recommended 10 guiding principles. Similar to The 10 Commandments, they offer a way of thinking, acting, and living—to make the healthcare industry a better place. These healthcare 10 commandments include the following:

1. “The NHS should continually and forever reduce patient harm by embracing wholeheartedly an ethic of learning.” While we should all aspire to zero harm, the reality is that getting there will be a long and difficult goal, more than likely a goal of continual reduction. Defining harm is also more difficult than looking just at what meets the eye; because the qualitative “you know it when you see it” will likely never be embraced widely, we are left with quantitative and imperfect measures, such as hospital-acquired conditions (HACs) and patient safety indicators (PSIs). Despite the imperfection of current measures, the goal for continual reduction is laudable and necessary.
2. “All leaders concerned with NHS healthcare—political, regulatory, governance, executive, clinical, and advocacy—should place quality of care in general, and patient safety in particular, at the top of their priorities for investment, inquiry, improvement, regular reporting, encouragement, and support.” As with anything, leadership sets the vision, mission, and values of an organization or system. Leadership will have to commit to placing patient safety at the top of the priority list, without sacrificing other priorities.

1. “Patients and their caregivers should be present, powerful, and involved at all levels of healthcare organizations, from the wards to the boards of trusts.” This directive is certainly ideal, but, realistically, it will take a while to develop a level of comfort from both the patients and the providers, because both are much more used to operating in parallel, with intermittent intersections. Involving patients in all organizational decision-making, and including the boards of trustees, will be prerequisite to true patient-caregiver-centered care.
2. “Government, Health Education England, and NHS England should assure that sufficient staff are available to meet the NHS’ needs now and in the future. Healthcare organizations should ensure staff are present in appropriate numbers to provide safe care at all times and are well-supported." All healthcare organizations should be on a relentless pursuit to match workload and intensity to staffing, pursue work standardization and efficiency, and match work to human intellect. These are the founding tenets of Lean and Six Sigma and should be pursued for all disciplines, both clinical and non-clinical.
3. “Mastery of quality and patient-safety sciences and practices should be part of initial preparation and lifelong education of all healthcare professionals, including managers and executives.” The U.S. has made great strides in incorporating at least a basic curriculum of quality and safety for most healthcare professionals, but we need to move the current level of understanding to the next level. We need to ensure that all healthcare professionals have at least a basic understanding of the fundamental principles.
4. “The NHS should become a learning organization. Its leaders should create and support the capability for learning, and therefore change, at scale within the NHS.” Healthcare organizations should not just be willing to learn from individual and system opportunities; they should be eager to learn. Quality and safety missions should uniformly extend into educational and research missions in all organizations, to enhance learning opportunities and create best practice.
5. “Transparency should be complete, timely, and unequivocal. All data on quality and safety, whether assembled by government, organizations, or professional societies, should be shared in a timely fashion with all parties who want it, including, in accessible form, with the public.” Many healthcare organizations equate transparency with marketing, where they tout their fanciest technology or latest innovation. And many also subscribe to the theory “if you’re gonna go bare, you better be buff” and only widely disseminate those metrics that make them appear superior. We all need to be more transparent across the board, because going “bare” can actually stimulate improvements more quickly and reliably than they would otherwise occur. Organizational metrics really should not belong to the organization; they should belong to the patients who created the metrics. As such, full transparency of organizational performance (on all the domains of quality) should be an organizational and patient expectation.
6. “All organizations should seek out the patient and caregiver voice as an essential asset in monitoring the safety and quality of care.” Organizations should seek out patient-caregiver feedback and should be eager to learn from their words. Most other industries regularly and routinely seek out customer feedback to improve upon their products and services; some even pay customers for a chance to hear what they have to say. Too often, the theme from disgruntled patients is that no one is listening to them.
7. “Supervisory and regulatory systems should be simple and clear. They should avoid diffusion of responsibility. They should be respectful of the goodwill and sound intention of the vast majority of staff. All incentives should point in the same direction.”
8. U.S. regulatory agencies have an incredible amount of simplification to accomplish, along with a need to align incentives for the betterment of the patient. “We support responsive regulation of organizations, with a hierarchy of responses. Recourse to criminal sanctions should be extremely rare, and should function primarily as a deterrent to willful or reckless neglect or mistreatment.”

This commandment acknowledges the rarity of willful misconduct, by organizations and providers, and calls for a simplification of the governance needed for such rare events and situations.

In Sum As with The 10 Commandments, these guiding principles can help transform the way we in the healthcare industry think, act, and live—and put us on the road to making it a better place.

Reference

1. National Advisory Group on the Safety of Patients in England. A promise to learn a commitment to act: improving the safety of patients in England. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226703/Berwick_Report.pdf. Accessed September 21, 2013.

Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at scheured@musc.edu.

Don Berwick, MD, former president and CEO of the Institute for Healthcare Improvement (IHI) and former administrator for the Centers for Medicare and Medicaid Services (CMS), recently consulted with the National Health Service (NHS) on how to devise and implement a safer and better healthcare system for England. His services were solicited due to a number of high-profile scandals involving neglect in hospitals. His team’s work resulted in a report entitled “A Promise to Learn – A Commitment to Act: Improving the Safety of Patients in England.”¹ The purpose of the consultative visit and resulting series of recommendations was to identify and recommend solutions to ailments and limitations in the current NHS.

Many of the “current state” ailments outlined in Dr. Berwick’s report would not sound terribly novel or unfamiliar to most U.S. healthcare systems. The report listed problems with:

• Systems-procedures-conditions-environments-constraints that lead people to make bad or incorrect decisions;
• Incorrect priorities;
• Not heeding warning signals about patient safety;
• Diffusion of responsibility;
• Lack of support for continuous improvement; and
• Fear, which is “toxic to both safety and improvement.”

Dr. Berwick and his team made a number of recommendations to reshape priorities and resources, enhance the safety of the system, and rebuild the confidence of its customers (e.g., patients and caregivers).

The consultant group’s core message was simple and inspiring:

“The NHS in England can become the safest healthcare system in the world. It will require unified will, optimism, investment, and change. Everyone can and should help. And, it will require a culture firmly rooted in continual improvement. Rules, standards, regulations, and enforcement have a place in the pursuit of quality, but they pale in potential compared to the power of pervasive and constant learning.”

To achieve improvement, Dr. Berwick’s team recommended 10 guiding principles. Similar to The 10 Commandments, they offer a way of thinking, acting, and living—to make the healthcare industry a better place. These healthcare 10 commandments include the following:

1. “The NHS should continually and forever reduce patient harm by embracing wholeheartedly an ethic of learning.” While we should all aspire to zero harm, the reality is that getting there will be a long and difficult goal, more than likely a goal of continual reduction. Defining harm is also more difficult than looking just at what meets the eye; because the qualitative “you know it when you see it” will likely never be embraced widely, we are left with quantitative and imperfect measures, such as hospital-acquired conditions (HACs) and patient safety indicators (PSIs). Despite the imperfection of current measures, the goal for continual reduction is laudable and necessary.
2. “All leaders concerned with NHS healthcare—political, regulatory, governance, executive, clinical, and advocacy—should place quality of care in general, and patient safety in particular, at the top of their priorities for investment, inquiry, improvement, regular reporting, encouragement, and support.” As with anything, leadership sets the vision, mission, and values of an organization or system. Leadership will have to commit to placing patient safety at the top of the priority list, without sacrificing other priorities.

1. “Patients and their caregivers should be present, powerful, and involved at all levels of healthcare organizations, from the wards to the boards of trusts.” This directive is certainly ideal, but, realistically, it will take a while to develop a level of comfort from both the patients and the providers, because both are much more used to operating in parallel, with intermittent intersections. Involving patients in all organizational decision-making, and including the boards of trustees, will be prerequisite to true patient-caregiver-centered care.
2. “Government, Health Education England, and NHS England should assure that sufficient staff are available to meet the NHS’ needs now and in the future. Healthcare organizations should ensure staff are present in appropriate numbers to provide safe care at all times and are well-supported." All healthcare organizations should be on a relentless pursuit to match workload and intensity to staffing, pursue work standardization and efficiency, and match work to human intellect. These are the founding tenets of Lean and Six Sigma and should be pursued for all disciplines, both clinical and non-clinical.
3. “Mastery of quality and patient-safety sciences and practices should be part of initial preparation and lifelong education of all healthcare professionals, including managers and executives.” The U.S. has made great strides in incorporating at least a basic curriculum of quality and safety for most healthcare professionals, but we need to move the current level of understanding to the next level. We need to ensure that all healthcare professionals have at least a basic understanding of the fundamental principles.
4. “The NHS should become a learning organization. Its leaders should create and support the capability for learning, and therefore change, at scale within the NHS.” Healthcare organizations should not just be willing to learn from individual and system opportunities; they should be eager to learn. Quality and safety missions should uniformly extend into educational and research missions in all organizations, to enhance learning opportunities and create best practice.
5. “Transparency should be complete, timely, and unequivocal. All data on quality and safety, whether assembled by government, organizations, or professional societies, should be shared in a timely fashion with all parties who want it, including, in accessible form, with the public.” Many healthcare organizations equate transparency with marketing, where they tout their fanciest technology or latest innovation. And many also subscribe to the theory “if you’re gonna go bare, you better be buff” and only widely disseminate those metrics that make them appear superior. We all need to be more transparent across the board, because going “bare” can actually stimulate improvements more quickly and reliably than they would otherwise occur. Organizational metrics really should not belong to the organization; they should belong to the patients who created the metrics. As such, full transparency of organizational performance (on all the domains of quality) should be an organizational and patient expectation.
6. “All organizations should seek out the patient and caregiver voice as an essential asset in monitoring the safety and quality of care.” Organizations should seek out patient-caregiver feedback and should be eager to learn from their words. Most other industries regularly and routinely seek out customer feedback to improve upon their products and services; some even pay customers for a chance to hear what they have to say. Too often, the theme from disgruntled patients is that no one is listening to them.
7. “Supervisory and regulatory systems should be simple and clear. They should avoid diffusion of responsibility. They should be respectful of the goodwill and sound intention of the vast majority of staff. All incentives should point in the same direction.”
8. U.S. regulatory agencies have an incredible amount of simplification to accomplish, along with a need to align incentives for the betterment of the patient. “We support responsive regulation of organizations, with a hierarchy of responses. Recourse to criminal sanctions should be extremely rare, and should function primarily as a deterrent to willful or reckless neglect or mistreatment.”

This commandment acknowledges the rarity of willful misconduct, by organizations and providers, and calls for a simplification of the governance needed for such rare events and situations.

In Sum As with The 10 Commandments, these guiding principles can help transform the way we in the healthcare industry think, act, and live—and put us on the road to making it a better place.

Reference

1. National Advisory Group on the Safety of Patients in England. A promise to learn a commitment to act: improving the safety of patients in England. Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226703/Berwick_Report.pdf. Accessed September 21, 2013.

Dr. Scheurer is a hospitalist and chief quality officer at the Medical University of South Carolina in Charleston. She is physician editor of The Hospitalist. Email her at scheured@musc.edu.

Hospitals nationwide face significant capacity constraints in emergency departments. High hospitalization rates can have a ripple effect, leading to long wait times, frequent diversion of patients to other hospitals, and higher patient-care expenses. However, a sizable number of inpatient admissions can be prevented through dedicated clinical observation units, or COUs. Such a strategy is likely to be more efficient, can result in shorter lengths of stay, and can decrease health-care costs.¹

Also known as clinical decision units, “obs” units, or short-stay observation units, these hospital-based units lend themselves as a feasible solution. Many of the COU success stories come from “chest pain” units, along with ED-based observation units. Over time, the COUs have been expanded to include many more conditions and have enjoyed success when dealing with asthma exacerbations, transient ischemic attacks, bronchiolitis in pediatric populations, and congestive-heart-failure exacerbation, to name a few.

Most COUs use a window of six to 24 hours to carry out triaging, diagnosing, treating, and monitoring the patient response. Anytime before the 24-hour mark, a decision is made whether to discharge or admit the patient. The success of dedicated COUs relies heavily on strong leadership, strict treatment protocols, and well-defined inclusion/exclusion criteria.

COU utilization has been well received by several professional bodies. Both emergency medicine physicians and hospitalists are natural key players in the widespread utilization of COUs. SHM, in a white paper, concluded: “Collaboration between hospitalists, emergency physicians, hospital administrators, and academicians will serve not only to promote outstanding observation care, but also to focus quality improvement and research efforts for the observation unit of the 21st century.”² The American College of Emergency Physicians (ACEP), in its position statement, said the “observation of appropriate ED patients in a dedicated ED observation area, instead of a general inpatient bed or an acute care ED bed, is a ‘best practice’ that requires a commitment of staff and hospital resources.”³

As promising as the COUs appear, it is estimated that only one-third of hospitals have them in place.⁴ And while much of the COU story is good, there are concerns with the patient-care model.

The Good

Instinctively, a COU is a win-win proposition for all stakeholders. Essentially, many see these units as a fine blend of clinical care, fiscal responsibility, and patient accountability. Among the benefits:

Reduced admissions. On average, the admission rates from ED to inpatient services are 13.3%.⁵ In contrast, in hospitals that have a robust COU in place, the admission rates are much lower. As an example, Cook County Hospital in Chicago in the mid-1990s saw a decline in the admission rates from the emergency room following implementation of a COU, along with an increase in bed capacity due to the efficient, protocol-driven approach that goes along with successful ED observation units.⁶ With well-structured and managed observation units, such a reduction in hospitalization rates has been shown, is reproducible, and is achievable.

Improved case-mix multiplier. Inpatient reimbursements from the Centers for Medicare and Medicaid Services (CMS) and private insurers frequently are tied to the acuity of care a hospital provides. Critical to making that determination is the case mix that a given hospital sees. Usually, the more complex patients a hospital admits, the higher the reimbursements are. With a successful COU, a hospital can expect a case-mix multiplier representing patients with greater complexity and higher acuity.

What a successful COU essentially does is lead to the admission of patients with greater comorbidities—those who are sicker than the average patient. In doing so, COUs also facilitate safe discharges of the patients who do not necessarily need to be admitted. As an average, the cohort of patients who are admitted as inpatients then consists of patients who are sick enough and absolutely need to be admitted.

Resource utilization. When a patient is admitted from the ED to an inpatient floor, a lot of resources are utilized. These include expenses related to transportation, housekeeping, nursing, and ancillary services. Each of these additional resources comes with an expense. The more resources that are put in motion, the greater the expense a hospital incurs. With effective COUs, it is generally expected that suitable patients will get the care in a specific geographic area by the same set of providers. COUs tend to reduce unnecessary hospitalizations, redundancy of manpower utilization, and duplication of documentation—therefore reducing the expenses incurred by the hospital.

Infection control. The COUs operate based on minimizing the stay of the patients who can be safely discharged after a brief observation period. Decreased duration of stay also means decreased movement and unique provider contact/exposure—thus decreasing the chances for acquiring health-care-related infections. Besides, most COUs are restricted to a certain geographic area within the hospital, which helps to restrict patients to a limited area. This again may be helpful in better overall infection-control practices. More research is necessary to establish this association of the infection-control advantages of COUs. The hypothesis, however, does appear very promising.

Prompt and standardized care. Most COUs use an evidence-based, standardized approach toward the patients seen in the ED. Several professional bodies have endorsed the use of protocol-driven care for the conditions seen in the COU. Most professional organizations that have a key role in COUs advocate this approach, and include the ACEP, AHA, and SHM. When a COU has established itself, it likely is to use specific, expedited, protocol-driven approaches. This allows for care to be focused and standardized. This also is an opportunity to avoid redundant imaging and lab testing.

Patient safety. In its landmark publication “To Err is Human: Building a Safer Health System,” the Institute of Medicine identified communication error as one of the factors that lead to mistakes in patient care.⁷ COUs often tend to provide bulk of care at a given geographical area; this minimizes the transfer of patients from one place to another, thereby decreasing communication errors.

By providing more time to make decisions, COUs afford a greater diagnostic certainty. In the long run, this also helps a hospital minimize costly lawsuits.

The Bad

Not everything about COUs is great. There are certain areas that dull the luster of an observation unit.

Overzealous approaches. COUs are designed to allow more time to make clinical decisions when the triaging is in a gray area: whether to admit or not. Also, COUs provide clinicians with more time to follow the response to the care the patients receive in an emergent fashion. It needs to be emphasized that COUs are designed neither to replace hospitalization, nor to act as urgent care. As a corollary, there is a chance clinicians may be overzealous in discharging patients from COUs close to the 24-hour mark—even though it might not be clear whether the patient needs to be admitted or discharged. Overzealous discharging of COU patients can damage the premise of these units: to determine the need for admission and ensure patient safety. Having strict inclusion and exclusion criteria and good management can prevent these problems.

Staffing. Introduction of a COU can strain an already short-staffed ED. No different from any other novel approach, COU staffers need to be afforded a learning curve. This requires training personnel and establishing a robust team to staff COUs. It can be a strenuous process, at least in the beginning. Strong leadership and support of hospital, physician, and nursing leadership all play a role in the successful implementation and ongoing utilization of COUs.

Logistics. Coordination of people, facilities, and supplies that go into instituting a COU might be a challenge. Also, there may be times where patient ownership may not be very clear. Logistical concerns can include:

• Who owns the patient?
• How much of a role does a consulting service have?
• Who oversees the follow-up plans?

Although a popular COU setup is to have a dedicated observation unit adjacent to the ED, it is not a standard.

Reimbursement. Unfortunately, there is some degree of negative incentive built into reimbursements for COU operations. To understand why this is a bad thing for a hospital, let’s examine how hospitals are paid for services provided in a COU.

Frequently, COU patients are treated as “outpatients.” The operating formula is based on the Hospital Outpatient Prospective Payment System (OPPS), which is based on Ambulatory Payment Classification, or APC.⁸ Reimbursement differences in these two approaches can be quite sizable. Depending on what condition is being treated, the hospital reimbursement can be as little as half to a quarter of the payment for inpatient treatment.⁹ Essentially, the patient would have received very similar care, diagnostic work-up, antibiotics, imaging, lab work, and equally qualified clinicians as caretakers in both the settings. The payments need to account for the care in the COUs, which is usually more acute than in the ambulatory setting and potentially more efficient than an inpatient setting. The payments, therefore, should be sensitive to these factors.

The Ugly

COUs are intended to address many of the challenges facing the healthcare system, and in large part, that is what they do. However, some hospitals could be penalized for providing care through COUs. An efficient COU means that the patients who are admitted are, in fact, sicker. Logically, these patients will have a higher chance of being readmitted. Because the “not so sick” patients were successfully intervened and discharged from COUs, the patients that did get admitted must be pretty sick and must have higher comorbidities.

According to CMS, a readmission occurs if a patient has “an admission to a subsection hospital within 30 days of a discharge from the same or another subsection hospital.”¹⁰ The denominator here consists of all the patients who were discharged from the hospital inpatient stay. If a hospital does not have a robust COU, a large number of “not so sick” patients will be admitted as inpatients and will provide a larger denominator for calculating the readmission rates.

In contrast, a successful COU will allow for a large number of “not so sick” and “borderline” patients to be discharged, shrinking the denominator base, and “very sick” patients who are likely to be readmitted. This may erroneously cause the hospital to appear to have higher 30-day readmission rates. These hospitals may risk substantial readmission-related penalties.

This issue, along with a lopsided payment model, makes the COU landscape murky. With a greater share of pie being the “Il buono” in Il buono, il brutto, il cattivo, clinical observation units are certain to take a prominent position in addressing many of the issues that plague current healthcare facilities—capacity constraints, long ED wait times, limited inpatient beds, and soaring health-care expenditures.

Most important, COUs can lead to better and more efficient patient care.¹¹ It is, therefore, not surprising that the IOM, in its report “Hospital Based Emergency Care—At the Breaking Point,” has identified clinical decision units as a “particularly promising” technique to improve patient flow.¹²

Dr. Asudani is a hospitalist in the division of hospital medicine in the department of internal medicine at the University of California San Diego Health System. Dr. Tolia is director of observation medicine in the department of emergency medicine and internal medicine at UCSD Health System.

References

1. Baugh CW, Venkatesh AK, Hilton JA, Samuel PA, Schuur JD, Bohan JS. Making greater use of dedicated hospital observation units for many short-stay patients could save $3.1 billion a year. Health Aff (Millwood). 2012;31(10):2314-2323.
2. Society of Hospital Medicine. The observation unit white paper. Society of Hospital Medicine website. Available at: http://www.hospitalmedicine.org/AM/Template.cfm?Section=White_Papers&Template=/CM/ContentDisplay.cfm&ContentID=21890. Accessed April 3, 2013.
3. American College of Emergency Physicians. Emergency department observation services. American College of Emergency Physicians website. Available at: http://www.acep.org/Clinical—Practice-Management/Emergency-Department-Observation-Services. Accessed April 10, 2013.
4. Niska R, Bhuiya F, Xu J. National Hospital Ambulatory Medical Care Survey: 2007 emergency department summary. Hyattsville, Md.: National Center for Health Statistics; 2010.
5. Centers for Disease Control and Prevention. Fast stats. Centers for Disease Control and Prevention. Available at: http://www.cdc.gov/nchs/fastats/ervisits.htm. Accessed April 9, 2013.
6. Martinez E, Reilly BM, Evans AT, Roberts RR. The observation unit: a new interface between inpatient and outpatient care. Am J Med. 2001;110(4):274-277.
7. To err is human: building a safer health system. Institute of Medicine. Washington (DC): National Academies Press; 2000.
8. Centers for Medicare & Medicaid Services. Hospital outpatient prospective payment system. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/hospitaloutpaysysfctsht.pdf. Accessed April 2, 2013.
9. Runy L. Clinical observation units: Building a bridge between outpatient and inpatient services. Hospitals and Health Networks website. Available at: http://www.hhnmag.com/hhnmag/jsp/articledisplay.jsp?dcrpath=HHNMAG/PubsNewsArticle/data/2006March/0603HHN_FEA_gatefold&domain=HHNMAG. Accessed April 9, 2013.
10. Centers for Medicare & Medicaid Services. Readmissions reduction program. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Readmissions-Reduction-Program.html. Accessed May 6, 2013.
11. Baugh CW, Venkatesh AK, Bohan JS. Emergency department observation nits: a clinical and financial benefit for hospitals. Health Care Manage Rev. 2011;36(1):28-37.
12. Institute of Medicine. Hospital-based emergency care: at the breaking point. Washington: National Academies Press; 2007.

Hospitals nationwide face significant capacity constraints in emergency departments. High hospitalization rates can have a ripple effect, leading to long wait times, frequent diversion of patients to other hospitals, and higher patient-care expenses. However, a sizable number of inpatient admissions can be prevented through dedicated clinical observation units, or COUs. Such a strategy is likely to be more efficient, can result in shorter lengths of stay, and can decrease health-care costs.¹

Also known as clinical decision units, “obs” units, or short-stay observation units, these hospital-based units lend themselves as a feasible solution. Many of the COU success stories come from “chest pain” units, along with ED-based observation units. Over time, the COUs have been expanded to include many more conditions and have enjoyed success when dealing with asthma exacerbations, transient ischemic attacks, bronchiolitis in pediatric populations, and congestive-heart-failure exacerbation, to name a few.

Most COUs use a window of six to 24 hours to carry out triaging, diagnosing, treating, and monitoring the patient response. Anytime before the 24-hour mark, a decision is made whether to discharge or admit the patient. The success of dedicated COUs relies heavily on strong leadership, strict treatment protocols, and well-defined inclusion/exclusion criteria.

COU utilization has been well received by several professional bodies. Both emergency medicine physicians and hospitalists are natural key players in the widespread utilization of COUs. SHM, in a white paper, concluded: “Collaboration between hospitalists, emergency physicians, hospital administrators, and academicians will serve not only to promote outstanding observation care, but also to focus quality improvement and research efforts for the observation unit of the 21st century.”² The American College of Emergency Physicians (ACEP), in its position statement, said the “observation of appropriate ED patients in a dedicated ED observation area, instead of a general inpatient bed or an acute care ED bed, is a ‘best practice’ that requires a commitment of staff and hospital resources.”³

As promising as the COUs appear, it is estimated that only one-third of hospitals have them in place.⁴ And while much of the COU story is good, there are concerns with the patient-care model.

The Good

Instinctively, a COU is a win-win proposition for all stakeholders. Essentially, many see these units as a fine blend of clinical care, fiscal responsibility, and patient accountability. Among the benefits:

Reduced admissions. On average, the admission rates from ED to inpatient services are 13.3%.⁵ In contrast, in hospitals that have a robust COU in place, the admission rates are much lower. As an example, Cook County Hospital in Chicago in the mid-1990s saw a decline in the admission rates from the emergency room following implementation of a COU, along with an increase in bed capacity due to the efficient, protocol-driven approach that goes along with successful ED observation units.⁶ With well-structured and managed observation units, such a reduction in hospitalization rates has been shown, is reproducible, and is achievable.

Improved case-mix multiplier. Inpatient reimbursements from the Centers for Medicare and Medicaid Services (CMS) and private insurers frequently are tied to the acuity of care a hospital provides. Critical to making that determination is the case mix that a given hospital sees. Usually, the more complex patients a hospital admits, the higher the reimbursements are. With a successful COU, a hospital can expect a case-mix multiplier representing patients with greater complexity and higher acuity.

What a successful COU essentially does is lead to the admission of patients with greater comorbidities—those who are sicker than the average patient. In doing so, COUs also facilitate safe discharges of the patients who do not necessarily need to be admitted. As an average, the cohort of patients who are admitted as inpatients then consists of patients who are sick enough and absolutely need to be admitted.

Resource utilization. When a patient is admitted from the ED to an inpatient floor, a lot of resources are utilized. These include expenses related to transportation, housekeeping, nursing, and ancillary services. Each of these additional resources comes with an expense. The more resources that are put in motion, the greater the expense a hospital incurs. With effective COUs, it is generally expected that suitable patients will get the care in a specific geographic area by the same set of providers. COUs tend to reduce unnecessary hospitalizations, redundancy of manpower utilization, and duplication of documentation—therefore reducing the expenses incurred by the hospital.

Infection control. The COUs operate based on minimizing the stay of the patients who can be safely discharged after a brief observation period. Decreased duration of stay also means decreased movement and unique provider contact/exposure—thus decreasing the chances for acquiring health-care-related infections. Besides, most COUs are restricted to a certain geographic area within the hospital, which helps to restrict patients to a limited area. This again may be helpful in better overall infection-control practices. More research is necessary to establish this association of the infection-control advantages of COUs. The hypothesis, however, does appear very promising.

Prompt and standardized care. Most COUs use an evidence-based, standardized approach toward the patients seen in the ED. Several professional bodies have endorsed the use of protocol-driven care for the conditions seen in the COU. Most professional organizations that have a key role in COUs advocate this approach, and include the ACEP, AHA, and SHM. When a COU has established itself, it likely is to use specific, expedited, protocol-driven approaches. This allows for care to be focused and standardized. This also is an opportunity to avoid redundant imaging and lab testing.

Patient safety. In its landmark publication “To Err is Human: Building a Safer Health System,” the Institute of Medicine identified communication error as one of the factors that lead to mistakes in patient care.⁷ COUs often tend to provide bulk of care at a given geographical area; this minimizes the transfer of patients from one place to another, thereby decreasing communication errors.

By providing more time to make decisions, COUs afford a greater diagnostic certainty. In the long run, this also helps a hospital minimize costly lawsuits.

The Bad

Not everything about COUs is great. There are certain areas that dull the luster of an observation unit.

Overzealous approaches. COUs are designed to allow more time to make clinical decisions when the triaging is in a gray area: whether to admit or not. Also, COUs provide clinicians with more time to follow the response to the care the patients receive in an emergent fashion. It needs to be emphasized that COUs are designed neither to replace hospitalization, nor to act as urgent care. As a corollary, there is a chance clinicians may be overzealous in discharging patients from COUs close to the 24-hour mark—even though it might not be clear whether the patient needs to be admitted or discharged. Overzealous discharging of COU patients can damage the premise of these units: to determine the need for admission and ensure patient safety. Having strict inclusion and exclusion criteria and good management can prevent these problems.

Staffing. Introduction of a COU can strain an already short-staffed ED. No different from any other novel approach, COU staffers need to be afforded a learning curve. This requires training personnel and establishing a robust team to staff COUs. It can be a strenuous process, at least in the beginning. Strong leadership and support of hospital, physician, and nursing leadership all play a role in the successful implementation and ongoing utilization of COUs.

Logistics. Coordination of people, facilities, and supplies that go into instituting a COU might be a challenge. Also, there may be times where patient ownership may not be very clear. Logistical concerns can include:

• Who owns the patient?
• How much of a role does a consulting service have?
• Who oversees the follow-up plans?

Although a popular COU setup is to have a dedicated observation unit adjacent to the ED, it is not a standard.

Reimbursement. Unfortunately, there is some degree of negative incentive built into reimbursements for COU operations. To understand why this is a bad thing for a hospital, let’s examine how hospitals are paid for services provided in a COU.

Frequently, COU patients are treated as “outpatients.” The operating formula is based on the Hospital Outpatient Prospective Payment System (OPPS), which is based on Ambulatory Payment Classification, or APC.⁸ Reimbursement differences in these two approaches can be quite sizable. Depending on what condition is being treated, the hospital reimbursement can be as little as half to a quarter of the payment for inpatient treatment.⁹ Essentially, the patient would have received very similar care, diagnostic work-up, antibiotics, imaging, lab work, and equally qualified clinicians as caretakers in both the settings. The payments need to account for the care in the COUs, which is usually more acute than in the ambulatory setting and potentially more efficient than an inpatient setting. The payments, therefore, should be sensitive to these factors.

The Ugly

COUs are intended to address many of the challenges facing the healthcare system, and in large part, that is what they do. However, some hospitals could be penalized for providing care through COUs. An efficient COU means that the patients who are admitted are, in fact, sicker. Logically, these patients will have a higher chance of being readmitted. Because the “not so sick” patients were successfully intervened and discharged from COUs, the patients that did get admitted must be pretty sick and must have higher comorbidities.

According to CMS, a readmission occurs if a patient has “an admission to a subsection hospital within 30 days of a discharge from the same or another subsection hospital.”¹⁰ The denominator here consists of all the patients who were discharged from the hospital inpatient stay. If a hospital does not have a robust COU, a large number of “not so sick” patients will be admitted as inpatients and will provide a larger denominator for calculating the readmission rates.

In contrast, a successful COU will allow for a large number of “not so sick” and “borderline” patients to be discharged, shrinking the denominator base, and “very sick” patients who are likely to be readmitted. This may erroneously cause the hospital to appear to have higher 30-day readmission rates. These hospitals may risk substantial readmission-related penalties.

This issue, along with a lopsided payment model, makes the COU landscape murky. With a greater share of pie being the “Il buono” in Il buono, il brutto, il cattivo, clinical observation units are certain to take a prominent position in addressing many of the issues that plague current healthcare facilities—capacity constraints, long ED wait times, limited inpatient beds, and soaring health-care expenditures.

Most important, COUs can lead to better and more efficient patient care.¹¹ It is, therefore, not surprising that the IOM, in its report “Hospital Based Emergency Care—At the Breaking Point,” has identified clinical decision units as a “particularly promising” technique to improve patient flow.¹²

Dr. Asudani is a hospitalist in the division of hospital medicine in the department of internal medicine at the University of California San Diego Health System. Dr. Tolia is director of observation medicine in the department of emergency medicine and internal medicine at UCSD Health System.

References

1. Baugh CW, Venkatesh AK, Hilton JA, Samuel PA, Schuur JD, Bohan JS. Making greater use of dedicated hospital observation units for many short-stay patients could save $3.1 billion a year. Health Aff (Millwood). 2012;31(10):2314-2323.
2. Society of Hospital Medicine. The observation unit white paper. Society of Hospital Medicine website. Available at: http://www.hospitalmedicine.org/AM/Template.cfm?Section=White_Papers&Template=/CM/ContentDisplay.cfm&ContentID=21890. Accessed April 3, 2013.
3. American College of Emergency Physicians. Emergency department observation services. American College of Emergency Physicians website. Available at: http://www.acep.org/Clinical—Practice-Management/Emergency-Department-Observation-Services. Accessed April 10, 2013.
4. Niska R, Bhuiya F, Xu J. National Hospital Ambulatory Medical Care Survey: 2007 emergency department summary. Hyattsville, Md.: National Center for Health Statistics; 2010.
5. Centers for Disease Control and Prevention. Fast stats. Centers for Disease Control and Prevention. Available at: http://www.cdc.gov/nchs/fastats/ervisits.htm. Accessed April 9, 2013.
6. Martinez E, Reilly BM, Evans AT, Roberts RR. The observation unit: a new interface between inpatient and outpatient care. Am J Med. 2001;110(4):274-277.
7. To err is human: building a safer health system. Institute of Medicine. Washington (DC): National Academies Press; 2000.
8. Centers for Medicare & Medicaid Services. Hospital outpatient prospective payment system. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/hospitaloutpaysysfctsht.pdf. Accessed April 2, 2013.
9. Runy L. Clinical observation units: Building a bridge between outpatient and inpatient services. Hospitals and Health Networks website. Available at: http://www.hhnmag.com/hhnmag/jsp/articledisplay.jsp?dcrpath=HHNMAG/PubsNewsArticle/data/2006March/0603HHN_FEA_gatefold&domain=HHNMAG. Accessed April 9, 2013.
10. Centers for Medicare & Medicaid Services. Readmissions reduction program. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Readmissions-Reduction-Program.html. Accessed May 6, 2013.
11. Baugh CW, Venkatesh AK, Bohan JS. Emergency department observation nits: a clinical and financial benefit for hospitals. Health Care Manage Rev. 2011;36(1):28-37.
12. Institute of Medicine. Hospital-based emergency care: at the breaking point. Washington: National Academies Press; 2007.

Hospitals nationwide face significant capacity constraints in emergency departments. High hospitalization rates can have a ripple effect, leading to long wait times, frequent diversion of patients to other hospitals, and higher patient-care expenses. However, a sizable number of inpatient admissions can be prevented through dedicated clinical observation units, or COUs. Such a strategy is likely to be more efficient, can result in shorter lengths of stay, and can decrease health-care costs.¹

Also known as clinical decision units, “obs” units, or short-stay observation units, these hospital-based units lend themselves as a feasible solution. Many of the COU success stories come from “chest pain” units, along with ED-based observation units. Over time, the COUs have been expanded to include many more conditions and have enjoyed success when dealing with asthma exacerbations, transient ischemic attacks, bronchiolitis in pediatric populations, and congestive-heart-failure exacerbation, to name a few.

Most COUs use a window of six to 24 hours to carry out triaging, diagnosing, treating, and monitoring the patient response. Anytime before the 24-hour mark, a decision is made whether to discharge or admit the patient. The success of dedicated COUs relies heavily on strong leadership, strict treatment protocols, and well-defined inclusion/exclusion criteria.

COU utilization has been well received by several professional bodies. Both emergency medicine physicians and hospitalists are natural key players in the widespread utilization of COUs. SHM, in a white paper, concluded: “Collaboration between hospitalists, emergency physicians, hospital administrators, and academicians will serve not only to promote outstanding observation care, but also to focus quality improvement and research efforts for the observation unit of the 21st century.”² The American College of Emergency Physicians (ACEP), in its position statement, said the “observation of appropriate ED patients in a dedicated ED observation area, instead of a general inpatient bed or an acute care ED bed, is a ‘best practice’ that requires a commitment of staff and hospital resources.”³

As promising as the COUs appear, it is estimated that only one-third of hospitals have them in place.⁴ And while much of the COU story is good, there are concerns with the patient-care model.

The Good

Instinctively, a COU is a win-win proposition for all stakeholders. Essentially, many see these units as a fine blend of clinical care, fiscal responsibility, and patient accountability. Among the benefits:

Reduced admissions. On average, the admission rates from ED to inpatient services are 13.3%.⁵ In contrast, in hospitals that have a robust COU in place, the admission rates are much lower. As an example, Cook County Hospital in Chicago in the mid-1990s saw a decline in the admission rates from the emergency room following implementation of a COU, along with an increase in bed capacity due to the efficient, protocol-driven approach that goes along with successful ED observation units.⁶ With well-structured and managed observation units, such a reduction in hospitalization rates has been shown, is reproducible, and is achievable.

Improved case-mix multiplier. Inpatient reimbursements from the Centers for Medicare and Medicaid Services (CMS) and private insurers frequently are tied to the acuity of care a hospital provides. Critical to making that determination is the case mix that a given hospital sees. Usually, the more complex patients a hospital admits, the higher the reimbursements are. With a successful COU, a hospital can expect a case-mix multiplier representing patients with greater complexity and higher acuity.

What a successful COU essentially does is lead to the admission of patients with greater comorbidities—those who are sicker than the average patient. In doing so, COUs also facilitate safe discharges of the patients who do not necessarily need to be admitted. As an average, the cohort of patients who are admitted as inpatients then consists of patients who are sick enough and absolutely need to be admitted.

Resource utilization. When a patient is admitted from the ED to an inpatient floor, a lot of resources are utilized. These include expenses related to transportation, housekeeping, nursing, and ancillary services. Each of these additional resources comes with an expense. The more resources that are put in motion, the greater the expense a hospital incurs. With effective COUs, it is generally expected that suitable patients will get the care in a specific geographic area by the same set of providers. COUs tend to reduce unnecessary hospitalizations, redundancy of manpower utilization, and duplication of documentation—therefore reducing the expenses incurred by the hospital.

Infection control. The COUs operate based on minimizing the stay of the patients who can be safely discharged after a brief observation period. Decreased duration of stay also means decreased movement and unique provider contact/exposure—thus decreasing the chances for acquiring health-care-related infections. Besides, most COUs are restricted to a certain geographic area within the hospital, which helps to restrict patients to a limited area. This again may be helpful in better overall infection-control practices. More research is necessary to establish this association of the infection-control advantages of COUs. The hypothesis, however, does appear very promising.

Prompt and standardized care. Most COUs use an evidence-based, standardized approach toward the patients seen in the ED. Several professional bodies have endorsed the use of protocol-driven care for the conditions seen in the COU. Most professional organizations that have a key role in COUs advocate this approach, and include the ACEP, AHA, and SHM. When a COU has established itself, it likely is to use specific, expedited, protocol-driven approaches. This allows for care to be focused and standardized. This also is an opportunity to avoid redundant imaging and lab testing.

Patient safety. In its landmark publication “To Err is Human: Building a Safer Health System,” the Institute of Medicine identified communication error as one of the factors that lead to mistakes in patient care.⁷ COUs often tend to provide bulk of care at a given geographical area; this minimizes the transfer of patients from one place to another, thereby decreasing communication errors.

By providing more time to make decisions, COUs afford a greater diagnostic certainty. In the long run, this also helps a hospital minimize costly lawsuits.

The Bad

Not everything about COUs is great. There are certain areas that dull the luster of an observation unit.

Overzealous approaches. COUs are designed to allow more time to make clinical decisions when the triaging is in a gray area: whether to admit or not. Also, COUs provide clinicians with more time to follow the response to the care the patients receive in an emergent fashion. It needs to be emphasized that COUs are designed neither to replace hospitalization, nor to act as urgent care. As a corollary, there is a chance clinicians may be overzealous in discharging patients from COUs close to the 24-hour mark—even though it might not be clear whether the patient needs to be admitted or discharged. Overzealous discharging of COU patients can damage the premise of these units: to determine the need for admission and ensure patient safety. Having strict inclusion and exclusion criteria and good management can prevent these problems.

Staffing. Introduction of a COU can strain an already short-staffed ED. No different from any other novel approach, COU staffers need to be afforded a learning curve. This requires training personnel and establishing a robust team to staff COUs. It can be a strenuous process, at least in the beginning. Strong leadership and support of hospital, physician, and nursing leadership all play a role in the successful implementation and ongoing utilization of COUs.

Logistics. Coordination of people, facilities, and supplies that go into instituting a COU might be a challenge. Also, there may be times where patient ownership may not be very clear. Logistical concerns can include:

• Who owns the patient?
• How much of a role does a consulting service have?
• Who oversees the follow-up plans?

Although a popular COU setup is to have a dedicated observation unit adjacent to the ED, it is not a standard.

Reimbursement. Unfortunately, there is some degree of negative incentive built into reimbursements for COU operations. To understand why this is a bad thing for a hospital, let’s examine how hospitals are paid for services provided in a COU.

Frequently, COU patients are treated as “outpatients.” The operating formula is based on the Hospital Outpatient Prospective Payment System (OPPS), which is based on Ambulatory Payment Classification, or APC.⁸ Reimbursement differences in these two approaches can be quite sizable. Depending on what condition is being treated, the hospital reimbursement can be as little as half to a quarter of the payment for inpatient treatment.⁹ Essentially, the patient would have received very similar care, diagnostic work-up, antibiotics, imaging, lab work, and equally qualified clinicians as caretakers in both the settings. The payments need to account for the care in the COUs, which is usually more acute than in the ambulatory setting and potentially more efficient than an inpatient setting. The payments, therefore, should be sensitive to these factors.

The Ugly

COUs are intended to address many of the challenges facing the healthcare system, and in large part, that is what they do. However, some hospitals could be penalized for providing care through COUs. An efficient COU means that the patients who are admitted are, in fact, sicker. Logically, these patients will have a higher chance of being readmitted. Because the “not so sick” patients were successfully intervened and discharged from COUs, the patients that did get admitted must be pretty sick and must have higher comorbidities.

According to CMS, a readmission occurs if a patient has “an admission to a subsection hospital within 30 days of a discharge from the same or another subsection hospital.”¹⁰ The denominator here consists of all the patients who were discharged from the hospital inpatient stay. If a hospital does not have a robust COU, a large number of “not so sick” patients will be admitted as inpatients and will provide a larger denominator for calculating the readmission rates.

In contrast, a successful COU will allow for a large number of “not so sick” and “borderline” patients to be discharged, shrinking the denominator base, and “very sick” patients who are likely to be readmitted. This may erroneously cause the hospital to appear to have higher 30-day readmission rates. These hospitals may risk substantial readmission-related penalties.

This issue, along with a lopsided payment model, makes the COU landscape murky. With a greater share of pie being the “Il buono” in Il buono, il brutto, il cattivo, clinical observation units are certain to take a prominent position in addressing many of the issues that plague current healthcare facilities—capacity constraints, long ED wait times, limited inpatient beds, and soaring health-care expenditures.

Most important, COUs can lead to better and more efficient patient care.¹¹ It is, therefore, not surprising that the IOM, in its report “Hospital Based Emergency Care—At the Breaking Point,” has identified clinical decision units as a “particularly promising” technique to improve patient flow.¹²

Dr. Asudani is a hospitalist in the division of hospital medicine in the department of internal medicine at the University of California San Diego Health System. Dr. Tolia is director of observation medicine in the department of emergency medicine and internal medicine at UCSD Health System.

References

1. Baugh CW, Venkatesh AK, Hilton JA, Samuel PA, Schuur JD, Bohan JS. Making greater use of dedicated hospital observation units for many short-stay patients could save $3.1 billion a year. Health Aff (Millwood). 2012;31(10):2314-2323.
2. Society of Hospital Medicine. The observation unit white paper. Society of Hospital Medicine website. Available at: http://www.hospitalmedicine.org/AM/Template.cfm?Section=White_Papers&Template=/CM/ContentDisplay.cfm&ContentID=21890. Accessed April 3, 2013.
3. American College of Emergency Physicians. Emergency department observation services. American College of Emergency Physicians website. Available at: http://www.acep.org/Clinical—Practice-Management/Emergency-Department-Observation-Services. Accessed April 10, 2013.
4. Niska R, Bhuiya F, Xu J. National Hospital Ambulatory Medical Care Survey: 2007 emergency department summary. Hyattsville, Md.: National Center for Health Statistics; 2010.
5. Centers for Disease Control and Prevention. Fast stats. Centers for Disease Control and Prevention. Available at: http://www.cdc.gov/nchs/fastats/ervisits.htm. Accessed April 9, 2013.
6. Martinez E, Reilly BM, Evans AT, Roberts RR. The observation unit: a new interface between inpatient and outpatient care. Am J Med. 2001;110(4):274-277.
7. To err is human: building a safer health system. Institute of Medicine. Washington (DC): National Academies Press; 2000.
8. Centers for Medicare & Medicaid Services. Hospital outpatient prospective payment system. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/hospitaloutpaysysfctsht.pdf. Accessed April 2, 2013.
9. Runy L. Clinical observation units: Building a bridge between outpatient and inpatient services. Hospitals and Health Networks website. Available at: http://www.hhnmag.com/hhnmag/jsp/articledisplay.jsp?dcrpath=HHNMAG/PubsNewsArticle/data/2006March/0603HHN_FEA_gatefold&domain=HHNMAG. Accessed April 9, 2013.
10. Centers for Medicare & Medicaid Services. Readmissions reduction program. Centers for Medicare & Medicaid Services website. Available at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Readmissions-Reduction-Program.html. Accessed May 6, 2013.
11. Baugh CW, Venkatesh AK, Bohan JS. Emergency department observation nits: a clinical and financial benefit for hospitals. Health Care Manage Rev. 2011;36(1):28-37.
12. Institute of Medicine. Hospital-based emergency care: at the breaking point. Washington: National Academies Press; 2007.

If he wasn’t a physician administrator working for one of the largest physician management companies in the country, or a clinical instructor at a medical school, or a pediatric hospitalist picking up shifts at a children’s hospital, Greg Harlan, MD, MPH, would have a very different life.

He says he’d “promote vegetable gardens to kindergartners, hike the West Coast Trail, fight the obesity epidemic, and play lots of golf.”

Oh, yeah, one more: “Give every kid a bicycle.”

It’s quite the altruistic—some might say enviable—list. Instead, Dr. Harlan is hard at work as director of medical affairs at North Hollywood, Calif.-based IPC The Hospitalist Company. He is also a clinical instructor at the University of Southern California Medical School and moonlights as a pediatric hospitalist in Los Angeles.

He says he chose to focus on hospital medicine as a career while working as a young faculty member at the University of Utah.

“I noticed that lots of innovation, experimentation, and energy was coming from the newly formed hospitalist division,” says Dr. Harlan, one of nine new members of Team Hospitalist, The Hospitalist’s volunteer editorial advisory group. “I tried it out and loved it, especially getting to teach the students and residents for intense periods of time.”

At IPC, Dr. Harlan leads company-wide quality improvement (QI) initiatives, coordinates risk reduction activities, and directs the IPC-University of California San Francisco Fellowship for Hospitalist Leaders. He says he has a growing interest in “physician leadership, high-functioning teams, and physician groups’ well-being.”

I am really excited to put some science behind “leadership in medicine” and “optimal teamwork in medicine.” I think there is so much more we can learn and implement.

“I am using my QI background to apply these principles to better understanding how teams and leaders can thrive,” he says.

Question: Why did you choose a career in medicine?

A: Medicine is a cool combination of hard science, psychology, counseling, and teaching. It’s an amazing way to combine multiple passions and get to be involved on a very intimate level with many people.

Q: What do you like most about working as a hospitalist?

A: The focus on improving the system as a whole. Ultimately, the patients benefit, but so do many of the other stakeholders in the processes we touch.

Q: What do you dislike most?

A: It’s tough to take in-house call at night. It’s also hard to step in to many sick patients’ care for a short period of time, especially midway through their hospitalization.

Q: What’s the best advice you ever received?

A: Find the people who actually do the work. This is the concept of going to the front line, to see where the real work is being done. It never ceases to amaze me to find out the difference between what we think is going on and what is actually going on.

Q: What’s the biggest change you’ve seen in HM in your career?

A: Providers are getting squeezed a little more each year. There are growing pressures from many sides, and the providers are feeling “crunched.”

Q: Why is it important for you to continue seeing patients?

A: Feeling the joy and pain of actually providing care for patients is integral to leading the hospitalist movement. By acutely experiencing an electronic health record, or dealing with medication authorizations or handoffs, one stays in the real world of hospital medicine.

Q: What is your biggest professional challenge?

A: Balancing my multiple passions. I love being a teacher and still teach young med students at USC med school (my alma mater). I still enjoy seeing patients, too. I am most excited by a growing interest in leadership and teamwork, but it’s still in its development stage as a career path.

Q: What is your biggest professional reward?

A: Being able to see others flourish. Whether it’s beginning med students, professional colleagues, or administrative staff, I truly beam when someone I’ve helped succeeds.

Q: When you aren’t working, what is important to you?

A: My family, my health, and staying balanced. I am learning the importance of listening to my body, trusting my intuition, and finding true “balance.” It’s not easy, but it’s imperative.

Q: What’s next professionally?

A: I am really excited to put some science behind “leadership in medicine” and “optimal teamwork in medicine.” I think there is so much more we can learn and implement.

Q: What’s the best book you’ve read recently? Why?

A: A few come to mind: “18 Minutes” by Peter Bregman offers some really easy steps to getting organized and focused; “Six Thinking Hats” by Edward de Bono is a great framework for approaching problems and innovations; “The Inner Game of Golf” by W. Timothy Gallwey makes me realize how amazing our bodies and minds truly are.

Q: How many Apple products do you interface with in a given week?

A: I only have an iPhone. Amazing little gadget, but I don’t want to become wedded to it. Maybe I’ll get a MacBook soon.

Q: What’s next in your Netflix queue?

A: We use Netflix mainly for their drama series. I prefer foreign films and documentaries. My wife and I love “Breaking Bad.” My kids and I are working our way through the “Star Wars” episodes.

Richard Quinn is a freelance writer in New Jersey.

If he wasn’t a physician administrator working for one of the largest physician management companies in the country, or a clinical instructor at a medical school, or a pediatric hospitalist picking up shifts at a children’s hospital, Greg Harlan, MD, MPH, would have a very different life.

He says he’d “promote vegetable gardens to kindergartners, hike the West Coast Trail, fight the obesity epidemic, and play lots of golf.”

Oh, yeah, one more: “Give every kid a bicycle.”

It’s quite the altruistic—some might say enviable—list. Instead, Dr. Harlan is hard at work as director of medical affairs at North Hollywood, Calif.-based IPC The Hospitalist Company. He is also a clinical instructor at the University of Southern California Medical School and moonlights as a pediatric hospitalist in Los Angeles.

He says he chose to focus on hospital medicine as a career while working as a young faculty member at the University of Utah.

“I noticed that lots of innovation, experimentation, and energy was coming from the newly formed hospitalist division,” says Dr. Harlan, one of nine new members of Team Hospitalist, The Hospitalist’s volunteer editorial advisory group. “I tried it out and loved it, especially getting to teach the students and residents for intense periods of time.”

At IPC, Dr. Harlan leads company-wide quality improvement (QI) initiatives, coordinates risk reduction activities, and directs the IPC-University of California San Francisco Fellowship for Hospitalist Leaders. He says he has a growing interest in “physician leadership, high-functioning teams, and physician groups’ well-being.”

I am really excited to put some science behind “leadership in medicine” and “optimal teamwork in medicine.” I think there is so much more we can learn and implement.

“I am using my QI background to apply these principles to better understanding how teams and leaders can thrive,” he says.

Question: Why did you choose a career in medicine?

A: Medicine is a cool combination of hard science, psychology, counseling, and teaching. It’s an amazing way to combine multiple passions and get to be involved on a very intimate level with many people.

Q: What do you like most about working as a hospitalist?

A: The focus on improving the system as a whole. Ultimately, the patients benefit, but so do many of the other stakeholders in the processes we touch.

Q: What do you dislike most?

A: It’s tough to take in-house call at night. It’s also hard to step in to many sick patients’ care for a short period of time, especially midway through their hospitalization.

Q: What’s the best advice you ever received?

A: Find the people who actually do the work. This is the concept of going to the front line, to see where the real work is being done. It never ceases to amaze me to find out the difference between what we think is going on and what is actually going on.

Q: What’s the biggest change you’ve seen in HM in your career?

A: Providers are getting squeezed a little more each year. There are growing pressures from many sides, and the providers are feeling “crunched.”

Q: Why is it important for you to continue seeing patients?

A: Feeling the joy and pain of actually providing care for patients is integral to leading the hospitalist movement. By acutely experiencing an electronic health record, or dealing with medication authorizations or handoffs, one stays in the real world of hospital medicine.

Q: What is your biggest professional challenge?

A: Balancing my multiple passions. I love being a teacher and still teach young med students at USC med school (my alma mater). I still enjoy seeing patients, too. I am most excited by a growing interest in leadership and teamwork, but it’s still in its development stage as a career path.

Q: What is your biggest professional reward?

A: Being able to see others flourish. Whether it’s beginning med students, professional colleagues, or administrative staff, I truly beam when someone I’ve helped succeeds.

Q: When you aren’t working, what is important to you?

A: My family, my health, and staying balanced. I am learning the importance of listening to my body, trusting my intuition, and finding true “balance.” It’s not easy, but it’s imperative.

Q: What’s next professionally?

A: I am really excited to put some science behind “leadership in medicine” and “optimal teamwork in medicine.” I think there is so much more we can learn and implement.

Q: What’s the best book you’ve read recently? Why?

A: A few come to mind: “18 Minutes” by Peter Bregman offers some really easy steps to getting organized and focused; “Six Thinking Hats” by Edward de Bono is a great framework for approaching problems and innovations; “The Inner Game of Golf” by W. Timothy Gallwey makes me realize how amazing our bodies and minds truly are.

Q: How many Apple products do you interface with in a given week?

A: I only have an iPhone. Amazing little gadget, but I don’t want to become wedded to it. Maybe I’ll get a MacBook soon.

Q: What’s next in your Netflix queue?

A: We use Netflix mainly for their drama series. I prefer foreign films and documentaries. My wife and I love “Breaking Bad.” My kids and I are working our way through the “Star Wars” episodes.

Richard Quinn is a freelance writer in New Jersey.

If he wasn’t a physician administrator working for one of the largest physician management companies in the country, or a clinical instructor at a medical school, or a pediatric hospitalist picking up shifts at a children’s hospital, Greg Harlan, MD, MPH, would have a very different life.

He says he’d “promote vegetable gardens to kindergartners, hike the West Coast Trail, fight the obesity epidemic, and play lots of golf.”

Oh, yeah, one more: “Give every kid a bicycle.”

It’s quite the altruistic—some might say enviable—list. Instead, Dr. Harlan is hard at work as director of medical affairs at North Hollywood, Calif.-based IPC The Hospitalist Company. He is also a clinical instructor at the University of Southern California Medical School and moonlights as a pediatric hospitalist in Los Angeles.

He says he chose to focus on hospital medicine as a career while working as a young faculty member at the University of Utah.

“I noticed that lots of innovation, experimentation, and energy was coming from the newly formed hospitalist division,” says Dr. Harlan, one of nine new members of Team Hospitalist, The Hospitalist’s volunteer editorial advisory group. “I tried it out and loved it, especially getting to teach the students and residents for intense periods of time.”

At IPC, Dr. Harlan leads company-wide quality improvement (QI) initiatives, coordinates risk reduction activities, and directs the IPC-University of California San Francisco Fellowship for Hospitalist Leaders. He says he has a growing interest in “physician leadership, high-functioning teams, and physician groups’ well-being.”

I am really excited to put some science behind “leadership in medicine” and “optimal teamwork in medicine.” I think there is so much more we can learn and implement.

“I am using my QI background to apply these principles to better understanding how teams and leaders can thrive,” he says.

Question: Why did you choose a career in medicine?

A: Medicine is a cool combination of hard science, psychology, counseling, and teaching. It’s an amazing way to combine multiple passions and get to be involved on a very intimate level with many people.

Q: What do you like most about working as a hospitalist?

A: The focus on improving the system as a whole. Ultimately, the patients benefit, but so do many of the other stakeholders in the processes we touch.

Q: What do you dislike most?

A: It’s tough to take in-house call at night. It’s also hard to step in to many sick patients’ care for a short period of time, especially midway through their hospitalization.

Q: What’s the best advice you ever received?

A: Find the people who actually do the work. This is the concept of going to the front line, to see where the real work is being done. It never ceases to amaze me to find out the difference between what we think is going on and what is actually going on.

Q: What’s the biggest change you’ve seen in HM in your career?

A: Providers are getting squeezed a little more each year. There are growing pressures from many sides, and the providers are feeling “crunched.”

Q: Why is it important for you to continue seeing patients?

A: Feeling the joy and pain of actually providing care for patients is integral to leading the hospitalist movement. By acutely experiencing an electronic health record, or dealing with medication authorizations or handoffs, one stays in the real world of hospital medicine.

Q: What is your biggest professional challenge?

A: Balancing my multiple passions. I love being a teacher and still teach young med students at USC med school (my alma mater). I still enjoy seeing patients, too. I am most excited by a growing interest in leadership and teamwork, but it’s still in its development stage as a career path.

Q: What is your biggest professional reward?

A: Being able to see others flourish. Whether it’s beginning med students, professional colleagues, or administrative staff, I truly beam when someone I’ve helped succeeds.

Q: When you aren’t working, what is important to you?

A: My family, my health, and staying balanced. I am learning the importance of listening to my body, trusting my intuition, and finding true “balance.” It’s not easy, but it’s imperative.

Q: What’s next professionally?

A: I am really excited to put some science behind “leadership in medicine” and “optimal teamwork in medicine.” I think there is so much more we can learn and implement.

Q: What’s the best book you’ve read recently? Why?

A: A few come to mind: “18 Minutes” by Peter Bregman offers some really easy steps to getting organized and focused; “Six Thinking Hats” by Edward de Bono is a great framework for approaching problems and innovations; “The Inner Game of Golf” by W. Timothy Gallwey makes me realize how amazing our bodies and minds truly are.

Q: How many Apple products do you interface with in a given week?

A: I only have an iPhone. Amazing little gadget, but I don’t want to become wedded to it. Maybe I’ll get a MacBook soon.

Q: What’s next in your Netflix queue?

A: We use Netflix mainly for their drama series. I prefer foreign films and documentaries. My wife and I love “Breaking Bad.” My kids and I are working our way through the “Star Wars” episodes.

Richard Quinn is a freelance writer in New Jersey.

Click here to listen to more of our interview with Mike Matray

Click here to listen to more of our interview with Mike Matray

Click here to listen to more of our interview with Mike Matray