The Hospitalist

The government's shadow looms large over the health care industry, and a recent hospital-physician venture in Lee County is one more sign of that.

Changes in the way Medicare will pay doctors and mandates from the health care law known as Obamacare are forcing physicians to reorganize their businesses. Medicare is the government health insurance program for older people, and its impact is so significant that private insurance companies often follow the agency's lead.

Some of these payment changes have spawned a new kind of physician: the hospitalist. A hospitalist is a doctor who handles patients at hospitals, replacing the job of primary care doctors who now can't afford to spend time away from their own practices to make the rounds at the hospital because of cuts in insurance reimbursements.

“It's much more effective for them to contact the hospitalist,” says Scott Nygaard, chief medical officer for Lee Memorial Health System.

One group of about 20 hospitalists in Fort Myers called Hospitalist Group of Southwest Florida recently formed a joint venture with the largest privately held hospitalist company, Cogent HMG, to provide hospitalists to Lee Memorial's four hospitals under a three-year contract. Terms of the deal were not disclosed for the joint venture, now called Inpatient Specialists of Southwest Florida.

“Health care reform has challenged all of us,” says Joseph Daley, a physician and the director of quality services for Inpatient Specialists. Another 16 hospitalists will join the staff of Inpatient Specialists, Daley says.

The deal will allow hospitalists to take advantage of Cogent's size to handle the government reporting and other back-office functions as well as provide education and training to physicians. Brentwood, Tenn.-based Cogent employs more than 1,000 hospitalists in more than 100 hospitals around the country with 200 support staff.

“The hospital used to be like a flea market,” says Nygaard. The flea-market analogy is apt: Physicians of all kinds got privileges to work at the hospital and it became a sort of marketplace for doctors and patients. Until entrepreneurial doctors started to siphon the best-paying patients to outpatient centers, the hospital used to be the place where doctors built their practices.

But changes in the way the government will reimburse medical providers based on patient outcomes rather than volume means hospitals must gain a greater measure of quality control. Complicating matters is that hospitals have become the providers of medical care for the elderly and indigent who don't have private insurance.

“The country has been built on fee-for-service,” says Nygaard. Now, he says, hospitals and doctors must adapt to new reimbursement schemes that reward or punish medical providers based on outcomes such as patient health. Still, he says it's not clear yet what the potential savings or additional revenues Lee Memorial might gain from this venture.

While the physicians declined to reveal details of the joint venture, they say 40% of the compensation of Inpatient Services will depend on such outcomes as readmission rates and patient and physician satisfaction. “This is the most advanced hospitalist partnership I've seen,” says John Donahue, the CEO of Cogent.

That's important because hospitalists will have an incentive to see a patient through her stay at the hospital and give her effective treatment when she leaves. “That engagement is part of the quality of care,” Nygaard says. “We have to work together.”