To join conference call Dial-in: 1-866-809-9263 Participant code: The ED Call Pay Crisis: Strategies for Fair, Equitable, and Sustainable Solutions Presented by: Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D. Michael E. Hogue, M.D. June 4, 2009 610-285-8791 To join conference call Dial-in: 1-866-809-9263 Participant code: 610-285-8791 HMR, LLC ED Call Panel Solutions Martin B. Buser, MPH, FACHE Roger A. Heroux, Ph.D. 1 Overview of Today’s Objectives Define the problem with ED call panels Understand the process to approach the issues with ED call panel solutions Findings from interviews Findings from research Feasibility analysis and business plan Possible recommendations for a fair and equitable solution Call The Pay Security Solution To join conference call future Dial-in: 1-866-809-9263 Participant code: 610-285-8791 2 Stipend impact for on your bottom line Year One: Three panels (GS, Ortho and NS) at $500/day $547,500 Year Two: Six panels at $500/day $1,095,000 Year Three: Fourteen panels at $500/day $2,555,000 Year Four: Year One Specialties Separate Year Tw o Year Three Year Four General Surgery, Orthopedics and Neurosurgery at $1,500 Cardiology, Urology, Pulm, Vascular Surgery, OB, G-I, IM/FP, ENT, Plastics at $800 Peds, Ophthalmology, Neurology and Cardiac Surgery at $500 $5,000,500 To join conference call Dial-in: 1-866-809-9263 And escalating!! Participant code: 610-285-8791 3 The Driving Forces Behind the On-Call Crisis 4 Emergency Department (ED) Requirements Ethically Full and by law... panel of specialty physicians Distinct from the emergency physicians who provide the first level of care in ED’s 5 Definition: Unassigned patients “Patients who require on-site consultation or admission to the hospital and do not have a a prior relationship with a physician on the Medical Staff to assume their care” Independent of patient funding Cannot make payments to physicians to care for their own patients 6 Background Past: Voluntary Cost shifting possible Referrals How community service built practices fast can I get on the panel? 7 Scope of the Problem National You’re issue not alone! Problem growing daily Specialty-driven Increased adversarial relationships between medical staff and hospital No easy solution Expensive to solve 8 Definition: ED On-Call Panel for Unassigned Patients Significant volume For a 40,000 visit ED, it will represent over 2,000 inpatients per year Unassigned population: 35-50% of the ED hospital admissions 12-20% of the total hospital admissions are ED unassigned admissions If a trauma hospital- adds more volume and dynamics 9 Designing for the Future The best solutions allow for better clinical integration and partnerships between the hospital and medical staff term – learning how to work together with common goals and aligned incentives within a shared budget Long Must be more efficient and effective 10 Multi-Step Process Learn what the issues are Learn what the burden is Learn what the market is Develop a forum for discussion Develop an acceptable solution that is fair, equitable and financially sustainable Manage the implementation well 11 The Needs of the Medical Staff 12 ED Call Panel/Medical Staff Analysis: Interviews What have we learned? 13 Interviewing What are the issues and dynamics? How deep do they go? Who is leading the cause? What are their real issues? Income? Competency? Manpower? Greed? Irritations with the hospital systems? What How can you do something about and what is impossible? urgent is it? 14 What we find from the Interviews Special No Rules to Get Off Call Longer Able to Cost Shift for Unfunded Patients Desire to be Paid for Availability Lifestyle ED Issues Call Affecting Recruitment and Retention Potential 15 Research: What do we learn? Data is objective and revealing! 16 The Research Process: Opens the “Black Box” Each study period unassigned chart audited for CPTs and ICD-9 professional codes Code all care provided throughout the hospitalization Unassigned Expected volumes and payer mix identified by specialty rate of reimbursement by specialty Service line analysis (average length of stay (ALOS) by diagnostic related group (DRG), $/DRG/Specialty, etc.) Financial scenarios 17 Get the Right Data – Find Out What’s Happening at your Hospital Sample Hospital Reports 18 Analyze: Number of Panels Staffing by Panel Required Panels ED Call Burden By Specialty Quantify the volume by specialty RVUs by Specialty Current Payment System Expected Payment to Specialties 19 Hospital Statistics Overview (FY2008) Hospital Admissions 16,972 ED Visits (Inpatient and Outpatient) 73,552 ED Admissions 8,226 Total ALOS 3.79 Total Hospital Case Mix 1.5356 20 ED Unassigned Annualized Patient Categorization Breakdown Admits ED Only Consults Total Patients 4,992 696 5,688 Note: Patients may be seen in multiple locations, however this report shows the primary location of service for each specific patient. The ED unassigned admission volume is estimated based on an annualization of patients identified by hospital staff. 21 ED Unassigned Overall Averages Months Studied RVUs per Patient Ave Specialties per Patient Ave Inpatient LOS 0.5 22.97 1.75 3.93 Note: The ED unassigned admission volume is estimated based on an annualization of patients identified by hospital staff. 22 ED Unassigned Financial Class Group - Mix of Patients ED Patients from the Primary Service Area Only ED Referrals from Outlying Communities 7% 20% 1% 18% 13% 2% Blue Cross/Blue Shield (312) 19% Champus (48) 13% Commercial (792) Medicaid (744) Medicare (1464) 11% Self Pay (840) 35% 18% 43% 23 Estimated Current ED Unassigned Annualized Professional Fee Practice Value for All Specialties Estimated Current Practice Value $3,856,211 Note: The estimated collection rate and current estimated practice value is calculated on estimates made by financial class based on historical trends. Actual results may vary depending on actual billing experience. 24 Monthly Average ED Unassigned Specialty Cases and RVUs Delivered Specialty Hospitalist/Internal Medicine FP Resident Cardiology Surgery Gastroenterology Family Practice Critical Care/Pulmonology Infectious Disease Nephrology Urology Pediatrics Internal Medicine Hospitalist/Family Medicine Orthopedics Neurology Cardiovascular Surgery Pulmonary Neurosurgery OB/Gyn Otolaryngology Podiatry Psychiatry Oncology Anesthesia Electrophysiology Endocrinology Ophthalmology Distinct MDs Coded (Study Period) 7 10 10 9 6 11 2 2 5 5 8 4 1 7 2 3 2 3 5 3 2 3 4 1 1 1 1 Monthly Average Specialty Case Count 138 96 90 72 48 44 36 32 32 32 30 28 26 24 20 16 12 10 10 8 6 6 4 2 2 2 2 25 Monthly Average RVUs Delivered 1,396.64 860.80 1,566.78 1,414.46 601.72 354.78 325.61 361.90 383.82 369.58 201.86 312.98 205.84 656.84 178.58 1,069.40 64.30 153.54 196.42 65.84 56.66 23.08 46.88 2.04 9.00 4.18 2.64 RVUs per Specialty Case 10.12 8.97 17.41 19.65 12.54 8.06 9.04 11.31 11.99 11.55 6.73 11.18 7.92 27.37 8.93 66.84 5.36 15.35 19.64 8.23 9.44 3.85 11.72 1.02 4.50 2.09 1.32 Monthly Average ED Unassigned Specialty Cases Specialty Hospitalist/Internal Medicine FP Resident Cardiology Surgery Gastroenterology Family Practice Critical Care/Pulmonology Infectious Disease Nephrology Urology Pediatrics Internal Medicine Hospitalist/Family Medicine Orthopedics Neurology Cardiovascular Surgery Pulmonary Neurosurgery OB/Gyn Otolaryngology Podiatry Psychiatry Oncology Ophthalmology Electrophysiology Endocrinology Anesthesia Summary IP Admit Specialty Cases 102 76 42 24 6 34 0 0 14 2 28 26 10 24 8 0 0 10 6 2 0 0 2 0 0 0 0 416 IP Consult Specialty Cases 34 20 44 32 38 10 36 32 18 6 0 2 16 0 6 16 12 0 2 2 6 6 2 2 2 2 2 348 26 ED Only All Specialty Cases 2 0 4 16 4 0 0 0 0 24 2 0 0 0 6 0 0 0 2 4 0 0 0 0 0 0 0 64 Total Specialty Cases 138 96 90 72 48 44 36 32 32 32 30 28 26 24 20 16 12 10 10 8 6 6 4 2 2 2 2 828 Solution Strategies and Model Programs 27 Should Physicians Be Paid for ED Call? Yes Should be Fair, Equitable for the Medical Staff Panel Members Should be Financially Sustainable for the Hospital 28 Sample Hospital Report – Develop a Business Plan Get the facts! Build a business plan for expected shortfall if payment guarantees are provided Understand economic value of ED call to each specialty 29 ED On-Call Panel Options: Remove Close irritants of call the ED Develop an IM hospitalist program Develop Surgical Specialty hospitalist programs Maintain bylaws mandatory on-call w/o pay Regionalize Require care by specialty among local hospitals a minimum number of call days before payment 30 ED On-Call Panel Options (cont’d): Recruit more specialists Pay stipends Pay base stipend plus activation fee Hire physician assistant first responders Guarantee pay for work performed All patients Uninsured patients only Uninsured patients outside of the immediate service area Develop Co Management Agreements Compensate Hybrid for selected OP Follow Up items compensation model Compensate with Tax Advantaged dollars 31 Options: Remove Irritants of Call Make ED more efficient Track throughput Reduce constant ED calls Open surgery for ED follow-up cases Assist with $ for selected ED referrals Cover unfunded patients Allow easy re-admission of difficult patients Manage discharge planning effectively 32 Options: Hospitalists Dedicated Internal inpatient physicians medicine/family practice 55%-60% of ED unassigned admissions are medicine-related Control utilization Control referrals Allows Must time to explore options be properly staffed and designed to be extremely effective 33 HOSPITALIST DIRECTED PATIENT CARE Acute Patient Care Hospitalist Physician On-site Hospitalist Support Team (Case Manager, Care Coordinator/Clerical) On-site Medical Director Supportive Infrastructure Benchmarking for Best Practices 34 Options: Specialty Hospitalist Programs Growing quickly as an option If paying stipends, it may be more economical to hire full time surgical specialists and achieve dedicated service Must develop a business plan to understand the costs and risks 35 Hospitalist Services Go Beyond IM! 1. Internal Medicine/FP 2. IM/Peds 3. Peds 4. OB 5. Ortho/Traumatology 6. General Surgeons 7. Intensivists for the Critical Care Patients 36 Options: Pay Stipends Fixed costs Difficult to determine proper payment Stipends Never What tend to go to the most vocal stops escalating is the relative value of on-call time? 37 Options: Pay Stipends Should there be tiers? Everyone on call panel should receive the same base rate Vary the activation fee based upon frequency, severity and FMV analysis How do you determine the amounts? With facts 38 One Sample Hospital Report Option: Base Fee Plus Activation Fee Ortho, Neuro, OB and General Surgery $200 Base Fee + $XXX Activation Fee Pulmonology, Vascular, Cardiology, Neurology and Plastic Surgery $200 Base Fee + $YYY Activation Fee G-I, Opth, Peds, Psych, Urology, and ENT $200 Base Fee + $ZZZ Activation Fee 39 Option: NP/PA First Responder First Line of Response Covers ED Consults for Trauma, Neurosurgery, Cardiovascular and Orthopedic Surgery Coordinates all care with the on-call specialist Responsible from admission to discharge Assign Net 4 Surgical NP FTE’s to cover 24/7 Cost is Staffing Costs less Professional Fees collected. 40 Option: Pay for Productivity Emergency A on-call medical group separate professional corporation Contracts with existing medical staff members 41 Contractual Relationships Billing Service Hospital Steering & Coding Committee Medical Corporation Contracting MD Contracting MD Contracting MD Indicates contracts 42 Contracting MD Sample Hospital Report Pro Forma Summary - Yearly Cost Estimates With Various Scenarios Program Cost Paying 100% of Medicare Cost Paying 110% of Medicare Cost Paying 120% of Medicare Cost Paying 130% of Medicare Cost Paying 140% of Medicare Cost Paying 150% of Medicare All Specialties and All Payors $895,111 $1,423,982 $1,952,853 $2,481,723 $3,010,594 $3,539,464 All Specialties and Unfunded Payors Only $603,406 $663,746 $724,087 $784,428 $844,768 $905,109 Non-Selected Specialties and All Payors $504,294 $773,687 $1,043,080 $1,312,473 $1,581,866 $1,851,259 Non-Selected Specialties and Unfunded Payors Only $338,344 $372,178 $406,013 $439,847 $473,681 $507,516 Note: Excludes those specialties with existing coverage agreements or exclusive franchises 43 Option: Compensate with Tax Advantaged Dollars Integrated Healthcare Strategies Michael E. Hogue, M.D. Call Pay Security Solution 44 Call Pay Program Integrated Healthcare Strategies developed a call pay program designed to meet the following goals: Transition from a cash payment philosophy to the development and implementation of a retirement program opportunity Generate Control future escalation in call pay amount Flexibility Provide immediate and long term savings in implementation a competitive differentiation Encourage long-term retention 45 Call Pay Dilemma – Systems Cost of call is becoming a significant burden on hospital operating margins Current structure unsustainable as costs are escalating yearly at unacceptable rates Hospital systems face increasing call pay requests—slowly becoming the industry standard Increasing strain on emergency departments—increasing number of uninsured patients 46 Call Dilemma – Physicians Perception that “On-Call” problem for physicians is unreimbursed care In reality, “On-Call” is a time issue Historical attempts have been to solve this with monetary payment Payment is made/taxed/spent—money is gone and the time issue is unchanged Current call pay structure will never be enough to reimburse for excess time away from family 47 Additional Physician Issues Call time adds increasing burden to physician work schedules Call time limits physicians’ opportunity to maximize income Reduces clinic time Reduces elective cases Increases exposure to uninsured patients and corresponding legal risk Private practice physicians have difficult time sheltering money for retirement Qualified plans inadequate to meet the needs of highly compensated physicians – increased exposure to market risk 48 Solution IHStrategies’ approach to solving the call pay issue is focused on answering three key questions: How do we generate immediate savings for systems? Can we offset physician time issues by addressing another critical issue? How do we design a plan to more adequately reward physicians for time commitment? 49 Solution Physician Issues Hospital Issue Need physicians’ time to cover call Time away from clinic Time out of OR Time away from family Increased malpractice exposure Negative impact on practice COST OF RETIREMENT SAVING 50 The Call Pay Security Solution Is a personal retirement program that combines a specially-designed indexed universal life insurance contract with a unique tax replacement strategy to provide a global solution to the challenges of developing long-term retirement income. 51 The Call Pay Security Solution Designed to function like a Roth IRA with a twist The Basics Contributions made after tax Account grows tax deferred Distributions are tax free The Twist No income limits for participation No limit on contributions Replaces income earning potential on lost taxes with a tax replacement loan “Dollar for Dollar, A Roth IRA may just be the best savings plan in America.” - Money Magazine, October 2008 52 The Call Pay Security Solution Provided on an after-tax basis Outside of IRS deferred compensation scrutiny Immediately vested - fully portable Provides a tax replacement loan to participant Participant grossed-up annually for taxes by outside lender Gross-up funded by a third party Gross-up not reportable on 990 Organization pays annual financing cost on the tax gross-up Utilizes a highly tax-efficient indexed universal life insurance product Only vehicle that offers tax deferred earnings and tax-free distributions Guaranteed issue ($1million - $2million) Minimum annual guaranteed return Tax free distributions reduces exposure to increasing tax rates Assets protected from malpractice claims (in most states) 53 Call Pay Comparison CURRENT PROPOSED System $25,000 + Interest $35,000 Physician Outside Lender System $6,000 Physician 1099 of $35,000 Taxes @ 40% 14,000 Net of $21,000 54 1099 of $25,000 Taxes @ 40% $10,000 Net Contribution $15,000 Gross Up Loan $6,000 Net Investment $21,000 The Call Pay Security Solution How It Works (2) Tax cost replenishment loan (3) Earnings (1) Participants’ after-tax contribution Expenses (1) Cost of insurance (2) Administrative fees INDEXED CONTRACT At Retirement (1) Tax-free retirement income (2) Ultimately – tax-free insurance death benefit 55 Cost Comparison of Call Pay Options Current annual call pay obligation of $35,000, reduced to $25,000 in CPSS program Impact Centura ifif Call Call Pay Impact totoSystem Payis is paid in cash annually paid in cash annually Impactto to System Centura using CPSS scenario Impact using CPSS scenario Year Proposed Call Pay (1) Match / Loan (2) Annual Interest on Loan (3) Total Cost Total Annual Annual Cost to to Centura System (1) + (3) Year Call Pay 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 575 1,150 1,725 2,300 2,875 3,450 4,025 4,600 5,175 5,750 6,325 6,900 7,475 8,050 8,625 9,200 9,775 10,350 10,925 11,500 25,575 26,150 26,725 27,300 27,875 28,450 29,025 29,600 30,175 30,750 31,325 31,900 32,475 33,050 33,625 34,200 34,775 35,350 35,925 36,500 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 35,000 36,050 37,132 38,245 39,393 40,575 41,792 43,046 44,337 45,667 47,037 48,448 49,902 51,399 52,941 54,529 56,165 57,850 59,585 61,373 500,000 286,748 120,000 68,820 120,750 56,753 620,750 343,501 Totals NPV at 6% Totals NPV at 6% 940,463 509,654 Total estimated savings of 32.6% over the 20-year period ASSUMPTIONS: • Annual increase in call pay (if paid in cash): 3.0% • Tax rate: 40% 56 • Loan interest rate: 5.75% • Carrier: Penn Mutual The Call Pay Security Solution Retirement Funding Comparison – 45 Years Old Call Pay The Call Pay Paid in Cash Security Solution (25-Year Stream) (Income Stream to Age 121) $35,000 $25,000 ($14,000) (10,000) $0 $6,000 $21,000 $21,000 ANNUAL AFTER-TAX RETIREMENT INCOME $63,156 $87,500 TOTAL AFTER-TAX RETIREMENT INCOME $1,578,900 $4,375,000 FREE OF FORFEITURE RISK YES YES FREE OF CORPORATE INSOLVENCY RISK YES YES PROTECTION FROM INCREASING TAX RATES NO YES TAX-FREE LIFE INSURANCE DEATH BENEFIT NO YES CALL PAY AMOUNT INCOME TAX PAID CONTRIBUTION GROSS UP LOAN AMOUNT TO DEFER OR INVEST ANNUALLY The Call Pay Security Solution delivers a 38% increase in annual after-tax retirement income versus cash in a 25-year income stream ASSUMPTIONS • Tax rate of 40.0% • Investment yield of 7% gross during accumulation phase for cash option • Investment yield of 5.5% gross during distribution phase for cash option • Investment yield of 7% for CPSS • Annual call pay increase of 3% • Income stream begins at age 71 57 S&P 500 Index versus Indexed Universal Life (IUL) S&P 34 year annualized return 6.59% IUL 34 Year annualized return 58 8.60% The Call Pay Security Solution – Contract Details The probability of earning different index return levels during the last 20 years of monthly S&P 500 price returns assuming the 14% annual cap and 2% floor (12/07) Earning a Return Greater Than Annual Returns 3-yr Returns 5-yr Returns 10-yr Returns 20-yr Returns 5.0% 70.2% 92.7% 98.1% 100.0% 100.0% 6.0% 68.2% 84.4% 90.4% 100.0% 100.0% 6.5% 66.0% 82.4% 87.8% 100.0% 100.0% 7.0% 63.0% 78.0% 83.8% 100.0% 99.3% 7.5% 61.0% 73.3% 77.7% 100.0% 95.9% 8.0% 58.7% 68.1% 72.4% 97.3% 85.8% 8.5% 57.7% 61.6% 65.2% 89.6% 71.0% 9.0% 55.4% 55.1% 56.8% 72.0% 48.6% 10.0% 51.5% 28.9% 34.1% 25.1% 8.7% 59 Summary Of System Benefit The Call Pay Security Solution provides systems with the following benefits: Provides immediate savings of approximately 26% Provides long term reduction in cost of approximately 33% Individualizes Eliminates call pay negotiations by specialty/section/facility the need for continuing negotiations for call pay Provides a highly flexible plan that can be customized to the organization’s needs 60 Summary Of Physician Benefit The Call Pay Security Solution provides physicians with the following benefits: Tax-leveraged Immediately Not wealth accumulation program vested and portable subject to corporate insolvency or risks of forfeiture Secure investment vehicle Asset protection Minimum guaranteed return Index based, no asset management 61 Negotiating with the Medical Staff 62 The Forum for Negotiations “The power is in the process” Interview to learn perceptions of the medical staff Research Engage the ED unassigned data the leadership of the medical staff Establish a small steering committee Solutions only for the entire medical staff Get sign-off from the medical executive committee Implement Keep with precision steering committee involved Measure, monitor and manage 63 Common Solutions ED Unassigned and Unfunded Only ED Unassigned Patients Base IM Stipend plus FFS Guarantee Specialty Hospitalist Program Additional Specialty Hospitalist Programs Activation Fee Tiered Stipends Coverage Fracture Agreements Clinic for Orthopedic follow up Compensation with Tax Advantaged Dollars 64 The Future? More specialties will be hospital-based Estimate that 75% of hospital census will be managed by some form of hospitalists including: Internal medicine hospitalists Intensivists OB Pediatrics Orthopaedic surgeons General trauma surgeons 65 About Integrated Healthcare Strategies A Human Resources consulting firm exclusively serving healthcare organizations Organizations we work with: Secular, religious, government-based and not-for-profit organizations Clients include hundreds of: Hospitals Academic medical centers Health networks Nursing homes 66 About Integrated Healthcare Strategies, cont. 5 integrated specialty practices: Executive Total Compensation MSA Executive Search Physician Services MSA HR Capital Governance and Leadership Services From these 5 practices, we’re able to assist clients in the areas of Physician strategy and compensation, employee compensation, executive compensation, human capital solutions, labor relations, leadership transition planning, executive search, employee surveys, performance management and board governance solutions. Founded Offices: Website: in 1958 Minneapolis, MN and Kansas City, MO www.IHStrategies.com 67 About Hospitalist Management Resources, LLC Independent consulting company We consult with Hospitalist Programs, Intensivist Programs and ED Call Panel Solutions We do not staff or operate programs More than 350 consultations in 11 years Develop new programs and enhance existing programs into Fourth Generation Programs Business plans, ROI strategies and clinical and financial benchmarks to validate Programs Help hospitals evaluate and create ED Call Panel Solutions 68 About Hospitalist Management Resources, LLC, cont. Founded April 1999 Founders: Each Martin Buser and Roger Heroux, Ph.D. bring 25+ years Healthcare experience Offices: San Diego, CA and Colorado Springs, CO Website: www.HMRLLC.com RHeroux@hmrllc.com MBuser@hmrllc.com Colorado Springs (719) 331-7119 San Diego (858) 344-1060 69 Questions? 70 Contact Us Michael E. Hogue, M.D. Mike.Hogue@IHStrategies.com 1-800-327-9335 Martin B. Buser, MPH, FACHE MBuser@hmrllc.com 1-858-344-1060 Roger A. Heroux, Ph.D. RHeroux@hmrllc.com 1-719-331-7119 71