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The ED Call Pay CrisisStrategies 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
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• HMR, LLC
• ED Call Panel Solutions
• Martin B. Buser, MPH, FACHE
• Roger A. Heroux, Ph.D.

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Overview of Todays 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 Pay Security Solution
• The future

To join conference call Dial-in
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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 Specialties Separate
• General Surgery, Orthopedics and Neurosurgery
  at 1,500
• Cardiology, Urology, Pulm, Vascular Surgery,
  OB, G-I,
• IM/FP, ENT, Plastics at 800
• Peds, Ophthalmology, Neurology and Cardiac
  Surgery at 500
• 5,000,500
• And escalating!!

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• The Driving Forces Behind the On-Call Crisis

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Emergency Department (ED) Requirements

• Ethically and by law...
• Full panel of specialty physicians
• Distinct from the emergency physicians who
  provide the first level of care in EDs

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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

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Background

• Past
• Voluntary community service
• Cost shifting possible
• Referrals built practices
• How fast can I get on the panel?

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Scope of the Problem

• National issue
• Youre not alone!
• Problem growing daily
• Specialty-driven
• Increased adversarial relationships between
  medical staff and hospital
• No easy solution
• Expensive to solve

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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

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Designing for the Future

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

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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

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• The Needs of the Medical Staff

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ED Call Panel/Medical Staff Analysis Interviews

• What have we learned?

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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 can you do something about and what is
  impossible?
• How urgent is it?

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What we find from the Interviews

• Special Rules to Get Off Call
• No Longer Able to Cost Shift for Unfunded
  Patients
• Desire to be Paid for Availability
• Lifestyle Issues
• ED Call Affecting Recruitment and Retention
  Potential

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Research

• What do we learn?
• Data is objective and revealing!

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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 volumes and payer mix identified by
  specialty
• Expected rate of reimbursement by specialty
• Service line analysis (average length of stay
  (ALOS) by diagnostic related group (DRG),
  /DRG/Specialty, etc.)
• Financial scenarios

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• Get the Right Data Find Out WhatsHappening at
  your Hospital
• Sample HospitalReports

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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

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Hospital Statistics Overview (FY2008)
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ED Unassigned Annualized Patient Categorization
Breakdown
Note Patients may be seen in multiple locations,
however this report shows the primary
location of service for each specific patient.
The ED unassigned admission volume is
estimated based on an annualization of patients
identified by hospital staff.
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ED Unassigned Overall Averages
Note The ED unassigned admission volume is
estimated based on an annualization of
patients identified by hospital staff.
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ED Unassigned Financial Class Group - Mix of
Patients
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Estimated Current ED Unassigned Annualized
Professional Fee Practice Value for All
Specialties
Note The estimated collection rate and current
estimated practice value is calculated
on estimates made by financial class based on
historical trends. Actual results may
vary depending on actual billing experience.
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Monthly Average ED Unassigned Specialty Cases and
RVUs Delivered
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Monthly Average ED Unassigned Specialty Cases
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• Solution Strategies andModel Programs

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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

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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

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ED On-Call Panel Options

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

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ED On-Call Panel Options (contd)

• 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 for selected OP Follow Up items
• Hybrid compensation model
• Compensate with Tax Advantaged dollars

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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

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Options Hospitalists

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

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HOSPITALIST DIRECTED PATIENT CARE
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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

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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

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Options Pay Stipends

• Fixed costs
• Difficult to determine proper payment
• Stipends tend to go to the most vocal
• Never stops escalating
• What is the relative value of on-call time?

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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

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One Sample Hospital ReportOption Base Fee Plus
Activation Fee

• Ortho, Neuro, OB and General Surgery200 Base
  Fee XXX Activation Fee
• Pulmonology, Vascular, Cardiology, Neurology
  andPlastic Surgery200 Base Fee YYY
  Activation Fee
• G-I, Opth, Peds, Psych, Urology, and ENT200
  Base Fee ZZZ Activation Fee

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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 4 Surgical NP FTEs to cover 24/7
• Net Cost is Staffing Costs less Professional Fees
  collected.

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Option Pay for Productivity

• Emergency on-call medical group
• A separate professional corporation
• Contracts with existing medical staff members

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Contractual Relationships
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Sample Hospital ReportPro Forma Summary - Yearly
Cost Estimates With Various Scenarios
Note Excludes those specialties with existing
coverage agreements or exclusive franchises
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Option Compensate with Tax Advantaged Dollars

• Integrated Healthcare Strategies
• Michael E. Hogue, M.D.
• Call Pay Security Solution

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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 immediate and long term savings
• Control future escalation in call pay amount
• Flexibility in implementation
• Provide a competitive differentiation
• Encourage long-term retention

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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
  requestsslowly becoming the industry standard
• Increasing strain on emergency departmentsincreas
  ing number of uninsured patients

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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/spentmoney is gone and the
  time issue is unchanged
• Current call pay structure will never be enough
  to reimburse for excess time away from family

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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

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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?

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

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Call Pay Comparison
CURRENT
PROPOSED
System
System
Outside Lender
25,000 Interest
35,000
6,000
Physician
Physician

• 1099 of 35,000
• Taxes _at_ 40 14,000
• Net of 21,000

• 1099 of 25,000
• Taxes _at_ 40 10,000
• Net Contribution 15,000
• Gross Up Loan 6,000
• Net Investment 21,000

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The Call Pay Security Solution
How It Works
(2) Tax cost replenishment loan
(3) Earnings
(1) Participants after-tax contribution

• Expenses
• Cost of insurance
• Administrative fees

INDEXED CONTRACT

• At Retirement
• Tax-free retirement income
• Ultimately tax-free insurance death benefit

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Cost Comparison of Call Pay Options
Current annual call pay obligation of 35,000,
reduced to 25,000 in CPSS program
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

• Loan interest rate 5.75
• Carrier Penn Mutual

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The Call Pay Security Solution
Retirement Funding Comparison 45 Years Old
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

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SP 500 Index versus Indexed Universal Life (IUL)
SP 34 year annualized return 6.59 IUL 34 Year
annualized return 8.60
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The Call Pay Security Solution Contract Details

• The probability of earning different index return
  levels during the last 20 years of monthly SP
  500 price returns assuming the 14 annual cap and
  2 floor (12/07)

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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 call pay negotiations by
  specialty/section/facility
• Eliminates the need for continuing negotiations
  for call pay
• Provides a highly flexible plan that can be
  customized to the organizations needs

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Summary Of Physician Benefit

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

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• Negotiating with theMedical Staff

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The Forum for NegotiationsThe power is in the
process

• Interview to learn perceptions of the medical
  staff
• Research the ED unassigned data
• Engage 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 with precision
• Keep steering committee involved
• Measure, monitor and manage

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Common Solutions

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

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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

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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

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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, were 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 in 1958
• Offices Minneapolis, MN and Kansas City, MO
• Website www.IHStrategies.com

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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

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About Hospitalist Management Resources, LLC, cont.

• Founded April 1999
• Founders Martin Buser and Roger Heroux, Ph.D.
• Each bring 25 years Healthcare experience
• Offices San Diego, CA and Colorado Springs, CO
• Website www.HMRLLC.com
• RHeroux_at_hmrllc.com Colorado Springs (719)
  331-7119
• MBuser_at_hmrllc.com San Diego [phone]

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• Questions?

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Contact Us

• Michael E. Hogue, M.D.
• Mike.Hogue_at_IHStrategies.com
• 1-800-327-9335
• Martin B. Buser, MPH, FACHE
• MBuser_at_hmrllc.com
• 1-858-344-1060
• Roger A. Heroux, Ph.D.
• RHeroux_at_hmrllc.com
• 1-719-331-7119