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Format: 04/20/2014
Format: 04/20/2014

News

Pittsburgh Business Times: Butler hospital saves by shrinking length of stay

Friday, November 20th, 2009

by Kris B. Mamula
 

Hiring doctors to focus exclusively on the health of people who are hospitalized has shaved a day off the average stay for patients at Butler Memorial Hospital, according to CFO Anne Krebs. (Link to Pittsburgh Business Times)

Butler Memorial introduced hospitalists 18 months ago as a way to better coordinate care, then saw its average length of stay shrink to 4.5 days from 5.5 days, Krebs said. The result has been increased revenue and a 5 percent to 10 percent increase in the availability of beds.

At the same time, the hospital hired intensivists to oversee the care of patients in the intensive care unit, which also has helped reduce length of stay, she said.

Critical care doctors who only treat hospitalized patients have been a staple at big urban academic teaching centers for years, including Allegheny General and UPMC Presbyterian Shadyside hospitals. Now, smaller and community hospitals are using the strategy to reduce admission time while enhancing quality and preventing unnecessary readmissions.

The effort is important because medical care can be a fragmented affair, sometimes causing longer stays than necessary and, therefore, a lower margin for hospitals, which are reimbursed a flat rate for care by insurers. At a time when reimbursement is stagnant or declining, cash-strapped hospitals are desperate for ways to cut costs while maintaining the quality of care.

“We’re going to see more of that approach,” said Patricia Raffaele, vice president of the Hospital Council of Western Pennsylvania, a Warrendale-based trade group. “There’s a growing need for these folks.”

Hospitalist programs operate at four out of five hospitals with more than 200 beds, representing 58 percent penetration, according to a study done in January by the Philadelphia-based Society of Hospital Medicine, an education and advocacy group. A total of 83 percent of 4,897 hospitals surveyed have hospital medicine programs, and the number of hospitalists grew 20 percent between 2006 and 2007, reaching 28,000 doctors in 2009.

Locally, the Forbes Campus of West Penn Hospital introduced hospitalists two years ago. The doctors are employed by Monroeville-based Premier Medical Associates, the region’s biggest independent physician group, which contracts with Forbes for the service.

“It has worked out fabulously for both parties,” said Premier CEO Mark DeRubeis. “We’ve driven down average stays by .5 days, and patient satisfaction surveys have gone quite well.”

Premier has 11 hospitalists working at Forbes, including Dr. Niraj Mohan.

“Its exceeded all expectations in a short two and a half years,” he said about the program.

The hospitalist strategy helped Butler increase net revenue 10 percent to $207 million for an operating margin of 4.8 percent during the fiscal year that ended June 30 at a time when admissions were mostly flat. The hospital is forecasting an operating margin of 5 percent for the current fiscal year with a 7 percent to 10 percent growth in operating revenue.

In addition to the hospitalist program, Krebs attributed Butler’s performance to cost containment and lower interest and depreciation expenses than some of its peers. Butler’s new patient tower won’t be occupied until July, so those charges won’t show up until fiscal 2011, she said.

Financially, Butler is outpacing many hospitals in the region. The average hospital margin in Allegheny and surrounding counties was 2.75 percent in fiscal 2009, Raffaele said, far less than that 6 percent to 8 percent return needed for building improvements and new equipment. But Butler is closer to the ideal return than many of its peers.

“Any hospital that can get close to that is definitely doing well,” Raffaele said.

 

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