The Financial Case for Using Telehospitalists
Written by Andrew McWilliams
You have read about the potential benefits of using telehospitalist services and are interested in exploring the possibilities further. However, you know that your CFO will need to see some evidence of the service’s positive impact on the hospital’s bottom line before proceeding. How, then, do you make the financial case for using telehospitalist services?
The Changing Reimbursement Landscape
Historically, the financial case for employing telehospitalists for most programs had to be made using benefits other than the generation of professional fees.Telehospitalistsuntil recentlywere not able to generate much revenue from professional billing. Medicare did not reimburse professional fees for telehospitalist visits, and most other payers followed Medicare’s example.
This situation changed, at least temporarily, with the onset of the COVID-19 pandemic. To help relieve the pandemic’s strain on scarce hospital resources, Medicare has started reimbursing hospital televisits that involve real-time audio and video telecommunications between clinician and patient at the same rate as in-person interactions. Reimbursement is authorized under the Public Health and Medical Emergency Declarations and Waivers for the COVID-19 pandemic.
Teleshospitalistservices that Medicare currently is reimbursing include initial inpatient (codes 99221-99223) and observation (codes 99218-99220), subsequent inpatient (codes 99231-99233) and observation (codes 99224-99226), discharge day inpatient (codes 99238, 99239) and observation (code 99217), and same-date observation/inpatient (codes 99234-99236). The reimbursement authorization for these services, except subsequent inpatient care (codes 99231-99233), is only temporary.
Any long-term changes in the reimbursement of most telehospitalist services are not certain. For one thing, no one knows how long the pandemic will continue, which services will continue to be reimbursed by Medicare after the pandemic ends, and at what level.
These is some cause for optimism regarding Medicare reimbursements, in part because Medicare already pays for other virtual specialty services such as telestroke. In addition, many states have enacted telemedicine parity laws, which require private payers to pay for all health care services equally, regardless of modality (audio, video, or in person). However, the fact is that it is difficult to model the direct financial impact of telehospitalist services in terms of professional fees generated.
Other Ways Telehospitalist Services Can Impact the Bottom Line
Even if you leave telehospitalists’ professional fees temporarily out of the picture, pending resolution of the reimbursement issues, there are other, indirect ways that telehospitalistservices can have a positive impact on the hospital’s bottom line. These include increasing the hospital’s average daily inpatient census, operating efficiencies and various other cost savings.
Increasing Average Daily Inpatient Census
There is evidence that telehospitalist services can have a positive indirect impact on the hospital’s bottom line through their impact on the average daily inpatient census. Among other things, a telehospitalist’s expertise may contribute to keeping higher acuity patients in-house. A larger average daily census can result in higher net revenues for the hospital.
Unfortunately, the evidence for telehospitalists’ positive impact on average daily census is not yet absolutely conclusive. A 2018 pilot telehospitalist project conducted between an academic medical center and one rural hospital in Iowa concluded that telehospital services did not have a significant net impact on the average inpatient census. The telehospitalist service allowed a higher percentage of acute inpatients to receive care in their local hospital, but the increase in patients admitted locally was offset by a parallel increase in the number of ED patients discharged home rather than to a hospital bed.
On the other hand, the authors of another study concluded that telemedicine consultation between pediatric intensivists and community hospital physicians combined with a pediatric hospitalist program at the community hospital has the potential to significantly reduce the need to transfer patients. Transfer rates were 85.7% - 100% lower after implementation of telemedicine consultation.
The problem of low/declining inpatient census is part of the issue of rural hospital bypass, in which rural residents start out by seeking care directly from large urban hospitals. A 2020 study used a much larger sample (Medicare FFS) data to show that rural hospitals where inpatient telehealth consultation services were available had significantly lower avoidable bypass. In the sample. rural hospitals that used telehealth services had an average bypass rate of 26% compared to 33% for facilities that did not use telehealth consultation services
For telehospitalist programs that can cover several sites, the cost is substantially less than employing individual on-site hospitalists at each site to do low-volume work. Telehospitalist programs usually are less costly than locum tenens staffing. For hospital aystems, a case can be made that keeping a patient in a smaller, low-cost venue, rather than transferring them to a larger, higher-cost venue, can reduce the system’s overall cost to treat the patient.
Other Cost Savings
Other cost savings resulting from the use of telehospitalists include lower costs to retain and recruit hospitalists. A hospitalist’s job is demanding and stressful, and hospitals are finding it increasingly challenging to fill these positions.
When all is said and done, according to Physician Career Advisor, it can cost $100,000 or more must to get a new hospitalist in the door. Then there are the onboarding costs (training, credentialing and other miscellaneous expenses), which are estimated to run as high as $200,000 - $300,000 per hospitalist.
In addition to the major investment in a new hospitalist, there are the revenue losses when a hospitalist leaves. Once source puts the revenue loss at about $39,000 per year, best-case.
Need for Further Analysis
The information in this article by itself probably will not satisfy your CFO. Hopefully, it will open the door to a careful consideration of the financial pros and cons of using a telehospitalist service in place of, or in addition to, the hospital’s in-house hospitalist staff. Obtain your prospective telehospitalist provider’s help in filling in all the financial blanks objectively and compare them with you own estimates and projections before making a decision.