Archive for August, 2007

Case Study: Are physicians to blame for a failed hospital — and why couldn’t they have stopped the financial bleeding?

August 21, 2007

One of our colleagues is currently consulting at a hospital in the Northeast that is in bankruptcy proceedings.

A number of factors have led to the demise of this community hospital, including some strong tertiary care competitors 30 minutes away and a corrupt former CEO who allegedly misused funds for his own gain.

However, the physicians also have been blamed for the hospital’s failure, and their role in the hospital’s collapse raises important issues about physician accountability for today’s healthcare crisis.

The facts: This hospital’s length of stay was over 7.5 days, the highest we have seen in years! Why? Because — according to the staff MDs — physicians receive more money keeping patients in the hospital than by discharging them and following up. Attempts by hospital administration to influence physicians to manage utilization according to protocols and best practices went unheeded for years.

So now the community faces a difficult situation as their only community hospital is about to close, forcing a long drive to the tertiary care facilities. And the physicians will have a hard time getting privileges at other facilities given their dismal utilization record.

Now, this is clearly a unique situation, especially over 2 decades since DRGs led to reductions in length of stay.

However, it points to a few problems in healthcare that every physician must confront and consider:

1. Are you doing enough to help your hospital succeed, or are you sabotaging your hospital? If you derive a benefit from your primary hospital, then you have an obligation to work collaboratively with hospital administration to help them manager costs, utilization, and community reputation.

2. If you are pulling profitable services out of the hospital and into your office (or new specialty surgery center), are you setting the hospital up to fail once every physician in your community does the same (in a systems archetype that Peter Senge calls Tragedy of the Commons) — or does the capitalist system make this issue a moot point?

3. Overall, have you considered the value of your hospital(s) to your practice? If your hospital closed or faced a serious financial crisis (even beyond what it is facing now), would your practice suffer? And if so, are you treating your hospital administration like allies? Or, are you acting like a few too many physicians and ignoring the needs of these struggling organizations — or perhaps taking things even further by behaving in an adversarial manner out of arrogance and lack of understanding of organizational dynamics?

These are tough questions that most physicians are likely to shrug away. “I have my own problems….” you may say.

But that is precisely the problem facing health care today. Too many players in the industry point the finger elsewhere — at insurance companies, the government, the drug companies — without looking at how they can make things better with a more collaborative attitude and the willingness to think about new models that work towards everyone’s benefit.

There is no doubt that things are harder than ever for many physicians. But through an understanding of how to think about organizations and systems, and how to collaborate with complex groups consisting of clinicians and administrators (something not taught in medical school), local and regional health care systems can improve for everyone.