Physician Strategy News: June '08
Advanced Manpower Planning
Most hospital executives are familiar with the basics of physician manpower planning. The utilization of physician-to-population ratios, completing an age analysis of the hospital's medical staff, and qualitative measures such as interviews and opinion surveys are expected pieces of the process.
Healthcare Strategy Group's manpower planning moves the planning process beyond the "cookie-cutter" approach, providing a more sophisticated analysis. This particular discussion involves two key techniques that help hospitals tailor the analysis to their hospital and its service area. These techniques are:
- Adjusting the models, and
- Defining service areas based on service lines.
Model Adjustments
Models typically used in physician manpower planning, such as Hicks & Glenn, GEMNAC, and US Supply, are limited by time and locale. The ratios were crafted years ago and are national in focus. They do not consider technological advancements over time nor do they consider the differing healthcare needs of local populations across the country. Medicated stents and new imaging procedures are examples of advancements that have greatly impacted the demand for physician services, but are unaccounted for by existing models. What's more, lifestyle choices and socio-economic factors greatly impact the physician requirements for a given population. These factors are not considered by standard ratios.
Technology Adjustments
HSG recommends making conservative percentage technology adjustments to the following specialties:
- Cardiology = +15%
- Cardiac surgery = - 15%
- Neurology = + 10%
- Neurosurgery = + 10%
- Orthopedics = + 5%
These recommended adjustments are based on an exhaustive review of the medical literature every two years to project the impact of new technology on specialties. Examples of advancements impacting both cardiology and cardiac surgery include: medications, drug eluting stents, pacemakers, and electrophysiology and ablation procedures.
Mortality Adjustments
Because models are largely national in nature and because health status varies by market, HSG recommends making adjustments to models based on mortality rate variances. By contrasting national and local (i.e., county-specific) mortality rates, a percentage variance can be calculated. These percentage variances can be used to adjust appropriate models.
Mortality rates for five leading causes of death are readily available at the national level through the CDC and at the local level through state departments of health. The five leading causes of death that are the basis for model adjustments and specialties adjusted are:
Adjustments made should be conservative. We do not recommend adjustment if the difference is less than 10%, as small variances in demand can be absorbed by your medical community. Adjusting for 80% of the variance after the first 10% represents a conservative adjustment that recognizes the needs of the local community and can be supported by the medical staff and legal counsel. An example of the adjustment calculation is as follows: 15% variance equals a 4% adjustment (15% - 10% = 5% * 80% = 4%).
Age Adjustment
Adjustments can also be developed for specialties without relevant mortality statistics. Such adjustments are based on weighted average utilization of physician services by age cohort. Below is an example for orthopedics:
Average patients in national distribution are expected to generate 14.7 visits per 100 patients. In the sample market, the number is 16.0 visits per 100 patients, as a result of an older patient base. The local market can be expected to generate 8.8% more visits; thus, the orthopedic model ratio is adjusted upward by 8.8%.
Defining Service Areas Based on Service Lines
Many hospitals have services lines that they consider tertiary, drawing patients to the hospital from a much larger area than the hospital's more basic services. The service area for medicine or general surgery will be more immediate to the hospital than more highly specialized services such as cardiothoracic surgery, neurosurgery, radiation oncology, or subspecialty orthopedics. In instances when a tertiary service line exists, a separate and larger service area should be defined. To confirm if a service line is tertiary, inpatients by zip code origin for the service line in question should be compared to corresponding data for the hospital overall.
This comparison is done by first obtaining inpatient origin data by zip code for each potential tertiary service line and the hospital overall for a given year. By organizing the data into a spreadsheet, one can compare the percentage of inpatients supplied by each zip code. A column should be created for each set of inpatient data so that a cumulative percentage can be calculated. By sorting in descending order, the size of each service area can be compared and contrasted. The same guidelines and parameters should be employed in defining each service area. Healthcare Strategy Group utilizes the guidance provided by the Stark Law through its physician recruitment exception as the basis for defining service areas for manpower planning purposes.
The Stark Law defines a hospital's service area as the lowest number of contiguous zip codes from which the hospital draws at least 75% of its inpatients. The recently released Stark III update expands the definition for rural hospitals to include the lowest number of contiguous zip codes (and in some circumstances, noncontiguous zip codes) from which the hospital draws 90% of its inpatients. Stark III also relaxes the 75% test for facilities unable to reach 75% in contiguous zip codes due to a broad regional or national reputation.
Healthcare Strategy Group, along with hospital legal counselors with whom we have worked holds that the 75% test provided by Stark should be a guideline, but not an absolute for defining "community need". That being said, it should be held as an absolute for actual physician recruitment. The 75% test must be adhered to in order to protect the hospital from cross-town recruitment violations that the Stark Law is designed to prevent. A sample spreadsheet for defining and comparing service areas is provided below. Notice that this particular hospital has a broader reach for oncology, hence a tertiary service area.
Its inpatient distribution does not vary much for heart surgery–the hospital does not have a tertiary service area for heart surgery.
For more information, please contact Neal Barker, Senior Consultant, at (502)814-1189, or nbarker@healthcarestrategygroup.com.
