physicians practicing in hospitals: implications for a medical staff policy

Excellus Health Plan, Inc.

Physicians Practicing in Hospitals: Implications for a Medical Staff PolicyAuthor(s): Mark E. Miller, W. Pete Welch and Ellen EnglertSource: Inquiry, Vol. 32, No. 2 (Summer 1995), pp. 204-210Published by: Excellus Health Plan, Inc.Stable URL: http://www.jstor.org/stable/29772540 .

Accessed: 28/06/2014 16:09

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].

.

Excellus Health Plan, Inc. is collaborating with JSTOR to digitize, preserve and extend access to Inquiry.

http://www.jstor.org

This content downloaded from 46.243.173.81 on Sat, 28 Jun 2014 16:09:37 PMAll use subject to JSTOR Terms and Conditions

http://www.jstor.org/action/showPublisher?publisherCode=excellus

http://www.jstor.org/stable/29772540?origin=JSTOR-pdf

http://www.jstor.org/page/info/about/policies/terms.jsp


Mark E. Miller Physicians Practicing in W. Pete Welc Ellen Englert w Pete Welch

Hospitals: Implications for a Medical Staff Policy

President Clinton's health reform package included a proposal that would limit Medicare payments to the medical staffs of hospitals whose inpatient physician service volume was systematically above national norms. Under this policy, it would be possible for a physician practicing in more than one hospital to be penalized in one

and not the other. Physicians might direct their admissions to certain hospitals to

avoid penalties, and thereby would threaten the viability of some hospitals. However, to engage in large-scale admission shifting, physicians must practice in multiple hospitals. Using a national database, we find that, on average, physicians are

affiliated with 1.56 hospitals and that 62% are affiliated with one hospital. On average, 90% of a physician's admissions are in a single hospital. We also find that, in the

average hospital, a relatively small percentage of physicians (20%) admit a majority (60%) of Medicare patients. We discuss policy implications.

In an earlier paper (Miller and Welch 1993), we

presented three policy strategies for controlling the volume of Medicare inpatient physician services. One such strategy, referred to as the "high-cost medical staff policy," was included as a Medicare

budget-saving proposal in the Clinton administra? tion's health reform package (Section 4114).1 Under this policy, Medicare would reduce its payment to

physicians on medical staffs whose service volume

per admission consistently exceeded the national median. A medical staffs volume per admission would be measured as relative value units (RVUs) per admission, adjusted for case mix, teaching ac?

tivity, and disproportionate share status.2 More precisely, the volume per admission of each

staff in the country would be calculated for a base

year (1996); urban medical staffs exceeding 125%, and rural staffs exceeding 140% of the national median would be designated "high cost." During a

given "performance" year (e.g., 1998), 15% of the Medicare payment would be withheld from each

physician claim submitted by members of high-cost staffs. The following year (e.g., 1999), each staff would be re-evaluated relative to the limit. If the staff responded to the incentives of the policy and

performed below the limit, the withhold would be returned (with interest). Alternatively, depending on how far above the limit the staff was, some or none of the withhold would be returned.3

If a physician practiced in more than one hospital, payment could be withheld for services provided in one hospital and not another.4 In commenting on our research, Ginsburg (1993) raised the concern that this shifting of admissions could threaten the

viability of certain hospitals. This paper examines the number of hospitals in

which attending physicians practice (i.e., affiliation

rates). We focus on attending physicians because

MarkE. Miller, Ph.D., is senior research associate, and W. Pete Welch, Ph.D., is principal research associate, both at the Urban Institute. Ellen Englert, BA., is a graduate student, Department of Economics, University of Wisconsin.

Address correspondence to Dr. Welch at the Urban Institute, 2100 M St., N.W., Washington, DC 20037.

Inquiry 32: 204-210 (Summer 1995). ? 1995 Blue Cross and Blue Shield Association and

Blue Cross and Blue Shield of the Rochester Area.

204 0046-9580/95/3202-0204$! .25



they are critical in determining admission patterns and are responsible for a patient's care during the

hospital stay (this is discussed in more detail later). We seek to answer two policy questions: (a) How

many hospitals do physicians practice in? and (b) What proportion of their admissions occurs in a

single hospital? To shift admissions between hospi? tals, physicians must have more than one affiliation. Current affiliation patterns will dictate physicians' ability to shift admissions in the short run. Beyond these policy questions, this paper endeavors to un?

derstand more fully the relationship between phy? sician hospital affiliations and their practice pat? terns. To that end, it determines whether a few

attending physicians control a majority of Medicare admissions provided by the staff.

Data

Our analyses use the 1992 Medicare Patient Anal?

ysis and Review (MedPAR) file. This file contains all Medicare admissions nationally; each admission claim includes the hospital identification number and the unique physician identification number

(UPIN) of the attending physician.5 Using the hos?

pital identification number, we linked admissions to various files with hospital characteristics (e.g., ur? ban/rural location). Using the UPIN we linked admissions to a UPIN master file with physician characteristics (e.g., specialty). The resulting file includes 255,653 physicians with 10 million admis? sions in 5,362 hospitals.

Results

Although protocol can vary from hospital to hospi? tal, medical staff membership generally defines the

organizational rights and responsibilities6 of the

physician and, more importantly, the physician's admitting privileges (Nash, Mullaney, and Murphy 1991). For example, an active staff member may,

within the constraints of occupancy and medical

judgment, admit any patient. In contrast, a consult?

ing membership might be granted to a specialist who

only provides consultations to other physicians and has no admitting privileges. Generally, only a phy? sician with admitting privileges can be an attending physician and the attending physician is responsible for the overall treatment of the patient during the

stay.

We focus on the attending physicians for two

important reasons. First, as the physicians respon?

sible for admitting, it is the behavior of these phy

Medical Staff Policy

sicians that is most critical to the shifting issue.

Second, the medical staff policy puts the staff at risk for the volume of services provided during the

admission, and presumably the attending physician plays an important role in determining the services

provided. Although the attending physician may not

provide each and every service, the attending phy? sician decides which physicians provide services to the patient during an admission.

How Many Affiliations Do Physicians Have?

We calculated the number of affiliations for each

physician (i.e., UPIN) as the number of different

hospitals in which the physician has admissions in our database. Table 1 reports the average number of

hospital affiliations by specialty.7 We find that at?

tending physicians have few affiliations, about one and one-half (1.56) on average. Sixty-two percent of

attending physicians have one affiliation; only about 4% have more than three affiliations.

Average affiliations vary to some extent by spe? cialty. Surgical specialists have the highest average affiliations (1.73), followed by medical specialties (1.58), general and family practice (1.42), and other

physicians (1.25). Three surgical specialties have

relatively high average affiliations?thoracic sur?

gery (2.10), urology (2.16), and cardiovascular sur?

gery (2.05). Similarly, four medical specialties stand out as having higher than average affiliation rates?

cardiology (2.00), vascular disease (2.01), pulmo? nary disease (1.90), and oncology (1.87).

Previous research has been conducted on physi? cian affiliations. Using American Medical Associa? tion (AMA) survey data, Musacchio et al. (1985) found that physicians had privileges at an average of 2.1 hospitals in 1982. Gaflfney and Glandon (1982) report that 89% of a physician's admissions were to a single hospital in 1978. Finally, Custer and Willke

(1991) report that, in 1985, physicians in teaching hospitals had 2.2 hospital affiliations and admitted about 75% of their patients to a primary hospital.

These studies find somewhat higher affiliation rates than our analysis. There are several potential

reasons for the differences. First, these studies are

based on data that are nearly a decade old, and affiliation patterns may have changed in the interim.

Indeed, some observers believe there is a trend toward fewer affiliations (Shortell, Morrison, and Friedman 1990). Second, in contrast to the survey data used in earlier research, we use claims data and

thus count de facto affiliations. In response to a

survey question, a hypothetical physician might

205



Inquiry/Volume 32, Summer 1995

Table 1. Number of hospital affiliations of attending physicians by specialty (N = 255,653 physicians)

Specialty Mean Standard deviation

Percentage of physicians by number of affiliations

1 2-3 4-6 7-9 Minimum Maximum

Percentage of

physicians

All physicians 1.56

General/Family practice 1.42

Medical specialties 1.58 Internal medicine 1.60

Cardiology 2.00

Gastroenterology 1.83 Vascular disease 2.01

Neurology 1.54

Psychiatry 1.18

Pulmonary disease 1.90 Geriatrics 1.53

Emergency medicine 1.26

Oncology 1.87 Other medical 1.41

Surgical specialties 1.73 General surgery 1.70

Orthopedic surgery 1.76 Thoracic surgery 2.10

Urology 2.16

Ophthalmology 1.28 Cardiovascular surgery 2.05 Other surgical 1.59

Other 1.25

.89

.72

.91

.89 1.17 1.02 1.29 .80 .46

1.08 .80 .60

1.14 .78

.99

.95

.93 1.32 1.19

.59 1.21 .91

.62

62.2 33.7

68.2 29.9

61.5 59.0 43.7 47.1 43.2 61.1 84.9 45.2 62.3 80.9 50.1 70.8

53.5 54.3 48.5 42.0 35.3 78.0 42.1 61.0

34.2 37.1 45.5 46.0 48.0 36.1 14.8 46.6 34.7 18.1 40.6 26.6

40.4 40.4 46.2 44.5 51.6 21.0 45.9 34.8

81.5 17.1

3.9

1.8

4.2 3.8

10.4 6.8 7.4 2.8

.3 7.9 3.0 1.1 9.0 2.5

5.9 5.2 5.2 12.3 12.7 1.0

11.5 4.1

1.3

.2

.0

.2

.2

.5

.1 1.4 .0 .0 .3 .0 .0 .3 .2

.2

.1

.1 1.2 .4 .0 .6 .2

100.0

19.9

49.4 19.8 4.8 2.1

.1 2.1 2.7 1.6 .2 .9

1.2 13.9

24.2 7.6 5.8 1.1 2.9 2.6

.5 3.8

6.6

Source: Medicare's 1992 100% admission file (MedPAR). Note: "Affiliation" is the number of hospitals in which a physician has admissions during the year.

report two affiliations?only one of which the phy? sician actually uses. Our analysis of claims data

would report one affiliation for this physician. Third, we focus on the attending physician, which means a physician with a medical staff membership that includes admitting privileges. Using survey data, another physician might report two affilia?

tions, one with admitting privileges (e.g., full med? ical staff membership) and one with nonadmitting privileges (e.g., a consulting medical staff member?

ship). Again, our claims data analysis would report one affiliation for this physician.

A final point must be made regarding the affilia? tion rates here and those reported in previous re?

search. Our analysis is based on Medicare claims

data, because the policy in question pertains to

Medicare admissions. However, if physicians 44sort" patients among hospitals based on payer, our results may not be fully representative of all

payers. An obvious step for future research would be to replicate this analysis using data for all payers.

206

What Proportion of a Physician's Practice is in

One Hospital?

The concentration of a given attending physician's

practice is measured using the percentage of admis? sions to a single hospital. Thus, if an attending

physician has 100 admissions in the national file and

70 are located in one hospital and 30 in another, the

physician's concentration percentage would be

70%. We designate the hospital with the plurality of a physician's admissions as the physician's "pri? mary" hospital.

The overwhelming majority, 90%, of attending physicians' Medicare admissions are provided in a

single, primary hospital (see Table 2).8 Only about 2% of Medicare attending physicians have less than

50% of their admissions in their primary hospital. These findings are generally consistent across spe?

cialty category, although not surprisingly, special? ties with higher affiliation rates have somewhat lower concentration rates. Thus, 88% of surgical



attending physicians' admissions are in their pri? mary hospitals as compared with 90% for medical

specialists, 93% for general and family practitio? ners, and 95% for "other" physicians.

Do a Few Attending Physicians Admit Most Medicare Patients?

We next examine the proportion of admissions at? tributed to attending physicians within the medical staff. A medical staff policy is more likely to lower volume per admission if admissions are concen? trated among a few physicians. That is, it would be easier for the staff to work with a small group of

physicians. Alternatively, if admissions were dif? fused across all physicians, greater effort would be

required to change behavior. Table 3 reports the distribution of attending phy?

sicians and admissions within a hospital. For each

hospital, we calculated the percentage of admis? sions for which each attending physician accounted, and then ordered attending physicians from the lowest to the highest percentage of admissions.9 We find that, in the average hospital, the top 20% of


attending physicians account for a majority (60%) of admissions. Given that the average medical staff has about 64 Medicare attending physicians (data not

shown), about 13 physicians are responsible for

managing the majority of Medicare admissions.

Discussion

We find, then, that attending physicians tend to have few affiliations and to concentrate their admis? sions in one hospital (i.e., an average of 1.56 affil?

iations; 90% of admissions in a primary hospital). We also find that on the average medical staff, 20% of attending physicians control 60% of Medicare admissions. These findings have two sets of impli? cations for the administration's high-cost medical staff policy?those relating to the issue of shifting admissions and those to profiling physician practice patterns to support the policy.

Implications for Admission Shifting

The fact that attending physicians tend to concen? trate their admissions in a single hospital increases the likelihood that the policy will encourage physi

Table 2. Concentration of attending physician admissions in a single hospital by specialty (N = 255,653 physicians)

Specialty Mean Standard deviation Median

Percentage of

physicians with less than 50% Minimum Maximum

Percentage of

physicians

All physicians

General/Family practice

Medical specialties Internal medicine

Cardiology Gastroenterology Vascular disease

Neurology Psychiatry Pulmonary disease Geriatrics

Emergency medicine

Oncology Other medical

Surgical specialties General surgery Orthopedic surgery Thoracic surgery Urology Ophthalmology Cardiovascular surgery Other surgical

Other

.90

.93

.90

.91

.87

.86

.86

.89

.96

.86

.92

.95

.87

.91

.88

.89

.87

.85

.83

.93

.86

.88

.95

1.00

1.00

1.00 1.00

.98

.97

.97 1.00 1.00 .97

1.00 1.00 1.00 1.00

1.00 1.00

.98

.96

.91 1.00 .97

1.00

1.00

2.2

1.1

2.2 1.9 4.1 4.1 6.1 2.4

.4 4.8

.8 1.2 4.0 1.6

3.5 3.1 3.1 5.5 6.7 1.2

4.4 3.1

.17

.21

.17

.19

.24

.25

.30

.25

.31

.22

.43

.20

.21

.17

.19

.20

.24

.21

.21

.20

.29

.19

.23

1.00

1.00

1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

1.00

100.0

19.9

49.4 19.8 4.8 2.1

.1 2.1 2.7 1.6 .2 .9

1.2 13.9

24.2 7.6 5.8 1.1 2.9 2.6

.5 3.8

6.6

Source: Medicare's 1992 100% admission file (MedPAR). Note: "Concentration" is the average percentage of an attending physician's admissions that are in a single, primary hospital.

207




Table 3. Distribution of admissions by percentage of attending physicians (N = 5,362 hospitals)

Percentage of attending physicians8

10 20 30 40 50 60 70 75 80 85 90 95 l??

All hospitals .01 .02 .03 .06 .10 .17 .26 .33 .40 .50 .62 .77 1.00

Source: Medicare's 1992 100% admission file (MedPAR). a The proportion of a medical staffs patients admitted by each attending physician was calculated and then attending

physicians were ranked from lowest to highest. Thus, the top 20% of attending physicians account for 60% (1.00- 40) of Medicare admissions.

cians on a staff to collaborate in controlling service volume. Concentration also lessens the opportunity for admission shifting among hospitals in the short run.

However, some may be concerned that shifting would occur over the long run, and thereby threaten the viability of certain hospitals. Although a medical staff policy would create an incentive for the indi? vidual physician to obtain more affiliations (thereby increasing opportunities to shift admissions), the

policy also would create an incentive for the med? ical staff to carefully review the granting of affilia? tions. Changes in the legal and economic climate have made the process of obtaining affiliations more

rigorous over the last few years (Nash, Mullaney, and Murphy 1991). Recent court cases have estab? lished that hospitals are liable for the quality of care

provided by the physicians on their staffs. This legal precedent requires hospitals both to screen creden? tials of potential candidates and to review these credentials periodically.10 Additionally, competi? tion among hospitals is leading to more medical staff

strategic planning and economic credentialing. The former refers to selecting the staff to maximize the

provision of specific (profitable) services; the latter refers to selecting physicians who provide efficient care in general.

Additionally, there is empirical evidence suggest? ing that current admission patterns are unlikely to

change quickly, even with a medical staff policy. Burns and Wholey (1992a) find that changes in

organization factors (e.g., conflict, decision-making

involvement) have little impact on physicians' ad?

mitting patterns, which are driven primarily by con?

venience (e.g., proximity to office) and inertia. Burns and Wholey (1992b) find that the patient's preference to be admitted near home (even in an

urban area) also has a strong influence on admission decisions.

Two additional points are relevant with respect to the viability of hospitals. First, the medical staff

policy is directed toward Medicare admissions,

208

which represent about one-third of all admissions

nationally. This fact weakens incentives to shift admissions between hospitals. Second, urban, inner

city, public hospitals serving a disproportionate share of the poor are a category of hospital where

viability is a particular concern. The legislation requires special adjustments for both teaching ac?

tivity and disproportionate share status.

Implications for Physician Profiling

Our analyses also have implications for "physician profiling," which is the examination of practice patterns using large-scale databases. Although not included as part of the Clinton administration's

proposal, it would make sense to provide regularly profiling information to medical staffs. Establishing cost limits (as the policy would) and providing phy? sicians with information on their own practice pat? terns and prevailing norms should produce the in? tended effect?reducing variation in inpatient physician services per admission. The benefit of such a two-prong strategy both to the Medicare

program and physicians is that it avoids microman

agement; there is no need for Medicare to review each clinical decision made by the physician.

Elsewhere (Welch, Miller, and Welch 1994), we

have developed profiling methodologies that use case mix-adjusted RVUs per admission to profile inpatient physician services. Inpatient physician profiling data could be provided to medical staffs at two relevant levels of aggregation. The medical staff as a whole could be profiled by type of service (e.g., Does staff A use more imaging services per admis? sion than the national norm?). And attending phy? sicians could be profiled for total services (e.g., Does physician A use more RVUs per admission than the medical staff norm?). Medical staff aver?

ages could be compared to national, state, or hos?

pital type (e.g., teaching hospitals) norms. Attend?

ing physician averages could be compared to

national, state, specialty-specific, or medical staff

specific norms.



The fact that relatively few attending physicians account for most Medicare admissions suggests that medical staffs could focus on a relatively small number of attending physicians to effect change successfully in the performance of the staff as a

whole. We acknowledge that for some medical


staffs, changing the behavior of even a relatively small group of physicians could be challenging. However, combining profiling information pertain? ing to the staff (e.g., by type of service) with a clear set of cost-containment incentives is the most prom?

ising approach to changing physician behavior.

Notes

Support for this research was provided by Health Care

Financing Administration Cooperative Agreement No.

18-C-90038I3-01. Any opinions expressed are those of the authors and do not necessarily represent the opinions of the Health Care Financing Administration, the Urban

Institute, or its sponsors.

1 Because the high-cost medical staff policy produces Medicare savings, it is likely to be considered as part of compromise health reform packages or in later bud?

get reconciliation packages. 2 The Medicare fee schedule has RVUs for each physi?

cian service CPT-4 code. RVUs do not reflect varia? tions in physician fees and, hence, RVUs per admis? sion measure physician service volume (number of

services) and intensity (complexity of services) per admission. We use "volume per admission" through? out the paper to mean case mix-adjusted RVUs per admission.

3 See Welch and Miller (1994) for complete discussion of policy.

4 Generally, the terms "hospital" and "medical staff" will be used interchangeably, because a hospital can? not function without its medical staff (i.e., its physi? cians) and vice versa.

5 Several screens were performed on this data: nonpro

spective payment system and HMO beneficiary admis? sions were eliminated as well as admissions with in? valid UPINs (e.g., OTH000); 28 physicians (and their admissions) with excessively high (^10) affiliations were removed. The file covers the 50 states, the Dis? trict of Columbia, and Puerto Rico.

6 For example, an active member will have various committee responsibilities (e.g., utilization review), will have to pay dues to the staff, and will have to

participate in decisions to grant new affiliations. Active

membership also might entail accepting emergency calls and care for unassigned patients.

7 Medical specialties include: internal medicine, cardi

ology, gastroenterology, vascular disease, neurology, psychiatry, pulmonary disease, geriatrics, emergency medicine, oncology, and other medical specialty (e.g., allergy, obstetrics, gynecology, infectious disease, en?

docrinology). Surgical specialties include: general sur?

gery, orthopedic surgery, thoracic surgery, urology, ophthalmology, cardiovascular surgery, and other sur?

gical specialty (e.g., neurological surgery, oral surgery,

plastic surgery). Other specialties include: radiology, anesthesiology, and pathology, other physicians (e.g., chiropractor), and unreported (i.e., specialty not re?

ported). 8 This is consistent with previous research reporting an

average admission concentration of 89% (Gaffney and Glandon 1982).

9 There are two measures of concentration typically used by economists: the Herfindahl index and the Gini concentration ratio. The former measures absolute concentration and the latter measures proportional concentration. Consider two hospitals with 100 and 20

physicians, respectively, and assume that in both hos?

pitals, 20% of physicians account for all admissions. The Gini concentration ratio would yield the same score (.80) in both hospitals, indicating equal propor? tional concentration. The Herfindahl index would yield different scores (.05 and .5, respectively), indicating lower absolute concentration in the hospital with more

physicians. Summary scores of this kind are useful for

examining differences by hospital type (i.e., teaching versus nonteaching). However, our analyses by hos?

pital type do not show marked differences, with the

exception of small and rural hospitals (lower propor? tional concentration; higher absolute concentration), and hence are not reported here.

10 Such credentialing requirements are codified by the Joint Commission on the Accreditation of Health Care

Organizations (JCAHO) which defines criteria for the establishment and accreditation of hospital medical staffs.

References

Bums, L. R., and D. R. Wholey. 1992a. Factors Affecting Physician Loyalty and Exit: A Longitudinal Analysis of Physician-Hospital Relationships. Health Services Research 27:1-24.

-. 1992b. The Impact of Physician Characteristics in Conditional Choice Models for Hospital Care. Jour? nal of Health Economics 11:43-62.

Custer, W. S., and R. J. Willke. 1991. Teaching Hospital Costs: The Effect of Medical Staff Characteristics. Health Services Research 25:831-857.

Gaffney, J. C, and G. L. Glandon. 1982. The Physician's

Use of the Hospital. Health Management Review

7(Summer):49-58. Ginsburg, P. 1993. Refining Medicare Volume Perfor?

mance Standards. Medical Care 30:260-264.

Miller, M., and W. P. Welch. 1993. Growth in Medicare

Inpatient Physician Charges per Admission, 1986 1989. Medical Care 30:249-259.

Musacchio, R. A., S. Zuckerman, L. E. Jensen, and L. Freshnock. 1985. Hospital Ownership and the Prac? tice of Medicine: Evidence from the Physician's Per?

spective. In For-Profit Enterprise in Health Care,

209




B. H. Grey, ed. Washington, D.C.: National Acad?

emy Press.

Nash, S. P., A. D. Mullaney, and S. P. Murphy. 1991. Medical Staff Credentialing. In Physician's Sur vival Guide: Legal Pitfalls and Solutions, Berenson et al., eds. Washington, D.C.: National Health Law?

yers Association and the American Medical Associ? ation.

Shortell, S., E. M. Morrison, and B. Friedman. 1990.

Strategie Choices for America's Hospitals. San Fran?

cisco, Calif.: Jossey-Bass. Welch, H. G., M. Miller, and W. P. Welch. 1994. Physi?

cian Profiling: An Illustration Using Inpatient Practice Patterns in Florida and Oregon. New England Journal

of Medicine 329:607-612.

Welch, W. P., and M. Miller. 1994. Proposals to Control

High-Cost Hospital Medical Staffs. Health Affairs 13:42-57.

210



physicians practicing in hospitals: implications for a medical staff policy

Documents