Characteristics and financial performance of a pediatric faculty inpatient attending service: A resource-based relative value scale analysis

Objectives. In many children's hospitals, inpatient attending physician services are provided by academic faculty who function as part-time inpatient specialists or hospitalists. Although some have claimed that hospitalist care can reduce length of stay and total hospital resource use and expenses, there are few benchmarks or data regarding physician productivity or the characteristics and financial performance of these programs. The resource-based relative value scale (RBRVS) is a valuable tool for developing national benchmarks and comparing the financial performance of inpatient programs at varying daily census and reimbursement levels. The objectives of this study were to 1) describe physician productivity on an inpatient service as measured by total relative value units (TRVUs) and professional charges, 2) determine whether inpatient collections were adequate to support faculty salaries for the time spent attending, and 3) develop a model to evaluate financial performance of inpatient programs at varying census and TRVU reimbursement levels. Methods. A retrospective review of hospital discharge and faculty practice billing data between June 1997 and July 1998 was conducted in a general medical service in a regional, 208-bed, university-affiliated children's hospital in the Pacific Northwest. Results. Of 4113 patients who were admitted to the children's hospital general medical service during a 12-month period, faculty part-time hospitalists (N = 28) served as the attending physician for 1738 (42%). On an annual basis, faculty attended for an average of 29.1 days (median: 21.0; range: 7.0-97.0), with an average daily patient census (ADC) of 7.2 (median: 6.5; range: 2.8-12.0). Inpatient attendings billed for 1738 initial visits and 3957 subsequent visits. Total physician productivity for the inpatient attending group during 1 year included 12085 TRVUs and gross professional charges of $777 743. The average payment, or conversion factor (CF), was $24.46/TRVU (71% of Medicare CF). The cash collection rate was 38%, reflecting a payor mix that included 54% Medicaid, 28% commercial payors, 12% health maintenance organization, and 6% other payors. On a weekly basis, physicians generated an average of 109 TRVUs and collected $2665 in cash. The average salary cost per RVU was $23.40, and weekly faculty salary and benefit expenses were $2550. After operating expenses and academic taxes totaling 24% were deducted ($5.87/TRVU), RBRVS-based payments and cash collections covered 79% of average faculty weekly salaries. Financial modeling showed that either an average CF of $31/TRVU or an ADC of 9 patients per day on the inpatient service would be required to generate sufficient revenue to support physician salaries and operating expenses. Conclusions. For a faculty inpatient attending service in a children's hospital with an ADC of 7, a $24.46 RBRVS-based CF payment is inadequate to support faculty salaries and operating expenses for the time spent attending. Inpatient services in similar payor environments with comparable expenses and staffed by faculty who care for fewer than 9 patients per day will not cover typical faculty salary costs and operating expenses.