The business of pediatric hospital medicine

Pediatric hospital medicine (PHM) programs are mission driven, not margin driven. Very rarely do professional fee revenues exceed physician billing collections. In general, inpatient hospital care codes reimburse less than procedures, payer mix is poor, and pediatric inpatient care is inherently time-consuming. Using traditional accounting principles, almost all PHM programs will have a negative bottom line in the narrow sense of program costs and revenues generated. However, well-run PHM programs contribute positively to the bottom line of the system as a whole through the value-added services hospitalists provide and hospitalists' ability to improve overall system efficiency and productivity. This article provides an overview of the business of hospital medicine with emphasis on the basics of designing and maintaining a program that attends carefully to physician staffing (the major cost component of a program) and physician charges (the major revenue component of the program). Outside of these traditional calculations, resource stewardship is discussed as a way to reduce hospital costs in a capitated or diagnosis-related group reimbursement model and further improve profit-or at least limit losses. Shortening length of stay creates bed capacity for a program already running at capacity. The article concludes with a discussion of how hospitalists add value to the system by making other providers and other parts of the hospital more efficient and productive.