Observation services are provided for clinical conditions that do not meet inpatient admission criteria but require a period of observation for evaluation and treatment. Dedicated observation units can serve this purpose and are found in 18.8% of emergency departments. While these units have traditionally been managed by emergency room physicians, there is an increasing trend for hospitalist involvement.
To create a hospitalist run observation unit and track performance by measuring patient volume, length of stay (LOS), readmission rate, conversion to inpatient status, total observation hours, and facility charges.
In February 2011, Denver Health Medical Center, an academic safety net hospital, opened a 5 bed observation unit in order to reduce total observation hours and improve reimbursement for observation services. It was projected that the unit would care for 1300 patients per year and generate $1.5 million in charges annually. Diagnoses were deemed appropriate for the unit if they had established clinical pathways and clear discharge criteria. These diagnoses were grouped into diagnostic syndromes (chest pain, syncope, and abdominal pain) and treatment of emergent conditions (COPD, asthma, pneumonia, pyelonephritis, electrolyte disturbances, dehydration, and transfusion). Exclusion criteria were developed and admissions required hospitalist approval. The unit is staffed by hospitalists and dedicated observation nurses. Nurses are trained to identify discharge milestones and initiate discharges 24 hours a day. At the 24 hour mark, patients who have not yet been discharged are reevaluated for disposition and transferred to an inpatient service if discharge is not foreseeable in the next 24 hours. Performance metrics including patient volume, LOS, readmission rate, conversion to inpatient status, total observation hours, and facility charges were measured. During the first 6 months, 648 patients were admitted to the unit. 12% required conversion to inpatient status. For the remaining 570 patients, LOS was 21 hours. The readmission rate was 15%, which is comparable to that of all medicine services for the hospital (TABLE). Total observation hours were reduced by 25%. The unit generated $915,000 in facility fee charges. Medicare and Medicaid accounted for half of the payer source. 35% of patients were selfpay or medically indigent. The unit’s net revenue was $49,000 during a 3 month audit. This indicates that the unit has met initial projections for patient volume and generation of revenue.
A hospitalist run observation unit can be financially viable and decrease total observation hours in a safety net hospital.
Table 1LOS, Readmission Rate, Conversion to Inpatient Status
|All||Chest pain||Syncope||Abdominal pain||COPD||Asthma||Pneumonia||Dehydration||Electrolyte Disturbance||Pyelonephritis||Transfusion|
|% of admissions||100%||50%||16%||10%||6%||6%||5%||3%||2%||2%||<1%|
|% Readmitted in 30 days||15%||21%||3%||14%||17%||6%||8%||17%||20%||0%||25%|
|% Converted to Inpatient Status||12%||21%||7%||12%||9%||6%||8%||1%||25%||21%||0%|
To cite this abstract:Mancini D, Taub J, Mastalerz K, Cervantes L, Mascolo M, Frank M, Maher M, Fung P, Chadaga S. Creation of a Financially Viable Hospitalist Run Observation Unit in a Safety Net Hospital. Abstract published at Hospital Medicine 2012, April 1-4, San Diego, Calif. Abstract 97759. Journal of Hospital Medicine. 2012; 7 (suppl 2). https://www.shmabstracts.com/abstract/creation-of-a-financially-viable-hospitalist-run-observation-unit-in-a-safety-net-hospital/. Accessed July 21, 2019.