Hospitalists in value-based purchasing: 2017 meeting insights

Hospital Medicine 2017 brought hospitalists and other healthcare professionals together at Mandalay Bay Resort and Casino in Las Vegas from 1 to 4 May. The meeting offered research updates, practical education, continuing medical education credits and opportunities for professional exchange. For hospital medicine leaders, the central question was how to align clinical decisions with a purchasing system that rewards better outcomes for the resources spent. Hospitalists were placed at the centre of that shift because they coordinate care across specialties, work with nurses and pharmacists, and often oversee the transition from admission to home.

The role of hospitalists in value-based purchasing became a prominent theme in the 2017 meeting updates. Value in this setting is broader than lower expenditure: it combines clinical outcomes, avoidable complications, patient experience, equity and appropriate use of resources. Spending less by withholding beneficial treatment is not value, just as spending more without improving outcomes is not automatically better care. Purchasing incentives must therefore be judged by what happens to patients throughout an episode of care, including the period after discharge.

Australian readers should adapt these lessons rather than copy United States payment structures directly. Public hospitals here are funded largely by state and territory governments, with Commonwealth support and activity-based funding linking service delivery to budgets. The Pharmaceutical Benefits Scheme shapes medicines costs, while private insurers use negotiated contracts for many private hospital episodes. A hospitalist may therefore influence several budgets at once, from an inpatient episode to medicines, community follow-up and a future readmission.

Local conditions add another layer. Crowded emergency departments in Sydney and Melbourne influence admission and discharge decisions, while rural and remote communities face additional barriers to follow-up. Culturally safe care for Aboriginal and Torres Strait Islander patients is also central to quality. These realities make shared decision-making, reliable discharge processes and transparent measurement indispensable. They sharpen the hospitalist’s role as a clinical leader who can explain why a cheaper or shorter pathway must remain safe, equitable and workable for the person receiving care.

From volume to value in clinical practice

The practical distinction is between paying for volume and paying for outcomes. The core differences are clear:

None of these differences removes the need for sound clinical judgement. Value-based arrangements can create pressure to shorten length of stay or reduce readmissions, so measures must account for case complexity, social circumstances and the risk of penalising hospitals that treat vulnerable populations. A useful approach is to balance efficiency measures with safety and experience measures, then review the combined results with the multidisciplinary team.

The wider clinical updates from HM17 illustrate how quickly evidence-based practice can change. For hospitalists, translating those updates into pathways, order sets and bedside habits matters as much as knowing the evidence itself. Purchasing arrangements reward implementation that is consistent and measurable, rather than isolated improvements that disappear when a project ends.

What hospitalists can influence

The strongest case for hospitalist leadership rests on decisions made during a typical ward round: confirming the working diagnosis, avoiding unnecessary investigations, reconciling medicines and setting realistic treatment goals. These decisions influence expenditure without requiring a separate efficiency programme. They also determine whether care feels safe, coordinated and comprehensible to the patient.

That influence extends to transitions beyond the hospital. A discharge summary is useful only when the patient can obtain medicines, understand follow-up arrangements and reach the right community service. Hospitalists can work with pharmacists, general practitioners, aged-care providers and community nurses to identify gaps before discharge. Patients and families are part of this process, particularly when medication changes are complex or the proposed destination does not match the person’s support needs.

Hospitalists also shape patient experience through communication and shared decisions. Explaining why a test is needed, discussing treatment options and setting achievable goals can reduce confusion and prevent avoidable delays. This is particularly important when people have limited English proficiency, sensory impairment or difficulty navigating the health system. Good communication is sometimes treated as a soft outcome, yet it directly affects whether treatment is completed successfully.

Costs, diets and discharge planning

Cost reduction becomes credible when it begins with clinical waste rather than blanket restrictions. Reviewing medicines, investigations and monitoring can identify unnecessary treatment without compromising care. In Australian hospitals, medication reconciliation and deprescribing are especially important because the Pharmaceutical Benefits Scheme changes the cost of many medicines, and renal impairment or transitions between specialists can create duplicated or inappropriate therapy. Clinical decisions should remain based on the patient’s needs rather than simplistic targets for fewer tests or shorter treatment.

Guidance on managing non-nutritive sweeteners in hospital diets shows how everyday details of hospital food can become part of quality improvement. This includes nutrition and glucose management, patient preference and consistent ward routines. The value lies in matching the diet to the clinical plan while avoiding assumptions about what every patient should receive.

Length of stay is often treated as a cost signal, yet discharge before a patient can manage medicines or follow-up can create a more expensive readmission. For rural and remote patients, a reliable discharge summary, telehealth review and timely access to subsidised medicines may matter more than a marginal reduction in inpatient hours. Hospitalists can connect these decisions with community services instead of treating the ward as an isolated unit.

Making value work across Australian hospitals

Activity-based funding pays for activity, so it does not by itself create accountability for the full episode. State and territory health services need to pair funding information with measures that reflect quality, safety and patient experience. The purchasing challenge is to identify where resources genuinely influence outcomes, rather than assuming that every increase in activity represents better care or that every reduction represents waste.

Partnerships need to include allied health teams, community providers and patients because no hospital owns the entire patient journey. Clinicians and administrators should examine variation between teams, wards and sites before deciding which apparent inefficiency is real. Good data distinguishes a practice problem from differences in case mix; poor data can turn a procurement target into unsafe pressure.

For Aboriginal and Torres Strait Islander patients, cultural safety, supported communication and the National Safety and Quality Health Standards must shape how local measures are interpreted. A shorter stay is not a success if follow-up is inaccessible or the patient did not understand the treatment. Equity checks therefore belong beside efficiency measures in the same review.

Clinical priorities

• Link one readmission or complication measure to a named clinical process.
• Pair medication reconciliation with pharmacist review before discharge.
• Record patient preferences in the discharge plan.

Service priorities

• Map costs across the episode, including readmissions and complications.
• Review state and territory data alongside local measures.
• Check that improvements do not widen gaps for patients facing access barriers.

A practical takeaway for daily hospital practice

Value-based purchasing succeeds when clinical teams can see the relationship between resources and outcomes. Hospitalists are well placed to make that relationship concrete by connecting ward decisions with medication safety, discharge reliability and patient experience. The work is not about compressing every admission; it is about removing waste while protecting access, appropriate treatment and trust.

The practical takeaway is to judge each local pathway against three linked checks: care remained safe, the patient understood and participated in the plan, and an avoidable complication or return was prevented. Used together, these checks turn a broad purchasing goal into a daily clinical responsibility that every team can apply.