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Economics of academic medical consultations.

(Tables and illustrations not included)

In the Division of Urology at the University of New Mexico School of Medicine, faculty members did not routinely submit charges for consultations, and the practice of consultations was generally held in low esteem. Several faculty perceptions contributed to this situation:

* The economic class mix of hospital patients precluded meaningful collections.

* After the "Dean's tax" and the "Chairman's tax," no meaningful collections returned to the consulting physician.

* The collections were insignificant when compared with collections for surgical procedures.

* The time required for consultations was excessive.

A study was designed to assess the validity of these perceptions. A further motivation for the study was the increased importance of faculty-generated patient care revenue to the academic medical center. Several research questions were posed:

* Is meaningful revenue returned to the institution?

* Is consultation revenue ultimately translated into enough additional income to a faculty member to provide an incentive?

* Does time spent performing consultations significantly detract from education and research?


During the four-month study, inpatient consultations were evaluated by both a resident and a faculty member. The faculty member submitted a charge based upon the complexity of the consultation. Charges were determined by prevailing community fees and by projected time requirements and ranged from $33 for a follow-up to $150 for an extended consultation. The faculty time spent and the patient financial class (self-pay, HMO, commercial, etc.) were recorded for each consultation. Many months would have been required to determine the collection rate for the actual charges submitted on the study patients. Therefore, the historical collection rates for each financial class were used for data analysis. The required distributions from total collections were ascertained, permitting determination of the percentage of billings actually returned to faculty members. The total billing for each month of the study was compared with the same months of the previous year as a control.


Consultations were requested for 93 patients during the study, but 26 were not seen by a faculty member. For most of these patients, the consultation request came late in the hospitalizations, and the patients had already been discharged. The consultations were not urgent, and outpatient appointments were made with the appropriate faculty member. For others of the 26 not seen, faculty consultation was deemed inappropriate (e.g., insertion of a Foley catheter). Therefore, 67 patients were in the study.

Consultation charges were significantly greater during the study than during the control period (table 1 on this page). The historical collection rates varied from a low of 24 percent for self-pay to a high of 100 percent for workers' compensation. The mean collection rate for all financial classes, after deduction of discounts, allowances, and bad debt, was 72 percent (table 2 on this page). Distributions were then made for general budgetary support of the School of Medicine ("Dean's tax") and Department of Surgery ("Chairman's tax"). Ultimately, 40.5 percent of the charges was returned to the faculty. The mean faculty time expended per consultation was 33 minutes.


Annual projections of the data better illustrate the economic impact of faculty consultations. Based upon the 67 patients actually seen during the study, projected total annual charges would be $19,404. Another 26 patients were not seen by faculty members. Further, approximately 25% of consultation requests were not reported to faculty members. If these requests were also included and had similar demographic characteristics, an additional $14,190 could have been billed annually. Thus, the total consultation charges for 1986-87 could have approached $34,000. This compares to the actual total billing for consultations of $4,581 for 1985-1986. At a mean collection rate of 72 percent, the institution would have gained $24,480 in revenue. Using a mean return to the faculty of 40.5 percent of charges, an additional $13,770 could have been received.

As noted, during the four months of the study, consultations were requested on 93 patients and an estimated 23 other requests did not reach faculty members. Therefore, the projected number of monthly consultations is 29 for the three faculty members. Consequently an individual would perform appro)dmately one consultation, requiring roughly 33 minutes, every three days.

The results of the study show that faculty perceptions regarding consultations were inaccurate. Faculty performance of consultations can result in meaningful revenue to both the institution and the faculty members. The time spent performing consultations would not detract from other important activities. When the minimal time commitment and its attendant financial return are considered, sufficient motivation exists for faculty to actively participate in consultation services.

The study also illuminated two other areas not initially considered: the educational aspect of consultations and the importance of information management. The performance of a high-quality consultation is an acquired skill. Participation in consultation is not an issue in private practice, because only the individual practitioner is available. However in an academic setting, faculty members may delegate this responsibility to residents. An actively participating faculty member can teach these cognitive skins, and residents will perceive that consultations are an important aspect of a surgical practice.

An information management system that permitted extraction of data in a useful form regarding individual physician and divisional productivity; amount, type, and intensity of services delivered; and billing and collection rates was invaluable for this study. Implications of this study could extend beyond the Division of Urology at the University of Mexico School of Medicine. If other departments/divisions used similar data to evaluate consultation services, the teaching and practice habits of additional faculty members might be modified. While the particulars of the University of Mexico situation make translation to other institutions dffficult, it is also possible that lessons could be transported outside the university.
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Author:Woodside, Jeffrey R.
Publication:Physician Executive
Date:Sep 1, 1989
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