The Hospital CMO

The announcement “Code Blue, Room 722,” reverberates through the hospital. Someone is experiencing a cardiopulmonary arrest.

Team members from various hospital locations swiftly converge on the announced room. One starts CPR, another retrieves and opens the crash cart, and someone prepares medications while confirming or establishing intravenous access. Simultaneously, one team member pulls up medical records, and another records intervention timings, adhering to the evidence-based protocol. Family members and friends are escorted out and comforted, or efforts are made to locate loved ones to keep them informed.

Regardless of how many code blue events one attends, they are always intense — someone’s life is at stake, and everyone is doing their utmost to help the patient in need. Code Blue events also highlight the remarkable teamwork in hospitals, where people come together instantly to help someone in a dire situation — people saving people.

The hospital chief medical officer (CMO) has the opportunity to establish the highest quality medical programs and enlighten non-clinical executives about the best practices in medicine and their secure implementation.

Overview of Hospital Operations

According to the American Hospital Association’s Fast Facts, there were a total of 6,129 hospitals in the United States in 2023, with 919,649 licensed hospital beds. Regardless of their differences, all these hospitals share a common characteristic: They function as homes for the sickest individuals, those too unwell to thrive at home or in other care facilities.

The most critically ill patients require the most intensive care, demanding around-the-clock assessments and interventions. This involves a multitude of individuals with various expertise: preparing medications, conducting lab analyses, performing tests, administering medications, monitoring vital signs or assessment changes, creating special diets, and maintaining clean rooms and equipment, along with well-stocked supplies.

Unlike most homes and businesses, hospitals operate continuously throughout the day and night, all year long. Operating 24/7 requires substantial labor resources and supplies. Due to their intensity, hospitals are also the most expensive to operate. To keep hospitals open, cost-effective strategies must be identified, similar to any other business.

The only constant in medicine is continual change. Medical advancements have expanded treatment options, introduced new medications, facilitated less invasive testing and interventions, and improved the safety and efficacy of surgeries. Medicine is progressively shifting toward outpatient settings with the advent of ambulatory surgery centers, hospital in-home programs, and infusion programs.

Patients now have more opportunities for treatment outside the hospital. Recognizing the inherent risks in hospitals, it becomes crucial to limit the time patients spend in these settings. Since hospitals represent the most intensive and expensive level of care, coupled with associated risks, it is imperative to strengthen the continuity of care from pre-hospitalization to post-hospitalization.

When hospitalization is unavoidable, the goal is to minimize the patient’s time in the hospital. Understanding the available resources and care options outside the hospital in your community is essential. Collaborating with these resources and various care levels helps optimize efficiency for hospitals and other care centers.

In explaining the physiological experience during hospitalization, I draw a parallel between the human body and a car ascending a hill. When the body is in good health, it requires minimal necessities such as food, water, safety, and sleep. However, during hospitalization, at least one acute process is at play, be it an infection, organ dysfunction, body trauma, or an exacerbation of one or multiple conditions. This places the body in a state of stress, rapidly depleting energy from within.

The heightened stress cycles and hormones exert additional pressure on the system, demanding more energy. The immune system becomes strained, and weakness sets in rapidly. Sometimes, even a single day in the hospital may necessitate over a week of rehabilitation to return to the prior baseline status, even without complications.

During periods of stress and illness, appetite is often reduced, and coupled with hospital food rather than one’s favorite meals, oral intake can be severely diminished. Poor sleep patterns due to being outside their own beds and subjected to a schedule of assessments and interventions further complicate the patient’s recovery process. Healing is more effective when social and environmental supports boost emotional health. However, hospitals are often places of uncertainty, fear, and vulnerability, intensifying patient stress and impeding the healing process.

Staying in a hospital can lead to well-known complications, including those arising from inserted catheters, lines, and tubes, decreased activity levels, impacts on thinking and cognition, disruptions to normal digestion, and exposure to serious infections prevalent in hospitals.

Given these factors, it is optimal to discharge patients from the hospital as soon as possible. This clinical concept should be conveyed to all team members. Nurses can assist with early mobility protocols, aiming to make patients as functional as possible as early as possible in their hospital stay.

Physical and occupational therapies play a vital role in implementing mobility protocols and encouraging patients to return to the safest and lowest level of care promptly. Despite being exhausted and in pain, patients should be informed that any level of movement aids blood flow, natural healing, and prevents muscle wasting and further complications.

Quality Metrics

Every member of the hospital staff influences hospital length of stay. Maximizing all workflows, including timely tests, having medications and supplies ready, efficient bed turnovers, and ensuring that patients requiring fasting before tests or procedures do not receive meal trays, all contribute to the patient’s journey.

Quality metrics play a crucial role in guiding high-quality care and ensuring specific benchmarks are met for certain diseases. Understanding the basis of these metrics and initiatives is essential for effective collaboration when everyone comprehends the shared goals and rationale.

Clinical teams should grasp the importance of providing quality care along with accurate and effective documentation. Documentation serves as the narrative of the patient’s illness, describing the what and why of interventions in the hospital. Patients should receive the highest quality care at the right level for healthcare delivery to function optimally.

Optimizing prevention and chronic disease management through outpatient primary and specialty care is vital. Patients should have access to providers and care managers for assistance with acute medical problems and addressing the social determinants of health.

When outpatient management is exhausted, and patients need a more intensive level of care, hospitals step in to continue that medically necessary care. Medical necessity has evolved over time, shaping the landscape of healthcare delivery.

Costs of Care and Case Management

Not all care within the hospital is inpatient care. Medical necessity is a prerequisite for inpatient hospital care, and outpatient levels of hospital care also exist — observation care and bedded outpatient (also known as extended outpatient services or outpatient in a bed [OPIB]). Since we observe patients in hospitals and monitor their clinical responses, many may not think of observation care as an outpatient level of care covered under Medicare Part B (outpatient services) rather than Medicare Part A, which covers inpatient hospital services.

Observation status entails using a hospital bed for monitoring or patient care necessary to evaluate an outpatient condition while determining the need for an inpatient admission. Observation indicates lower severity of illness and resource intensity. If the patient’s illness severity increases or additional treatment escalation is required, consideration should be given to inpatient admission.

Observation hospitalizations have increased over time as national criteria have tightened inpatient medical necessity criteria, and some diagnoses transition to inpatient admission only for life-threatening conditions or after “failing observation” care. Observation care is not dictated by a time frame but instead by medical necessity criteria.

Although many healthcare payers designate a maximum number of hours in observation care, it does not guarantee that medical necessity criteria will be met at the completion of the maximum observation hours. Conditions must require ongoing or escalating treatments and evaluations for inpatient medical necessity.

Previously, hospitals were paid based on the actual cost of care. When this cost became burdensome, an awareness developed regarding which conditions and which patients required care in the hospital. The Diagnosis Related Group (DRG) system was developed to monitor the costs of care and the utilization of services in hospitals.

The DRG classification system is based on diagnoses to relate the types of patients being treated to the overall costs of care. DRG classifies the patient’s case by principal diagnosis and other comorbid (CC) or major comorbid (MCC) conditions or complications. The lists of DRGs, as well as the CCs and MCCs, are published and updated yearly. It is important to familiarize oneself with the DRG system and with the CCs and MCCs, as these are the complications and comorbid conditions that increase the severity of illness.

The collective complexity of cases in the hospital is determined from the DRGs and called the case mix index, which is the marker of how sick the patients are who require care in the hospital. DRG also determines the geometric mean length of stay (GMLOS), which is defined as the number of days given to each patient based on the principal diagnosis, secondary conditions, and surgery if applicable. Since GMLOS is calculated based on diagnoses, it reflects the average time that patients with similar conditions should stay in the hospital.

GMLOS is a guide to help with length of stay management. Since GMLOS also guides the cost of care allotted to the patient with those specific conditions, hospitals perform best financially when the average hospital length of stay is at or under the average GMLOS. Hospital-acquired complications are exempt from a higher DRG category to prevent potential rewards for compromising quality of care.

Another way to understand case mix complexity is to break down its components. Once we understand the key terms of severity of illness, prognosis, treatment difficulty, need for intervention, and resource intensity, we may begin to teach these concepts to others.

First, let’s remind ourselves that hospitals are homes for the sick and deliver one part in the continuum of care. The hospital portion of care is meant to be short-term and high acuity, so this is important to both understand and to document well. Severity of illness relates to the loss of function and risk of mortality that a patient experiences from a certain illness or illnesses. Prognosis is the predicted outcome related to the illness, possible deterioration, or recurrence of the illnesses and, in some cases, may include predictions about the life span. Treatment difficulty refers to the management of the patient’s care due to specific illnesses—such as complex required procedures or close monitoring and assessments.

The need for intervention describes what consequences would happen if the care were not immediately performed or continued. Resource intensity describes the volume and types of diagnostic and therapeutic services required for the management of certain illnesses. In the simplest breakdown, patients in the hospital must (1) be sick and must (2) require hospital-level resources and interventions. If patients are being monitored without interventions or if the interventions are all available in a lower level of care, does the patient really require hospital-level care?

The Importance of Documentation

Telling the story specific to the patient, their illnesses, and the need to be in the hospital is important for transmitting accurate documentation to support medical necessity, quality of care, rationale for care, and recording the details of the hospital portion of the care continuum for the patient and their clinical teams.

Per the Centers for Medicare and Medicaid Services (CMS), the two-midnight standard rule is a policy that applies to inpatient hospital admissions where the patient is reasonably expected to stay at least two midnights, and this expectation is documented in the medical record by the clinician.

Medical evidence should be documented, such as the risk of an adverse event during hospitalization and the complexity of the patient’s conditions and what assessments and treatment will be needed for the acute illness(es). Considerations in documentation would include the medical history and comorbid conditions, severity of the presenting complaints, medical needs of the patient, and the risk of adverse events and mortality.

The two-midnight expectation and the daily hospital progress and care provided are crucial to telling the story of the hospitalization. At times, the patient’s length of stay may not span the expected two midnights. In these situations, it is important to complete accurate documentation explaining why the length of stay did not meet the initial clinical expectation. Examples of such unforeseen circumstances would be a patient leaving against medical advice, the election of hospice services, a recovery that was faster than expected, transfer for a higher level of care, or death.

Additionally, CMS publishes the inpatient-only list yearly, which is a list of the surgeries that are required to be done in a hospital inpatient setting due to the complexity of the surgeries or postoperative care required. The surgeries found on the inpatient-only list do not require a two-midnight stay expectation. According to the CMS final rule 2023, Medicare Advantage plans will also be required to use the two-midnight rule beginning in 2024.

Health plans, including Medicare Advantage, commercial, and Managed Medicaid plans, have the opportunity to use other criteria for medical necessity. Different plans use various criteria; some even use more than one set or self-written criteria layered on top of nationally published criteria. The most utilized of these criteria are the MCG Guidelines and InterQual. Both of these criteria require subscriptions for access and are ever-changing. The Milliman Care Guidelines (MCG) were developed in 1988 by a global actuarial and consulting firm, Milliman, and collaborating physicians to form the first evidence-based care guidelines based on risk-versus-benefit calculations. MCG was acquired by Hearst Corporation, a large, diversified media and information company, in 2012. (See www.mcg.com for details.)

InterQual was developed in 1976 and is owned by Change Healthcare, which was acquired in 2021 by Optum, a healthcare analytics company owned by UnitedHealth Group. (See www.changehealthcare.com for details.) Federal lawsuits by the Department of Justice attempted unsuccessfully to halt the acquisition of the InterQual decision support tool by a health insurance company due to the potential for conflicts of interest.

The most effective strategy to help hospitals is to get to know the breakdown of payers at the hospital and understand which criteria they use. Discuss the contracts and how they work. Understand if the contracts are fee-for-service or based on DRGs; this will help in the prevention and management of denied claims. Building a connection to the payers is a necessary strategy to work together to help your mutual patients. After all, we all want the same goals: high-quality care at the lowest level of care possible.

By understanding the basic concepts of medical necessity and our role in public health for the community, it strengthens the work with payers and the symbiotic role to help build effective and efficient practices hospital-wide while getting the care reimbursed. If you lean into learning this and collaborate with your payer partners, it makes the job much easier.

Denied claims are a burden to the healthcare system. Denials are generated when the care or level of service is thought to be not medically necessary or not meeting contracted guidelines. If you are finding trends with certain payers, denied inpatient claims, denials for post-acute care levels, work with the payers on smoothing out your processes.

Utilizing medical necessity criteria is important, but teaching your clinicians accurate documentation of the illness severity and required resource intensity is equally important. Payers pay the hospital. Payers will pay the hospital for the appropriate services when the medical care is necessary. If the care could be offered at a lower level, such as a post-acute facility or with home healthcare, then it is clinically best to transition to that lower level of care.

Making sure patients meet the criteria for the lower level of care is also crucial. Patients must have a skilled need for a skilled nursing (subacute rehabilitation) facility and must demonstrate the opportunity for progression and improvement to the prior baseline or a new baseline. Patients must also participate in their care to qualify for post-acute services. If you notice a payer having an inadequate network for post-acute services, discuss the opportunities with them directly. Compare with other payers to strengthen the pre- and post-hospitalization options.

Discharging from the hospital involves the multidisciplinary team. It is important to have the components of the discharge and which medications the patient will need, but also to link to outpatient care and ongoing disease management to prevent readmission to the hospital. Patients often need help with obtaining medications, transportation, or help with appointments for follow-up with primary and specialty care services. The more we help patients on discharge, the greater likelihood that patients will have a successful recovery to return to the prior baseline. Care of the patient requires attention to the biopsychosocial model of care. Evaluation of the patient’s prehospital baseline is important, and evaluation of the new level of functionality and where the patient may discharge safely.

The Role of the CMO

Hospitals are homes for the sick. However, hospitals are always open and ready to help patients. Thus, hospitals may also become utilized for safe shelter and access to food and medications. Patients often have dire home or social situations, including homelessness or increasing difficulty thriving in the home environment. It is important to identify the resources available in your community to help those who need help. Connect to the agencies providing home healthcare, medical equipment, transportation, caregiver services, reduced-cost services on a sliding scale. If you have community health centers or Federally Qualified Health Centers in the area, connect with them to provide referrals for patients. The stronger your connectedness to community resources and entities helping with pre- and post-hospital care, the smoother your patient transitions are in and out of the hospital.

Medical school teaches us about clinical problem-solving: gathering data in assessments to arrive at medical decision-making and treating patients to help them feel better and improve the quality of life. Now we must continue to learn about the new medical advancements while keeping up with the ever-changing rules about how to effectively deliver healthcare. Embracing constant change is one of the most important qualities as a clinical leader.

It is the role of the CMO to help clinicians understand how hospitals thrive in a challenging healthcare climate. Let’s go back to a code blue called overhead in the hospital. Effectively running a code blue requires two things: (1) knowing the lifesaving algorithms and (2) leading a team to effectively implement the algorithm in the highest-pressure situation.

Being an effective CMO relies on the same concepts. It is important to understand the foundations of how hospitals operate and get paid, the specifics about your hospital or hospital system. It is equally as important to build your well-functioning team. Whether you are building a team, rebuilding a team, or joining an expert team, it is important to get to know your individual members. Work together to understand the reasons for the goals.

Before trying to motivate your team toward a goal, dive in to understand how the goal works and why it’s important. Empower others about the mission. Building and retaining a high-quality workforce is more effective than trying to recruit a new one.

Hospitals will continue to be day and night, year-round homes for the sickest in our community. Hospitals are a vital part of the care continuum but are now in trouble with the many pressures of a high-cost operation, high denial rates due to the high costs, and so many services shifting to outpatient centers.

This is our chance to help hospitals. Be curious and be passionate. Learn about the new ways to thrive despite the changing healthcare climate. Negotiate with kindness. Build a team that works well together. Build a team that enjoys working through challenges. Then your team will come running to your hospital like an effective and life-saving code blue so that we may continue to save lives and help our communities.

Excerpted from I Want to Be a Chief Medical Officer: Now What? edited by Rex Hoffman, MD, MBA, FACHE, CPE.