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Thinking of Transitioning to an Internal Physician Advisor Program?

By Tim Brundage, MD CCDS

Health systems face pressure in today’s margin-compressed environment. Department heads are routinely called to justify their budgets, ensure costs are contained, and deliver on metrics prioritizing immediate departmental financial health. Yet, while hospitals excel at scrutinizing expenses, few have mastered connecting those expenses to the returns they generate—particularly when those returns show up in different parts of financial statements. 

Hospitals may focus on short-term savings but unintentionally miss out on significant long-term value, sometimes to the extent that maintaining or even increasing investment could lead to better financial outcomes. 

The result? Hospitals risk being “penny wise and pound foolish.”

The Hidden Risk of Cost-Focused Decision-Making

Utilization Management (UM) and Utilization Review (UR) leaders are rewarded for keeping staffing costs under budget or maintaining low utilization percentages.  These department-level metrics, while important, often come with unintended consequences:

Budget Cuts in Staffing Can Cost You More Than You Save

Budget-focused staffing decisions for UR often hinder the ability to maintain consistent practices, ultimately resulting in negative impacts on revenue.

Limited Physician Advisor Support: A Hidden Revenue Drain

Cost control measures that limit Physician Advisor support often lead to missed revenue opportunities from compliant inpatient status determinations and reduced denials.

Focusing Solely on Vendor Price Over ROI

Focusing exclusively on reducing vendor costs for Physician Advisor services may inadvertently undermine compliance and miss the return on investment (ROI) these services deliver through capturing and recovering earned revenue.

A clear, enterprise-level understanding of costs and benefits empowers hospitals to avoid unintended decisions that could negatively affect their financial health. 

The 10:1 Payoff: Unlocking the True Value of Physician Advisor Programs

Well-implemented Physician Advisor services frequently deliver a 10:1 (or even better) ROI. For every dollar spent on Physician Advisor resources, hospitals can capture or retain $10 in compliant net revenue.  For instance:

Investing $100,000 monthly in Physician Advisor services could yield $1 million in monthly incremental net profit by reducing denials and facilitating compliant observations to inpatient conversions; these services typically offer higher reimbursement rates for equivalent care.

However, the 10:1 ratio can flex up or down as it is heavily impacted by the skill and experience of the Physician Advisors being utilized; in upcoming blog posts, we will dive deeper into the full economics of Physician Advisor programs to explore how hospitals can optimize Physician Advisor support.

Avoiding the Myopic View

Unfortunately, too many hospitals focus solely on the expense side of the equation, treating Physician Advisor services as a cost center rather than an essential component of the revenue cycle needed to ensure appropriate reimbursement. This perspective ignores the financial ripple effect of suboptimal or insufficient Physician Advisor utilization, including:

    • Missed opportunities to overturn denials.
    • Incorrect status determination leading to revenue loss and increased denials.
    • Delays in identifying medical necessity issues that impact reimbursement.

At Brundage Group, we work closely with our hospital partners to factor both costs and benefits at an enterprise level- not just department silos. Our mission is clear: to empower hospitals to remain financially viable while continuing to serve their communities.

Key Questions for Decision-Makers

If you are evaluating your approach to Physician Advisor services- whether considering internal programs, third-party support, or a combination- ask yourself these critical questions:

revenue value of case versus stay

Do we understand the revenue value of an observation case versus an inpatient stay?

Inpatient/Observation Mix

What is our current inpatient/observation mix, and how does it compare with Physician Advisor support or to our peers?

financial statements

Where in the financial statements will we see the benefit of our decisions and performance related to Physician Advisor services?

Scorecard metrics

What scorecard metrics should we use to assess the value and effectiveness of a Physician Advisor program/provider?

Making decisions about Physician Advisor services is not just about managing costs—it’s about understanding the complete financial picture of the clinical revenue cycle and ensuring your hospital maximizes compliant revenue opportunities. As a trusted advisor, Brundage Group provides the expertise and tools needed to navigate these decisions competently and confidently.

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