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Hospital observation is a topic of interest among patients for whom being classified as observation has negative financial ramifications. Similarly, observation rate is monitored by some hospital administrators because of its potential financial impact on the health system. During the creation of an internal physician advisor program, the new health system physician advisor was asked to investigate causes for a higher than average observation rate for WellSpan Summit Health. Using Lean methodology, standard work was established for the physician advisor observation patient review process when inpatient criteria were not met. Key performance indicators were tracked using production boards and a dashboard that interfaces with the electronic health record. The physician advisor program decreased missed inpatient conversion opportunities, but despite fixing process problems, improving level of care determination accuracy, and seeing outcomes that should have decreased the observation rate, the observation rate paradoxically increased. The cause of the rising observation rate is unknown but is likely multifactorial. Possible causes include changing standards concerning what qualifies as inpatient, Affordable Care Act (ACA) expansion of insured patients presenting to the emergency department (ED) with low acuity conditions, and the safety net function of the hospital for patients living with adverse social determinants of health. The safety net theory is most likely true for “high utilizers” using a greater portion of hospital resources than the rest of the population. This study provides evidence that observation rate is not a useful metric in the absence of a process problem. A more meaningful metric concerning observation patients is observation length of stay.

Hospital based physician advisor program sheds new light on observation rate