11 Challenges and Opportunities for Orthopedic and Spine Practices in 2010

1. Orthopedic surgeons consider healthcare reform one of the largest concerns for 2010. According to Gary Brazina, MD, FACS, a board-certified orthopedic surgeon who practices orthopedic surgery and sports medicine in Marina del Rey, Calif., the uncertainty regarding healthcare reform and its impact on reimbursement is a challenge for practicing orthopedic and spine surgeons. "It's a huge challenge because no one knows what the system is going to look like. It's very difficult to do strategic planning for the day-to-day running of a business, which requires anticipating the business end of medicine," says Dr. Brazina. "Like any other business you have to anticipate income and expenditure before one can think about doing a major outlay of capital to purchase, an EMR system, X ray or an MRI scanner, for an outpatient setting. We don't know what the new rules will be or if some things such as diagnostic equipment will be outlawed under the new system."

Scott Trenhaile, MD, an orthopedic surgeon at Rockford (Ill.) Orthopedic Associates echoes Dr. Brazina's concerns. "I think one of things I struggle with at this point is not knowing what the future really holds about how I can best care for my patients. My patients express concern; it's hard to counsel patients because I don't know what will happen with healthcare reform, and it's not because of a lack of effort on my part," says Dr. Trenhaile.

2. Declining reimbursement is another major concern for orthopedic and spine surgeons and their practices. Healthcare reform efforts to redirect payments from specialists to primary care providers is a major concern for orthopedic and spine surgeons as are the lingering effects of a weak economy. As more people lose healthcare benefits due to job loss and expired COBRA coverage, the number of elective procedures, including most orthopedic procedures, is expected to decline, which will negatively impact practice and surgeon revenue.

According to Gina Volmert, CEO of GO Partners, an orthopedic practice management consulting firm, reimbursement decline is one of the biggest challenges facing orthopedic practices. "The biggest challenge is obviously and always has been declining reimbursements, which is now coupled with the delayed effects of the recession. We are just starting to see a reduction in the volume of patients considered somewhat elective," says Ms. Volmert. "The lingering effect of the economic slowdown and job loss is going start impacting volume. Practices will have to consider, 'If we lose one or two cases a week, how will that affect making payroll?'"

Dr. Brazina worries that reimbursement changes will direct payments away from specialists, and this could "have a detrimental effect on our ability to develop new techniques." He argues that directing money away from specialists, such as orthopedic surgeons, is a way for payors to reduce costs on what are often their biggest bills. However, he says that specialty care is expensive because of the advanced technologies and subtleties involved in treating complex cases.

Today, orthopedic sub-specialization is more common than practicing general orthopedics, especially in urban areas, which means that more orthopedic surgeons are trained to handle more technically demanding cases than in the past, which increases accessibility to quality orthopedic care, according to Dr. Brazina.

3. Some orthopedics surgeons report they will opt out of Medicare if reimbursement continues to decline. If Medicare reimbursements continue to decline, many orthopedic surgeons may consider opting out of Medicare in order to improve the profitability of their case mix. If they elect to do so, it would reduce access to the highest-quality orthopedic services and create a two-tiered healthcare system, according to some physicians.

"I personally believe we'll end up with a two-tiered medical system. Already in some urban environments, the more specialized, more-highly trained elite physicians are dropping Medicare completely because of poor reimbursement and the absolute hassle it is to actually receive payments," says Dr. Brazina.

Ralph Gambardella, MD, an orthopedic surgeon and president of Kerlan-Jobe Orthopaedic Clinic in Los Angeles, also predicts a two-tiered system if Medicare reimbursements continue to decline. "As surgeons, we cannot control most of our reimbursements. We only have control over one side of the equation. Current healthcare reform efforts appear to further socialize medicine, which will create a two-tiered system," says Dr. Gambardella. "How do you treat those two different populations while remaining viable?"

Ms. Volmert says that she is definitely seeing a trend of more physicians pulling out of Medicare and even some commercially-managed plans that pay what the physicians feel are low reimbursements. "Physicians feel that patients will still come to them even if they're out-of-network, and out-of-network typically reimburses at 30-40 times the contracted rates," she says. "We're also seeing more sports medicine practices pull out of Medicare. I don't think it's an idle threat that practices just won't participate [in Medicare]."

4. Many practices will focus on operational efficiencies in 2010 in order to best manage potential reimbursement declines. According to John Martin, CEO of OrthoIndy, an orthopedic practice based in Indianapolis, operational excellence is a major area of focus for OrthoIndy in 2010. "In the past, a practice could live on its reputation alone, and I don't think you can do that anymore," he says. "You have to focus on operational excellence and patient satisfaction. There is no other way to survive in this market."

Dr. Gambardella says that practices must adapt to reimbursement changes in order to remain viable. "Over the years, there has been an ever-changing rate of reimbursement for the same work product. A physician spending two hours on an orthopedic trauma is reimbursed differently than a physician doing a two-hour joint replacement," he says. "We try to make adjustments in some areas to remain viable. For example, we no longer have a joint-replacement physician in our practice. Their reimbursement does not compensate their time enough to make it in private practice."

5. Reimbursement uncertainty has caused many practices to consider offering ancillary services to expand revenue streams. "There is a constant downward pressure on reimbursement that is forcing us to look at a lot of other things," says Mr. Martin. "It's hard to control expenses because vendors still charge inflation in contracts, which continues to squeeze our margins. As a result, we're looking at costs and outside revenue opportunities."

Mr. Martin says several ancillary services the practice once considered but ultimately decided not to pursue are back on the table. "We're looking at having an in-office pharmacy dispensary. There are ways that you can dispense medications in the clinic and it would be a huge convenience for patients," he says. "We're basically taking a look at everything we send a patient outside OrthoIndy for and looking at if there is a way to provide that ourselves."

Physical therapy services are an ancillary service that fits well with orthopedics and that practices may want to consider if they do not already offer such services. Ms. Volmert reports that approximately 30 percent of the practices she works with have their own physical therapy services. "Physical therapy can be quite profitable if it can be done right," she says. "A group of five or more physicians can generally support physical therapy services, but the sweet spot is 10 doctors or more. If practices are doing a lot of sports medicine, having physical therapy in the building is a real draw for patients. It can also help in getting contracts with sports teams."

Sumeer Sathi, MD, a spine surgeon at Long Island Neuroscience Specialists based in East Patchogue, N.Y., says that the success of his practice has been its multidisciplinary approach to spine care, which includes the offering of ancillary services. "Multidisciplinary spine practices, which include pain management, orthopedic surgeons and neurosurgeons, are the way of the future," he says. "They allow the patient to smoothly transition through care and allow us to capitalize on ancillary services that increase our income, such as imaging services."

Investing in a surgery center is another option for orthopedic surgeons if they do not already have an ownership stake in a center. "In general, every physician can expect a decrease in their practice revenue, so your options are to live with that or increase your involvement in an ASC to get facility fees," says Ms. Volmert.

Although ASCs are popular investments for orthopedic surgeons, they are just becoming viable opportunities for spine surgeons as advances in spine care now allow for the movement of more procedures into the outpatient setting. Although most outpatient spine procedures are not reimbursed by Medicare, some managed care insurers will reimbursement spine procedures in the outpatient setting.

"Our next interest in New York is to try to establish an ASC at which to do those outpatient spine surgery procedures, because we can control our patients and maximize our income," says Dr. Sathi.

6. Reporting requirements and other regulations are another large concern for practices. Increased reporting requirements and administrative regulations continue to tax orthopedic and spine practices.
Kay Kirkpatrick, MD, an orthopedic surgeon and co-president of Resurgens Orthopaedics in Atlanta, Ga., says that government regulations take up a significant amount of administrative time and can be costly for a practice. "The government continues to make laws that make it harder and harder to practice," she says. "For example, we have spent the last nine months trying to figure out how to comply with the HITECH Act and other new HIPAA requirements. Some of these things cost a boatload of money. It eventually becomes difficult to take care of patients because we're so worried about breaking the rules."

Kenneth Pettine, MD, a spine surgeon with Rocky Mountain Associates in Orthopedic Medicine in Loveland, Colo., agrees that the increasing number of regulations can be difficult for practices and other physician-owned businesses. "These regulations are expected to improve safety and efficacy, but oftentimes you get into a bureaucracy and their decision-making doesn't necessarily make common sense," he says.

7. Expect further consolidation of practices in 2010. An article published in American Medical News reports a decline in the number of small, physician-owned practices. Depending on the survey, it is reported that the percentage of physicians who own their own practices varies from 30-60 percent, and it is widely believed that number is continuing to fall.

"It's hard as a physician to be out there on your own because of the increasing regulatory environment for practices. It's much more difficult for smaller practices to address and adapt to these regulations and requirements because they just don't have the resources they need to do so," says Dennis Viellieu, CEO of Midwest Orthopaedics at Rush in Chicago. "As a result, there appears to be a trend for smaller practices to merge or be acquired by larger practices and/or for physicians to look more seriously at the possibility of working for a hospital or health system. Historically, hospital employment of physicians has been a disaster for everyone involved, especially so for specialties, but maybe now the time is right where it can work."

Mr. Martin agrees that increased consolidation is a real possibility in 2010. "Smaller practices are having a real struggle trying to remain independent. You see smaller groups banding together to gain size. You also see small groups merging into a larger group like [OrthoIndy]. Hospitals are also taking both a direct-ownership approach and a partnership approach to practices in our market," he says.

Dr. Kirkpatrick agrees that the healthcare market is making consolidation inevitable. "You will see more consolidation. People are either going to get bigger or sell out to the hospital. For small practices it is a huge challenge to maintain the resources you need to make sure you're complying with all the regulations out there, which are already almost impossible to understand," she says.

Dr. Kirkpatrick recommends practices considering a merger ensure they can agree to a single compensation formula and have similar practices cultures before moving forward. She also recommends practices establish a governance structure that gives all groups equal representation.

While merging with a hospital may reduce some financial and regulatory struggles of practices, many physicians caution against such arrangements. "Hospital employment may work in the short-term, but it's not clear what the long-term benefit is to surgeons," says Dr. Kirkpatrick.

Dr. Gambardella says hospital employment further socializes medicine. "While you may be able to get a few good years out of hospital situation, it really leads to further socialization of medicine and loss of the control you had in a private practice," he says.

8. Affiliations with hospitals may be a viable business opportunity. Affiliation with a hospital is one alternative that may help some practices better deal with the changing reimbursement climate while allowing physicians to maintain control, says Dr. Gambardella.

Dr. Sathi says that his practice's affiliation with New York-Presbyterian/Weill Cornell Medical Center has proven beneficial so far. Under the practice's agreement with the hospital, the surgeons serve as clinical faculty for Weill Cornell. "There is not much of a disadvantage to being affiliated with a high-quality institution in private practice, and it's certainly been an advantage for developing our practice as we are the only practice on Long Island to have a relationship with Weill Cornell," says Dr. Saathi. "It's a bit to early to say how the affiliation has affected patient satisfaction, but it has made it easier to transfer difficult cases to Weill Cornell and get those patients appointments quickly."

Mr. Viellieu says that the practice he oversees, Midwest Orthopaedics at Rush, has had a long-standing affiliation with Rush University Medical Center. "The affiliation is a key to the success of our model. Our model separates clinical care, which is provided by the private entity Midwest Orthopaedics at Rush, from the research and teaching aspects which are provided by the Department of Orthopaedics of RUMC as well as the Medical School of RUMC. This separation allows for the efficient delivery of patient care in an academic medical center environment as well as access to the latest breakthrough's and technologies to the benefit of both parties.

"It's not all rosy, though. By having such a comprehensive affiliation with one institution, you suffer and benefit along with them," says Mr. Viellieu.

It's not all rosy, though. By having such a heaving affiliation with one institution, you suffer and benefit along with them," says Mr. Viellieu.

9. Electronic medical records implementation is a large opportunity for practices in 2010. EMRs can potentially reduce costs, improve coordination of care and make practices more efficient. Because of the recent release of American Recovery and Reinvestment Act funds to implement EMRs in physician practices, many orthopedic and spine practices are planning to implement such software in the coming year.

"We are going active with an EMR that is transferable between individual practices, which will make patient records more portable and more easily retrieved than the paper record," says Dr. Brazina. "The problem with EMR is at what point does the program become too cumbersome? There is a cost-benefit ratio, and these programs are extraordinarily expensive."

Mr. Martin reports that OrthoIndy will institute a new EMR system in its clinic to improve efficiency, and Dr. Kirkpatrick says that Resurgens is considering adding patient portal software to its already established EMR system that would allow patients to communicate safely and privately with their physicians over the internet.

Ms. Volmert says that implementing EMRs is one of the biggest opportunities for orthopedic and spine practices in 2010. "If I could give one piece of advice to practices it would be to adopt technology in every component of their practice. Get a practice management system, get an EMR that allows for digital x-rays and images and get workflow and communications automated. Get patients registering and scheduling appointment online, and do online insurance verification," she says. "There are amazing things you can do to follow patient care that you can't do without an EMR."

10. It is more important than ever to have the right staff and physicians at your practice.
A knowledgeable and experienced administrative staff is critical to ensuring the success of medical practices, especially at a time when regulatory and reporting requirements are more challenging than ever.

Dr. Gambardella recommends hiring an administrator with a business background to lead the administrative side of a practice. "It is a necessity to hire someone that has a business background rather than just a medical background," he says. "At the end of the day, if there are no dollars left, there's no business. You have to realize you are running a business and you need business expertise."

It is also critical that practices looking to expand volume through attracting a new physician bring on the appropriate physician. Turnover is costly and can really be a detriment to the financial health of a practice, says Nicola Hawkinson, founder and CEO of SpineSearch, a recruitment and training firm for spine practices. "Financially, you need to make sure you're bringing on the right person for the job and that that there is going to be a high-level of productivity associated with that person," she says.

Ms. Hawkinson recommends practices attempt to truly understand what each candidate is looking for in a position. "If this isn't the location or type of institution that they want to work in, hiring at an outrageous amount may get a great candidate to your practice but it won't keep them," she says.

She also recommends practices compensate physicians based on their productivity, at least after the physician has had a few years to establish a patient base.

11. Innovative techniques and research will continue to benefit practices.
Practices setting them selves apart by offering innovative techniques will continue to succeed in their markets.

According to Seth Neubardt, MD, an orthopedic spine surgeon with Brain & Spine Surgeons of New York in White Plains, N.Y., many of his new patients come to him because a physician, friend or family member recommended him and know about involvement in improving spine surgery safety. "I've been working in my community for 18 years, and I think many referring physicians are aware that I have several patented inventions for improving safety in the operating room to make spinal surgery safer. Patients come in to see me because they are interested in my approach to safety in the OR," he says.

Other physicians look to advance their practices through improving overall patient care. Dr. Trenhaile of Rockford Orthopedic Associates has undertaken an effort to compare patient outcomes and identify best practices. He is currently developing a database that automatically pulls data from his patients' EMRs so that the data can be analyzed for outcomes. "By trying to identify best practice protocols, we can try to eliminate waste and avoid complications. It's about improving the way we take care of patients based on evidenced-based medicine," he says. "Such efforts will help reduce costs and improve access."

Dr. Trenhaile hopes that the information he collects will eventually be pooled with information from other practices, which would allow researchers a wider patient population to study and ultimately would improve patient care. "We feel that most of people are treated in private practice settings, not academic institutions. Yet, a lot of the research reported in peer-reviewed journals takes place in places that have resources, such as a research staff, that private practices don't have. These findings may or may not be applicable to the grassroots medicine being practiced in private practices everyday," he says. "My goal was to establish a way to collect information without creating any extra work so I can have a busy practice and still obtain outcome scores and draw meaningful conclusions from my patients."



To receive the latest ASC news and feature stories from Becker's ASC Review, sign-up for the free Becker's ASC Review E-weekly by clicking here.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.

 

Featured Webinars

Featured Whitepapers

Featured Podcast