3 Most Important ASC Specialties Resisting the Trend of Movement to Employment by Hospitals: A Quick Look at Orthopedics, Ophthalmology and Gastroenterology

The three most important specialties to ASCs are orthopedics, ophthalmology and gastroenterology, based on case volume and revenue statistics. Many of these specialties can still excel in group practice due in part to significant control over the generation of their own business. The specialties do however face both short- and longer-term reimbursement challenges. Economic challenges are pushing many other specialties toward the security of hospital employment. This generally turns the physicians away from investing in and using ASCs.


In a report entitled "Hospitals Employing Physicians in Greater Numbers" by Merritt Hawkins:


"According to Hawkins, physicians are accepting employed positions with hospitals in order to avoid the hassles of private practice, which include high malpractice premiums and struggles for reimbursement. Younger physicians in particular, he notes, are less willing to "hang up a shingle" and practice on their own. Hospitals, which went through a phase of employing mostly primary care physicians in the 1990s, are employing both primary care doctors and specialists today. Employment helps secure physician loyalty to hospitals, Hawkins says, and reduces direct competition between physicians and hospitals for medical procedures and tests."


The report indicates that the financial incentives offered to recruit physicians continue to increase, reflecting robust demand in most specialties. Specialties seeing the greatest increase in income offers over the past year, according to the report include urologists, otolaryngologists, cardiologists, orthopedic surgeons, emergency medicine physicians and family practitioners.

1. Orthopedics. Orthopedic specialists are autonomous by nature, says Brandon T. Frazier, vice president of acquisitions and development at ASCOA. "They want control of scheduling, equipment, interaction with the patient and they are turned off by the perceived bureaucracy of hospitals," he says. These specialists can make significantly more money if they stay in private practice and use an ASC and are typically confident in their ability to do so, he says. Orthopedic procedures yield the highest revenue per treatment of all ASC specialties, according to the Astor Group's "Investment in the Healthcare Industry" white paper.


High income potential is the major reason young specialists are more like to join a practice right out of school, Mr. Frazier says.


"Young orthopedic specialists often join an existing orthopedic practice which provides a sort of middle ground between solo practice and hospital staff," says Mr. Frazier. He adds that this move is in line with the potential income the specialists can make and the fact that they don't like to take orders from others, as would be the case in hospital environments. Joining an orthopedic practice will often naturally lead to performing procedures in an ASC if other physicians in the practice do so already.


Joshua A. Siegel, MD, director of sports medicine for Access Sports Medicine & Orthopaedics in Exeter, N.H., says a good reputation is an orthopedic specialist's main ammunition to develop a successful orthopedic practice and ASC. "Our main way of resisting hospital employment is to establish a reputation and good will that supersedes even our own center and make ourselves known in the community as the place to go for exemplary service," he says.


We should note that there are an increasing number of markets where specialists including orthopedic surgeons, are aggressively being employed.


In an article entitled "Physician Alignment" by Ken Terry which appeared in the September 2009 issue of HHN Magazine, he provides a lengthy discussion as well as examples of employment trends involving specialists, and states:


"Methodist Medical Center of Peoria, Ill., and its cross-town rival, OSF St. Francis Medical Center, already employ most of the primary care physicians in their market. Now they're going after specialists. Michael Bryant, Methodist's president and CEO, believes that in five to seven years, "Most of the doctors in Peoria will be employed by either our system or St. Francis."


Something similar is happening in Greenville, S.C. Local hospitals are snapping up specialists, and for certain disciplines, they employ nearly every local physician. "There are no private-practice general surgeons left in Greenville County," notes Jerry Youkey, MD, vice president of medical services and dean of academic services for Greenville Health System University Medical Center. Other specialties in which a majority of doctors work for hospitals, he says, include cardiac surgery, colorectal surgery, neurosurgery, endocrinology, pulmonology and some pediatric subspecialties.


The article continues on as follows:

Why Specialists Are in Demand

The HSC survey, conducted before the recession was officially declared, found that many hospitals were employing physicians to compete with other hospitals. Some were hiring specialists to direct profitable service lines. Others decided that it was more cost-effective to employ specialists than to pay them large per diems to be on call. Some hospitals recruited outside physicians to fill gaps in their staff, "or to compete with physicians who were uncooperative with hospital initiatives." In some cases, they bought out specialists who might have otherwise built competing ambulatory surgery centers or specialty hospitals. They also hired physicians to increase hospital leverage with health plans. And many said they had to employ physicians to gain their cooperation in pay-for-performance and quality reporting programs.


The article also noted certain trends among specialties.


David Scroggins, a health care consultant based in Cincinnati, cites a pair of orthopedic surgeons who moved from Hawaii to Iowa because compensation was higher there. A recent MGMA survey found that experienced physicians were migrating to Texas and Florida, perhaps because those states have no income tax.


Despite these trends and decisions by some other orthopedic specialists, Dr. Siegel says he has no intention of selling his practice to a hospital.


"Although I believe there are many fine hospital-based and hospital-employed physicians, I believe that a doctor may give up the ability to establish his/her reputation as a doctor to that of the institution," he says. "For instance, there are many patients who would say I am going to the Cleveland Clinic, rather than to the specific doctor at the clinic, misunderstanding that the physicians are what makes the team and care so exemplary.


"I believe in a few instances that the institutional excellence may trump that of the individual doctors or groups such as at Mayo or Cleveland to name just a couple, but a vast majority of community hospitals who employ physicians cannot and do not look or even know exactly who they need to hire to create excellence whereas a small group that understands the medical field intimately will," he says.


2. Ophthalmology. According to Christopher Regan, managing director of The Chartis Group, many ophthalmologists do not find value in working at a hospital. "Physicians can afford to do it on their own and they often want to keep their money instead of partnering with a hospital," he says.


Hospitals may also put unnecessary restrictions on ophthalmologists, says David M. Kwiat, MD, FACS, of the Kwiat Eye and Laser Surgery in Amsterdam, N.Y..


"I am not likely to sell my practice to a hospital due to the constraints on efficiency and the decreased access to advanced technology," Dr. Kwiat says. "While this model may work well for primary care and its specialties, it falls short for the surgical practice. To offer the best care for our patients it is vital to stay current. In a hospital-owned setting there are large bureaucratic barriers to this and little incentive to do so.


"Selling to a hospital is analogous to government run medicine where the doctor is truly an employee and has the resulting decision-making power," he says. "I understand the desire of certain physicians to sell their practice for various reasons (retirement, illness, financial difficulties, etc.). However, the best medicine will almost always be provided by private practices. There is a much larger incentive for quality outcomes and patient care when your name is on the building instead of the hospital's."


John Narcross, senior engagement manager at The Chartis Group, has found that hospitals also aren't very interested in employing these specialists. "The only time I hear about hospital involvement in an employee situation with ophthalmologists is in trauma coverage," he says.


According to William L. Rich III, MD, medical director of health policy for the American Academy of Ophthalmology, ophthalmology thriving in ASC is helped by the fact that the specialty is not attractive financially to hospitals. "Hospitals aren't buying ophthalmology practices because they want specialties that generate more revenue for hospitals."


Ophthalmologists were some of the first adopters of ASCs because they typically don't embrace the hospital model, says Mr. Frazier. "They become frustrated with hospitals because of lack of procedure time and efficiency of turnover between cases that their specialty demands." Ophthalmologists tend to be very entrepreneurial and risk tolerant, and as long as they can market themselves, patients will beat a path to their doors, he says.

3. Gastroenterology. Hospitals need gastroenterologists more than GIs need hospitals. "Hospitals always have a need for GI procedures, but much of them can be done out of an outpatient setting," says Mr. Narcross. Even some third-party-payors are also helping to keep the procedures in ASC. In Massachusetts, for example, some payors are encouraging GIs to do procedures in an outpatient setting because it is so much cheaper, says Jeff Peo, a vice president of acquisitions and development at ASCOA.


There's no question that an ASC is a higher quality, lower cost environment for providing service, says John M. Poisson, executive vice president and strategic partnership officer at Physicians Endoscopy. More and more of these specialists are recognizing this fact. According to SDI's Outpatient Surgery Center Profiling Solution, from 2000 to 2009, gastroenterology had the most growth of any ASC specialty at 23 percent.


Mr. Frazier says GIs are making a shift away from being dependent on patient referrals from hospitals to self-referrals. "More patients are having colonoscopies for preventative measures and they are savvy enough to find their own physician instead of relying on a hospital referral," he says.


James Weber, MD, a gastroenterologist and president of the Texas Digestive Disease Consultants, says gastroenterologists have to be careful about giving up too much control to the hospitals or other large organizations or else they will have little control of their own future regarding how they practice medicine. This is the reason Dr. Weber says he and the group of physicians he works with have no interest in selling their practice to a hospital system.


"We enjoy our autonomy, with the ability to work at any facility and with any referring doctors," he says. "We feel that independently we can provide the best quality of care while maintaining a better work environment. The pride of ownership is reflective in one's work."

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