Future of Physician-Owned Facilities: Q&A With Dr. Jeff Hessing of Treasure Valley Hospital and SCA

Jeff Hessing, MD, is an orthopedist and physician-owner of Treasure Valley Hospital in Boise, Idaho, as well as a member of the physician leadership team for Surgical Care Affiliates. He has been in practice for more than 25 years in Boise and is part of an orthopedic group that has remained independent in its practice, unlike the estimated 60 percent of orthopedists in the Boise area who are employed by one of the two large hospitals in town.


Dr. Hessing is also a former physician-owner of an orthopedic-driven ambulatory surgery center, which was sold to a hospital in Dec. 2009, and is part of a group exploring new ASC ownership opportunities in Boise.


Dr. Hessing discusses his outlook on the future of physician-owned facilities and why Boise can serve as a model for physician ownership. Editor's note: Share your thoughts on the future of physician-owned facilities by emailing rob@berckersasc.com.


Q: Physician employment by hospitals is a growing trend, as is evident in Boise, and yet you have not only maintained independence as a practice and ownership in a hospital but are in discussions about becoming an owner of an ASC for a second time. Why are you seemingly going against the hospital-employment trend?


Dr. Jeff Hessing: I believe that physicians need to stay at the reign of healthcare and that's the opinion of our group. When our ASC was sold to one of the large hospitals two years ago, I was not one voting in favor of it. Overnight our prices were doubled when the hospital took control of our facility and converted it to their own facility. We had several patients complain about that transition, wanting to know why two years ago they had their knee scoped at the ASC for $7,000 and now it was costing $18,000.


On the other hand, for the specialty hospital which I have 4 percent ownership in (Treasure Valley Hospital is 60 percent owned by physicians, 40 percent owned by SCA), we have just completed an interesting review of our EOB information and we have very good information on pricing in this town. We can show that our pricing at Treasure Valley Hospital is indeed approximately 50 percent below market of the big hospitals in town for outpatient surgical charges. I'm very aware of what physician-owned facilities in this town cost, charge and are reimbursed and can compare those to the other two major hospital systems in town.


If you look at the [Medicare Hospital Compare website at www.hospitalcompare.hhs.gov] which has Medicare data taken from millions of Medicare claims and rates hospitals by area, go to our zip code in Boise and you'll find we are the highest rated facility when it comes to patient satisfaction, safety measures and quality. I know that the physician-owned facilities I have been a part of are the highest-quality, most-efficient and least-costly facilities in the region. I believe that happens because physicians are in charge of healthcare. We can balance the patients' needs with the bottom line. We can make the right decisions that bring down the costs of what we do.


At our facility, we treat almost the exact same percentage of Medicare and Medicaid that the other facilities in town treat. We do no-pays and we write-off, on a percentage basis, more of our care than they do. At the same time we pay taxes and we work for-profit. I've been in this practice now for 15 years with my own facilities, and I absolutely believe we are the low-cost, high-efficiency, high-quality providers. I believe that is why I am so bullish about physician-owned facilities.


Q: How do you see your business growing with increasing competition from the large hospitals?


JH: I believe that the downward pressure on pricing and reimbursements in our system in the future will drive cases out of the big facilities like our two local hospitals into facilities like Treasure Valley Hospital or physician-owned ASCs, and they'll be driven there because of the cost savings and high quality. Rather than threatening our survival, I believe it will fuel our growth in the future. I personally see that as a must if healthcare in this country is going to survive. You have to get these cases into facilities that can do them much cheaper and at a higher quality.


Q: What efforts are you undertaking to bring in more cases?


JH: We are evaluating all of the options. We are in the process right now of talking with a local physician-run network to work out a cost structure with companies signed-on [to the network] to put us on a first tier for their surgical care for the cases we do. They'll get a lower expense to the employee for that decision.


Another of our efforts is focused on two large family practice groups in town, which are 50-60 member groups. We are talking with both of them to reassure them there are independents in this market. We're organizing the independent doctors in this town around a common theme of maintaining our independence, supporting one another.


You have to be creative. You have to have a compelling story hat shows there are other alternatives [to hospital employment]. We're showing Treasure Valley that this is what's happening. I believe we have stayed the initial rush and now I think we're going to see growing support.


I believe the future is driving patients to us, not away from us, because the hospitals can't compete with us for what we do. That's why I think we're standing exactly squarely where I want to be. I think that's where the patients are coming. I know that's also the opinion of SCA and the private equity group that's behind us. We do have some hurdles to overcome. Most of that is the public doesn't really know about us but I believe we're getting our story out.


Q: How are you able to maintain such optimism and confidence in physician-ownership when so many of your peers in Boise have moved to physician employment?


JH: I think [Boise has] probably one of the highest percentages for hospital-employed orthopedists you're going to see in the country as I look at the data. And I think if we can [have successful physician-owned facilities] here in Boise with the kind of employment, it can be done anywhere. It's really paranoia that's driving physicians to the hospitals today. They're afraid of all of the pending legislation, accountable care organizations and how they are going to remain competitive.


I can tell you we're going to compete just fine as physician-managed facilities. I think Boise is a good test case. Give it another 2-3 years in Boise and I think you'll see the pendulum swing the other way. For some physicians who are employed by hospitals now, like many urologists in the area, their contracts with the hospitals are just ending and most of them have decided not to up again and not let the hospital employ them again. It's already starting to crack in Boise. I think you'll see those who want to ride it out will do just fine.


If you can offer physicians an alternative that makes sense to them and lets them maintain their independence, that's what a physician will choose. That's why we all went into medicine. I don't believe we went into medicine hoping we would be employed by a hospital.


Learn more about Treasure Valley Hospital and Surgical Care Affiliates.


More Articles Featuring SCA:

5 Surgery Center Specialties Predicted to Grow in 2011

Surgical Care Affiliates Enters Into Agreement With Jewish Hospital & St. Mary's HealthCare in Louisville

New Spine Program Benefited From Planning, Collaboration

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