Here are answers to eight big questions on orthopedic practice management.
Q1: How can our practice evolve to accommodate the changing healthcare environment and still turn a profit?
Reimbursement rates for Medicare patients, and increasingly private payors, are low and continuing to sink. As a result, more specialists are trying to build a cash-based system that attracts patients who are willing to pay a little extra for these services. "The whole purpose of my business model is to convert the practice to attract the cash patient," Geoffrey Connor, MD, founder of D1 Sports Medicine in Birmingham, Ala. "There are patients who see healthcare as something they want to improve their athletic performance."
There are several services orthopedic and sports medicine specialists can add to their practices that will increase its value. From a medical prospective, adding extra equipment to perform procedures such as platelet-rich plasma injections or in-office fiberoptic arthroscopy gives patients additional options if they choose to pay more out-of-pocket.
There are also several non-medical services sports medicine practices can add to bring in additional patients and revenue. Dr. Connor's practice includes equipment to perform nutritional analyses, cholesterol monitoring, C-reactive protein monitoring and the "Bod Pod" to perform body mass indexes, among other services. "These services measure patients' performances and helps them achieve their goals," he says. "My training is in surgical reconstruction of the joints, but I can provide other services and patients will see them as an added value."
For cash services, his practice has issued coupons for discounts. "We have worked on some different coupons for cash-based services, whether it's the body fat analysis, monitoring or platelet-rich plasma injections, to bring patients into our practice for non-payor based services," he says. "Patients really respond to that."
Q2: We are thinking of expanding our market reach to include satellite locations in surrounding communities. How can we tell if the community will be able to support our new location?
It is always important to gauge the potential for success before making a commitment to build in the community. Rothman Institute, which opened its 15th office this past summer, collects population demographic information first and then evaluates the potential patient volume. Taking on a hospital partner helps make the expansion less risky and begins to grow your professional network in the area. A primary goal of the practice is establishing strong relationships with a hospital partner, which allows practice physicians to integrate with the hospital but remain independent.
"One of the ways we are able to do integrate is through co-management arrangements where we partner with the respective hospitals by getting our physicians to participate in leadership positions," says Mr. West. "We think that by integrating with the hospitals, we are able to serve the same roles that hospitals are looking for when they hire physicians. We try to meet the hospitals' strategic needs while giving the physicians an option to remain independent."
As for the location, it will also take strategic planning to make sure you are in the right place to drive business. Every time Rothman decides to expand into a new community, the practice leaders must find a good location that will be easily accessible to the residents of that community. For example, after a while the practice began to outgrow its office in Voorhees, N.J., so they decided to ease the burden on that office by constructing a new location in Marlton, which is a little further north.
"This location really provided accessibility to the residents of South Jersey," says Mr. West. "Our South Jersey office is our fastest growing area — we experienced a 30-35 percent growth over the past three years. We see positive population growth in the future because we are opening offices in areas we haven't captured before with our other offices. By expanding, we hope to make our physicians easily accessibly for our patients."
Q3: How can our practice reduce staff turnover?
It's important to keep good staff members who know how to treat patients consistent with your group's patient-centered culture and can quickly answer any questions patients might have about their care. Training new staff members takes a great deal of time and money, and if they leave the practice quickly they are a drain on resources. "Practices have to remember that their most valuable resources are their staff and they have to work really hard to keep their staff happy," says John Wipfler, CEO of OA-Centers for Orthopaedics. "The average medical practice turnover rate is 18-19 percent and we are somewhere around 9 percent — half of the national average."
Practices can begin by offering fair, if not generous, salaries to their employees to show how valuable they are to the practice. However, the effort to keep employees happy shouldn't stop there. "Pay is only the beginning and it doesn't need to be at the top of the scale," says Mr. Wipfler. "Respecting their wisdom, giving them a voice in the practice, having working committees with staff and creating many channels for hearing about what they are thinking and feeling. We want to keep morale up and be very transparent about what is happening in the practice. Enlist them in helping you solve your problems."
Q4: I would like our small orthopedic group to merge with another small orthopedic group to form a larger group, thereby having stronger leverage in our community. How can I engage physician buy-in for this plan?
It's important for physician partners on both sides to have the same goals and share in each others' success. Earlier this year, four smaller orthopedic groups in Texas merged to form a large group practice, OrthoTexas. When Michael Schwartz, MD, board president of OrthoTexas, met with the other physician leaders to iron out the merger, it was important for everyone to understand that nobody was trying to take advantage of anybody else or profit from the other groups. "If we all worked together, we would benefit," he says. "A big part of the growth process was getting used to that idea. We're looking at this as a merger; this is for the benefit of us all. The merger will allow us to exist in the new healthcare environment in a better way than any of us could have in our individual groups."
After the initial meetings about the merger, the lead representatives from each practice went back to their respective partners and talked about the discussions. It was through these channels that the leaders were able to share their ideas with their partners and create a culture of trust and togetherness. While the idea of a merger between the four groups was bouncing around early, it took a long time for the concept to come to fruition. "There were a lot of meetings and discussions that provided face time for people to get to know each other and become comfortable with their future partners," says Dr. Schwartz.
Q5: When should the senior surgeons at our practice begin succession planning?
Ideally, orthopedic practices will have a succession plan written from inception and every surgeon who becomes a partner agrees to the plan at that time. However, this doesn't hold true in many cases, especially for small groups or single physician practices. If a plan wasn't created at the onset, orthopedic surgeons should begin succession planning at least five years before they plan on retiring because the transition can easily take two or more years to complete.
"In my experience, physicians are often unprepared for the final moment when they move on," says Glenn Molin, DC, MBA, a senior business intermediary at CI Harvest in Columbia, Md. "Hopefully, their financials are in order and they have a team in place that was there from the onset enabling them to create a practice that runs like a business because there will be issues and consideration with taxes, Stark laws and liability. If you deal with it early upfront and allow the plan to be fluid and flexible, it will be much easier when the transition occurs because you'll know exactly what you need."
The succession process includes several steps:
• Writing an agreement for succession planning between the surgeon and the practice
• Locating a successor for the practice
• Performing valuation of the practice
• Initiating and completing the financial transaction
• Transitioning patients to the new surgeon
Surgeons can either look internally or externally for the surgeon who will succeed them. If the practice is large enough, the senior partner can recruit a junior partner to take on the shares after retirement. If the group will need to recruit another physician to buy-in to the practice, looking externally might be the best option. Often, surgeons coming right out of medical school and training are the most available for recruitment, but they aren't in the best position to fully purchase shares of the senior physician's practice, which can lead to financing issues.
"If you look at Apple, they had succession planning in place so even though they lost their founder, they could still operate," says Wayne J. Miller, Esq., a healthcare transaction and regulatory attorney and founding partner of Compliance Law Group in Los Angeles, Calif. "It works the same way in medical practices and particularly in orthopedics because that's still a field where there is a physician shortage. The problem is there is a lot of need for new orthopedists, but not a lot of experienced owner physicians for retiring surgeons to sell their practice to. The thought about 'what is going to happen if we aren't here' is an exercise that senior surgeons need to get involved in as soon as they can."
Q6: How can our physician group work successfully with our local hospital on a co-management arrangement for the orthopedic service line?
Orthopedic surgeons are accustomed to hospitals looking at them for support, says Rick Wilfong of Rick Wilfong Consulting, but surgeons need to start looking at hospitals as customers as well. "Too often with physicians, it's more about 'what can you do to help me earn money,' and it needs to be 'here is what I can offer you'," he says. "Surgeons need to be able to talk to hospital executives about what type of cases they have, case volume and their payor mix. It shows the hospital that these surgeons are taking the partnership seriously." Hospital executives will be interested in knowing your practice metrics, such as cost for doing each procedure, recidivism rate and other quality indicators before entering into a committed partnership with you or your practice.
Once the partnership has been cemented, understand that you won't be able to change the hospital's orthopedic department overnight. Hospitals are racked with bureaucracy, and even the most optimistic orthopedic surgeons aren't going to immediately change the system through an alignment or joint venture. "A lot of surgeons believe you can implement changes quickly and hospitals should do something differently beginning tomorrow. The surgeon has to know the system and work through it," says Neel Anand, MD, director of orthopedic spine surgery for the Spine Center at Cedars-Sinai Medical Center in Los Angeles. Throughout these meetings and negotiations, it is particularly important that orthopedic surgeons help administrators understand their point-of-view through the lens of financial gain because most administrators don't have a medical background and may not understand medical implications driving a decision.
Q7: Where should we focus our practice marketing efforts?
Depending on the community and target audience, there are several different marketing methods that can work for your orthopedic practice. If you are a group of sports medicine physicians targeting young athletes, you should focus your marketing efforts with local athletic leagues and schools to increase your visibility. This may mean sitting on the sidelines as a team physician during games, sending an athletic trainer to practices or presenting at the beginning of the season meetings. If you are targeting patients who are undergoing elective surgery, using social media to promote your practice may be most effective. Surgeons can promote their community outreach events through social media outlets. Remind patients about your orthopedic webinars or seminars to improve attendance. "There's 500 million people on Facebook, and 120 million users are in the United States," says John Luginbill, CEO of The Heavyweights, a marketing company. "There's a whole lot more people gathering information from the computer than picking up the newspaper."
If your practice is focusing more on the exploding baby boomer population, online marketing and social media may not be your best focus. Instead, optimize your resources by focusing on the type of communication that reaches this population: print media or personal contact. Surgeons can give lectures at local gyms during the day focused on best practices for nursing injuries, staying healthy and keeping a nutritious lifestyle. "Typically, the population that attends these sorts of events are the middle and older age group," says James N. Gladstone, MD, co-chief of sports medicine at Mount Sinai Medical Center in New York City. "I often find that people come in and their knees hurt because they are overweight. They want to lose the weight but can't run. We can be helpful in offering alternatives based on the patient's specific ability."
For print media, you can focus on placing yourself in publications baby boomers are likely to read. Place articles or advertisements in magazines with an older audience, such as AARP or Vim and Vigor, says Gary S. Levengood, MD, founder of Sports Medicine South in Atlanta. He has published patient profiles about the work he's done with older patients in such publications, which attracts the publication's readership to his office. "People read the profiles about patients coming in not being able to do things and then we get them back to their lives," says Dr. Levengood. "The readers say, 'Hey, that's me. I'm not ready to pack it in yet, I'm ready to keep going.'"
Q8: When we are recruiting new junior partners, how can we tell who will be the best fit for our practice?
It's important for new physicians to fit within your group's ethic and work well with senior partners. However, it's hard to tell whether a new surgeon will make a positive impact on the practice from a single interview. "You're not going to find out everything just by meeting the candidate," says David Ott, MD, president of the nine-physician group Arizona Orthopaedic Associates in Phoenix. "It's about trying to do what is right for the group and right for the physician. We tell candidates that it behooves them for the partnership to be as happy as it can be."
Here are a few red flags for physician leaders interviewing potential partners: surgeons who have multiple practice locations already on their resume; surgeons who have average reviews from references and negative reviews from former colleagues; surgeons needing an exception to practice rules before agreeing to join; and surgeons who don't spend any time in the community before setting their sites on become one of your practice partners.
Related Articles on Orthopedic Practices:
20 Orthopedic Practice Partnerships and Expansions
10 Marketing Strategies Orthopedic Practices Can Apply Now
8 Points on Succession Planning for Orthopedic Surgeons
Q1: How can our practice evolve to accommodate the changing healthcare environment and still turn a profit?
Reimbursement rates for Medicare patients, and increasingly private payors, are low and continuing to sink. As a result, more specialists are trying to build a cash-based system that attracts patients who are willing to pay a little extra for these services. "The whole purpose of my business model is to convert the practice to attract the cash patient," Geoffrey Connor, MD, founder of D1 Sports Medicine in Birmingham, Ala. "There are patients who see healthcare as something they want to improve their athletic performance."
There are several services orthopedic and sports medicine specialists can add to their practices that will increase its value. From a medical prospective, adding extra equipment to perform procedures such as platelet-rich plasma injections or in-office fiberoptic arthroscopy gives patients additional options if they choose to pay more out-of-pocket.
There are also several non-medical services sports medicine practices can add to bring in additional patients and revenue. Dr. Connor's practice includes equipment to perform nutritional analyses, cholesterol monitoring, C-reactive protein monitoring and the "Bod Pod" to perform body mass indexes, among other services. "These services measure patients' performances and helps them achieve their goals," he says. "My training is in surgical reconstruction of the joints, but I can provide other services and patients will see them as an added value."
For cash services, his practice has issued coupons for discounts. "We have worked on some different coupons for cash-based services, whether it's the body fat analysis, monitoring or platelet-rich plasma injections, to bring patients into our practice for non-payor based services," he says. "Patients really respond to that."
Q2: We are thinking of expanding our market reach to include satellite locations in surrounding communities. How can we tell if the community will be able to support our new location?
It is always important to gauge the potential for success before making a commitment to build in the community. Rothman Institute, which opened its 15th office this past summer, collects population demographic information first and then evaluates the potential patient volume. Taking on a hospital partner helps make the expansion less risky and begins to grow your professional network in the area. A primary goal of the practice is establishing strong relationships with a hospital partner, which allows practice physicians to integrate with the hospital but remain independent.
"One of the ways we are able to do integrate is through co-management arrangements where we partner with the respective hospitals by getting our physicians to participate in leadership positions," says Mr. West. "We think that by integrating with the hospitals, we are able to serve the same roles that hospitals are looking for when they hire physicians. We try to meet the hospitals' strategic needs while giving the physicians an option to remain independent."
As for the location, it will also take strategic planning to make sure you are in the right place to drive business. Every time Rothman decides to expand into a new community, the practice leaders must find a good location that will be easily accessible to the residents of that community. For example, after a while the practice began to outgrow its office in Voorhees, N.J., so they decided to ease the burden on that office by constructing a new location in Marlton, which is a little further north.
"This location really provided accessibility to the residents of South Jersey," says Mr. West. "Our South Jersey office is our fastest growing area — we experienced a 30-35 percent growth over the past three years. We see positive population growth in the future because we are opening offices in areas we haven't captured before with our other offices. By expanding, we hope to make our physicians easily accessibly for our patients."
Q3: How can our practice reduce staff turnover?
It's important to keep good staff members who know how to treat patients consistent with your group's patient-centered culture and can quickly answer any questions patients might have about their care. Training new staff members takes a great deal of time and money, and if they leave the practice quickly they are a drain on resources. "Practices have to remember that their most valuable resources are their staff and they have to work really hard to keep their staff happy," says John Wipfler, CEO of OA-Centers for Orthopaedics. "The average medical practice turnover rate is 18-19 percent and we are somewhere around 9 percent — half of the national average."
Practices can begin by offering fair, if not generous, salaries to their employees to show how valuable they are to the practice. However, the effort to keep employees happy shouldn't stop there. "Pay is only the beginning and it doesn't need to be at the top of the scale," says Mr. Wipfler. "Respecting their wisdom, giving them a voice in the practice, having working committees with staff and creating many channels for hearing about what they are thinking and feeling. We want to keep morale up and be very transparent about what is happening in the practice. Enlist them in helping you solve your problems."
Q4: I would like our small orthopedic group to merge with another small orthopedic group to form a larger group, thereby having stronger leverage in our community. How can I engage physician buy-in for this plan?
It's important for physician partners on both sides to have the same goals and share in each others' success. Earlier this year, four smaller orthopedic groups in Texas merged to form a large group practice, OrthoTexas. When Michael Schwartz, MD, board president of OrthoTexas, met with the other physician leaders to iron out the merger, it was important for everyone to understand that nobody was trying to take advantage of anybody else or profit from the other groups. "If we all worked together, we would benefit," he says. "A big part of the growth process was getting used to that idea. We're looking at this as a merger; this is for the benefit of us all. The merger will allow us to exist in the new healthcare environment in a better way than any of us could have in our individual groups."
After the initial meetings about the merger, the lead representatives from each practice went back to their respective partners and talked about the discussions. It was through these channels that the leaders were able to share their ideas with their partners and create a culture of trust and togetherness. While the idea of a merger between the four groups was bouncing around early, it took a long time for the concept to come to fruition. "There were a lot of meetings and discussions that provided face time for people to get to know each other and become comfortable with their future partners," says Dr. Schwartz.
Q5: When should the senior surgeons at our practice begin succession planning?
Ideally, orthopedic practices will have a succession plan written from inception and every surgeon who becomes a partner agrees to the plan at that time. However, this doesn't hold true in many cases, especially for small groups or single physician practices. If a plan wasn't created at the onset, orthopedic surgeons should begin succession planning at least five years before they plan on retiring because the transition can easily take two or more years to complete.
"In my experience, physicians are often unprepared for the final moment when they move on," says Glenn Molin, DC, MBA, a senior business intermediary at CI Harvest in Columbia, Md. "Hopefully, their financials are in order and they have a team in place that was there from the onset enabling them to create a practice that runs like a business because there will be issues and consideration with taxes, Stark laws and liability. If you deal with it early upfront and allow the plan to be fluid and flexible, it will be much easier when the transition occurs because you'll know exactly what you need."
The succession process includes several steps:
• Writing an agreement for succession planning between the surgeon and the practice
• Locating a successor for the practice
• Performing valuation of the practice
• Initiating and completing the financial transaction
• Transitioning patients to the new surgeon
Surgeons can either look internally or externally for the surgeon who will succeed them. If the practice is large enough, the senior partner can recruit a junior partner to take on the shares after retirement. If the group will need to recruit another physician to buy-in to the practice, looking externally might be the best option. Often, surgeons coming right out of medical school and training are the most available for recruitment, but they aren't in the best position to fully purchase shares of the senior physician's practice, which can lead to financing issues.
"If you look at Apple, they had succession planning in place so even though they lost their founder, they could still operate," says Wayne J. Miller, Esq., a healthcare transaction and regulatory attorney and founding partner of Compliance Law Group in Los Angeles, Calif. "It works the same way in medical practices and particularly in orthopedics because that's still a field where there is a physician shortage. The problem is there is a lot of need for new orthopedists, but not a lot of experienced owner physicians for retiring surgeons to sell their practice to. The thought about 'what is going to happen if we aren't here' is an exercise that senior surgeons need to get involved in as soon as they can."
Q6: How can our physician group work successfully with our local hospital on a co-management arrangement for the orthopedic service line?
Orthopedic surgeons are accustomed to hospitals looking at them for support, says Rick Wilfong of Rick Wilfong Consulting, but surgeons need to start looking at hospitals as customers as well. "Too often with physicians, it's more about 'what can you do to help me earn money,' and it needs to be 'here is what I can offer you'," he says. "Surgeons need to be able to talk to hospital executives about what type of cases they have, case volume and their payor mix. It shows the hospital that these surgeons are taking the partnership seriously." Hospital executives will be interested in knowing your practice metrics, such as cost for doing each procedure, recidivism rate and other quality indicators before entering into a committed partnership with you or your practice.
Once the partnership has been cemented, understand that you won't be able to change the hospital's orthopedic department overnight. Hospitals are racked with bureaucracy, and even the most optimistic orthopedic surgeons aren't going to immediately change the system through an alignment or joint venture. "A lot of surgeons believe you can implement changes quickly and hospitals should do something differently beginning tomorrow. The surgeon has to know the system and work through it," says Neel Anand, MD, director of orthopedic spine surgery for the Spine Center at Cedars-Sinai Medical Center in Los Angeles. Throughout these meetings and negotiations, it is particularly important that orthopedic surgeons help administrators understand their point-of-view through the lens of financial gain because most administrators don't have a medical background and may not understand medical implications driving a decision.
Q7: Where should we focus our practice marketing efforts?
Depending on the community and target audience, there are several different marketing methods that can work for your orthopedic practice. If you are a group of sports medicine physicians targeting young athletes, you should focus your marketing efforts with local athletic leagues and schools to increase your visibility. This may mean sitting on the sidelines as a team physician during games, sending an athletic trainer to practices or presenting at the beginning of the season meetings. If you are targeting patients who are undergoing elective surgery, using social media to promote your practice may be most effective. Surgeons can promote their community outreach events through social media outlets. Remind patients about your orthopedic webinars or seminars to improve attendance. "There's 500 million people on Facebook, and 120 million users are in the United States," says John Luginbill, CEO of The Heavyweights, a marketing company. "There's a whole lot more people gathering information from the computer than picking up the newspaper."
If your practice is focusing more on the exploding baby boomer population, online marketing and social media may not be your best focus. Instead, optimize your resources by focusing on the type of communication that reaches this population: print media or personal contact. Surgeons can give lectures at local gyms during the day focused on best practices for nursing injuries, staying healthy and keeping a nutritious lifestyle. "Typically, the population that attends these sorts of events are the middle and older age group," says James N. Gladstone, MD, co-chief of sports medicine at Mount Sinai Medical Center in New York City. "I often find that people come in and their knees hurt because they are overweight. They want to lose the weight but can't run. We can be helpful in offering alternatives based on the patient's specific ability."
For print media, you can focus on placing yourself in publications baby boomers are likely to read. Place articles or advertisements in magazines with an older audience, such as AARP or Vim and Vigor, says Gary S. Levengood, MD, founder of Sports Medicine South in Atlanta. He has published patient profiles about the work he's done with older patients in such publications, which attracts the publication's readership to his office. "People read the profiles about patients coming in not being able to do things and then we get them back to their lives," says Dr. Levengood. "The readers say, 'Hey, that's me. I'm not ready to pack it in yet, I'm ready to keep going.'"
Q8: When we are recruiting new junior partners, how can we tell who will be the best fit for our practice?
It's important for new physicians to fit within your group's ethic and work well with senior partners. However, it's hard to tell whether a new surgeon will make a positive impact on the practice from a single interview. "You're not going to find out everything just by meeting the candidate," says David Ott, MD, president of the nine-physician group Arizona Orthopaedic Associates in Phoenix. "It's about trying to do what is right for the group and right for the physician. We tell candidates that it behooves them for the partnership to be as happy as it can be."
Here are a few red flags for physician leaders interviewing potential partners: surgeons who have multiple practice locations already on their resume; surgeons who have average reviews from references and negative reviews from former colleagues; surgeons needing an exception to practice rules before agreeing to join; and surgeons who don't spend any time in the community before setting their sites on become one of your practice partners.
Related Articles on Orthopedic Practices:
20 Orthopedic Practice Partnerships and Expansions
10 Marketing Strategies Orthopedic Practices Can Apply Now
8 Points on Succession Planning for Orthopedic Surgeons