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6 Different Methods for Orthopedic Surgeon-Hospital Alignment

Written by  Laura Dyrda | Friday, 25 February 2011 22:12
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There are several different ways orthopedic surgeons and orthopedic practices can align or partner with hospitals besides becoming employed physicians. Traditionally, non-employed physicians operated their practices and regarded the hospital as only the location for performing surgery. However, due to the changing healthcare environment, many orthopedic physicians are opting to create a partnership or alignment with hospitals in their community.


"There have been changes promoting a tighter relationship between hospitals and non-employed physicians," says Brian McCartie, vice president of Culbert Healthcare Solutions, an operations management, revenue cycle, clinical transformation and information technology firm. "Demand significantly outstrips supply of orthopedic surgeons. The make up of the next generation of physicians has changed with a high percentage being female and looking for a more secure and balanced work life balance. Community hospitals in a market where the orthopedists are independent and more focused on ambulatory care must be proactive in securing alignment with community physicians to ensure they meet the hospitals community obligation."

Orthopedic surgeons and industry experts discuss the different types of agreements emerging between orthopedists and hospitals.

1. Accountable care organizations. Orthopedic surgeons and hospitals can work together to form a type of accountable care organization. The national guidelines stipulating what constitutes an ACO have not been released, but many surgeons and hospitals are beginning to create a partnership that could be the basis for an ACO. "As we move into this new era of ACOs, hospital-physician alignment is going to become even more critical than it ever has in the past," says Matt Reigle, of Marshall | Steele, a healthcare firm focused on transforming hospital services into destination centers. "In order to achieve good outcomes, physicians and hospitals must be aligned on compensation, goals and metrics to improve outcomes, patient satisfaction and compensation."

There are several different ways to facilitate an ACO, and hospitals are acquiring physician practices or creating co-management arrangements to begin the partnership. In many cases, the reimbursement for orthopedic care is based on the quality of outcomes instead of on the volume of patients seen, says Mr. McCartie. The compensation associated with an ACO is bundled and each specific agreement details the percent physicians receive.

2. Strategic alignment through co-management agreements.
Strategic alignments between hospitals and orthopedic surgeons are based on agreement of appropriate metrics, goals for future accomplishment and acknowledgement of the baseline data. Financial terms of the agreement should also be clearly stated upfront, says Mr. Reigle. As a result of the co-management, hospitals should provide a program manager to make sure the arrangement continues to remain lawful and managed appropriately. Surgeons also need to provide strong leadership for the program. "The absence of leadership from either the administrative or physician side will cause the program to atrophy due to the lack of single point accountability to make sure all problems are solved," he says. "Co-developing a program with a hospital helps physicians maintain independence, but also secures a role for them in the future to have a strong relationship with the hospital."

Sanjay Jatana, MD, founder of Denver Spine, is part of a co-management agreement with one of the hospitals in his area. The physicians who work within the orthopedic specialty at the hospital created a company to form an operating agreement with the hospital. Inclusion in the company is based on credentialing and a quality of care set up by the physician group. "The concept is that a company is created by a bunch of physicians working at the hospital and the prime function of the company is to improve quality and efficiency of care for that institution," he says. Benchmarks in 18-20 categories are set for several different components to improve the efficiency of the surgical process, decrease readmission rates and length of stay and minimize the cost of implants. Once the benchmarks are set, surgeons must meet the benchmarks 100 percent in each category to receive extra compensation.

"The idea is that it's not gainsharing, it's more of a co-management agreement that has nothing to do with the volume of surgery being conducted at the facility," says Dr. Jatana. "It's designed more toward quality and efficiency." Under these agreements, physicians aren't putting in time that isn't reimbursed and are able to use the hospital's database to monitor patients.

3. Joint ventures on a surgery suite. Orthopedic and spine surgeons can enter into a joint-venture agreement to manage an orthopedic or trauma center. One way the two parties can collaborate is though extra compensation for on-call time. "For some orthopedists, their call duty is secondary to the responsibilities at their practice; the people who they see on-call are often uninsured," says Mr. McCartie. Joint ventures can also result in single-signature contracts where the physicians remain independent, but the hospital provides them with a physician's assistant and other staff as well as access to the hospital's electronic medical records and billing services. "This way, the physician runs a leaner shop because he or she doesn't have the overhead expenses associated with staff employment," says Mr. McCartie.

This type of agreement is also beneficial for surgeons because the hospital often provides the appropriate equipment and block time for the physicians involved, says Dr. Jatana. It can take a medical team that isn't familiar with each other a long time to do the pre-operative assessment and make sure that the operating room is ready for surgery. However, if the surgeons regularly work with the same team of professionals at the hospital, they can become more efficient with their work. However, physicians and hospitals must make sure the joint venture doesn't violate the Stark Act.

4. Management services agreement.
Under management services agreement, the hospital partners with a physician to manage the hospital's service line with financial remunerations, says David Ott, MD, a surgeon with Arizona Orthpaedic Associates in Phoenix. These agreements can either be comprehensive or limited, depending on how both parties wish to align. Some of these agreements include hospitals essentially "leasing" operating rooms for the surgeons to employ the staff of the hospital and run the department as a mini-hospital within the hospital. "For a really busy surgeon, this type of agreement could mean a significant revenue enhancement," says Dr. Ott. "The compensation is a demonstrable amount that is pre-negotiated and measurable."

Hospitals can't legally pay for referrals, but if the partnership with the physician demonstrates savings, the physician can share in that. "Physician groups will contract with the hospital in a managed services agreement, where the physicians share in the hospital's gain," says Dr. Ott. "For example, if there is a reduction in the price of implants used at the hospital, the physicians would share in that gain." For more limited agreements, there might not be financial gains for the surgeons, but they can hold a leadership position where they work on efficiencies and agree upon policies and procedures within the hospital.

In gainsharing agreements, make sure that the financial agreement is separate from any other agreements between the two parties, says Dr. Jatana. "Depending on what part of the country you're in, the local regulatory issues and the hospital environment, orthopedic surgeons can see if an additional separate agreement can be feasible," he says. "The other important part of the agreement is that each entity should have a 30-60 day 'out' so there's no lock-in for a minimal timeframe. Federal regulations are always changing and it may become too risky for one of the parties to continue."

5. Paid leadership agreement. Hospitals can pay individual surgeons to take on leadership roles within the hospital, such as medical director, says Dr. Ott. This requires the orthopedic surgeon to attend meetings, create policies and implement new procedures and processes at the hospital. Under other leadership agreements, an entire orthopedic staff may contract with the hospital and spread part of the savings equally among the group while the other part is given to surgeons based on their individual efforts. If the hospital builds up the orthopedic service line and the surgeons are invested in leading it, patient volume at the facility can increase.

"One of the traditional models is for hospitals to advertise a service line, such as great orthopedic care, without mentioning a particular physician," says Dr. Ott. "However, sometimes patients are looking for a specific physician and will go to the hospital where the surgeon is a leader. Hospitals will try to build up the business for the physicians through advertising the surgical and patient education programs. The relationship can increase referrals to physicians and improve the service line to the hospital."

6. Partnership on new technology and surgical systems.
Much of the new technology today is focused on minimally invasive orthopedic and spine surgery, which sometimes require large and expensive devices such as the C-arm and SpineAssist. Orthopedic and spine surgeons working through surgery centers may not have the capital to invest in these types of systems, whereas the hospital could purchase the technology and partner with a physician trained in the surgery to promote a new procedure, says Mr. McCartie. "The question becomes: How does the hospital facilitate the agreement so the technology is available for the surgeons to use?" he says.

Read other coverage on orthopedic and spine surgeon alignment:

- 5 Benefits and Challenges of Co-Management Agreements for Orthopedic Surgeons

- The Future of Orthopedic Surgeon Employment: 3 Core Concepts

Last modified on Monday, 21 March 2011 13:40
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