More spine surgeons are questioning whether insurance contracts still make financial sense as reimbursement declines, administrative burdens grow and practice costs continue to climb. Three surgeons discuss the math behind going out of network, and what ultimately tips the decision.
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Editor’s note: Responses were lightly edited for clarity and length.
Question: More spine surgeons are stepping away from insurance contracts. Walk us through your math on going out of network or to cash pay, and what tips the decision either way.
Peter Derman, MD. Endoscopic & Minimally Invasive Spine Surgeon and Founder of Peter B. Derman, MD.: The unfortunate reality of the U.S. healthcare system is that the financial incentives reward big fusion surgeries and not outpatient, minimally invasive decompressions like the endoscopic procedures I routinely perform. Cervical and lumbar disc replacement are similarly undervalued.
With increasing costs (e.g., rent, insurance, staff, benefits) and declining payments from insurance companies, there comes a point where it no longer remains economically viable to focus on the procedures about which I am so passionate.
The only options are to: 1) abandon these procedures in favor of more destructive surgeries, 2) treat patients like cattle and see an extremely high volume of them or 3) break free of the broken system. I’m unwilling to compromise on the quality of care and therefore made the decision to embrace option No. 3. As such, I founded my own boutique, private-pay practice earlier this year. While my professional fees are cash pay, patients can still use their insurance for other related costs, such as anesthesia and facility fees. This has allowed me to provide patients with minimally invasive solutions and the attention they deserve.
Brian Gantwerker, MD. Neurosurgeon and President of The Craniospinal Center of Los Angeles: Having stepped away from contracts several years ago, we have given our patients very clear and predictable costs for their care. The math was tough at first, as we had many patients have to stay in network, understandably so. The tipping point came when each Medicare patient became a net-net loss on each and every office visit. The warning bells sounded before that when my practice manager figured we were making more money in the clinic than in the OR.
It is hard to make it work, and in many markets, it’s probably not doable. If you are employed, it’s not possible, but it can be done in many instances. The Costco model of surgery won’t work anymore in that scenario and you really have to focus on high-touch and quality patient care, rather than doing as many cases as you can crank out a week. For many people, that might be scary or feel like an inversion, but for some, you might find yourself getting to know your kids and spouse a bit better.
Issada Thongtrangan, MD. Endoscopic and Minimally Invasive Spine Surgeon at MicroSpine (Scottsdale, Ariz.): Deciding whether to drop insurance contracts comes down to a clear volume-versus-margin calculation: if going out of network or cash pay increases your average per-case revenue by three to four times, you only need to retain roughly 25% to 33% of your surgical volume to break even, all while drastically slashing billing overhead and preauthorization headaches.
What ultimately tips the scales is your market and your clinical niche. For an ultra-minimally invasive, outpatient-focused practice, patients are highly motivated to pay a premium or travel out of network for a specialized, faster recovery, making a hybrid or pure cash model financially viable, whereas a practice heavy on complex, high-acuity fusions remains tethered to traditional commercial contracts.
Personally, I may look into “the hybrid compromise”: Many spine surgeons don’t go 100% cash overnight. They tip the scales by dropping their lowest-paying, highest-friction commercial contracts first, keeping one or two premium payers and offering a transparent cash-pay bundle for specific outpatient procedures, like microdiscectomies or cervical decompressions, to test the market waters.
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