Ed Hellman, MD, president and interim CEO of Indianapolis-based OrthoIndy, has navigated several healthcare challenges over the last 30 years as an orthopedic surgeon.
Chief among the challenges facing the industry today is the battle to maintain independence amid significant consolidation and as healthcare continues its shift from fee for service toward a value-based care model.
Dr. Hellman spoke to Becker's about how OrthoIndy aims to capitalize on outpatient migration, value-based care in orthopedics and the biggest opportunities for growth in the coming years.
Note: Responses are lightly edited for style and clarity.
Question: What do you see as the most pressing issue facing orthopedic practices at the moment?
Dr. Ed Hellman: The biggest thing is how to stay independent. The last decade or two we've seen reductions in reimbursements for professional services while reimbursements have stayed high on the facility side. At the same time, overhead has gone up, such as malpractice insurance, information systems and compliance. These things are very costly, and that's decreased the margins that an independent orthopedic group operates under. The successful groups have found ways to develop ancillary income streams, whether it's ownership of therapy or imaging centers or surgery centers. In our case, we have a physician-owned hospital that's part of that as well, and that has allowed us to stay independent of the major health systems.
Q: Do you see a place for small- to medium-sized orthopedic groups in the future?
EH: I would not be confident if I were in a group of three or four physicians. I think they're going to find it really difficult to maintain their income level and to be competitive. I think there is a role for independent groups, but I think that size is going to be important.
Q: What are three healthcare trends you're keeping a close eye on?
EH: In the orthopedic world, there's the move to outpatient. Over the next several years, I think you're going to see the hospital be a place where orthopedic trauma and surgery on patients with major medical comorbidities are done. Patients who may need intensive care levels will still require hospitalization, but most orthopedic cases are going to move out of the hospital into an ambulatory world.
We're also looking at videoconferencing and telehealth systems. I'm not so sure how big a part of orthopedic care it's going to be, but I do think it will play a role. It's very difficult to do a physical exam over a video link, so it won't really replace a patient coming in to have their knee, shoulder or spine examined. But there are situations where it can be extremely helpful and user-friendly for both the patient and the physician. For example, a patient who's concerned after surgery about swelling, what their incision looks like, or whether or not they're making the right progress with physical therapy, those types of situations can be easily handled over video. You can see an incision and see if a leg is swollen — many times that can help avoid patients coming into the office.
Another issue is how healthcare will be paid for. Obviously, the whole fee-for-service, third-party payer system is coming under a lot of stress as we approach 20 percent of GDP going to healthcare. A lot of our companies are looking at their healthcare spend as something that's really hurting their bottom line, and it gives us an opportunity to develop more innovative models, such as direct-to-employer contracts and bundled payment programs. The buzz term is "value-based care," but it's very difficult to find value, so I think these other ways of looking at care are going to be very important. That's also one of the reasons why smaller orthopedic groups might struggle — it really requires some degree of size to be able to participate in these programs.
Q: How has OrthoIndy approached bundled payment programs for joint replacements?
EH: We've been very successful with joint replacement bundled payments, but there's only so much you can get out of them in terms of savings. When bundled payments started, we looked at our program to determine where we could cut the fat. We put together a lot of programs regarding patient education and expectations in terms of the whole episode of care, especially what happens after you leave the hospital. If you educate patients about what they need as opposed to what they say they want, a lot of the time you can eliminate a lot of unnecessary care steps. We really cut back the number of patients leaving the surgical facility and going to another inpatient facility for rehab. We diminished discharges to extended care and acute rehab facilities. Some of the patients who may have previously gone to a facility now go home with some degree of home care.
We also assessed home care usage. A lot of people used home physical therapy or home nursing almost routinely, so we questioned if that was necessary or can we get some of the people who are going home with home care into an outpatient physical therapy location. Then we looked at the patients who were going to outpatient physical therapy facilities and asked, "Can some of these patients do their rehab on their own?" Especially now with the use of video assistance, wearables and other technologies. All of this has really diminished our post-discharge spend. The problem is once you've instituted those programs, what's next? A lot of the bundled payment programs, like the [Bundled Payments for Care Improvement] program, each year you're expected to cut more, and it becomes very difficult once you've made these initial program changes. So, we're not currently participating in that program because we don't see where it goes from here. We think that initially a lot of good came out of bundled payments, but there's only so far that you can take them.
Q: Where are OrthoIndy's biggest opportunities for growth in 2022?
EH: Because we have a physician-owned surgical hospital, we're sort of a hybrid: We're seeing some of the advantages and some of the stresses that practices see, and some of the advantages and stresses that hospitals see. Clearly we need to develop and expand our outpatient strategy because just like the community hospital down the road, procedures are going to move out of the hospital to an ASC. We need to have those ASCs positioned in the community where we can serve patients close to home, efficiently and with a positive margin as we move out of the hospital. That's likely our biggest potential for growth. We're looking at a hub-and-spoke model. I think having clinics that are closer to home that can provide services where patients live and work, and bringing only the higher-acuity procedures to our main hospital location makes the most sense.
Q: What skills are critical for healthcare leaders to thrive in today's environment?
EH: It has to start with an understanding of the entire business environment. As a physician, it's really easy to focus on day-to-day operations and what directly affects our patients and our practices, but in order to lead the organization you need a much more global view of things. I also think that there needs to be an understanding that you can't go it alone. Success is a team sport, so you need to have an open outlook in terms of talking with other groups, facilities and interested parties in the community. You need to have that negotiation ability as well as the ability to bring teams together to be successful.
Q: What personal goals do you hope to achieve in the coming years?
EH: At OrthoIndy, we've always had a physician president, which is my role now. I'm about half clinical and half administrative. I've been doing what I do clinically for 30 years, and don't think I have anything to prove in that regard. Where I get the most satisfaction now is what I'm doing administratively, working with our leadership team to try and bring OrthoIndy into the best position possible for the future to remain independent. That way when I retire, I want to see my junior partners have something bigger and better than what I started with, and I hope that they have the same attitude so their junior partners yet to come will have something bigger and better than what they start with.