Some orthopedic practices have partnered with hospitals to support operations. However, the arrangement is not the best fit for all groups.
Five spine and orthopedic surgeons share their advice for smaller practices and what they need to consider when it comes to hospital partnerships.
Note: Responses were lightly edited for clarity.
Question: What should smaller practices know before entering a hospital partnership?
James Chappuis, MD. Spine Center Atlanta: Before entering a hospital partnership, smaller practices should be sure that the partnership is rooted in full transparency communication and shared values.
The basis of excellent healthcare is attentive and thorough communication. Smaller practices and hospitals should be clear in defining their roles, their expectations, and their processes to make the partnership as cohesive as possible. This also includes planning contingency strategies for emergencies, exit options and employee changes.
An integral part of making communication transparent is ensuring values align. Going into a partnership where the smaller practice and hospital's goals do not match will lead to an unsuccessful pairing. A foundation rooted in a defined, shared directive will likely lead to the most successful partnership.
Jesse Even, MD. TMI Sports Medicine and Orthopedic Surgery (Arlington, Texas): We are a smaller practice of 10 surgeons, and we have utilized a hospital partnership to bring on several of our more recent partners.
These partnerships can be beneficial to small practices that don't have the capital to fund new grad hires. However, you must read the fine print because these agreements can not only put the new physician in a relationship with a hospital system, but the entire practice also.
Your practice needs to understand the requirements from a billing and accounting standpoint, and what will be required during the agreement and years after if an audit is required. The practice also needs to have everything in the agreement delineated with regards to overhead support, call pay, etc.
I think it is also very important to understand the restrictive covenants that you are putting your practice and your new hire under when you enter into these agreements because they usually affect the ability to invest into ancillary agreements such as ambulatory surgery centers.
Rafid Kasir, MD. San Diego Orthopaedic Associates Medical Group: The collaboration between a small practice and a hospital must be approached thoughtfully. As a surgeon fresh out of training who has worked with practices of all scopes, I recommend smaller practices to first evaluate their compatibility with the hospital's culture and values. Smaller practices should prioritize patient care and long-term benefits over short-term gains. It's crucial to thoroughly understand the partnership's terms, considering factors like shared values, patient care enhancements and workflow changes. As an example, new technologies in surgery could potentially greatly enhance patient care, but the lack of direct control over procurement decisions can be a challenge for smaller practices that do not fully explore the terms of the partnership prior to entering an agreement. Smaller practices should also anticipate changes in workflow and administrative processes, and ensure that the partnership enhances their ability to provide high-quality patient care.
Roland Kent, MD. Axis Spine Center (Post Falls, Idaho): There are several possible advantages for a small practice to enter a hospital partnership, including reducing administrative costs, increasing reimbursement for professional fees (including the possibility of RVU-based reimbursement), transferring administrative burden to the hospital entity, etc. However, it's important for a small practice entering a hospital partnership to have an appreciation for the possible loss of operational autonomy. Many small clinics benefit from agile bureaucracies that can be stifled when including the hospital system's procedures in the daily operations. Agreements can be made that help maintain this autonomy (with some retained administrative burden). Additionally, it's important to know the small practice employees' tolerance of becoming part of a larger system. Intolerance may lead to attrition of some of a smaller clinic's best talent and will likely negatively affect operational efficiency.
Brian Larkin, MD. Orthopedic Centers of Colorado (Denver): Hospitals and health systems look at healthcare delivery and revenue differently than smaller orthopedic practices. Critical to the success in any partnership is where each entity can bring value that they don't already capture. Often in hospital partnerships, the hospital is looking to keep lucrative orthopedic surgeries in the hospital setting and maximize that revenue stream. Smaller practices may be enticed by potential new referral sources and primary care networks. Beyond these benefits, analyzing an orthopedic group's current contracts and how they are affected in this partnership is essential. As value-based care reimbursement becomes more established with a goal of driving the total cost of care delivery down, some of these partnerships may not survive in the same manner as they were thought up. Lastly, the terms of the contract and when renegotiation happens is critical. Healthcare economics are constantly being challenged, and that changing landscape can make the next contract term quite different than the initial one.