'We're at a perfect size now': EmergeOrtho sets sights on MSOs, clinically integrated networks

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In 2016, four orthopedic groups merged to form Durham, N.C.-based EmergeOrtho, which added a fifth group the following year. Since then, the statewide orthopedic group has expanded to more than 140 physicians and 46 locations.

Frank Aluisio, MD, orthopedic surgeon and physician president of EmergeOrtho, spoke to Becker's about overcoming practice integration challenges, why he's excited about the transition to value-based care and how EmergeOrtho aims to grow in the next five years.

Question: As a larger orthopedic group, what are some of the biggest advantages you have over smaller groups in your market?

Dr. Aluisio: We cover a broad geographic area in North Carolina. Since we're covering multiple markets in the state, we have access to a greater number and larger variety of patients than any single orthopedic group or a single hospital franchise in one market. With our size, we have much greater economies of scale when it comes to purchasing, back-office functions, human resources, etc. We also have a greater ability to adapt to varying situations than smaller groups, both from a financial and manpower standpoint.

When you compare us to the hospitals, as we transition to value-based care, just by definition — with value being quality divided by cost — we feel as a large independent group we can provide higher value care because we can provide equal or better quality at a much lower cost than the hospitals. We're poised to really thrive in a value-based system.

Q: In terms of value-based care, how is EmergeOrtho approaching bundled payments for joint replacements?

FA: A few of our regions have been participating in procedural bundles for quite a while, such as hip and knee bundles, but in the last year our overall group has been participating in these bundles. That's our primary inroad into value-based care. In the future, we aim to get involved in population health for musculoskeletal care across all regions in the state. We truly believe that value-based care is coming, and we're prepared to take the next steps beyond just procedural bundles, in which we've seen tremendous success — specifically in two of our markets, but now we're seeing success across the whole state.

Q: There are well-documented complexities with spine surgery bundled payments. Has EmergeOrtho been able to find success with spine bundles?

FA: The limiting factor in participating in commercial bundles is getting the payers to follow. It's a difficult transition for them because they have to change certain things in their infrastructure. We have relationships with at least one commercial payer where we're getting ready to launch spine bundles. It hasn't taken effect yet, but we anticipate it will take off this year.

Q: What are some of the challenges you run into as a larger organization that medium-sized orthopedic groups may not run into?

FA: There are definitely challenges in the developmental stage of the practice, particularly when you're bringing in successful groups with their own way of operating and they've been doing things their own way for years. Everyone thinks their way is the best. You have to adapt and look at what the best practices are from each of the regions. Some providers have to philosophically relinquish some of the ways they've been doing things to potentially operate in a better way. That's the first challenge when you're taking on other groups. You also have to gain trust from the providers you're working with, and that can take a couple of years.

From there, the challenges from consolidation. When everyone's on the same page, you have to then consolidate processes such as back-office functions and eventually get to a point where you develop your C-suite with your statewide CFO and CEO. In the past year, that's what we've done. Now, about 60 percent to 70 percent of the things we do are shared services among all the regions, and the rest of it is still local to certain regions. The challenge now is further consolidation, but we've made huge inroads over the past year. Ultimately, we're trying to further streamline things, improve our efficiencies and make EmergeOrtho a leaner organization. Saving money on overhead and doing things the same way can potentially lead to better revenue streams. Once you get past the first few years, you get much more buy in.

Q: What challenges are you experiencing in your specific geographic region?

FA: Because we represent such a broad geographic area, each region serves different patient populations, and each market has different competitors. This becomes challenging from a staffing standpoint with regards to employee recruitment and retention. Each region has to adapt to their situation in unique ways to ensure a stable and capable workforce. Every region in EmergeOrtho is on the same page philosophically with the way we practice and how we handle our day-to-day operations, but minor differences exist due to the local landscapes. 

Q: We're seeing some larger groups, such as Rothman Orthopaedics, expanding into other states. Does there come a point where independent orthopedic groups become too big?

FA: I think it's a fine balance between being large enough to effectively serve the geographic area you cover versus being too large that it dilutes your leadership. If you have too many people on your board or leadership council, then it becomes much more difficult to get everybody on the same page to make efficient and effective decisions. I think if you're in one geographic area or state, you can only grow a certain amount. We're at a perfect size now, and how I envision our growth in the future is through different relationships. 

I see us collaborating with other groups, not with full-on integration, but through strategic relationships, such as clinically integrated networks, to work together on large value-based projects. I also see us growing similar to Rothman, not so much by adding more groups to the "mothership," but by managing smaller groups through management services organizations where they can remain independent and not have to fully merge with us. We can help them with back-office functions and streamline other processes to keep their practices alive and independent.

Q: We've seen a lot of growth in the MSO space this year. How do you envision EmergeOrtho stepping into the MSO space to help smaller independent practices?

FA: You can do that through regional or national MSOs versus doing it independent. We're still in the infancy of discussing how we're going to attack that and develop an MSO, but there are many different ways to approach it.

Q: Do you think consolidation will be inevitable for smaller orthopedic groups challenged with maintaining autonomy?

FA: The cost of practicing medicine is astronomical, and it's not going down. Especially as we transition to value-based care, the cost is going to increase, because it's a whole new way of practicing. Data collection and data management become so much more important in order to be successful in value-based care, and that's expensive. If the smaller groups want to survive, they have to make a decision to stay independent or fall into a hospital system. 

If they want to stay independent, they're going to have to look at joining larger groups. It's difficult to survive now, but it's going to be next to impossible to survive as we transition to the next phase of healthcare. Not only value-based care, but as we also transition to direct-to-employer care, you need to be able to provide the full gamut of musculoskeletal services, and it's necessary in a larger group to offer that full spectrum of services.

Q: Has EmergeOrtho secured many direct-to-employer partnerships in North Carolina?

FA: They're only starting to develop now. You don't see it, really, in many parts of the country at this point, but I think a lot of the larger groups are beginning to head in that direction.

Q: In the next five years, how do you see EmergeOrtho growing?

FA: I don't think we'll add any other large groups because we want to maintain a flexible and nimble leadership. If we add too many other groups, you can have too large of a leadership and succumb to paralysis by overanalysis. We want to be able to stay ahead of the curve and be able to make quick decisions. I see us potentially adding small groups into the fold without diluting leadership and also managing small groups either alone or in conjunction with other large groups.

North Carolina is a certificate of need state, so you can't open ASCs easily. There have been attempts over the past decade to get rid of CON legislation, so hopefully something will change soon. If that happens, we'll certainly expand into more ASCs. But right now we plan on doing a lot of our expansion through orthopedic urgent care and physical therapy facilities.

Q: Personally, what do you hope to achieve over the next five years?

FA: I'm in my 23rd year of practice, so I hope to continue to enjoy practicing at a high level. I'm thoroughly enjoying my position as physician president and am putting our organizational goals ahead of my personal goals. I want to see us grow and enter the new phases of care and gain a stronghold in value-based care and management. By doing that, we're providing better and more cost-effective care for our patients and can really make a dent in the healthcare expenditure curve. If we do that properly, we can make healthcare better throughout the country, not just EmergeOrtho, but overall as we transition to a value-based environment.

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