4 orthopedic, spine leaders on the future of practice management

Practice Management

As hospitals sever service lines, physician pay continues to drop and supply chain disruptions persist, healthcare industry professionals see both opportunities and challenges going forward. 

Four orthopedic specialists recently connected with Becker's to discuss how leadership structure at ASCs, hospitals and health systems could be affected by the evolving healthcare landscape. 

Q: How do you expect the health system/hospital/ASC ownership structure to shift in the next year?

Note: Responses have been lightly edited for length and clarity.

Brian Bizub. CEO of Raleigh (N.C.) Orthopaedic: Valued-based healthcare and inpatient surgical procedures migrating from the inpatient-only list to the outpatient list is creating a shift for hospitals to broaden their market share by shifting to ASCs. Although, hospitals-only owned ambulatory surgical centers receive reimbursements for implants versus ASCs, which only receives a facility fee, creates a paradigm to maintain both ACCs and ASCs. However, hospitals are now more willing to partner with physician-owned ASCs to create a larger portfolio and extend their long-term vision and strategy in the healthcare space based on consumer demand and preferences. Hospitals and physicians' practices have shifted to a more retail model that responds to the consumers' preference and a more personalized experience. In my opinion, hospitals will continue to grow in the ASC environment to maintain a share hold in growth in their communities. ASCs are less expensive to consumers than hospital-owned ASCs, and the financial investment in joint ventures with physicians creates cost consciousness, increases surgical volumes and drives patient satisfaction.

From the insurance perspective, payers are looking for the best value and outcomes for their members, and the ASC model provides both for the appropriate members of their risk pool. 

Michael Boblitz. CEO and Chief Strategy Officer of Tallahassee (Fla.) Orthopedic Clinic: Market forces continue to shift towards lower-cost settings of care with ASCs front and center.  

Employers are beyond frustrated with the never-ending rise in premium costs to administer healthcare benefits to their employees and beneficiaries. Payers are under attack as a result and beyond frustrated with provider networks for not being able to aggressively respond to the pressing desires to lower the overall cost of care.  

The employers are beginning to seek direct-to-provider arrangements that guarantee care in the lower-cost ASC setting and thus reduce the spend by at least 30 to 40 percent per case (relative to hospital-based surgery).  

Payers are thereby scrambling to create: 1. New payer policies that no longer cover certain elective outpatient surgery in hospital-based settings, and 2. Building "in-house" provider networks that include ASCs with a laser focus on moving patients to lower-cost settings — fast.

Several states are also responding to the rapidly rising costs and related employer frustrations by going even further to consider abolishing the certificate of need law that has preserved hospital-based surgery and restricted the ability for more ASCs to be built and help reduce cost of care. Some states, such as Florida, already implemented this change.

As Newton's third law has always stated, "Every action creates an equal and opposite reaction," and to no surprise hospitals are trying to react to the same market forces and making modest investments in ASCs, but at a very slow pace.

Over the next year and beyond, the tailwinds will continue to fuel the growth of ASCs with employers and payers leading the charge and hospitals running behind trying to keep up and stay in the game.  

I envision the structure to swing towards pure surgical practice ownership without any joint venture arrangements that may include non-provider capital lending and certainly the continued opportunity to partner with private equity firms.

Looking further, the joint venture ASC model will shift from traditional hospital/surgical practice arrangements to payer and surgical practice partnerships with direct-to-employer bundled pricing coming along for the ride.

Adam Bruggeman, MD. Spine Surgeon at Texas Spine Care Center (San Antonio): I don't think we have seen the end of consolidation within the healthcare ownership market. The mix of increasing costs and reduced reimbursement will continue to accelerate consolidation, leading to further acquisitions in the ASC and health system space. This trend will continue to drive costs upward, and I ultimately believe will help increase the desire to lift the ban on physician-owned hospitals over time. New growth in the sector will continue to come from ASCs as surgeons recognize the importance of ownership in facilities that are seeing upward trends in reimbursement while physician compensation continues to trend downward.

Kim Mikes, BSN, RN. CEO of Hoag Orthopedic Institute (Newport Beach, Calif.): As the popular saying goes, "follow the money." When CMS moves more orthopedic and spine procedures from inpatient-only status to ACS status, more surgeries will be performed in ASCs. Our orthopedic surgeons were pioneers in doing joint replacements in ASCs, so our model of care is built around an inpatient hospital and a growing network of ASCs. We plan to open at least one more ASC this year to serve the growing need in our community. It reduces costs for all stakeholders when orthopedic procedures can be done in the ASC with no reduction in clinical outcomes. That's why more hospitals and health systems are acquiring more ASCs. More importantly, private equity — so-called smart money — is reshaping our industry. Because of the value proposition, these deals will continue to accelerate. With this shift, we may see more consolidation and investment in ASCs across the country.

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