5 Points on a Successful Orthopedic Department Business Plan

Practice Management

"If you think it's impossible for orthopedic surgeons to align their goals with those of the hospital leadership, divide a piece of paper in two and make a list of surgeon goals on one side and hospital goals on the other. You'll be surprised at how many goals are the same."
- Ira H. Kirschenbaum, MD Four years ago, Ira Kirschenbaum, MD, chairman of the orthopedic department at Bronx (N.Y.)-Lebanon Medical Center, built an orthopedic program at Bronx Lebanon that took the department with limited revenue generation and service per year to having a significant positive impact on hospital revenue and patient service. A big part of his success was promoting physician leadership and alignment between the orthopedic surgeon group and hospital leadership.

"Our group is involved in every level of patient care — OR management, clinic management, insurance verification — and we are completely aligned with the hospital," he says. "The physicians are still able to make more than the average salary and the hospital is improving its bottom line. Insurance companies are being paid and the patients are being treated, so it's a winning situation."

Orthopedic departments should devise a business plan to help the department grow, says Dr. Kirschenbaum. He discusses the five major points of his department's business plan.

1. Do more cases.
Performing more cases means bringing in additional patients and having the resources to support those cases. "We're going to have to market to more patients and have the ability to process the patients in the hospital," says Dr. Kirschenbaum. For example, if the goal is to bring in five more patients per day, surgeons will need to make sure there are support services for those patients, the OR is more efficient and the hospital will need to become more accommodating so the surgeons will want to bring their cases there. In most medical markets the volume of patients is already out there, the rate-limiting factor is often the structure of your office or operating room to handle this volume.

2. Do more cases in a day. Increasing case volume per day is all about maximizing efficiency. There are several ways to make your process more efficient, including contracts for just-in-time delivery of processing for equipment and devices. "Both surgeons and hospitals can work toward this goal because it's a cost savings for them to perform more cases per day," says Dr. Kirschenbaum. Selective use of multiple operating rooms and strategies to limit dependency on central sterile processing both play important roles.

3. Make sure checks from the insurance company are deposited. It may seem simple, but failing to deposit checks from the insurance company in the bank because of a glitch in the system can cost hospitals and physicians a great deal of money. If the hospital's electronic medical record system isn't working right, the bill for a procedure may never be sent. Additionally, if no one in the OR indicates on the operative report that the surgeon used a specific type of implant with carve outs in the payor contracts, then the bill won't include that information and the hospital will eat that expense.

"Hospitals leave millions on the table by not keeping track of these contracts, and the insurance companies don't have to pay when the bill isn't delivered or wrongly coded," says Dr. Kirschenbaum. "If the hospitals don't bill for an implant, the payors don't have to pay for it, but the hospital still has to purchase the implant from the device company." The surgeon can be a critical piece of this equation. The hospital needs the surgeon's buy-in in this area.

4. Reasonable cost savings. Not every hospital can get the same price from device companies for implants and some ORs need extra services for vendors, so physician leaders have to work with hospitals to figure what reasonable cost savings will be. It's important for both parties to keep quality patient care in mind during these strategy meetings — not just the bottom line.

"Don't get bent out of shape for the prices you are paying device companies, and don't get out of control with saving expenses at the cost of generating revenue," says Dr. Kirschenbaum. "The number one cost in hospitals is salaries and benefits of the people who work there, but you can't just decide to save money and fire all the staff. Hospitals and physicians have to work together to find the reasonable cost savings before there is an impact on revenue or quality of care."

5. Compliance.
Physician leaders must get their partners on board for keeping the hospital in business when it comes to regulatory compliance, because if the hospital isn't compliant, it could be shut down or at the very least sustain significant penalties. "Compliance is a gift the physician can give to the hospital," says Dr. Kirschenbaum.

Related Articles for Orthopedic Surgeons:

Leadership During Hospital Alignment: 6 Points for Orthopedic Surgeons

6 Different Methods for Orthopedic Surgeon-Hospital Alignment

9 Points for Orthopedic and Spine Surgeons on Forming Positive Relationships With Hospitals

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