Healthcare delivery is changing and proactive orthopedic groups are taking several steps to meet subsequent challenges head on. "The primary challenge facing orthopedic practices is the level of uncertainty [about the future]," says Bill Champion, founder and president of Orthopaedic Marketing Group. "Whether it is federal reimbursements or increased competition from hospital medical groups, most practices at some level are waiting for more clarity. This uncertainty has practices allocating resources to prepare for what they aren't sure is going to happen."
Here, orthopedic surgeons and industry experts discuss how orthopedic practices can position themselves to remain successful in the future, despite today's uncertainties.
1. Merge with other practices. The costs of owning a medical practice have risen over the past few years while reimbursements stagnated or decreased, which has made an increasing number of orthopedic surgeons choose hospital employment over private practice. When small group practices feel the pinch of today's circumstances but aren't willing to sign a hospital employment contract, many choose merging with other practices to form a larger group practice that can leverage power within the community.
"Physicians groups have been getting larger over the past few years in an attempt to gain bargaining power with insurance companies," says David Ott, MD, a surgeon with Arizona Orthopaedic Associates in Phoenix. "Now, more are assimilating because of the political mandates. We've created a merger of 19 orthopedic practices with 27 locations and 30-plus PAs or nurse practitioners."
Dr. Ott's practice became a limited liability company and functions as a single group with multiple divisions. "You have to give up some of the autonomy and freedom that you had as a smaller group, but at the same time, the safety net provided by a larger group is substantial," he says.
Once a large orthopedic group has formed, it's important for the leaders to know how to fully use their size. "Practice size has a number of apparent benefits, but few practices really know how to leverage their position to market their advantage," says Mr. Champion. "Proven quality, exceptional service, efficient processes and clear communication efforts are critical initiatives moving forward."
2. Devise strategic partnerships with outside entities. Orthopedic practice leaders must think outside the box and explore new methods for increasing practice profits. Dr. Ott's practice is looking at creative contracting with hospitals and insurance companies for funneled payments. The surgeons are also discussing their options for capturing additional business through ancillary services. "We're definitely more attuned to running a profitable and efficient practice than we were in the past," he says. His practice is also preparing for participating in accountable care organizations. "We hope to contract with an ACO or multiple ACOs, but not be employed by ACOs. We're either looking for a fee-for-service contract, capitation or bundled payment-type agreements."
Beyond partnering with hospitals, orthopedic practices are collaborating with healthcare-related groups in their communities. For example, Geoffrey Connor, MD,'s medical practice, D1 Sports Medicine, has partnered with a sports fitness and performance facility, D1 Sports Training. His practice caters to athletically-minded individuals and offers orthopedic in addition to fitness services.
"The clinic I have developed overlooks the D1 Sports Training as well as a football field," he says. "My clinic has collaborated with a secondary entity focused on fitness and sports performance to help encourage patients to understand the value of both services."
3. Seek help for ICD-10 switch. Healthcare providers across the board are struggling to prepare for the conversion from ICD-9 codes to ICD-10. These changes could make billing and coding easier in the future because they allow for a more specific description of the procedures performed, but the implementation of a new system has upfront inefficiencies, especially for small practices. "Small practices will probably have a more difficult time due to a lack of resources and personnel to mitigate these requirements," says Brad Melis, executive vice president of ChartLogic, a vendor of software for orthopedic practices. "The level of coding that will be required is much more specific and the codes that staff members are going to have to deal with will increase significantly."
Some practices are looking to professional billing companies to ensure their claims are coded correctly. "We're anticipating some smaller practices will turn to billing services instead of trying to handle changes for fear that they won't get it right," says Mr. Melis. "Most practices understand that you need a quality biller to maximize revenue. These professionals are expensive, but when you double the code set, it becomes obvious that knowledgeable coders will be very valuable."
Electronic medical records and company vendors are also becoming more proactive in helping physicians locate the right code and transitioning to the new system. "We've worked on initiatives to perform cross correlation from ICD-9 to ICD-10 so physicians or coders can pick out familiar codes in ICD-9 and we'll transfer it to ICD-10," he says. "Vendors are doing consultations with physicians to make sure they are collecting their money appropriately. All these changes require a commitment from stakeholders to help physicians, because physicians are the ones we depend on. The market is taking an aggressive approach to make sure these initiatives aren't just thrown at physicians, but they have a resource to go to for help."
4. Optimize meaningful use data. Meaningful use is a big part of new healthcare reform legislation, but it's hard for individual practitioners and small group practices to meet the requirements on their own. Electronic medical records are necessary to perform this function. Providers receive limited incentive payment from the government for early implementing meaningful use, and some are taking advantage of what little incentive is available while others are insisting on waiting until the last possible minute to implement EMRs.
"The government doesn't reimburse the total cost of this implementation, so physicians are skeptical and think this is going to be a lot more costly than what the government tells them," says Mr. Melis. "There are many who are working to comply with meaningful use, but they wonder whether the return ultimately will be there."
There are some orthopedic surgeons and groups that have decided not to begin meaningful use implementation because they won't receive penalties for noncompliance yet. "Those who delay it will have a more difficult time because they won't be used to incremental meaningful use data capture; they will be hit with it all at once," says Mr. Melis. "Their staff will become overwhelmed with meaningful use requirements."
There are several more rounds of implementation yet to come with each round requiring more data gathering. Groups that have already begun the process will have an advantage over those who remain steadfast against it until the last moment. Dr. Ott's group has been collecting outcomes data for 17 years and is ready to meet new requirements, but he recognizes other groups may not be.
"People have stuck their heads in the sand and hoped that change wouldn't happen," he says. "With the data we have, we are able to contract with insurance companies on quality, not just physician fees. We are able to have good relationships with our payors based on quality and they feel we can give their clients better care. Anyone can go to a payor and say they have better care, but we can prove it."
In the future, insurance companies won't be the only people looking at outcomes data. "Ultimately orthopedists will be compensated based on patients and referrals sources choosing them over other competitive options," says Mr. Champion. "What practices do to help patients and referral sources choose them will be important. In many ways, the current challenges are sharpening the business mindset of the practices. They are looking at ways to prove value to all customer audiences in ways that are both effective and efficient."
5. Focus on efficiency. Many practices have begun the transition to electronic medical records to meet meaningful use requirements, and some are now able to increase efficiency as a result. "The amount of time it takes to manage paper charts is really significant and the staff will tell you they spend a lot of time every day filling in and processing paper charts," says Mr. Melis. "Every time the phone rings in the office, they have to pull a chart. When you take that all away, employees will report they are working more quickly because EMRs have made it easier to access patient data."
Some EMRs also have transcribing functions to convert verbal physician reports into documented notes quickly. "The EMRs could reduce or neutralize the time physicians spend doing hand written notes, but the quality of the transcribed notes is clearer, which can lead to more codes being captured appropriately and better reimbursement," says Mr. Melis. Despite all of these advantages, the transition to EMRs can be stressful because it takes time for medical providers and practice staff to become comfortable with new processes.
"The fear of change is really the biggest issue," he says. "If you're used to doing something the same way for decades, there is a gripping fear that can come with the change. There are some people who hope new regulations will go away, but most people know that the time for discussion is over and are ready to begin EMR implementation."
It can be daunting for practices to sort through dozens of vendors in the field to find the perfect solution, but extensive research is crucial for finding the right system for each practice. Dr. Ott's practice was at the forefront of EMR implementation a few years ago, but lack of research and knowledge about the different vendors led them to pay a good price for a bad system. His practice is now in the process of choosing a new EMR system, and even within his large group the process hasn't been easy.
"I advise people to look specifically and carefully at what their current needs and future needs are as much as they can," he says. "Go spend time in practices that have the same system you are looking at and really get to know the system. There are also list serves that have people who are on these systems who can tell you the pros and cons. These chat rooms are very valuable. We were looking at switching to a big system and when we started talking to people who were using it, most of them said they didn't like it."
6. Turn to cash patients and services. Declining reimbursements from payors and a broken sustainable growth rate have made it difficult for surgeons to financially support a practice. There has been proposed legislation that would cut specialty physician reimbursement for Medicare patients significantly over the next several years. Some worry this could create a two-tiered healthcare system with some physicians limiting their practices to only those who can pay for their treatment while others bare the brunt of the Medicare and low-reimbursing payor population.
"I certainly have an investment in patient care, but I have 15 staff members who rely on pay based on the reimbursement we expect from total knee and total hip replacements," says Dr. Connor. "The current reimbursement rates for Medicare beneficiaries are unsustainable. If I want to keep all my employees, I can't watch the reimbursements degrade for our procedures."
Dr. Connor made the decision last year to begin targeting cash pay patients for his practice. While he is a trained orthopedic surgeon and performs joint replacement surgeries regularly, he also offers services such as platelet-rich plasma injections and in-office fiberoptic arthroscopy on a cash basis. Additional cash-based services include sports performance measures, such as body mass index and nutritional analysis, to create an environment of concierge sports medicine.
"If more subspecialists turn to the cash patient model, Medicare patients may have to wait longer for care or choose to pay more out-of-pocket," says Dr. Connor. "I don't want to scare Medicare beneficiaries, but hip implants and surgeries are expensive and the proposed rates just aren't viable. I set up a system like plastic surgeons or bariatric care; I'm trying to evolve an orthopedic practice that captures patients who need medical services with added value."
However, transitioning to a more cash based practice, including patients with a high deductible plan, isn't as easy as hanging a sign outside your front door. When patients are paying out of pocket for these services, they'll want the most bang for their buck. "With more out-of-pocket costs, patients will be far more demanding and expect a higher level of care, caring and services that are rare to find in today's orthopedic practices," says Mr. Champion.
Related Articles for Orthopedic Practices:
5 Out-of-the-Box Strategies for Increasing Orthopedic Practice Profits
5 Points on Developing a Concierge Sports Medicine Practice
5 Advantages of Orthopedic Groups Aligning With Hospitals
1. Merge with other practices. The costs of owning a medical practice have risen over the past few years while reimbursements stagnated or decreased, which has made an increasing number of orthopedic surgeons choose hospital employment over private practice. When small group practices feel the pinch of today's circumstances but aren't willing to sign a hospital employment contract, many choose merging with other practices to form a larger group practice that can leverage power within the community.
"Physicians groups have been getting larger over the past few years in an attempt to gain bargaining power with insurance companies," says David Ott, MD, a surgeon with Arizona Orthopaedic Associates in Phoenix. "Now, more are assimilating because of the political mandates. We've created a merger of 19 orthopedic practices with 27 locations and 30-plus PAs or nurse practitioners."
Dr. Ott's practice became a limited liability company and functions as a single group with multiple divisions. "You have to give up some of the autonomy and freedom that you had as a smaller group, but at the same time, the safety net provided by a larger group is substantial," he says.
Once a large orthopedic group has formed, it's important for the leaders to know how to fully use their size. "Practice size has a number of apparent benefits, but few practices really know how to leverage their position to market their advantage," says Mr. Champion. "Proven quality, exceptional service, efficient processes and clear communication efforts are critical initiatives moving forward."
2. Devise strategic partnerships with outside entities. Orthopedic practice leaders must think outside the box and explore new methods for increasing practice profits. Dr. Ott's practice is looking at creative contracting with hospitals and insurance companies for funneled payments. The surgeons are also discussing their options for capturing additional business through ancillary services. "We're definitely more attuned to running a profitable and efficient practice than we were in the past," he says. His practice is also preparing for participating in accountable care organizations. "We hope to contract with an ACO or multiple ACOs, but not be employed by ACOs. We're either looking for a fee-for-service contract, capitation or bundled payment-type agreements."
Beyond partnering with hospitals, orthopedic practices are collaborating with healthcare-related groups in their communities. For example, Geoffrey Connor, MD,'s medical practice, D1 Sports Medicine, has partnered with a sports fitness and performance facility, D1 Sports Training. His practice caters to athletically-minded individuals and offers orthopedic in addition to fitness services.
"The clinic I have developed overlooks the D1 Sports Training as well as a football field," he says. "My clinic has collaborated with a secondary entity focused on fitness and sports performance to help encourage patients to understand the value of both services."
3. Seek help for ICD-10 switch. Healthcare providers across the board are struggling to prepare for the conversion from ICD-9 codes to ICD-10. These changes could make billing and coding easier in the future because they allow for a more specific description of the procedures performed, but the implementation of a new system has upfront inefficiencies, especially for small practices. "Small practices will probably have a more difficult time due to a lack of resources and personnel to mitigate these requirements," says Brad Melis, executive vice president of ChartLogic, a vendor of software for orthopedic practices. "The level of coding that will be required is much more specific and the codes that staff members are going to have to deal with will increase significantly."
Some practices are looking to professional billing companies to ensure their claims are coded correctly. "We're anticipating some smaller practices will turn to billing services instead of trying to handle changes for fear that they won't get it right," says Mr. Melis. "Most practices understand that you need a quality biller to maximize revenue. These professionals are expensive, but when you double the code set, it becomes obvious that knowledgeable coders will be very valuable."
Electronic medical records and company vendors are also becoming more proactive in helping physicians locate the right code and transitioning to the new system. "We've worked on initiatives to perform cross correlation from ICD-9 to ICD-10 so physicians or coders can pick out familiar codes in ICD-9 and we'll transfer it to ICD-10," he says. "Vendors are doing consultations with physicians to make sure they are collecting their money appropriately. All these changes require a commitment from stakeholders to help physicians, because physicians are the ones we depend on. The market is taking an aggressive approach to make sure these initiatives aren't just thrown at physicians, but they have a resource to go to for help."
4. Optimize meaningful use data. Meaningful use is a big part of new healthcare reform legislation, but it's hard for individual practitioners and small group practices to meet the requirements on their own. Electronic medical records are necessary to perform this function. Providers receive limited incentive payment from the government for early implementing meaningful use, and some are taking advantage of what little incentive is available while others are insisting on waiting until the last possible minute to implement EMRs.
"The government doesn't reimburse the total cost of this implementation, so physicians are skeptical and think this is going to be a lot more costly than what the government tells them," says Mr. Melis. "There are many who are working to comply with meaningful use, but they wonder whether the return ultimately will be there."
There are some orthopedic surgeons and groups that have decided not to begin meaningful use implementation because they won't receive penalties for noncompliance yet. "Those who delay it will have a more difficult time because they won't be used to incremental meaningful use data capture; they will be hit with it all at once," says Mr. Melis. "Their staff will become overwhelmed with meaningful use requirements."
There are several more rounds of implementation yet to come with each round requiring more data gathering. Groups that have already begun the process will have an advantage over those who remain steadfast against it until the last moment. Dr. Ott's group has been collecting outcomes data for 17 years and is ready to meet new requirements, but he recognizes other groups may not be.
"People have stuck their heads in the sand and hoped that change wouldn't happen," he says. "With the data we have, we are able to contract with insurance companies on quality, not just physician fees. We are able to have good relationships with our payors based on quality and they feel we can give their clients better care. Anyone can go to a payor and say they have better care, but we can prove it."
In the future, insurance companies won't be the only people looking at outcomes data. "Ultimately orthopedists will be compensated based on patients and referrals sources choosing them over other competitive options," says Mr. Champion. "What practices do to help patients and referral sources choose them will be important. In many ways, the current challenges are sharpening the business mindset of the practices. They are looking at ways to prove value to all customer audiences in ways that are both effective and efficient."
5. Focus on efficiency. Many practices have begun the transition to electronic medical records to meet meaningful use requirements, and some are now able to increase efficiency as a result. "The amount of time it takes to manage paper charts is really significant and the staff will tell you they spend a lot of time every day filling in and processing paper charts," says Mr. Melis. "Every time the phone rings in the office, they have to pull a chart. When you take that all away, employees will report they are working more quickly because EMRs have made it easier to access patient data."
Some EMRs also have transcribing functions to convert verbal physician reports into documented notes quickly. "The EMRs could reduce or neutralize the time physicians spend doing hand written notes, but the quality of the transcribed notes is clearer, which can lead to more codes being captured appropriately and better reimbursement," says Mr. Melis. Despite all of these advantages, the transition to EMRs can be stressful because it takes time for medical providers and practice staff to become comfortable with new processes.
"The fear of change is really the biggest issue," he says. "If you're used to doing something the same way for decades, there is a gripping fear that can come with the change. There are some people who hope new regulations will go away, but most people know that the time for discussion is over and are ready to begin EMR implementation."
It can be daunting for practices to sort through dozens of vendors in the field to find the perfect solution, but extensive research is crucial for finding the right system for each practice. Dr. Ott's practice was at the forefront of EMR implementation a few years ago, but lack of research and knowledge about the different vendors led them to pay a good price for a bad system. His practice is now in the process of choosing a new EMR system, and even within his large group the process hasn't been easy.
"I advise people to look specifically and carefully at what their current needs and future needs are as much as they can," he says. "Go spend time in practices that have the same system you are looking at and really get to know the system. There are also list serves that have people who are on these systems who can tell you the pros and cons. These chat rooms are very valuable. We were looking at switching to a big system and when we started talking to people who were using it, most of them said they didn't like it."
6. Turn to cash patients and services. Declining reimbursements from payors and a broken sustainable growth rate have made it difficult for surgeons to financially support a practice. There has been proposed legislation that would cut specialty physician reimbursement for Medicare patients significantly over the next several years. Some worry this could create a two-tiered healthcare system with some physicians limiting their practices to only those who can pay for their treatment while others bare the brunt of the Medicare and low-reimbursing payor population.
"I certainly have an investment in patient care, but I have 15 staff members who rely on pay based on the reimbursement we expect from total knee and total hip replacements," says Dr. Connor. "The current reimbursement rates for Medicare beneficiaries are unsustainable. If I want to keep all my employees, I can't watch the reimbursements degrade for our procedures."
Dr. Connor made the decision last year to begin targeting cash pay patients for his practice. While he is a trained orthopedic surgeon and performs joint replacement surgeries regularly, he also offers services such as platelet-rich plasma injections and in-office fiberoptic arthroscopy on a cash basis. Additional cash-based services include sports performance measures, such as body mass index and nutritional analysis, to create an environment of concierge sports medicine.
"If more subspecialists turn to the cash patient model, Medicare patients may have to wait longer for care or choose to pay more out-of-pocket," says Dr. Connor. "I don't want to scare Medicare beneficiaries, but hip implants and surgeries are expensive and the proposed rates just aren't viable. I set up a system like plastic surgeons or bariatric care; I'm trying to evolve an orthopedic practice that captures patients who need medical services with added value."
However, transitioning to a more cash based practice, including patients with a high deductible plan, isn't as easy as hanging a sign outside your front door. When patients are paying out of pocket for these services, they'll want the most bang for their buck. "With more out-of-pocket costs, patients will be far more demanding and expect a higher level of care, caring and services that are rare to find in today's orthopedic practices," says Mr. Champion.
Related Articles for Orthopedic Practices:
5 Out-of-the-Box Strategies for Increasing Orthopedic Practice Profits
5 Points on Developing a Concierge Sports Medicine Practice
5 Advantages of Orthopedic Groups Aligning With Hospitals