The Future of Orthopedic Surgeon Employment: 3 Core Concepts

Laura Dyrda -  
Increasingly, orthopedic surgeons coming out of school are joining hospitals rather than independent practices. At the same time, orthopedic practices are increasingly entering into co-management or joint venture agreements with hospitals to stay afloat. While it is impossible to tell exactly where most orthopedic surgeons will be practicing five years from now, there may be light at the end of the tunnel for physicians who want to remain in private practice.

Hospital employment

The trend: It's no secret that more surgeons are choosing to become hospital employees instead of practice partners, whether they are seasoned veterans or students finishing their residencies. Hospitals around the country are happy to hire the specialists in their communities, especially orthopedic and neurosurgeons, to protect their market share, says Jan Vest, CEO of Signature Medical Group in St. Louis. Hospitals are attractive to surgeons nearing retirement because the arrangement can offer a leadership position and potential job security that is uncertain for physicians in private practice. Employment by hospitals is also attractive to young surgeons strapped with debt coming out of training because the contracts often offer signing bonuses and the promise of steady income, says Robert Snyder, MD, a physician with Orthopaedic & Spine Care in Newport News, Va. These surgeons are also offered guaranteed vacation days and can focus on their clinical practice instead of dealing with the administrative aspects of running a practice.

However, hospital employment isn't always all it's cracked-up to be. "What young surgeons fail to see is that by signing on to a hospital and working for a salary, they are giving up a lot of the independence they have when running their practice," says Dr. Snyder. Hospital employees are subject to administrative control, which means surgeons may be required to use the same type of equipment as other surgeons instead of their preferred implants to streamline costs. There is also a potential for hospitals to stop renewing the surgeon's contract or cut the surgeon's pay if the hospital is losing money.

Under the right circumstances, however, surgeons can use the competition between hospitals to their advantage. "If the surgeon is in an area of the country where there are multiple hospitals competing for surgeons, it will work for the surgeon's advantage," says Dr. Snyder. "If surgeons go to an area where the hospital has it locked up, you are playing by their rules."

What will happen in the future: While many orthopedic surgeons are eager to sign employment agreements now, they recognize the potential for private practice in a better market. "A lot of surgeons will get into agreements that will allow them to get out of their agreements later," says Mr. Vest. By making sure the contract creates room for the physician to end employment on good terms, the physician maintains control over his or her career and can go back to practicing independently and, if he or she chooses, investing in independent ambulatory surgery centers as the market allows.

Physician-owned practices

The trend:
Smaller orthopedic practices around the country have been hit hard by declining reimbursements and face an uncertain future. Physician groups around the country have been closing their doors or selling their practices to hospitals, especially if these practices are located in smaller communities dominated by hospitals, says David M. Ott, MD, an orthopedic surgeon with Arizona Orthopaedic Associates in Phoenix. "I don't see much future for small group practices," he says, because these groups have little negotiating power with the payors. The additional documentation and accountability requirements healthcare reform puts on medical providers is often overwhelming for a small practice. "When you have more surgeons, you can create meaningful data and comply with reform," says Dr. Ott. "Between the payors not paying enough and demanding accountability, it's too big of an expense [for smaller practices]."

However, larger practices, such as OrthoIndy or Resurgens, that employ more than 40 surgeons have been more successful in overcoming the challenges facing smaller physician practices. "If you are in a large group, you can negotiate good rates with payors," says Mr. Vest. The advantages of physician ownership, such as the potential to earn more money by working harder and the freedom to make decisions about one's own practice, are still attractive to many orthopedic surgeons, says Dr. Snyder.

What will happen in the future: The orthopedic practices that will be able to survive without partnerships or agreements with hospitals will be the larger groups in metropolitan areas, says Dr. Ott. These practices will be able to take more physician partners into their groups. Bringing in surgeons as partners could be considered advantageous by entrepreneurial-minded surgeons, or disadvantageous by a more adventurous surgeon, says Dr. Snyder. Becoming a partner means the surgeon has co-ownership of the loans for the building, which will make it harder to move locations. This type of flexibility will be attractive to younger surgeons looking to explore different locations and opportunities.

Co-management & joint ventures

The trend:
In areas where the hospital and the physician practice are more dependent on each other to survive, the two organizations often work together to provide orthopedic services to the community. Private practice physicians who enter into co-management agreements often become orthopedic service line directors to maintain control over orthopedic services. When negotiating co-management agreements, Mr. Vest says the two parties should hire an outside negotiations manager to make sure the contract benefits both parties. The orthopedic surgeons should also consider hiring a consultant to help them with negotiations.

Co-management arrangements also allow physicians to coordinate care with other medical professionals, including the nurses and physical therapists, for a more organized patient experience at the hospital. The surgeons, in turn, help the hospital improve efficiencies and make sure the services are Medicare compliant, says Dr. Snyder. "We meet with the administrators from the hospital and look at the cost for doing joint replacements," says Dr. Snyder. "Wherever there is a glitch or a problem, we find a solution for it. Hopefully, the hospital is going to be able to prevent some of the situations where they stand to lose compensation, such as preventable hospital injuries." As part of the contract, the surgeons must meet a set of agreed-upon indicators, or benchmarks, to receive extra compensation. Otherwise, the surgeons only receive extra compensation for their leadership role in meetings.

What will happen in the future:
Co-management agreements between hospitals and larger orthopedic practices will be popular in many communities. If a practice is the only orthopedic group in town, the surgeons will have the advantage in negotiations because hospitals want their services, says Mr. Vest. However, if the hospital has alternative sources for joint venturing, the surgeons have a weaker position. Smart surgeons will make sure the contracts state that if the co-management or joint venture doesn't work out, the surgeon or practice can continue existing in the same community, says Mr. Vest. "If the arrangement doesn't work out, you want to be able to return to private practice with no harm, no foul," says Mr. Vest.

The most successful hospitals will be looking for physician groups to joint venture with, says Dr. Snyder. Hospitals that only hire orthopedic surgeons from outside of the community instead of also partnering with private practice physicians risk alienating surgeons from those groups, making them less likely to bring cases to that hospital, says Dr. Snyder.

Read more coverage on orthopedic surgeon employment:

- Independent Medical Practice: Does Healthcare Reform Mean the Beginning of the End?

- Can Orthopedic Surgeons Still Practice in Small Groups?

- 5 Tips to Improve Recruitment of Spine Physicians and Staff

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